23 July 2021Insurance

Beazley's 'encouraging' H1 results show business well managed under new CEO Cox

London-listed specialist insurer  Beazley swung back to profit delivering 22 percent top line growth, with all divisions achieving rate rises, in the first six months of 2021. Analysts believe that after a tough 2020 that included significant COVID-19 related claims, these results are "far more encouraging" and thus investors should be pleased with them.

The company's new chief executive Adrian Cox (pictured), who succeeded Andrew Horton in April, stated that he is excited about the growth opportunities ahead, adding that the company's capital base remains strong and the firm is well placed to support an ambitious growth plan at similar levels to 2021.

Beazley achieved a first-half net profit of $167.3 million (pre-tax), compared with the net loss before tax of $13.8 million in the same period of 2020.

Gross premiums written increased by 22 percent to $2.035 billion from $1.664 billion reported in the prior year period.

The combined ratio came in at 94 percent, a huge improvement from 107 percent seen in H1 2020.

Beazely benefited from "stronger than expected" rate increases on renewal portfolio (20 percent), compared with 11 percent in the prior year period. It said rate increases were seen across all classes, platforms and territories, with most significant hardening in cyber in response to ransomware.

The investment return achieved was also strong at 1.2 percent year to date.

Beazley’s COVID-19 first part loss estimate remains unchanged at $340 million, net of reinsurance with a potential additional $50 million of provisions should the operating environment not return to normal. Beazely said it remains comfortable with these estimates as the additional $50 million net of reinsurance has not been incurred to date.

Cox highlighted that the company is "well capitalised and strongly positioned" to deploy its capital in areas where it can make the most of hard market opportunities.

"In the midst of another turbulent year, we are positive that through the hard work and diligence of our colleagues we can deliver on our ambitions to build profitable growth in markets where we demonstrate value, instigate constructive change and build long-term collaborative relationships with our clients and partners," he said.

Commenting on the outlook, he said: "Our current expectations of percentage growth for the full year is in the mid-20s gross of reinsurance and mid-teen digits net of reinsurance. We maintain our previous guidance of a full year combined ratio percentage in the low nineties, assuming average claims in the second part of 2021."

The company stated that its board remains committed to a dividend payment and will consider this at year-end after taking into account the 2021 results as a whole.

Analyst Karl Morris, director of financials at Edison Group, is of the view that "the business is being managed well under new CEO by Adrian Cox and thus investors should be pleased with the results - except for the absence of an interim dividend."

" Beazley’s share price has been somewhat volatile YTD after a torrid 2020," he added. "Nevertheless, the shares have performed well into these results, rising almost 23 percent from the 27 May low of 294.4p to 361p. We expect that investors will be reasonably reassured that capital and cyber risk is being managed well."

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