The impressive full-year profit hike at Lloyd's insurer Beazley (BEZ) reflects a backdrop of rising premium rates and - with the exception of Hurricane Sandy - a year that was largely free of costly catastrophes. Indeed, and while Beazley's Sandy-related loss reached $90m (£57m), the group's combined ratio (of claims to premiums) returned to a solidly profitable 91 per cent from 2011's barely profitable 99 per cent.
With insurers still hiking premium rates to compensate for 2011's long list of catastrophe-related losses, Beazley saw premium rates rise 2.8 per cent overall during 2012. Within that, its reinsurance and property account delivered 5 per cent and 6 per cent rate hikes, respectively, while its speciality lines book grew rates 3 per cent. Meanwhile, Beazley's investment book - which remains focused on safe-looking bonds and cash - doubled its return in the year to 2 per cent.
Management is repaying surplus capital, too, and announced an 8.4p-a-share special dividend to be paid alongside a second interim payout of 5.6p. A second £75m retail bond is also being considered - the first, paying 5.375 per cent, was launched in September - and Beazley will use the funds to repay subordinated debt. That would remove the need for a credit rating and the associated capital requirement.
Broker Numis Securities expects current-year EPS of 21.6p (26.7p for 2012) and year-end net tangible assets (NTA) of 157.6p a share, up from 134p in 2012.
| BEAZLEY (BEZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 202p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 201.5-202p | 12-MONTH HIGH: | 202p | 132p |
| DIVIDEND YIELD: | 4.1%* | PE RATIO: | 8 | |
| NET ASSET VALUE: | 233c | COMBINED RATIO: | 91% | |
| Year to 31 Dec | Net premiums (£bn) | Pre-tax profit (£m) | Investment income (£m) | Dividend per share (p) |
| 2008 | 0.74 | 87.2 | -25.8 | 6.60 |
| ($bn) | ($m) | ($m) | (p) | |
| 2009 | 1.33 | 158 | 88.1 | 7.00 |
| 2010 | 1.40 | 251 | 37.5 | 7.50* |
| 2011 | 1.37 | 62.7 | 39.3 | 7.90 |
| 2012 | 1.54 | 251 | 82.6 | 8.30* |
| % change | +12 | +300 | +110 | +5 |
Ex-div: 27 Feb Payment: 2 Apr *Excludes special dividend: 2.5p in 2010 and 8.4p in 2012 £1=$1.57 Capacity owned: 82% | ||||
