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Feb 10, 2022

Beazley plc 2021 results announcement

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Beazley plc has released to the LSE its 2021 results statement available here in full.

The following financial highlights summarise the Group's performance during 2021:

· Profit before tax of $369.2m (2020: Loss $50.4m)

· Gross premiums written increased by 30% to $4,618.9m (2020: $3,563.8m)

· Combined ratio of 93% (2020: 109%)

· Rate increase on renewal portfolio of 24% (2020: 15%)

· Prior year reserve releases of $209.8m (2020: $93.1m)

We hope the following extracts from the Statement make interesting reading for Members.

Extracts from Chairman's Statement:

"The last few years have seen a hardening phase in the insurance market cycle as rates have risen. However, this market dynamic is not present across all lines, and in certain classes we are now seeing a tailing off or flattening out of those price rises as more capacity comes into the market. We pride ourselves on taking a disciplined approach to underwriting, being selective about risk selection and pricing, and even in the market conditions of recent years we have been prepared to walk away from mis-priced risk. This market cycle discipline will be even more important in 2022 given the many uncertainties faced by our clients."

Extracts from the Class of Business reports by the CEO Bob Quane:

Cyber & Executive risk (D&O, M&A)

Premiums +49%. Rates +49% average. Combined ratio 93%. Additional reinsurance protection purchased.

Marine including cargo, aviation, liability, satellite, hull and war

Premiums +11%. Combined ratio 72%

Political, Accident & Contingency

Premiums +18%. Combined ratio 98%. Rate increases in the contingency book as events got under way again.

Property

Premiums +25%. Combined ratio 99%.

Reinsurance

Premiums +16%. Combined ratio 126%. Affected by Hurricane Ida* . Only 50% of the European flood losses were insured.

"The rating environment going into 2022 is strong and we will maintain our current portfolio mix. Our exposure management team will continue to leverage sophisticated data sources, coupled with our own information to provide a view of the likely future probable maximum loss of both primary and secondary perils...."

[*Recently Munich Re estimated Ida to be an insured loss of US$36bn and that 2021 will be the second costliest year for insured catastrophe losses with an estimated total of US$120bn, the 2017 year being the highest at US$146bn.]

Specialty Lines

Premiums +23%. Average rating up 13%. Combined ratio 92%. Additional reinsurance protection purchased.

Cumulative Rate Change

2015

2016

2017

2018

2019

2020

2021

Cyber & Executive Risk

100%

100%

100%

99%

104%

122%

182%

Marine

100%

93%

90%

93%

103%

120%

130%

Market Facilities

100%

100%

103%

123%

143%

Political, Accident & Contingency

100%

96%

92%

91%

91%

95%

102%

Property

100%

96%

96%

106%

117%

135%

149%

Reinsurance

100%

96%

94%

100%

105%

118%

135%

Speciality Lines

100%

101%

102%

102%

107%

122%

138%

All Divisions

100%

98%

97%

100%

106%

122%

151%

Covid estimate

Remains unchanged at US$340m.

Reserve releases

Margin held above actuarial estimate of 6.4% at the end of 2021 (2020: 6.3%)

Prior year releases of US$209.8m represented 6.7% of net earned premium.

"This represents our highest release ever in monetary value, but the percentage of earned premium is subdued due to the large growth we have seen in premiums in 2021. It was promising to see all of the divisions releasing in total off the prior years ...."

Conclusion

A very strong set of results with a reinstatement of the dividend and encouraging prospects. We recommend reading the full announcement for the full flavour of the report including the Q&A with the Chief Executive Adrian Cox. The presentation given during this morning's earnings call is available here.