21st Apr 2008 16:07
Beazley Group PLC21 April 2008 Press Release Beazley Group plc Interim management statement for the 3 months ended 31st March2008 London, 21 April 2008 Trading update The group continues to deliver competitive results and performance is withinexpected business plans. +-----------------------------------+-----------+-----------+----------+| | | | || | | | || |31 Mar 2008|31 Mar 2007|% increase|| | | | || | | | |+-----------------------------------+-----------+-----------+----------+|Gross premiums written (£m) | 201.2| 205.0| (2)|+-----------------------------------+-----------+-----------+----------+|Net premiums written (£m) | 123.6| 125.6| (2)|+-----------------------------------+-----------+-----------+----------+| | | | |+-----------------------------------+-----------+-----------+----------+|Investments and cash (£m) | 1,544.6| 1,326.5| 16|+-----------------------------------+-----------+-----------+----------+|Investment return (%) - annualised | 0.5%| 5.3%| -|+-----------------------------------+-----------+-----------+----------+| | | | |+-----------------------------------+-----------+-----------+----------+|Rate (decrease)/ increase | (6%)| 3%| -|+-----------------------------------+-----------+-----------+----------+| | | | |+-----------------------------------+-----------+-----------+----------+| | | | |+-----------------------------------+-----------+-----------+----------+ Premiums written During the three month period to 31 March 2008, premiums were consistent withlast year at £201.2m, and in line with expectations. Gross premiums written byour underwriters at Lloyd's decreased from £192.7m to £171.0m, while our locallyunderwritten US business increased from $28.6m to $71.4m. (An element of the USpremium is underwritten for the account of third party capital providers atLloyd's and therefore is excluded from the group's figures in the table above.) Claims management Claims activity has been in line with expectation. Against the backdrop ofincreased market commentary about sub-prime mortgages and related issues, we setup an internal working party during 2007 tasked with monitoring the risks to andopportunities for Beazley. As was demonstrated in the late 1990s, Beazley haslimited appetite for professional liability risks within the financialinstitution sector. This has remained the case. Whilst the number of sub-primerelated lawsuits (as reported recently by Advisen) has now exceeded 250, weprovide D&O coverage for four of these entities and other types of coverage fora further seven. We currently expect that our exposure will remain within ourreserves and we do not anticipate a change to our reserving philosophy. US operations Our US based operations generated $71.4m of gross premiums written during thefirst quarter, of which $32.0m was written for the account of our Lloyd'ssyndicates and $39.4m was admitted business written for the account of ourinsurance company. We continue to target $250m of premium from our US operationsfor the whole of 2008, compared to $175.2m written for the year ended 31December 2007. Market conditions and events The premiums charged for business we renewed fell by 6% across all lines in thefirst quarter of 2008. As stated in our annual report, these reductions shouldbe noted in the context of the previous years' cyclical highs. We are seeing themost severe rate decreases in our commercial property business where ratedecreases on renewal business were 15%. Our largest business, specialty lines,has experienced decreases of only 7%. We remain positive about the quality ofthe business we are seeing and at this stage have no reason to believe themarket decreases will affect our ability to deliver solid results. Investment performance Asset growth remains on track, with group cash and investments having increasedfrom £1,490.6m at the end of 2007 to £1,544.6m at the end of March 2008.Investment income during the first quarter of 2008 was impacted by the mark tomarket effects of the continued stress in credit markets, resulting in sharpdeclines in bid prices for both corporate and asset-backed securities; and byweak equity markets. Although we do not believe the prices of these bondsreflect their ultimate ability to pay off, short term the effect of these pricedeclines has been to almost completely offset coupon and other investmentincome. The strategy in terms of asset mix and duration is unchanged since theend of December. With our managers, we continue to closely monitor events inthe credit markets and maintain a short duration, mainly fixed income,investment portfolio, while looking for opportunities to enhance returns overthe medium term. Capital and dividends The group's capital position remains strong. We are keen to release any excesscapital from the group to shareholders - the final dividend of 4.0p togetherwith the special dividend of 4.0p per share will be paid on 9 May 2008. Thiswill result in a total payment of £27.9m. The share buyback programme that commenced in November 2007 has continued. Todate 10.5m shares representing 2.85% of our share capital have been repurchasedfor £16.5m, at an average price of 156.8p per share. Outlook Beazley Group Chief Executive Andrew Beazley said: "Challenging investment market conditions in the first quarter underline theneed for focused and profitable underwriting. From an underwriting perspectivethe first quarter has developed as we expected. Our Lloyd's business has becomemore competitive and has contracted to a limited extent while the business ofour US operations continues to grow. In this softening market, the diversity ofour business and the experience of our underwriters should continue to serve uswell." ENDS For further information, please contact: Beazley Group plc Andrew Beazley T: +44 (0)20 7667 0623 Andrew Horton T: +44 (0)20 7667 0623 Finsbury Simon Moyse T: +44 (0)20 7251 3801 Note to editors: Beazley Group, plc (BEZ.L), based in London, is the parent company of global,specialist insurance businesses with operations in the UK, US, France, Singaporeand Hong Kong. Beazley manages two Lloyd's syndicates (Syndicate 2623 andSyndicate 623) with aggregate underwriting capacity in 2008 of £814m (US$1.6bn).Both syndicates are rated A by A.M. Best. In the US, Beazley's underwritersfocus on writing specialist insurance products in the admitted market, backed byBeazley Insurance Company, Inc., an admitted carrier in all 50 states; andsurplus lines risks, backed by the Beazley syndicates at Lloyd's. BeazleyInsurance Company, Inc. is rated A by A.M. Best. Beazley is a market leader in many of its chosen lines, which includeprofessional indemnity, commercial property, marine, reinsurance, and personallines. For more information please go to: www.beazley.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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