Beazley Group plc 23 March Results for the year ended 31 December 2003

Transcription

1 Beazley Group plc 23 March 2004 Results for the year ended 31 December 2003

2 Overview A significant year for the group - First results from 2003 underwriting year - Further significant growth from the managed syndicates Group highlights - Profit for the year at 17.1m (2002 : loss 1.2m) - Net assets m, 67p net assets per share (2002: 63p) - Total dividend 0.75p Syndicate highlights - Gross Premiums Written: 708m (2002: 438m) - Substantial improvement in Combined Ratio: 82% ( %) - Year-on-year renewal rate increase 11% ( %) YOA was breakeven as predicted shortly after 9/ YOA 11% return on capacity impacted by a devalued US dollar - Volume of transactions underwritten up from 9,461 to 13,188 a 39% increase Trading conditions in all key areas remain excellent - Continued growth in existing business lines; 2004 capacity at 741m of which group s share 54% ( 398m) - Rates remain strong across all classes

3 Beazley Group Plc - Financial Summary Year ended 31 December months ended 31 December 2002 Written premiums net of reinsurance Net earned premiums Balance on technical account Profit/(Loss) before tax 17.1 (1.2) Tax (5.3) 0.1 Profit after tax 11.8 (1.1) Diluted earnings per share 5.2p (1.7p) Dividend per share 0.75p - Net asset value per share 67p 63p

4 Earnings Pattern Approximately 50% of gross and net premiums written in 2003 have earned in 2003 Acquisition costs earn in line with premiums Administrative costs are charged in the calendar year Investment balance will continue to grow With loss ratios at current levels 2003 YOA will create larger profit in 2004 than 2003

5 Investments & Investment Strategy Investment Balance ( m) Funds at Lloyds Syndicate Funds Total Group Funds Syndicate funds are due to grow rapidly over the next two years as the average duration of claims payment is 3 years.

6 Investment Strategy Until end of 2003 all funds in high grade bonds In 2004 approximately 10% of funds to be placed in high yield, equities and fund of fund hedge funds Balance to investment portfolio to give enhanced returns with measured downside Fx Hedging Simple hedging of dollar profits as they arise No hedging in 2003 as need to grow cash balance for potential large loss

7 Managed Syndicate Results Full Year ended 31 December Gross Premiums Written ( m) Net Premiums Written ( m) Net Premiums Earned ( m) Net Claims Incurred ( m) (197) (174) (134) Net Operating Expenses ( m) (165) (102) (71) Profit/(Loss) for the Period ( m) (17) Claims Ratio 49% 60% 75% Expense Ratio 33% 34% 33% Combined Ratio 82% 94% 108%

8 Divisional Review: Specialty Lines For the year ended 31 December Gross Premiums Written ( m) Net Premiums Written ( m) Net Premiums Earned ( m) Claims Ratio 63% 80% Rate Increase Achieved 21% 38% Percentage of Business Led* 77% 77% Transaction Volume 6,021 4,293 One of the largest writers of professional liability business in Lloyd s Core business since 1986 Underwriting teams increased to develop and service a long term account Market opportunities are excellent. Rates are still increasing. *based on Gross Premium Written

9 Divisional Review: Property For the year ended 31 December Gross Premiums Written ( m) Net Premiums Written ( m) Net Premiums Earned ( m) Claims Ratio 37% 41% Rate Increase Achieved 4% 27% Percentage of Business Led* 53% 51% Transaction Volume 4,283 3,248 Trading conditions remain positive, but rates for large risks have begun to come under pressure Growth in high net worth homeowners account *based on Gross Premium Written

10 Divisional Review: Reinsurance For the year ended 31 December Gross Premiums Written ( m) Net Premiums Written ( m) Net Premiums Earned ( m) Claims Ratio 54% 68% Rate Increase Achieved 4% 44% Percentage of Business Led* 27% 20% Transaction Volume Core business since 1986 Growth due to new opportunities and greater participation in core accounts 2002 was a relatively catastrophe free year profits now recognised *based on Gross Premium Written

11 Divisional Review: Marine For the year ended 31 December Gross Premiums Written ( m) Net Premiums Written ( m) Net Premiums Earned ( m) Claims Ratio 29% 55% Rate Increase Achieved 10% 16% Percentage of Business Led* 53% 51% Transaction Volume 1,923 1,086 Not a generalist account Specialist underwriters hired to strengthen energy and cargo accounts Rate rises over last 12 months expected to continue into 2004 *based on Gross Premium Written

12 Key Strengths Management Team People Track Record Balance of Business Business model

13 Management Team: Experience & Alignment Andrew Beazley Age: 50 Chief Executive Officer Founded Beazley Furlonge in 1986 Shareholding 6,771,810 Jonathan Gray Age: 50 Team leader of Property Division Underwriting at Beazley since 1992 Shareholding 3,339,043 Johnny Rowell Age: 42 Team leader of Specialty Lines Division Underwriting at Beazley since 1993 Shareholding 4,120,663 Neil Maidment Age: 41 Team leader of Reinsurance Division Underwriting at Beazley since 1990 Shareholding 2,915,545 Nicholas Furlonge Age: 53 Founded Beazley Furlonge in 1986 Director of Risk Management Shareholding 2,451,307, Andrew Horton Age: 42 Finance Director 15 years in the banking industry Shareholding 23,203

14 People Headcount Specialty Lines Property Reinsurance Marine Support TOTAL At IPO At 31 December

15 People: Experience & Specialism Specialty Lines Johnny Rowell (92) 19 Adrian Cox (01) PSR 11 Adrian Lewers (01) PCG 15 Johnny Rowell Large Risks Andrew Culter (01) 18 Tina Kirby (97) 9 Lloyd Fielder Large PI (04) 19 Steve Bashford (00) 18 Neil Wilkinson D&O (03) 25 Eddie Wattenbach (94) 22 Nat Cross Med Mal (03) 16 Karyn Williams (94) 17 Total Team 53 ear joined Beazley) ars in the Industry

16 People: Experience & Specialism Property Jonathan Gray (92) 30 Alistair Robson (01) Alastair Blades (94) Derrick Harris (92) Paul Bromley (00) International North America Jewellers Block Covers Sarah Peters (03) 8 Total Team 25 ear joined Beazley) ars in the Industry

17 People: Experience & Specialism Marine Clive Washbourn (98) 21 Paul Dawson (03) Energy 20 Alasdair Butler (03) Cargo 24 Clive Washbourn (98) Hull 21 ear joined Beazley) ars in the Industry Total Team 9

18 People: Experience & Specialism Treaty Neil Maidment (90) 20 Will Curran (96) 8 Total Team 5 ear joined Beazley) ars in the Industry

19 Track Record: Growth & Consistency Capacity versus return on capacity within Beazley and Lloyd's Beazley capacity Beazley return on capacity Market Return on Capacity 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% -25.0%

20 Balance of Business: Business Mix GPW - 355m 2003 GPW - 438m GPW - 708m

21 Balance of Business: Geography/Short & Medium Tail Mix Beazley has an established book of specialist business that is diverse in terms of geography and risk profile Rest of World 30% US 47% Medium Tail 49% Short T 51% Europe 23%

22 Business Model Board with depth in underwriting Four businesses within a group Flat structure ensuring communication and decision making Specialists with experience Each business includes underwriting, claims and producer underwriters All other functions are centrally managed with some outsourced

23 Dividend Policy Group owned syndicate 2623 s first year of profits (2003) will be released from Lloyd s in 2006 The group is currently using all its capital to support syndicate 2623 in 2004 and is expected to need all for 2005 The group agreed to pay dividends at the time of the IPO Dividends are likely to be low until the 2005 year end and increase thereafter

24 What have we achieved? Deployed all the capital to support Group s capacity of 330m Utilised 99% of capacity in 2003 Delivered expected profit Paid dividends as promised Agreed 12% growth in capacity for 2004 to 741m of which group owns 54% Recruited talented people with required expertise and experience

25 Outlook Consolidate on growth in 2003 and fully use capacity in 2004 Continue to attract talent for more organic profitable growth Market conditions will lead to healthy underwriting profits 2004 earnings will be considerably greater than 2003

26 Beazley Group plc 23 March 2004 Results for the year ended 31 December 2003