With no repeat so far of last year’s grim catastrophe-related losses, Lloyd’s insurer Beazley’s earnings have recovered strongly – helped by solid premium rate increases. But its shares continue to trade at too modest a multiple of expected net tangible assets (NTA).
Beazley reported a profitable 91 per cent combined ratio (of claims to premiums) at the half-year stage – a huge improvement on last year’s loss-making 108 per cent ratio. Moreover, with last year’s heavy catastrophe losses continuing to boost premium rates across the sector, future prospects look good. Beazley’s premium rates on renewal rose 3 per cent overall, with heftier increases reported on catastrophe-exposed lines – reinsurance rates, for example, rose 5 per cent while property rates rose 7 per cent.
The investment book is in good shape, too, and delivered a 1.8 per cent return in the half – up from 1.1 per cent in 2011’s first half, largely reflecting a higher allocation of non-government bonds. Yet the book remains conservatively focused on cash and good quality bonds.
Broker Numis Securities expects full-year pre-tax profit of $281.7m, giving EPS of 21.5p.
BEAZLEY (BEZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 153p | MARKET VALUE: | £793m | |
| TOUCH: | 152-153p | 12-MONTH HIGH: | 154p | LOW: 108p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 217¢ | COMBINED RATIO: | 91% | |
| Half-year to 30 Jun | Net premiums ($m) | Pretax profit ($m) | Investment income ($) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 636 | -24.2 | 22.5 | 2.5 |
| 2012 | 651 | 113 | 36.1 | 2.7 |
| % change | +2 | - | +60 | +8 |
Ex-div: 1 Aug Payment: 30 Aug Capacity owned: 82% | ||||
