Beazley plc (LON:BEZ) has announced its results for period ended 31 December 2023.
• Profit before tax increased to $1,254.4m (2022: $584.0m)
• Insurance written premiums increased to $5,601.4m (2022: $5,246.3m)
• Net insurance written premiums increased to $4,696.2m (2022: $3,772.4m)
• Undiscounted combined ratio of 74% (2022: 82%), Discounted combined ratio of 71% (2022: 79%)
• Return on equity of 30% (2022: 19%)
• High single digit gross IWP growth for FY 2024
• Low 80s undiscounted combined ratio for FY 2024
• Interim dividend of 14.2p
• Launch of a share buyback programme of up to $325m
• Barbara Plucnar Jensen has been appointed as Beazley’s Chief Financial Officer (CFO), effective 1 May 2024
| Year ended 31 December 2023 | Year ended 31 December 2022 | % movement | |
| Insurance Written Premiums ($m) | 5,601.4 | 5,246.3 | 7% |
| Net Insurance Written Premiums ($m) | 4,696.2 | 3,772.4 | 24% |
| Insurance Service Result ($m) | 1,251.0 | 822.9 | 52% |
| Profit before tax ($m) | 1,254.4 | 584.0 | 115% |
| Earnings per share (pence) | 124.8 | 63.4 | 97% |
| Net assets per share (pence) | 468.6 | 364.2 | 29% |
| Net tangible assets per share (pence) | 448.7 | 348.3 | 29% |
Adrian Cox, Chief Executive Officer, said:
“I am delighted with our record $1.25 billion profit which enables us to launch a share buyback programme of up to $325m. The strength of Beazley’s expertise-led underwriting and claims management was the driver of the excellent combined ratio we achieved in 2023. We believe that with increased demand for insurance that the accelerating risk environment is creating, as well as an adequate rating environment, we are well positioned to continue successfully growing our business and I remain confident that Beazley will see strong, long-term performance.
I am pleased that Barbara Plucnar Jensen will become our CFO on 1 May 2024, the depth and breadth of her experience, together with her leadership style, will be both a great cultural fit and an asset to Beazley.”
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Statement of the Chair
Beazley delivered a record pre-tax profit in 2023 of $1,254.4m representing an increase of 115% on the previous year (2022: $584.0m). This equated to a return on equity of 30% (2022: 19%) and earnings per share of 154.7c (2022: 79.0c). Our combined ratio reflected an excellent insurance service result as it improved to 71% (2022: 79%) and 74% on an undiscounted basis (2022: 82%). These results enable the Board to commit to a share buyback programme of up to $325m. This is a powerful symbol of our confidence in the Company, its business model and the future. It reflects hard work over the last 12 months and I am pleased that we have repaid the confidence that you, our shareholders, place in us to deliver.
I was proud to take up the role of Chair of the Board of Directors in April 2023, and I’ve been impressed by the teams whom I have worked with across Beazley. Our colleagues demonstrate intellectual acuity, managerial agility and are committed to our values: Being Bold, Striving for Better and Doing the Right Thing. I am sure that, like me, the 545 other new colleagues we welcomed during 2023 will have recognised these values in their everyday experience. It is this that drives our competitive difference, enriching all our stakeholders.
Beazley aims to be the leading global sustainable specialty insurer. I am pleased to say that 2023 saw us make significant strides forward to deliver that.
Leading – Our track record is of strong financial results, which deliver excellent returns for our investors and shareholders, through insurance solutions that are valued by our clients and brokers.
Being a leader means both driving things forward and stepping back when market changes dictate. Leading is not easy, as the challenges in the cyber market this year have shown; but when systemic cyber risk needed to be addressed, Beazley was willing to ‘stand up’ and lead market thinking.
Global – We are a global company operating from 25 offices around the world. Through our wholesale platforms based in London, Miami and Singapore, we underwrite 53% of our Group premium. North America and European platforms contribute 40% and 7% respectively. In 2023, we further strengthened our global outreach with the appointment of Fred Kleiterp to lead our future strategic vision for Europe, plus the establishment of our onshore excess and surplus (E&S) carrier in the US, which commenced underwriting in January 2024.
Sustainable – We continue to manage the risk of a changing climate; harnessed to the real opportunities which energy transition will bring. I was pleased that we were able to present more detail on this at our Capital Markets’ Day in late November 2023.
Our focus is on how, by better understanding the underlying risks ourselves, we can support clients to adapt in ways that will not only reduce their business risks but will actively protect our environment from the worst impacts of climate change.
Specialty – As a specialty insurer, our business adds most value where things are complex, volatile or changing. Evidence of our commercial prowess is seen in the fact that we lead 87% of the business that our firm underwrites.
For instance, in the last 18 months the property insurance market has understood that inflationary pressures, demographics and climate change mean that as a class of insurance it should no longer be commoditised. Instead property insurance requires considerable underwriting skill; a reality that since the start of 2023 has been reflected in pricing; terms and conditions. This change has seen us lean into property with Property Risks premiums increasing 64% year on year. We are grateful to our shareholders who enabled us to seize this opportunity, by supporting our November 2022 capital raise.
Geopolitical turmoil and economic uncertainty also highlights the value of our specialist underwriting skills. In our MAP Risks division, which includes business such as marine, aviation, contingency and political risk, our team of expert underwriters add considerable value to our brokers and their clients, often underwriting policies for extremely difficult environments such as areas of conflict in Ukraine or the Middle East, or policies for the use of complex technology solutions, including putting satellites into space.
Insurer – We have built a global underwriting model which allows us to capitalise on opportunities or pause when markets become unprofitable. This protects both our strategic growth agenda and the interests of our clients.
We have an innovative, disciplined, underwriting led approach to developing products to solve real world problems. We combine this with a ‘claims ecosystem’ that consistently wins praise. In 2023 we were also proud to win the Gracechurch award for claims excellence for the eighth time in a row.
IFRS 17
This report marks the culmination of the first year of reporting under IFRS 17. The Board was kept fully informed of the progress of implementation throughout the year via regular updates and interactions through its Audit Committee. It was clear throughout, that it has been a challenging process and I would like to thank everyone across the business for their tireless efforts to ensure the successful introduction of the new accounting standard.
Beazley is well governed
On 1 March 2024 we welcomed Carolyn Johnson as Chair of our growing US operations and to the Beazley Plc Board. Her appointment to the Board is designed to strengthen our corporate structure with diverse and industry experienced colleagues of her calibre.
Christine LaSala has signalled her intent to step down from the Board, where she is the Senior Independent Non-Executive Director, at the conclusion of the 2024 AGM. I would like to thank Christine for her valuable input into the Company and the Board over her tenure, perhaps most notably when she stepped up as Interim Chair for six months in late 2022.
Capital management
Our 2023 interim results presentation in September set out in greater detail how we think about and plan our capital management. This was a clear statement of our intent to protect your company by maintaining a prudent capital surplus above 170% of the Solvency Capital Ratio. We will manage key underwriting risks’ exposure to equity (for example, natural catastrophe risk to a 1:250 event) and consideration of the prospects for profitable deployment of capital generated into the Company’s future. These considerations will be balanced versus appropriate returns of excess capital to shareholders.
Capital return
With this approach to capital management in mind I am pleased to say that the Board has proposed an ordinary interim dividend of 14.2p for the full year, we are also pleased to announce a share buyback programme of up to $325m.
Risky business
We are an ambitious company that will deliver what we promise. This is at the core of the Company’s commit and deliver philosophy, based on living up to our values and is the source of our competitive advantage. It enables our clients to explore, create and build their businesses, whilst positioning Beazley for success as a leader in our market.
I want to thank our clients, brokers and shareholders for their support over the last 12 months. The strength of our financial result reflects intelligent navigation of the risky world in which we all live and ensures we are here to support our clients and brokers in the future. As a leading, global, sustainable, specialty insurer we are in the risk business, but as shown this year, with risk comes reward.
Chief Executive Officer’s statement
I am pleased to be reporting a record pre-tax profit of $1,254.4m (2022: $584.0m), a strong investment return of 4.9% (2022: (2.1)%) and an impressive combined ratio of 71% for 2023 (2022: 79%). Our results demonstrate that the clarity of our strategy across platforms, products and geographies not only gives good access to risk but when combined with disciplined underwriting and a responsive claims infrastructure, delivers sustainable profits for all our stakeholders.
A year of achievement
Beazley achieved its goals in 2023. We successfully deployed capital across the business to capture opportunities and our insurance written premiums (IWP) now stands at $5,601.4m (2022: $5,246.3m). Our net IWP growth of 24% gives a strong indication of the Company’s trajectory during 2023 and I am pleased we’ve achieved this despite several headwinds. Property Risks has had a particularly successful year with premiums increasing by 64%, taking IWP to $1,351.9m. The key strengths that have led to this positive result are our expertise-led, specialty underwriting and our knowledge based, client focused claims service. I would also like to thank our trading partners, our brokers and our clients across the world for their support of our business.
Access to high quality risk is delivered via our straightforward and clear three platform strategy which brings together Wholesale via Lloyd’s and insurance companies in North America and Europe. In 2023 this strategy was further enhanced with the establishment of our dedicated Excess and Surplus (E&S) carrier in the US, which will open up access to business that is currently often only available to onshore carriers.
The appointment in June 2023 of Fred Kleiterp as European General Manager has brought additional focus and energy to our underwriting in the region and we look forward to seeing the roll out of more of the products and services we are known for across our platform in Europe.
There can hardly have been a more important moment for Beazley to stand with our clients and deliver specialist insurance risk management and capital as they address the challenges of climate change, rapidly advancing digitisation and a sea change in geopolitics. On all these key issues, Beazley has made an important contribution during the last 12 months.
It was also great to see our investments team complement the underwriting result, delivering an investment return of 4.9% (2022: loss of 2.1%). While we are primarily an insurance company, with assets under management in excess of $10bn, generating returns from our portfolio is a key focus for us and it is pleasing to see the effort made in this area bearing fruits.
Underwriting for climate change
We moved at speed to be at the forefront of the market as property insurers adjusted to the impact that climate change is bringing and which we believe will create a long term opportunity for Beazley, particularly in North America. We were able to do this because of the hard work done on risk selection, property valuations and, importantly, in building a climate risk framework. This framework seeks to engage with clients to understand, not just the impact of climate risk today, but how it is evolving and changing.
This work is part of an ongoing journey to assess a risk that is not following a linear path of development and to also seek out the opportunities that the energy transition will bring.
As a specialty insurer we need to support businesses to move beyond fossil fuels and during 2023 this saw us ramp up our renewable energy underwriting capabilities and invest in understanding how we can add further value to the carbon capture and storage industry.
Leading on cyber
To meet growing demand from clients for cyber insurance we believe it is vital for the industry to have access to a deep pool of capital which will allow it to hedge accumulation risk. We were therefore pleased, in January 2023, to be the first insurance company to launch a cyber catastrophe bond and to go further as the year turned with the launch of our first publicly traded cyber catastrophe bond. We are also seeing that broad market consensus is being achieved around the complex subject of cyber war, bringing clarity of purpose to the cover which is to the benefit of all.
Uncertainty calls for specialty
It is clear to us all that the geopolitical certainties that persisted for much of the last 80 years have shifted and we are in a challenging phase while new structures and norms take hold. Our expertise in understanding global trade flows, transportation and political uncertainty is actively helping support clients as they navigate through.
Agile cycle management
We are able to deliver consistent profitability because we operate a robust and effective approach to managing the insurance cycle. In 2023 this was demonstrated by our strong commitment to the Property Risks segment, where a change in the rating environment offered significant opportunity. In contrast, our approach to the directors and officers (D&O) market is suffering from excessive competition and is where we took the decision to stand back. This is never easy and I want to commend our Specialty Risks team for their professionalism and committed underwriting discipline, noting that this has allowed them space to creatively explore new and growing niches in the liability market.
A team that delivers
I want to thank our outstanding team across disciplines and geographies whose hard work and flexibility this year has helped deliver our record profit. Their commitment to living our values of Being Bold, Striving for Better and Doing the Right Thing, whilst working alongside our broker partners and supporting clients, is a key differentiator for Beazley and one that ensures strong retention across the business.
While the contribution of the entire team underpins our success, I would like to specifically mention some important changes that have happened in our senior team during the year. Brenna Westinghouse was promoted to Head of Strategy and, in January 2024, we welcomed Liz Ashford as Chief People Officer and Head of ESG.
Finally, I am looking forward to working with our new Chief Financial Officer (CFO) Barbara Plucnar Jensen, who will join Beazley on 1 May 2024. Barbara was, until late 2023, Group CFO at Tryg, the largest non-life insurer in Scandinavia with a top 3 market position across Denmark, Norway, Sweden. Barbara comes with over 25 years of experience in the financial services industry. Her depth and breadth of experience, together with her leadership style, will be both a great cultural fit and an asset to Beazley.
Responsibility
Being a Responsible Business is important to us and, in 2023, we reviewed our approach to further embedding ESG at Beazley. This work will inform our next round of three year target setting which is focused on maintaining the diversity of our workforce where we already see significant progress (45% senior women and 27% People of Colour) and in reducing our contribution to carbon emissions which today are 47% lower compared to 2019 levels when normalised per FTE.
I am pleased that our ESG Consortium, two years since founding, is building positive momentum and from 1 January 2024 has moved fully to syndicate 5623. It is also exploring how it can offer capacity via our North American and European insurance companies, as client demand for ESG solutions continues to develop.
Our Responsible Business efforts extend to our investment portfolio and our Impact Investment Fund made a positive contribution in 2023, by becoming a founding investor of the Big Issue Social Impact Debt Fund, which will contribute to housing, care and social infrastructure projects in the UK.
The work we have already concluded in the ESG space, together with the continuing effort to include climate change risk in our underwriting, will inform the development of our Net Zero Transition plan which we will deliver during 2024.
Harnessing AI
2023 saw a leap forward in the capability of Artificial Intelligence (AI) and in particular, Generative AI. We believe that this technology will enable the simplification of manual processes, improve decision making and ultimately improve product and service offerings to brokers and clients.
We are continuing to expand our use of AI, including piloting Generative AI in several areas of our business, to help improve speed, accuracy and to reduce risk.
AI is opening up exciting new horizons where our expert teams will increasingly be able to make faster and more effective decisions that will enrich their work by reducing administrative burdens. It will also improve our ability to grow, as the technology takes up the operational strain that an expanding business has historically created.
Getting on with the job
Recent years have seen many external challenges from pandemic to war and the impact of climate change. At Beazley we have been adapting to change, ensuring our underwriting contemplates the evolving risk landscape, increasing our own resilience and responding to customer needs. As we look ahead, we continue to operate with one eye on emerging threats and opportunities, be that AI technology or changes in the legal environment, while the other is firmly set on ensuring access for clients and brokers to our specialty products and services. Our expectation for 2024 is for high single digit gross IWP growth and an undiscounted combined ratio in line with our initial guidance for 2023 of low 80s.
We believe that by continuing to focus on what we do best, underwriting and managing specialty insurance risk, we will fulfil our purpose of enabling our stakeholders to explore, create and build and that this approach will deliver the ongoing profitability that our investors rightly expect of us.
