Building a strong platform in the US and switching to small-scale risks, where premiums are stronger, both helped to lift profits for Lloyd's of London underwriter Beazley (BEZ).
Speciality lines, which is the group's largest division, continued to grow strongly, with gross written premiums up 14 per cent in 2016. And Beazley has identified further opportunities to generate business away from the large-scale commercial property, energy and natural catastrophe markets. Just as well, because a combination of increased funds coming into the underwriting market and a benign claims environment have combined to drive premiums lower; something that Beazley has managed to avoid to a great extent by concentrating on smaller-scale speciality business.
Even so, rates on renewal business fell on average by 2 per cent, although gross written premiums were up 6 per cent. Profits were also boosted by an investment return rate of 2 per cent, up from 1.3 per cent a year earlier. Beazley also declared a special dividend of 10p a share, although with capital requirements up 11 per cent and expected to grow further in the coming year, excess capital is likely to be lower.
Analysts at Numis are forecasting pre-tax profits of $247m in 2017, giving adjusted EPS of 32p (from 37.8p in FY2016).
| BEAZLEY (BEZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 437.9p | MARKET VALUE: | £2.29bn | |
| TOUCH: | 437.7-438p | 12-MONTH HIGH: | 450p | LOW: 314p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 226p | COMBINED RATIO: | 89% | |
| Year to 31 Dec | Net premiums ($bn) | Pre-tax profit ($m) | Investment income ($m) | Dividend per share (p)* |
|---|---|---|---|---|
| 2012 | 1.54 | 251 | 82.6 | 8.3 |
| 2013 | 1.68 | 313 | 43.3 | 8.8 |
| 2014 | 1.73 | 262 | 83.0 | 9.3 |
| 2015 | 1.71 | 284 | 57.6 | 9.9 |
| 2016 | 1.85 | 293 | 93.1 | 10.5 |
| % change | +8 | +3 | +62 | +6 |
Ex-div: 2 Mar Payment: 29 Mar *Excludes special dividends: 8.4p (2012), 16.1p (2013), 11.8p (2014), 18.4p (2015) and 10p (2016). £1=$1.25 Capacity owned: 82 per cent | ||||
