Lloyd’s of London underwriter Beazley (BEZ) saw gross written premiums grow by 12 per cent in the year to December 2018, but headline profits were lower after prior year releases fell from $203.9m (£157m) to $115m. Net investment income was also down from $138.3m to $41.1m. After heavy claims experienced in 2017, last year was little better, with hurricanes and typhoons costing $105m followed by $40m associated with wildfires in California.
The good news is that, after five years of eroding premiums as a result of the benign claims environment, premiums are now hardening, and the withdrawal of several competitors from property underwriting following heavy losses should make higher premiums more sustainable.
The US business was particularly strong, with premiums up by 20 per cent, and further double-digit growth expected in 2019. Catastrophe claims meant that the combined ratio in the reinsurance division remained loss-making at 103 per cent, but property premium income rose by 14 per cent to $415.4m driven by a 10 per cent hike in premium rates.
Specialty lines was the largest contributor to the group, and achieved a combined ratio of 91 per cent, helped by a 14 per cent rise in premium income and a modest 1 per cent rise in rates.
Analysts at Numis are forecasting net tangible assets for the year to December 2019 of 222.2p a share (from 196.6p in 2018).
| BEAZLEY (BEZ) | ||||
| ORD PRICE: | 521p | MARKET VALUE: | £2.75bn | |
| TOUCH: | 520.5-521p | 12-MONTH HIGH: | 622p | LOW: 484p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 54 | |
| NET ASSET VALUE: | 278p | COMBINED RATIO: | 98% | |
| Year to 31 Dec | Net premiums ($bn) | Pre-tax profit ($m) | Investment income ($m) | Dividend per share (p)* |
| 2014 | 1.73 | 262 | 83.0 | 9.3 |
| 2015 | 1.71 | 284 | 57.6 | 9.9 |
| 2016 | 1.85 | 293 | 93.1 | 10.5 |
| 2017 | 1.98 | 168 | 138 | 11.1 |
| 2018 | 2.25 | 76.4 | 41.1 | 11.7 |
| % change | +14 | -55 | -70 | +5 |
| Ex-div: | 28 Feb | |||
| Payment: | 27 Mar | |||
| £1=$1.297 *Excludes special dividends 11.8p (2014), 18.4p (2015) and 10p (2016). Capacity owned: 82 per cent | ||||
