- Full-year losses well below forecasts
- Capital surplus is positive for growth
By now, investors in Beazley (BEZ) are well-acquainted with last year’s deteriorating claims environment, headline losses and weakening investment returns.
Though full-year numbers again spelled this out in black and white, the gloomiest market expectations were defied by a pre-tax loss less than half the $106m (£77m) consensus forecast.
Even more encouraging was the insurer’s surplus capital, which thanks to last year’s placing and the cancellation of the dividend now sits at $476m, 23 per cent above Lloyd’s requirements and near the top end of management’s preferred range.
Not only should this reassure investors that claims can be easily covered, but provides the firepower for a planned 15 to 20 per cent growth in gross written premiums in 2021, following a period of surging rates across its specialist lines.
Against that backdrop, the company has guided for “a low 90s” combined ratio this year. That's a faster and stronger recovery than the market was predicting; as such, City expectations of earnings of 28p per share in 2021 look light. Buy.
Last IC view: Buy, 365p, 7 Jan 2020
| BEAZLEY (BEZ) | ||||
| ORD PRICE: | 348p | MARKET VALUE: | £2.12bn | |
| TOUCH: | 343-347p | 12-MONTH HIGH: | 614p | LOW: 288p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 297¢ | COMBINED RATIO: | 109% | |
| Year to 31 Dec | Net written premiums ($bn) | Pre-tax profit ($m) | Investment income ($m) | Dividend per share (p) |
| 2016 | 1.85 | 293 | 93.1 | 10.5 |
| 2017 | 1.98 | 168 | 138 | 11.1 |
| 2018 | 2.25 | 76.4 | 41.1 | 11.7 |
| 2019 | 2.50 | 268 | 264 | 12.3 |
| 2020 | 2.92 | -50.4 | 188 | nil |
| % change | +17 | - | -29 | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| £1=$1.37 | ||||
