A surge in claims and more challenging investment market conditions pushed Beazley (BEZ) into a pre-tax loss during the first half of the year. Management has estimated that pandemic-related losses will amount to $170m (£155m) net of reinsurance, although there was still uncertainty around how Covid-19 will impact liability lines of business. As part of its recession planning activities, the group has been re-underwriting “the more recession prone” speciality and cyber & executive risk lines of business to reduce the potential impact of future claims.
However, there are signs the insurer is starting to benefit from rate increases, putting through an 11 per cent rise in rates on its renewal portfolio. Cargo, hull and aviation lines led the way, all reporting double-digit growth during the period. However, the reinsurance business suffered a 6 per cent fall in gross premiums as the group reduced its risk appetite for catastrophe reinsurance following several years of inadequate rate rises to compensate for claims sustained.
Panmure Gordon forecasts adjusted net tangible assets of 232p a share at the end of December, rising to 251p in the following year.
| BEAZLEY (BEZ) | ||||
| ORD PRICE: | 457p | MARKET VALUE: | £2.78bn | |
| TOUCH: | 452-458p | 12-MONTH HIGH: | 634p | LOW: 294p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 300¢ | COMBINED RATIO: | 107% | |
| Half-year to 30 Jun | Net premiums ($m) | Pre-tax profit ($m) | Investment income ($m) | Dividend per share (p) |
| 2019 | 1.23 | 166 | 170 | 4.1 |
| 2020 | 1.32 | -13.8 | 83.2 | nil |
| % change | +7 | - | -51 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.25 | ||||
