The US underwriting business continued to lead the way in driving up pre-tax profit at Lloyd's insurer Beazley (BEZ) through 2015. Premiums in the US rose by a fifth as the country's economy continued to rebound and claims on the group's professional and management liability books eased. Encouragingly, Beazley managed to reduce its combined ratio by two percentage points to 87 per cent, thanks to a more benign claims environment.
The group's largest speciality lines division enjoyed a 13 per cent rise in gross premiums written, which totalled $1.02bn (£0.7bn). This was largely due to growing demand for the insurer's cyber, management liability and miscellaneous medical product lines among small- and mid-size businesses in the US. However, market conditions were tougher for the group's catastrophe-exposed lines including energy and marine, as rates continued to fall. While premium rates on renewal business fell by an average 2 per cent across the group's portfolio, the marine division suffered an 8 per cent fall in rates.
Subdued prior year claim settlements meant the group was able to release $176m in prior year reserves, up 12 per cent on the previous year. The insurer also grew its return on equity to 19 per cent, allowing management to distribute a special dividend of 18.4p.
Broker Peel Hunt expects adjusted EPS of 26.7p for 2016, compared with 31p in 2015.
BEAZLEY (BEZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 366p | MARKET VALUE: | £1.91bn | |
| TOUCH: | 365-366p | 12-MONTH HIGH: | 402p | LOW: 274p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 276¢ | COMBINED RATIO: | 87% | |
| Year to 31 Dec | Net premiums ($bn) | Pre-tax profit ($m) | Investment income ($m) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.37 | 63.0 | 39.3 | 7.9 |
| 2012 | 1.54 | 251 | 82.6 | 8.3 |
| 2013 | 1.68 | 313 | 43.3 | 8.8 |
| 2014 | 1.73 | 262 | 83.0 | 9.3 |
| 2015 | 1.71 | 284 | 57.6 | 9.9 |
| % change | -1 | +8 | -31 | +6 |
Ex-div: 25 Feb Payment: 31 Mar *Excludes special dividends: 8.4p (2012), 16.1p (2013), 11,8p (2014) & 18.4p (2015) £1=$1.46 Capacity owned: 82 per cent | ||||
