Beazley has been benefiting from an overall 5 per cent rise in premiums in the wake of last year's hurricanes. Gross premiums written soared by 46 per cent to £596m in the first half, and even taking into account currency fluctuations the rise was still over 23 per cent, although this was offset by a net increase in insurance claims, which left the combined ratio (of claims as a percentage of premium income) little changed at 90 per cent.
Profits before currency adjustments on non-monetary items (relating to unearned premiums from business already written) rose 52 per cent to £69.9m. However, a large part of the increase in the value of written premiums was due to sterling's fall against the dollar, with around 75 per cent of premiums written in US dollars. And, more recently, sterling's revival against the dollar could see the value of premiums written come under pressure in sterling terms.
There has been a considerable amount of change at Beazley, with three new board members joining the group, while an additional £150m was raised through a rights issue to underwrite new business and to finance the purchase of US underwriter, First State. What's more, Beazley believes that many risk managers are now looking to diversify counterparty risk in order to reduce exposure to any one insurer, and this could bring in more business.
Collins Stewart expects full-year net income of £53m and EPS of 11.3p, rising to £125m and 24p, respectively, in 2009 (£64m and 18p in 2008).
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| BEAZLEY (BEZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 103p | MARKET VALUE: | £549m | |
| TOUCH: | 103-104p | 12-MONTH HIGH: | 145p | LOW: 78p |
| DIVIDEND YIELD: | 6.5% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 105p | CAPACITY OWNED: | 81% | |
| COMBINED RATIO: | 90% | |||
| Half-year to 30 Jun | Net premiums written(£m) | Pre-tax profit (£m) | Investment income (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 292 | 45.0 | 13.2 | 2.2 |
| 2009 | 342 | 20.1 | 27.0 | 2.3 |
| % change | +17 | -55 | +105 | +5 |
Ex-div: 29 Jul Payment: 28 Aug | ||||
