Beazley plc 2022 results

Beazley plc released its group results for the full year 2022 this morning. The full press release is available here.

The key highlights as follows:

• gross written premiums of US$5,268m (+14% on 2021);
• combined ratio of 89% (2021: 93%) notwithstanding hurricane Ian and Ukraine uncertainty;
• net investment loss of US$179.7m (2021: +US$116.4m);
• profit before tax of US$191m (-48% on 2021) after investment losses;
• average rate increase on renewal portfolio of 14% (24% 2021);
• prior year reserve releases of US$132.6m (2021: US$209.8m.

A few extracts and comments below:

Investments

The group holds US$8,998.1m of investments on which there was a 2.1% loss caused by the adverse impact of rising yields on bonds. This is an unrealised investment loss which affected the 2022 pre-tax loss however it is expected that there will be useful investment gains in the future, subject to inflation and direction of interest rates.

Cumulative rate change

Property and Hurricane Ian

"The success of work painstakingly done in recent years to address the impact of climate events and refine our risk selection, has seen the book progressively improve. With market conditions reaching a pivot point during 2022, we are now in a great position to reap the rewards. While Hurricane Ian will see a claims burden in the range of a $120m net loss and has undoubtedly had an impact on the 2022 result, we comprehensively plan for events of this size, and it falls within our expectations for such an event."

Property Treaty

"These focused efforts have put us firmly on the front foot to strongly build our Property premium base through 2023 - not just as we respond to an immediate and much needed improvement in the rating environment, but for the long term. As the rating environment remains favourable we will lean into the market opportunity; the equity raise of November 2022, has given further charge to this effort as we anticipate Property Treaty rate increases of up to 50% and over 15% in the direct Property book during 2023."

Reinsurance outwards

"In contrast, as a buyer of reinsurance we are seeing an increase in costs; but balanced against the overall benefit of more effective market pricing and our dual role as a Property reinsurer, we believe this environment creates excellent opportunities for Beazley as a leading specialist Property insurer."

Comment

There was continued strong rate momentum during 2022 which will continue for 2023. The Hurricane Ian loss is small. Beazley expects a combined ratio in the high 80s for 2023 which reflects the positive trading conditions prevailing in the market.

We will not receive the syndicates' results for some time. Please find a link to the slides published on Beazley's website.