With few catastrophe events during 2009 to eat into capital and, therefore, help underwriters to push premium rates up further, the insurance cycle may now be slipping gently downwards. But that didn't stop Lloyd's insurer Beazley from delivering a 3 per cent rate rise overall last year - helping it to report a decently profitable 90 per cent combined ratio (of claims to premiums).
Indeed, Beazley's reinsurance and commercial property accounts managed rate rises of 9 per cent and 6 per cent, respectively, in the year, while the group's energy account managed a hefty 27 per cent premium rate hike. Growth was also boosted by acquisitions - in 2008, the group bought Momentum Underwriting Management and, last year, it spent $75m (£47.5m) acquiring and recapitalising First State Management in the US. That latter deal was financed from last spring's £150m rights issue, with the balance of those funds being used to support new Lloyd's business. Meanwhile, Beazley's investment book has returned to profitability after making a £25.8m loss in 2008. The book is mainly focused on safe-looking cash and bonds - representing 92.7 per cent of the portfolio - and generated a decent enough 2.7 per cent return in the year.
Collins Stewart expects pre-tax profits of £128m for 2010 (£101m in 2009), giving EPS of 20.1p (18.4p in 2009).
More analysis of company results
BEAZLEY (BEZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 103p | MARKET VALUE: | £550m | |
| TOUCH: | 103-104p | 12-MONTH HIGH: | 120p | 86p |
| DIVIDEND YIELD: | 6.8% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 116p | COMBINED RATIO: | 90% | |
| Year to 31 Dec | Net premiums (£mn) | Pre-tax profit (£m) | Investment income (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 426 | 16 | 31.6 | 4.0 |
| 2006 | 574 | 87 | 48.3 | 4.8 |
| 2007 | 652 | 139 | 64.9 | 6.0* |
| 2008 | 740 | 87 | -25.8 | 6.6 |
| 2009 | 848 | 101 | 56.1 | 7.0 |
| % change | +15 | +16 | - | +6 |
Ex-div: 3 Mar Payment: 30 Mar *Excludes 4p special dividend Capacity owned: 81% | ||||
