Calm after the storm for Beazley?

This was highlighted by a significant deterioration in the combined claims ratio of claims to premium income, which went from 89 per cent to a just profitable 99 per cent. Among the different lines, property suffered the most, with the combined ratio moving from 87 per cent to a lossmaking 130 per cent. Reinsurance also suffered, with the ratio moving from 65 per cent to 107 per cent.

However, the headline profits were underpinned by an increase in prior year reserve releases, which rose from $180.7m to $203.9m. These are funds set aside in previous years to cover claims that later prove to be in excess of what is required. There was also a greater contribution from investment income, where the rate of return rose from 2 per cent to 2.9 per cent, lifting income from $93.1m to $138.3m.

In previous years, the benign claims environment has put downward pressure on premiums, and although the actual gross volume of premiums written rose by 7 per cent to $2.43bn, premium rates across Beazley’s portfolio fell by 1 per cent. However, given that the decline in premium rates has now been reversed, double-digit growth in written premiums is expected in 2018.

Reinsurance renewal prices rose by 3 per cent for non-US business and by 8 per cent for US business in January 2018, while the group’s property division, where 71 per cent of its business comes from the US, saw price increases of 6 per cent. And in the marine market, premium rates for cargo business, the class most affected by Atlantic storms, rose between 2.5 per cent and 5 per cent in the last quarter of 2017. Crucially, retention rates remained the same or better than the previous year.  

Analysts at Numis are forecasting net tangible assets of 205.9p per share at the December 2018 year-end, up from 186.2p in 2017.