Headline earnings for Lloyd’s insurer Beazley (BEZ) fell last year as it released less capital from reserves than in 2013 - $158m (£103m), down from $218m. That pushed up the combined ratio of total costs to premia from an exceptionally low 84 per cent to 89 per cent - though that's still pretty profitable, and below the five-year average of 90 per cent.
A bigger worry is that the benign claims environment continues to erode rates. On renewal business these were down 2 per cent last year, on average. Steps have been taken to shift the focus onto specialist products that command higher margins, and to resist the temptation of chasing business at uncompetitive levels. In response to evidence of overcapacity in the reinsurance market, for example, Beazley scaled back gross premiums in its reinsurance division by 9 per cent, with a further reduction expected this year. Other catastrophe-exposed accounts, such as commercial property and energy insurance, were scaled back by 12 per cent and 18 per cent respectively.
However, some areas have shown encouraging growth. US specialty lines, which attracts higher margins, saw gross written premiums rise by 8 per cent to $896m.
Analysts at Numis expect adjusted EPS of 27.9p and net tangible assets (NTA) of 172p a share, up from 26.1p and 158p last year.
| BEAZLEY (BEZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 299p | MARKET VALUE: | £1.56bn | |
| TOUCH: | 298.9-299.1p | 12-MONTH HIGH: | 302p | LOW: 233p |
| DIVIDEND YIELD: | 3.1%* | PE RATIO: | 11 | |
| NET ASSET VALUE: | 258¢ | COMBINED RATIO: | 89% | |
| Year to 31 Dec | Net premiums ($bn) | Pre-tax profit ($m) | Investment income ($m) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.40 | 251 | 37.5 | 7.5* |
| 2011 | 1.37 | 63 | 39.3 | 7.9 |
| 2012 | 1.54 | 251 | 82.6 | 8.3* |
| 2013 | 1.68 | 313 | 43.3 | 8.8* |
| 2014 | 1.73 | 262 | 83.0 | 9.3* |
| % change | +3 | -16 | +92 | +6 |
Ex-div: 26 Feb Payment: 27 Mar *Excludes special dividends: 2.5p (2010), 8.4p (2012), 16.1p (2013) & 11.8p (2014). £1=$1.511 Capacity owned: 82% | ||||
