Beazley's latest figures were accompanied by news that it's raising £150m of new capital, via a 9-for-19 rights issue at 86p and firm placing. But that isn't needed to bail the group out. Indeed, after insurers suffered losses from last year's hurricanes, as well as from investment book misery, underwriters need to rebuild reserves - and that's driving premium rate increases. So Beazley needs funds to take advantage of those conditions, which partly involves spending $35.4m (£24.5m) buying US insurer, First State. Beazley will also shift its tax domicile to Ireland.
The figures themselves reported plenty of evidence of an improving market. While premium rates slipped 6 per cent overall during 2008, Beazley has since pushed through renewal rate increases on its energy account of 10 per cent, along with 8 per cent rate rises on both its US commercial property and reinsurance accounts. Overall, management expects premium rates to increase 3 per cent during 2009. However, the investment book delivered a hefty loss, partly reflecting a write-down on Lehman bonds and the complete write-off of Madoff feeder fund exposure.
Broker Keefe, Bruyette & Woods (KBW) expects pre-tax profits of £102m for 2009 and EPS of 18.3p.
BEAZLEY (BEZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 103p | MARKET VALUE: | £360m | |
| TOUCH: | 103-104p | 12-MONTH HIGH: | 180p | LOW: 78p |
| DIVIDEND YIELD: | 6.4% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 118p | CAPACITY OWNED: | 82% | |
| COMBINED RATIO: | 90% | |||
| Year to 31 Dec | Net premiums written (£m) | Pre-tax profit (£m) | Investment income (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 329 | 35.4 | 11.3 | 1.00 |
| 2005 | 426 | 16.1 | 31.6 | 4.00 |
| 2006 | 574 | 86.8 | 48.3 | 4.80 |
| 2007 | 652 | 139 | 64.9 | 6.00* |
| 2008 | 740 | 87.2 | -25.8 | 6.60 |
| % change | +14 | -37 | - | +10 |
Ex-div: 11 Mar Payment: 30 Apr *Excludes special dividend of 4p a share | ||||
