2024-03-07 16:08:04 ET
Beazley plc (BZLYF)
Q4 2023 Results Conference Call
March 07, 2024 5:00 AM ET
Company Participants
Adrian Cox - CEO
Sally Lake - Group CFO
Robert Quane - Chief Underwriting Officer
Conference Call Participants
Freya Kong - BofA
Tryfonas Spyrou - Berenberg
Ivan Bokhmat - Barclays
Faizan Lakhani - HSBC
Andrew Ritchie - Bernstein
Kamran Hossain - JPMorgan
Qifan Yang - Goldman Sachs
Darius Satkauskas - Keefe, Bruyette, & Woods
Abid Hussain - Panmure Gordon
James Pearse - Jefferies
Presentation
Adrian Cox
Good morning, everyone. Welcome to the Beazley Annual Results for the Year 2023. I am Adrian Cox, the Group CEO, and I'm joined by Sally Lake on the right, our Group CFO; and Bob Quane on the left, our CUO.
So here with the order of play, I'll take you through the highlights and Sally will then go through some of the details from the financial performance. Bob will take us through the underwriting performance. I'll share thoughts a little bit after that about how we think about long-term performance and give some guidance for this year for 2024 and then we'll move on to Q&A. We have a hard stop at 10 o'clock for 2 reasons I think. One, some of us have to get to Admiral for 10:15. And we also have a fire alarm test at 10. So 2 good reasons I think to stop at 9:59. Please do read the disclaimer.
And with that done, we'll move on to the results. So a super set of results I think this year with record profits of $1.25 billion, which is over twice as much as our previous record profit with a combined ratio of 71% or 74% undiscounted. In addition, our insurance written premiums increased by 7% gross and 24% net for the full year, which I think are both in line with the guidance we gave at the third quarter. The net remains considerably higher than the gross because of that reduction in proportional reinsurance that we needed to buy following the capital raise in November 2022, which we've talked about before, all of which gives a combined return on equity of 30% for the year. And so given those numbers, I'm pleased to be able to declare an ordinary interim dividend of 14.2p, which is not surprisingly 5% more than last year, which is sort of what we do and a share buyback of up to $325 million.
I think that success last year demonstrates that our clear strategy based on good access to risk, a well-diversified business, disciplined underwriting and responsive claims infrastructure delivers good outcomes for all of our stakeholders. In particular, I'd like to call out property risks, which had a standout year, reflecting the rate increase of 22%, helping the growth of 64%, but really reflecting significant investment in our team, both in the U.S. and London, allowing us prudently to increase our exposure to take advantage of those excellent market conditions that we had and the opportunity in property business that we expect to persist for some time. In an area of accelerating risk, property risks need more expertise and underwriting expertise that we can bring to the market. And at $1.35 billion, that team is now the second largest in the company, which is great. I would like to reiterate that we wouldn't have had the confidence to execute on this property plan without the capital raise that we did in November '22.
Our cyber team also had an excellent year growing nicely outside the U.S., particularly in Europe, which grew by 27% last year off the back of continued accelerating demand growth. And that offset a more competitive environment in North America that was also quite noisy with cyber war discussions. We remain comfortable with the rating conditions in cyber and in the robustness of that ecosystem that we have that is proving effective at improving both our threat detection and our risk selection. And given that, our ransomware activity remained stable last year despite rising levels of cyber criminal activity across the world.
Given that one of the features of the 2023 earnings season has been reserve deterioration in U.S. casualty business in the so-called soft market era of 15% to 19% marked by social inflation, I wanted to highlight that the -- that this has had no material impact on our result in 2023. Sally will talk about this a little bit more later, but social inflation is something we've been adjusting for in pricing and reserving for a number of years. It's also something that hasn't gone away since 2019. And whilst it isn't a feature in most of our business because we don't write GL really or auto or umbrella or excess casualty that's in the crucible of social inflation, we do underwrite carefully to it where it is....
Read the full article on Seeking Alpha
For further details see:
Beazley plc (BZLYF) Q4 2023 Earnings Call Transcript