Beazley

www.beazley.com TICKER: BEZ     EXCHANGE: FTSE

Beazley plc is an Integrated Lloyd's Vehicle, both managing syndicates and supplying the capital supporting an underwriting syndicate. It combines high quality claims management, aiming to provide a prompt and fair settlement for every claim, with skilful underwriting - its Syndicate 623 has achieved a profit in every closed Year of Account since its formation in 1986. It also has a US subsidiary Beazley Insurance Company Inc which is an 'admitted carrier' licensed to write insurance in all 50 states. Beazley's primary focus is on 'medium-tail' Specialty Lines; a leader in Lloyd's where it is frequently invited to set the premium rates and even the terms and wording of a policy for a risk accepted by other underwriters. It also underwrites property, marine, political risks and contingency, life accident and health and provides reinsurance for other insurers. The Specialty Lines division includes professional indemnity, most notably for architects, engineers and lawyers, business liability for healthcare and other businesses and data breach insurance.

LATEST REPORTS

 
Quadrupled profits, despite Sandy
Published: Feb 08 2013

Beazley is the leading speciality line underwriter in Lloyd's, with a diversified spread of other insurance lines, and has opened the Lloyd's reporting season with a flourish. Profits of $251.2m were well ahead of optimistic expectations, let alone broker forecasts.
An improved combined ratio of 91% was back to normal after the catastrophe-hit 2011, but investment income more than doubled to £82.6m. 
The biggest gain was in Reinsurance which, despite Superstorm Sandy, suffered far less from catastrophes than in 2011. Yet all segments performed well in economic and market conditions politely described as challenging, but the group saw some improvements in premium rates for its core Specialty Lines group for the first time since 2006.
At 200p the forward PER is 8.5x, the historic yield 4.2% and the prospective yield 4.4%. Strangely, one of the best companies in the Non-life sector is rated at a significant discount to the sector's PER of 15x
 
Beazley braves gathered storms
Published: Jul 25 2011

This year the period for Lloyd's interim results may resemble the Grouse season when the centre of attention is betting its life on its ability to dodge a hail of shotgun pellets. Beazley has, as usual, come first braving the inkblots of teenage scribblers (and mine) following the most expensive first half for the insurance industry since records began. Japan, New Zealand, Queensland, tornadoes in Alabama & Missouri  we need an appendix to list the natural catastrophes and their cost, let alone the man-made ones like Tunisia, Egypt, Libya and Syria. The exact amount will not be known for years but it is already clear that the cost to Lloyd's of natural catastrophes in H1 2011 is more than three times that of the Chile earthquake in H1 2010.

The good news is that Lloyd's can still make respectable profits at these levels in a year with an average catastrophe cost and Beazley can in a year with catastrophe costs 50% higher than the long-term average.

 
Excellent results
Published: Jul 27 2010

First Lloyd's results in reporting season very impressive despite Chilean earthquake and Deepwater Horizon

Shares still trade below NAV and 5.1 PER is below 6.1% yield

Fair value per share seen at 147p versus current 123p mark
 
Robustly placed
Published: Feb 23 2010

Impressive and conservatively stated results for 2009

Strong yield support at over 6%

Forward PER of only 4.5x for this year looks too low

 
Record first half profits
Published: Jul 30 2009

Record first half profits partly concealed by technicality

Rapidly deployed capital raised in Rights Issue

Improving premium rates

Reduction in risk for both assets and liabilities

Fair value of 171p vs current price of 105p

 
Next leg of growth and expansion
Published: Feb 17 2009

Beazley has accompanied a fairly impressive set of results – IFRS profits of £87m in a year that Swiss Re reckons was the second most expensive year ever for insurers of natural catastrophes – with a Rights issue to raise £150m. This is to help expand its business, partly by acquisition, at a time when returns are expected to be much above average and to enhance earnings per share.
 
Results: resilient underwriting, disappointing investment returns
Published: Aug 01 2008

Strong USA growth vs decline in Lloyd's premiums

Well placed at this point of premium cycle

Despite soft premium rates outlook fair value still 160p / share

ARCHIVE

2008
Impressive results continue
Published: Mar 03 2008

Beazley's results were predictably good with pre-tax profits of £138.5m,nearly 1% above my July forecast and 12% ahead of the “consensus”. Profit before tax and the IFRS forex adjustment rose by 35% (pre-tax was up 60%), stated earnings per share by 68% and dividends (including a 4p special dividend) by 108%.
2007
Doubled profits - Beazley beats expectations
Published: Jul 31 2007

Excellent underwriting performance

Growth in USA accelerating

Investment income a sound foundation for future profits

Prospect of return of surplus capital

Beazley; Impressive results but more to go for
Published: Mar 12 2007

  • Rapid growth continues
  • Firm premium rates and a benign claims environment
  • Beazley US now reaching critical mass
Beazley; profit upgrades and strategically well placed
Published: Jan 09 2007

  • Consistently profitable Lloyd's insurer
  • Showing rapid growth and excellent return on capital
  • Upgrading of our 2006 and 2007 forecasts
  • Short term fair value seen at 169p/share; medium term target 210p
  • Current price 146p
2006
Beazley; strength in a storm
Published: Mar 23 2006

  • Pre tax profit despite hurricanes
  • Risk management process proven
  • Fair price 129p vs current 117
Beazley; well set for 2006
Published: Jan 09 2006

  • A major force at Lloyd's,with over 5% total stamp
  • Quality of underwriting and risk management proven in 2005 market
  • Upgrades to 2006 forecast EPS and PBT
  • Low PER (e), high yield
  • Means 121p / share fair value vs. current 96p

2005
Beazley; Well placed to ride out the storm
Published: Sep 14 2005

  • Strong first half results
  • Katrina to impact full year profits...
  • ...but positive effect on future premiums
  • Only 7.4x PER estimated for 2006
Beazley; we increase forecasts
Published: Mar 29 2005

Beazley increased pre-tax profits by 95% and earnings by 86% in 2004, despite the impact of the most expensive hurricane season recorded.

The increase of onethird in the dividend to 1p was accompanied by a reiteration of the intention to pay at least 4p for 2005, putting the shares on a prospective yield of 4.5%.

2004
Beazley; rights issue and acquisition
Published: Nov 10 2004

  • The rights issue plus the proposed purchase and capitalisation of BICI look sensible strategic actions and should prove EPS enhancing on a medium term basis (meaning for 2007).
  • However, there will be a price in the near term in EPS dilution - we estimate this will be 34.7% in 2005 owing to the fact that as a result of the group's prudent accounting the initial p&l impact of the extra Syndicates capacity recently secured will be minor. In addition, the group's enlarged US operations are expected by management to lose $5m in 2005.

Beazley; current year estimates reduced for hurrican losses - fair value unchanged
Published: Oct 27 2004

Two significant events have occurred since our last note (13th September):

  • Beazley has increased its share of capacity in Syndicate 623 on what we regard as favourable terms.
  • With the hurricane season now clearly a very bad one Beazley, in common with other Lloyd's underwriters, faces losses on this front. The company has
    quantified the effect of these losses on the 2004 P&L as being a probable £15m.
Beazley; Pessimists Disappointed
Published: Sep 15 2004

No real surprises: the Beazley management confirms what we hear from their peer - that trading conditions remain generally strong, despite rates easing in several business areas.
Beazley; A proven track record
Published: Aug 13 2004

  • Beazley's transformation puts the company in the vanguard of the far reaching changes now taking place in Lloyds of London
  • The company is a specialist underwriter in four main business areas.
  • The management has a proven track record of achieving high returns from a low risk business model.
  • The yield on our estimated dividend for 2005 is 5.6%
  • We value the shares at 135p against the current share price of 98p.