Press Release
Beazley delivers record first half year profit of $728.9m
London, 8 August 2024
Beazley plc results for period ended 30 June 2024
• Profit before tax increased to $728.9m (2023HY: $366.4m)
• Insurance written premiums increased to $3,123.3m (2023HY: $2,921.1m)
• Undiscounted combined ratio of 81% (2023HY: 88%)
• Discounted combined ratio of 77% (2023HY: 84%)
• Return on equity (annualised) of 28% (2023HY: 18%)
• Share buyback of up to $325m announced in March 2024 on track to complete by end of the year
• FY undiscounted COR guidance of around 80%
• FY premium growth of high single digits reiterated
| | Period ended 30 June 2024 | Period ended 30 June 2023 | % movement |
| Insurance Written Premiums ($m) | 3,123.3 | 2,921.1 | 7% |
| Net Insurance Written Premiums ($m) | 2,586.5 | 2,349.6 | 10% |
| Insurance Service Result ($m) | 558.0 | 342.2 | 63% |
| Profit before tax ($m) | 728.9 | 366.4 | 99% |
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| Earnings per share (pence) | 68.7 | 34.9 | 97% |
| Net assets per share (pence) | 504.7 | 376.6 | 34% |
| Net tangible assets per share (pence) | 483.1 | 360.4 | 34% |
Adrian Cox, CEO of Beazley, said:
"I am pleased to report a record first half profit of $728.9m. Expertise in underwriting and active risk selection are key drivers of this strong result, even as the rating environment is moderating. Property grew 25% in the first half, demonstrating the success of our strategy to grow in this increasingly specialist class, focusing on the US E&S market. We continue to innovate in cyber, launching one of the market's most comprehensive, integrated cyber security and insurance offerings with Full Spectrum Cyber and Beazley Security. When faced with the world's largest ever IT outage, Beazley's approach to underwriting cyber risk was tested and proved to be highly resilient. We see opportunities in the remainder of the year and are confident in delivering on our high single digit growth guidance. We are also pleased to confirm that we have improved our undiscounted combined ratio guidance for the full year to around 80%."
Conference call for investors and analysts will be held at 11.30am BST on Thursday, 8 August 2024.
Dial in details for analysts:
UK-Wide: +44 (0) 33 0551 0200
Webcast Link for all other participants:
https://brrmedia.news/BEZ_HY_24
ENDS
For further information:
Investors and analysts
Sarah Booth
+44 (0) 207 6747582
Media
Sam Whiteley
+44 (0) 207 6747484
Note to editors:
Beazley plc (BEZ.L), is the parent company of specialist insurance businesses with operations in Europe, North America, Latin America, and Asia. Beazley manages seven Lloyd's syndicates and, in 2023, underwrote gross premiums worldwide of $5,601.4million. All Lloyd's syndicates are rated A by A.M. Best.
Beazley's underwriters in the United States focus on writing a range of specialist insurance products. In the admitted market, coverage is provided by Beazley Insurance Company, Inc., an A.M. Best A rated carrier licensed in all 50 states and its subsidiary, Beazley America Insurance Company, Inc. In the surplus lines market, coverage is provided by the Beazley syndicates at Lloyd's, and from 1 January 2024, also from Beazley Excess and Surplus Insurance, Inc.
Beazley's European insurance company, Beazley Insurance dac, is regulated by the Central Bank of Ireland and is A rated by A.M. Best and A+ by Fitch.
Beazley is a market leader in many of its chosen lines, which include Professional Indemnity, Cyber Liability, Property, Marine, Reinsurance, Accident and Life, and Political Risks and Contingency business.
For more information please go to: www.beazley.com
Interim results statement
Overview
Beazley achieved a record interim profit before tax of $728.9m for the first half of 2024 (30 June 2023: $366.4m). This included an insurance service result of $558.0m (30 June 2023: $342.2m), resulting in a discounted combined ratio of 77% (30 June 2023: 84%) and an undiscounted combined ratio of 81% (30 June 2023: 88%). Our investment team achieved a strong investment result of $251.7m (30 June 2023: $143.9m) or 4.8% annualised (30 June 2023: 3.0%). Insurance written premiums growth across our business continued at 7%. Our annualised return on equity was 28% (30 June 2023: 18%).
Seizing the opportunity for specialty insurance
Beazley's performance in the first half of the year is a testament to the hard work and determination of our employees.
At 7%, growth is maintaining its positive trajectory, driven by our agile and disciplined approach to underwriting. As expected, the upwards rating environment, or hard market, of recent years is moderating and our clear priority is maintaining rate adequacy, whilst continuing with active cycle management to benefit from market opportunities and a change in risk reward ratios.
Achieving growth of 7% against a backdrop of a flat rating environment in total at the half year demonstrates how our robust approach to underwriting has delivered across Beazley.
Demand from brokers and businesses for specialty underwriting is strong, be that in the Excess & Surplus (E&S) market in the US, across our expanding European footprint or in the specialist classes we underwrite via Lloyd's.
On 19 July the world experienced its worst ever systems outage. I am proud of the response of all our teams to support clients during this incident, particularly those in Claims, Cyber Risks and at Beazley Security. We have long prepared for an incident of this nature and as a result I am pleased to confirm this event had no impact on our view of the outlook for the remainder of 2024. Our approach to cyber has been tested and proved resilient and we remain committed to a stable and sustainable rating environment.
We are proud that our approach to specialty underwriting was recognised at the prestigious British Insurance Awards, in July, where we were named Specialist Insurance Company of the Year 2024.
Highlights of the half year
In January 2024, our onshore US E&S carrier began underwriting and we have seen strong interest from our US broker partners, particularly where their clients are located away from the coasts or have a strong preference for locally based cover.
Beazley Security officially launched at the end of June 2024, with the integration of our in-house Cyber Services team and our wholly owned cyber security company Lodestone.
Our experience of managing thousands of cyber incidents shows that organisations with integrated risk management services are better able to pre-empt, respond and adapt to cyber threats. We believe our ability to keep clients one step ahead of the cyber threat aids the client's experience and enhances our underwriting potential.
At the start of the year, we announced the launch of our first 144a Cyber Catastrophe bond. At $140m it was nearly twice the size of the cover we achieved in 2023, via the market's first ever cyber catastrophe bond, and in May 2024, the bond more than doubled to $300m. Both of these have been a great success and we will continue to look at opportunities in a similar vein in the future.
We were also the first company to launch a property catastrophe bond on the Lloyd's London Bridge platform at the start of the year. This is also the first time that Beazley has sponsored its own property catastrophe bond.
These developments are testament to the outstanding work of our team in managing and modelling cyber risk so that we have a specialist investor base eager to invest. Together we are creating a vibrant cyber reinsurance market which will benefit the development of the whole cyber insurance industry.
In June 2024 we were pleased that these efforts to innovate in the catastrophe bond arena were recognised by winning (Re)Insurer Sponsor of the Year at the Insurance Insider ILS awards.
Access to risk
We continue to believe in the importance of being located where our clients and brokers are based and developing product solutions to the risk landscape they face.
Our three platforms are split into Wholesale (Lloyd's) 52%, North America 40% and Europe 8% at the half year. We continue the build out in Europe, with the appointment of Country Managers in France, Spain and the UK.
Changes to management
I want to welcome two new senior colleagues to Beazley, Carolyn Johnson, who joined the Board (and is Chair of our US holding company) in March and Barbara Plucnar Jensen who joined the Board as Chief Financial Officer in May. This is the first set of results I have worked on with Barbara and I am pleased to have such an experienced and capable colleague to lead our finance function.
Underwriting performance
Cyber Risks
The first half of the year saw attractive opportunities across international markets, where our strong underwriting discipline combined with ongoing rate adequacy was a significant driver of the 7% growth we saw in the division, although we are now seeing increased competition in this segment. In the US, the rating environment is now stabilising after rate reductions in the very competitive conditions of 2023. This reflects the ongoing maturing of the cyber insurance market, which sees increasing price stability, better cyber resilience and awareness of the threat amongst businesses leading to strong demand for both cyber security services and insurance.
Across our book we continue to see no material shift in ransomware claims despite the increased frequency in activity and we believe our integrated Full Spectrum Cyber offering is supporting our clients to build greater cyber resilience. We are also investing in our Cyber Risks management team with the appointment of new leads in North America and Europe.
Digital Risks
Our small business distribution division saw growth of 14%, mainly driven by specialty in Europe. The ongoing investment we are making into technology is supporting the digitisation of our underwriting processes as well as the distribution of specialty insurance solutions, to the small business segment which is the backbone of economies around the world.
Marine, Accident and Political ("MAP") Risks
We are seeing a positive rating environment as demand for our specialist insurance remains strong in the ongoing uncertain geopolitical environment. The division experienced a reduction to premium of 3% in 2024 (2023: decrease of 5%) driven by our planned platform changes within the Group in 2023 and 2024.
The value of our products has been clearly demonstrated in recent months. The tragic events in relation to the Middle East and the Baltimore Bridge incident in March show how a well functioning marketplace, like the Lloyd's marine community, in which we are a leader, can act to ensure that claims are effectively processed and new cover quickly put in place, allowing business and trade to continue.
Property Risks
The first half of 2024 saw continued strong growth in our property business, at 25% (2023: 65%), albeit, as we expected, at a more moderate pace than the year before. We are seeing competitors that stepped back last year re-enter the market, but we have not yet seen a dramatic influx of capacity as the fundamental challenges of climate change, rising property valuations and inflation, together with the potential for an active hurricane season, temper competition.
By building relationships with brokers and clients for the long-term, particularly in the US E&S market with our onshore carrier, we are gaining positive feedback and developing brand loyalty for our consistent and disciplined approach to specialty property underwriting.
Specialty Risks
Growth in our niches remains strong, focused on demand led areas such as Environmental Liability and Programs, or Safeguard, which supports institutions to mitigate and recover from the impacts of a safeguarding incident.
We continue to be cautious and exercise robust cycle management in the Directors & Officers (D&O) segment, although we may finally be seeing some nascent signs of plateauing of rates in D&O. Nevertheless we remain absolutely focused on ensuring rate adequacy after the challenging rating landscape of the last two and half years.
During the year, the terms of one of our major reinsurance contracts for the division were adjusted and we accrued for both additional premiums and a reduction of recoveries in the first six months contributing to an expense on the amount recoverable from reinsurers.
Reserving
Beazley has a consistent reserving philosophy, with initial reserves being set to include a risk adjustment that may be released over time as and when any uncertainty reduces. We maintain a preferred confidence level range of between the 80th and 90th percentile. This metric gives an indication about where the reserves sit compared to the best estimate and the capital requirement.
As at 30 June 2024, our reserve confidence level was at the 88th percentile (30 June 2023: 89th percentile, 31 December 2023: 85th percentile), which is towards the upper end of our preferred confidence level range.
Insurance written premiums/ Net insurance written premiums
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| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | ||
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| Insurance written premiums | Net insurance written premiums | Insurance written premiums | Net insurance written premiums |
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| $m | $m | $m | $m |
| Cyber Risks | 577.8 | 454.3 | 541.4 | 426.2 |
| Digital | 126.8 | 111.9 | 110.8 | 97.2 |
| MAP Risks | 506.9 | 435.3 | 522.4 | 429.2 |
| Property Risks | 1,008.4 | 784.8 | 805.2 | 643.0 |
| Specialty Risks | 903.4 | 800.2 | 941.3 | 754.0 |
| Total | 3,123.3 | 2,586.5 | 2,921.1 | 2,349.6 |
Cumulative rate change
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| 2019 | 2020 | 2021 | 2022 | 2023 | 2024HY |
| Cyber Risks | -% | 8% | 103% | 185% | 170% | 153% |
| Digital | -% | -% | 9% | 31% | 32% | 29% |
| MAP Risks | -% | 12% | 22% | 27% | 35% | 37% |
| Property Risks | -% | 14% | 27% | 40% | 72% | 77% |
| Specialty Risks | -% | 20% | 34% | 36% | 35% | 36% |
| All divisions | -% | 15% | 43% | 62% | 84% | 85% |
Investments
Our investment team enjoyed an excellent six monthly performance, delivering a strong return of $251.7m, or 2.4% in the first half of 2024 (30 June 2023: $143.9m, or 1.5%). The higher yield environment which began to benefit our returns last year remains in place and continues to support improved investment returns. However, risk-free yields have risen further this year, as expectations for lower interest rates were deferred, and this has generated some mark to market losses in the short-term. As a result, the overall return on our fixed income investments in the first half of 2024 is lower than yields would imply, at 1.8%. We reduced the duration of our fixed income investments at the beginning of the year, to 1.6 years, to help us manage asset/liability interest rate risks, and this helped protect our fixed income return in the period. Our capital growth investments have performed strongly, producing a return of 6.7%, led by our equity investments, which returned more than 14% in this period. We added to our equity, credit and hedge fund exposures during the first half and these changes have had a positive impact on our overall investment return. Looking ahead, the current yield of our fixed income investments, at 5.0%, provides an encouraging outlook for returns, although macro-economic risks remain elevated.
Investment performance
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| 30 June 2024 | 30 June 2024 | 30 June 2023 | 30 June 2023 |
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| $m | % | $m | % |
| Cash and cash equivalents | 945.6 | 8.9 | 964.3 | 10.0 |
| Fixed and floating rate debt securities |
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| - Government | 4,166.6 | 39.0 | 4,724.1 | 49.0 |
| - Corporate bonds |
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| - Investment grade | 3,589.9 | 33.6 | 2,500.9 | 25.9 |
| - High yield | 632.4 | 5.9 | 362.7 | 3.8 |
| Syndicate loans | 28.8 | 0.3 | 33.2 | 0.3 |
| Derivative financial assets | 9.6 | 0.1 | 6.8 | 0.1 |
| Core portfolio | 9,372.9 | 87.8 | 8,592.0 | 89.1 |
| Equity funds | 432.2 | 4.1 | 251.2 | 2.6 |
| Hedge funds | 645.2 | 6.1 | 564.5 | 5.8 |
| Illiquid credit assets | 212.6 | 2.0 | 236.4 | 2.5 |
| Capital growth assets | 1,290.0 | 12.2 | 1,052.1 | 10.9 |
| Investment portfolio total | 10,662.9 | 100.0 | 9,644.1 | 100.0 |
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| 30 June 2024 | 30 June 2024 annualised return | 30 June 2023 | 30 June 2023 annualised return |
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| $m | % | $m | % |
| Core portfolio | 171.9 | 3.6 | 100.7 | 2.5 |
| Capital growth assets | 79.8 | 13.4 | 43.2 | 9.1 |
| Overall return | 251.7 | 4.8 | 143.9 | 3.0 |
Expenses
The expense ratio, which under IFRS 17 includes only expenses directly attributed to insurance activities, decreased to 32% for the first half of the year (30 June 2023: 35%). For the first six months of the year, non-directly attributable expenses of $160.4m (30 June 2023: $137.6m) fall outside the insurance result. Total expenses for the first six months of the year were $918.0m (30 June 2023: $863.6m).
We continue to focus on our total expense base and are pleased that net insurance revenue growth has outpaced total expense growth showing our commitment to growing profitably.
Interest rate sensitivity
The Group has conducted a sensitivity analysis of its financial assets (specifically debt and fixed income holdings) and its (re)insurance contract liabilities (being the net of reinsurance contract assets and insurance contract liabilities) to estimate the immediate impact of the movement in interest rates on profit after tax / equity for the period:
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| Financial assets | |
| 30 June 2024 | 31 December 2023 | |
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| $m | $m |
| Shift in yield (basis points) |
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| 150 basis point increase | (161.1) | (190.6) |
| 100 basis point increase | (107.4) | (127.1) |
| 50 basis point increase | (53.7) | (63.5) |
| 50 basis point decrease | 53.7 | 63.5 |
| 100 basis point decrease | 107.4 | 127.1 |
| 150 basis point decrease | 161.1 | 190.6 |
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| (Re)insurance contract liabilities | |
| 30 June 2024 | 31 December 2023 | |
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| $m | $m |
| Shift in yield (basis points) |
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| 150 basis point increase | 118.6 | 114.3 |
| 100 basis point increase | 80.0 | 77.1 |
| 50 basis point increase | 40.5 | 39.1 |
| 50 basis point decrease | (41.5) | (40.0) |
| 100 basis point decrease | (84.0) | (81.0) |
| 150 basis point decrease | (127.6) | (123.0) |
Capital
We have a number of requirements for capital at a Group and subsidiary level. Capital is required to support underwriting at Lloyd's, within the US and through our European insurance company and is subject to prudential regulation by local regulators (PRA, Lloyd's, CBI, and the US state level supervisors). Further capital requirements come from rating agencies who provide ratings for BICI, BAIC, BESI and BIdac. Beazley aims to manage its capital and leverage levels to obtain the ratings necessary to trade with its preferred client base.
The amount of surplus capital held is considered on an ongoing basis. We aim to maintain a Group Solvency II ratio in excess of 170% of Solvency Capital Requirement ("SCR"). A number of additional factors are considered including the opportunities to deploy capital by investing in sustainable profits which hit our ROE target of 15% cross cycle in a way that helps build a balanced and diversified business. We also contemplate peak risks to equity, including natural catastrophe and cyber risks, which are reflected in our capital sensitivities, when deciding on the level of capital to hold.
As at 31 December 2023, our Solvency II coverage ratio post-dividend and share buyback was 219%. We estimate our 30 June 2024 Solvency II ratio to be at 245% (including total estimated amount of the share buyback announced in March 2024). As at 30 June, we have bought back £137m worth of shares through the share buyback. We generally expect half year Solvency II ratios to be higher than those at the end of the year, due to the end of year ratios including a projection for the following year's growth.
The half year ratio is a result of good underwriting performance and a strong return on investments driving significant own funds generation, while capital requirements are aligned with 2023 year end and represent the current year business plan.
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| 30 June 2024 Estimate | 31 December 2023 Actual |
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| $m | $m |
| Eligible Tier-1 capital after foreseeable distributions | 4,503.4 | 3,980.9 |
| Eligible Tier-2 capital - subordinated debt | 539.6 | 520.8 |
| Total Solvency II Eligible own funds | 5,043.0 | 4,501.7 |
| Capital requirement | 2,058.2 | 2,058.2 |
| Group Solvency II ratio | 245% | 219% |
In the second half of the year, our capital requirements will be recalculated to reflect the growth expected in the business during 2025 as well as own fund generation in the period. When considered together, these factors are expected to increase our capital requirements, which will result in a decreased Solvency II ratio at 31 December 2024 when compared to 30 June 2024.
Scenario sensitivity analysis
The table below shows the impact on the Group's estimated Solvency II ratio in the event of the following scenarios as at 30 June 2024.
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| Impact on solvency II ratio |
| Cyber 1-in-250 scenario | (31)% |
| Nat Cat 1-in-250 combined scenario | (26)% |
| 50 bps decrease in interest rates | (10)% |
Outlook
Using integrated insurance and risk management expertise that delivers solutions to the technology, geopolitical and climate threats that businesses face, is how Beazley adds value and builds resilience for its clients. As we progress through 2024, we believe this makes us increasingly relevant to our brokers and clients and is driving significant opportunities for us and you, our investors.
We remain confident in the ability of our multi-platform distribution capabilities, combined with our robust approach to cycle management, to continue to deliver sustainable and strong results.
We see opportunities in the remainder of the year and are on track to deliver on our high single digit growth guidance. We are also pleased to improve our undiscounted combined ratio guidance for the full year to around 80%.
Adrian Cox
Chief Executive Officer
Condensed consolidated statement of profit or loss for the six months ended 30 June 2024
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| 6 months ended 30 June | 6 months ended 30 June | Year to 31 December |
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| 2024 | 20231 | 20231 |
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| Note | $m | $m | $m |
| Insurance revenue | 3 | 2,730.6 | 2,628.1 | 5,442.4 |
| Insurance service expenses | 4 | (1,824.9) | (2,080.5) | (3,592.6) |
| Allocation of reinsurance premium | 5 | (335.3) | (538.6) | (1,127.3) |
| Amounts recoverable from reinsurers for incurred claims | 5 | (12.4) | 333.2 | 528.5 |
| Insurance service result |
| 558.0 | 342.2 | 1,251.0 |
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| Net investment income | 6 | 251.7 | 143.9 | 480.2 |
| Finance income/(expense) from insurance contracts issued | 6 | 25.2 | 2.8 | (169.3) |
| Finance income/(expense) from reinsurance contracts held | 6 | 12.3 | (4.2) | 15.9 |
| Net insurance and financial result |
| 847.2 | 484.7 | 1,577.8 |
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| Other income | 7 | 69.3 | 36.9 | 78.5 |
| Operating expenses | 8 | (160.4) | (137.6) | (365.8) |
| Foreign exchange (losses)/gains |
| (7.7) | 3.7 | 4.5 |
| Results from operating activities |
| 748.4 | 387.7 | 1,295.0 |
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| Finance costs | 9 | (19.5) | (21.3) | (40.6) |
| Profit before tax |
| 728.9 | 366.4 | 1,254.4 |
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| Tax expense | 10 | (157.3) | (82.3) | (227.6) |
| Profit after tax for the period |
| 571.6 | 284.1 | 1,026.8 |
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| Earnings per share (cents per share): |
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| Basic | 11 | 86.8 | 42.8 | 154.7 |
| Diluted | 11 | 84.8 | 42.1 | 151.4 |
| Earnings per share (pence per share): |
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| Basic | 11 | 68.7 | 34.9 | 124.8 |
| Diluted | 11 | 67.1 | 34.3 | 122.1 |
Condensed consolidated statement of comprehensive income for the six months ended 30 June 2024
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| 6 months ended 30 June | 6 months ended 30 June | Year to 31 December |
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| 2024 | 2023 | 2023 |
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| $m | $m | $m |
| Profit after tax for the period | 571.6 | 284.1 | 1,026.8 |
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| Items that will never be reclassified to profit or loss: |
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| Loss on remeasurement of retirement benefit obligations | - | - | (0.1) |
| Tax credit on defined benefit obligation | - | 0.7 | 0.7 |
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| Items that may be reclassified subsequently to profit or loss: |
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| Foreign exchange translation gains | 7.9 | 4.0 | 5.7 |
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| Total other comprehensive income | 7.9 | 4.7 | 6.3 |
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| Total comprehensive income recognised | 579.5 | 288.8 | 1,033.1 |
Condensed consolidated statement of changes in equity for the six months ended 30 June 2024
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| Share capital | Share premium | Foreign currency translation reserve | Other reserves | Retained | Total |
|
| $m | $m | $m | $m | $m | $m |
| Balance as at 1 January 2023 | 46.6 | 9.7 | (109.8) | (7.6) | 3,015.1 | 2,954.0 |
| Total comprehensive income | - | - | 4.0 | - | 284.8 | 288.8 |
| Dividends paid | - | - | - | - | (107.7) | (107.7) |
| Issue of shares | 0.1 | 0.3 | - | - | - | 0.4 |
| Equity settled share based payments | - | - | - | 12.9 | - | 12.9 |
| Acquisition of own shares held in trust | - | - | - | (27.2) | - | (27.2) |
| Tax on share option vesting | - | - | - | 0.6 | 1.8 | 2.4 |
| Transfer of shares to employees | - | - | - | (9.1) | 9.1 | - |
| Balance as at 30 June 2023 | 46.7 | 10.0 | (105.8) | (30.4) | 3,203.1 | 3,123.6 |
| Total comprehensive income/(expense) | - | - | 1.7 | - | 742.6 | 744.3 |
| Issue of shares | - | 0.6 | - | - | - | 0.6 |
| Equity settled share based payments | - | - | - | 23.3 | - | 23.3 |
| Acquisition of own shares held in trust | - | - | - | (6.4) | - | (6.4) |
| Tax on share option vesting | - | - | - | 0.1 | (3.4) | (3.3) |
| Transfer of shares to employees | - | - | - | 0.6 | (0.6) | - |
| Balance as at 31 December 2023 | 46.7 | 10.6 | (104.1) | (12.8) | 3,941.7 | 3,882.1 |
| Total comprehensive income | - | - | 7.9 | - | 571.6 | 579.5 |
| Dividends paid | - | - | - | - | (120.5) | (120.5) |
| Share buyback1 | (1.2) | - | - | 1.2 | (174.4) | (174.4) |
| Issue of shares | 0.1 | 0.2 | - | - | - | 0.3 |
| Equity settled share based payments | - | - | - | 12.3 | - | 12.3 |
| Acquisition of own shares held in trust | - | - | - | (2.3) | - | (2.3) |
| Tax on share option vesting | - | - | - | 2.9 | 0.7 | 3.6 |
| Transfer of shares to employees | - | - | - | (10.1) | 10.1 | - |
| Balance as at 30 June 2024 | 45.6 | 10.8 | (96.2) | (8.8) | 4,229.2 | 4,180.6 |
1 Refer to Note 15 for further details, including the value of the capital redemption reserve as at 30 June 2024.
2 Includes $6.4m of treasury shares held as at 30 June 2024, all of which were cancelled by 3 July 2024.
Condensed consolidated statement of financial position as at 30 June 2024
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|
| 30 June | 30 June | 31 December |
|
| | 2024 | 20231 | 20231 |
|
| Note | $m | $m | $m |
| Assets |
|
|
|
|
| Intangible assets |
| 178.4 | 134.8 | 165.3 |
| Plant and equipment |
| 21.4 | 15.3 | 15.9 |
| Right-of-use assets |
| 55.1 | 62.4 | 59.4 |
| Deferred tax asset | 10 | 105.9 | 35.7 | 46.9 |
| Retirement benefit asset |
| 4.6 | 4.7 | 4.5 |
| Insurance contract assets | 14 | 116.0 | 92.2 | 101.5 |
| Reinsurance contract assets | 14 | 2,422.7 | 2,492.8 | 2,426.7 |
| Financial assets at fair value | 13 | 9,717.3 | 8,679.8 | 9,665.5 |
| Other assets |
| 561.3 | 370.7 | 354.2 |
| Current tax asset |
| 35.0 | 6.4 | 13.2 |
| Cash and cash equivalents |
| 945.6 | 964.3 | 812.3 |
| Total assets |
| 14,163.3 | 12,859.1 | 13,665.4 |
| Equity |
|
|
|
|
| Share capital |
| 45.6 | 46.7 | 46.7 |
| Share premium |
| 10.8 | 10.0 | 10.6 |
| Foreign currency translation reserve |
| (96.2) | (105.8) | (104.1) |
| Other reserves | 15 | (8.8) | (30.4) | (12.8) |
| Retained earnings |
| 4,229.2 | 3,203.1 | 3,941.7 |
| Total equity |
| 4,180.6 | 3,123.6 | 3,882.1 |
| Liabilities |
|
|
|
|
| Deferred tax liability | 10 | 245.6 | 112.0 | 202.2 |
| Financial liabilities | 13 | 554.4 | 559.5 | 554.6 |
| Lease liabilities |
| 72.5 | 77.7 | 76.6 |
| Insurance contract liabilities | 14 | 8,118.7 | 7,858.3 | 7,992.2 |
| Reinsurance contract liabilities | 14 | 389.8 | 293.6 | 333.5 |
| Current tax liability |
| 82.4 | 30.7 | 13.7 |
| Other liabilities |
| 519.3 | 803.7 | 610.5 |
| Total liabilities |
| 9,982.7 | 9,735.5 | 9,783.3 |
| Total equity and liabilities |
| 14,163.3 | 12,859.1 | 13,665.4 |
Condensed consolidated statement of cash flows for the six months ended 30 June 2024
|
|
| 6 months ended 30 June | 6 months ended 30 June | Year to 31 December |
|
| | 2024 | 2023 | 2023 |
|
| Notes | $m | $m | $m |
| Cash flows from operating activities: |
|
|
|
|
| Profit before tax |
| 728.9 | 366.4 | 1,254.4 |
| Adjustments for non-cash items: |
|
|
|
|
| Interest and dividends receivable on financial assets | 6 | (152.8) | (103.5) | (215.3) |
| Finance costs payable | 9 | 19.5 | 21.3 | 40.6 |
| Net fair value gains on financial assets | 6 | (29.1) | (44.5) | (325.2) |
| Other non-cash items1 |
| 15.2 | (13.9) | 45.7 |
|
|
|
|
|
|
| Changes in operational assets and liabilities: |
|
|
|
|
| Increase in net insurance and reinsurance contracts | 14 | 172.3 | 315.3 | 545.9 |
| (Decrease)/increase in other liabilities |
| (91.2) | 279.7 | 86.5 |
| Increase in other assets |
| (207.1) | (166.5) | (150.0) |
| Purchase of investments |
| (4,108.6) | (3,216.5) | (7,115.9) |
| Proceeds from sale of investments |
| 4,096.5 | 2,971.2 | 6,129.8 |
| Repayment of syndicate loan | 13 | 7.7 | - | - |
| Interest and dividends received on financial assets | 6 | 147.6 | 99.4 | 207.4 |
|
|
|
|
|
|
| Tax paid |
| (109.6) | (14.9) | (110.7) |
| Net cash inflows from operating activities |
| 489.3 | 493.5 | 393.2 |
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
| Purchase of plant and equipment |
| (7.2) | (1.8) | (4.3) |
| Expenditure on software development and other intangible assets |
| (17.0) | (12.5) | (50.9) |
| Net cash outflows from investing activities |
| (24.2) | (14.3) | (55.2) |
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
| Acquisition of own shares in trust |
| (2.3) | (27.2) | (33.6) |
| Payment of lease liabilities |
| (12.1) | (6.6) | (12.0) |
| Share buyback |
| (171.5) | - | - |
| Finance costs paid | 9 | (18.0) | (19.5) | (37.5) |
| Dividend paid | 12 | (120.5) | (107.7) | (107.7) |
| Net cash outflows from financing activities |
| (324.4) | (161.0) | (190.8) |
|
|
|
|
|
|
| Net increase in cash and cash equivalents |
| 140.7 | 318.2 | 147.2 |
| Opening cash and cash equivalents |
| 812.3 | 652.5 | 652.5 |
| Effect of exchange rate changes on cash and cash equivalents |
| (7.4) | (6.4) | 12.6 |
| Closing cash and cash equivalents |
| 945.6 | 964.3 | 812.3 |
1 Other non-cash items includes amounts relating to depreciation, amortisation and foreign exchange differences.
1 Statement of accounting policies
Beazley plc ("the Group") is a company incorporated in England and Wales. The condensed consolidated interim financial statements of the Group for the six months ended 30 June 2024 comprise the parent company, its subsidiaries and the Group's interest in associates. These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, the UK-adopted International Accounting Standard, and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
With the exception of the new and amended standards and interpretations outlined below, the accounting policies and methods of computation applied by management in preparing the condensed consolidated interim financial statements are the same as those applied to the consolidated financial statements as at and for the year to 31 December 2023. Note that whilst the performance of individual business lines may be seasonal, particularly with respect to exposure to insurance claims, the Group does not consider its overall result to be impacted by seasonality.
The information in these interim condensed consolidated financial statements is unaudited and does not constitute annual accounts within the meaning of Section 434 of the Companies Act 2006. The external auditor's report on the Group's annual report and accounts for the year to 31 December 2023 was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not include a statement under s.498(2) or (3) of the Companies Act 2006.
The preparation of condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The significant judgements and key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year to 31 December 2023.
a. New and amended standards and interpretations
Effective at the reporting date
In these condensed consolidated financial statements, the Group has applied amendments to IFRS issued by the International Accounting Standards Board ("IASB") and endorsed by the UK Endorsement Board ("UKEB") that are mandatorily effective for accounting periods that begin on or after 1 January 2024. The new effective amendments are:
• Amendments to IAS 1 - Classification of Liabilities as Current or Non-current & Non-current Liabilities with Covenants;
• Amendment to IFRS 16 - Lease Liability in a Sale and Leaseback; and
• Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements: Disclosures.
None of the amendments issued by the IASB and endorsed by the UKEB have had a material impact on the Group.
Not yet effective
The following new standards and amendments to existing standards have been issued by the IASB at the reporting date:
• Amendment to IAS 21 - Lack of exchangeability (UKEB endorsed, effective 1 January 2025);
• IFRS 18 - Presentation and Disclosure in Financial Statements (not yet endorsed by UKEB, effective 1 January 2027); and
• IFRS 19 - Subsidiaries without Public Accountability: Disclosures (not yet endorsed by UKEB, effective 1 January 2027).
Beazley is in the process of reviewing the new standards and amendments and determining the impact on the consolidated financial statements.
b. Principal risks and uncertainties
The Group's principal risks and uncertainties are outlined in the risk management and compliance section of the Group's annual report and accounts 2023 (pages 69 to 74). These are insurance, market, credit, group, liquidity, regulatory and legal, operational, and strategic. The Group's exposure to and management of these risks has not changed since the last reporting date.
Additionally, further discussion of climate change risk and how it interacts with the principal risks and uncertainties is discussed in the Task Force on Climate-Related Financial Disclosures Section of Group's annual report and accounts 2023 (pages 22 to 44).
c. Going concern
The Board has reviewed the Group's current and forecast solvency and liquidity positions for the 12 months from the date that the financial statements are authorised for issue, and no material uncertainty in relation to going concern has been identified. In addition, as verified by the most recent regulatory submission, the Group's capital ratios and its total capital resources are comfortably in excess of regulatory solvency requirements.
Based on the going concern assessment performed, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence over a period of 12 months from the date of this report being authorised for issue, and therefore believe that the Group is well placed to manage its business risks successfully. Accordingly, the condensed consolidated financial statements of Beazley plc have been prepared on a going concern basis.
2 Segmental reporting
The Group's reporting segments and the basis of measurement of its segmental profit or loss are consistent with those applied in the consolidated financial statements for the year ended 31 December 2023. Information on the underwriting performance of each segment in the period has been included below.
Cyber Risks
Cyber has continued to perform favourably during the first half of 2024, with a lower claims ratio than in the same period in 2023. Despite an increase in ransomware activity, there has not been a material change in ransomware frequency in our book and with the significant rate change achieved in recent years, we continue to be satisfied with the margin within this book.
Digital
Digital continues to perform well, with best estimate reserves and risk adjustments development as expected.
MAP Risks
During 2024, MAP has seen a favourable claims environment, particularly within Political, Hull, Terrorism and Aviation. This has contributed to improvements within the best estimates. There have been structural changes to the intra group reinsurance arrangements within MAP risks, leading to a lower allocation of RI premium.
Property Risks
The half year 2024 Property claims ratio is comparable to that seen at half year 2023 representing continuing favourable experience within the segment. There have been reductions in gross claims estimates on some of the large losses that are currently within the reinsurance programme and this has contributed to a reduction in reinsurance recoveries. Under IFRS 17, the revenue within Property is recognised with the seasonality of the risk and thus there will be a higher insurance revenue and allocation of reinsurance premium within the second half of the year.
Specialty Risks
Overall, Specialty Risks has performed slightly adversely compared to half year 2023 from a claims perspective. During the year, the terms of one of our aggregate reinsurance contracts for the division were adjusted which resulted in a one-off reduction to our claims recoveries on this contract. This has led to an expense on the amount recoverable from reinsurers and has negatively impacted upon the combined ratio. We continue to monitor and make allowances for the current high economic & social inflation environment.
|
| 6 months ended 30 June 2024 | |||||
|
| Cyber Risks | Digital | MAP Risks | Property Risks | Specialty Risks | Total |
| 2024 | $m | $m | $m | $m | $m | $m |
| Insurance revenue | 603.6 | 112.6 | 452.0 | 644.3 | 918.1 | 2,730.6 |
| Insurance service expenses | (394.0) | (71.8) | (264.9) | (369.6) | (724.6) | (1,824.9) |
| Current and incurred past service claims | (274.9) | (28.2) | (111.1) | (184.6) | (470.7) | (1,069.5) |
| Insurance acquisition cash flows and directly attributable cash flows | (119.1) | (43.6) | (153.8) | (185.0) | (253.9) | (755.4) |
| Allocation of reinsurance premium | (89.7) | (15.2) | (37.7) | (112.4) | (80.3) | (335.3) |
| Amounts recoverable from reinsurers for incurred claims | 39.7 | 2.7 | 6.6 | (48.8) | (12.6) | (12.4) |
| Current claims recovered and past service movements | 40.5 | 2.7 | 7.4 | (49.0) | (11.8) | (10.2) |
| Current expense recovered and past service movements | (0.8) | - | (0.8) | 0.2 | (0.8) | (2.2) |
| Insurance service result | 159.6 | 28.3 | 156.0 | 113.5 | 100.6 | 558.0 |
|
|
|
|
|
|
|
|
| Net investment income | 46.5 | 7.6 | 29.7 | 47.1 | 120.8 | 251.7 |
| Finance (expense)/income from insurance contracts issued | (4.3) | 1.5 | 5.2 | 6.4 | 16.4 | 25.2 |
| Finance income/(expense) from reinsurance contracts held | 1.9 | 0.2 | 0.3 | 11.2 | (1.3) | 12.3 |
| Net insurance and financial result | 203.7 | 37.6 | 191.2 | 178.2 | 236.5 | 847.2 |
|
|
|
|
|
|
|
|
| Other income | 15.3 | 2.9 | 11.5 | 16.4 | 23.2 | 69.3 |
| Other operating expenses | (32.7) | (14.4) | (20.3) | (17.4) | (75.6) | (160.4) |
| Foreign exchange losses | (1.7) | (0.3) | (1.3) | (1.8) | (2.6) | (7.7) |
| Segment result | 184.6 | 25.8 | 181.1 | 175.4 | 181.5 | 748.4 |
| Finance costs |
|
|
|
|
| (19.5) |
| Profit before tax |
|
|
|
|
| 728.9 |
| Tax expense |
|
|
|
|
| (157.3) |
| Profit after tax |
|
|
|
|
| 571.6 |
| Claims ratio | 46% | 26% | 25% | 44% | 58% | 45% |
| Expense ratio | 23% | 45% | 37% | 35% | 30% | 32% |
| Combined ratio | 69% | 71% | 62% | 79% | 88% | 77% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6 months ended 30 June 2023 | |||||
|
| Cyber Risks | Digital | MAP Risks | Property Risks | Specialty Risks | Total |
| 2023 | $m | $m | $m | $m | $m | $m |
| Insurance revenue | 602.1 | 113.4 | 498.5 | 454.4 | 959.7 | 2,628.1 |
| Insurance service expenses | (447.7) | (86.6) | (383.1) | (293.3) | (869.8) | (2,080.5) |
| Current and incurred past service claims | (332.5) | (42.5) | (217.1) | (156.2) | (607.1) | (1,355.4) |
| Insurance acquisition cash flows and directly attributable cash flows | (115.2) | (44.1) | (166.0) | (137.1) | (262.7) | (725.1) |
| Allocation of reinsurance premium | (118.2) | (14.0) | (152.5) | (75.1) | (178.8) | (538.6) |
| Amounts recoverable from reinsurers for incurred claims | 89.1 | 6.8 | 38.9 | (16.8) | 215.2 | 333.2 |
| Current claims recovered and past service movements | 89.2 | 6.9 | 39.1 | (16.6) | 215.5 | 334.1 |
| Current expense recovered and past service movements | (0.1) | (0.1) | (0.2) | (0.2) | (0.3) | (0.9) |
| Insurance service result | 125.3 | 19.6 | 1.8 | 69.2 | 126.3 | 342.2 |
|
|
|
|
|
|
|
|
| Net investment income | 26.4 | 5.0 | 16.7 | 22.0 | 73.8 | 143.9 |
| Finance expense from insurance contracts issued | 2.6 | 3.9 | 4.5 | 6.7 | (14.9) | 2.8 |
| Finance (expense)/income from reinsurance contracts held | (3.0) | (0.4) | 0.1 | (1.2) | 0.3 | (4.2) |
| Net insurance and financial result | 151.3 | 28.1 | 23.1 | 96.7 | 185.5 | 484.7 |
|
|
|
|
|
|
|
|
| Other income | 5.5 | 3.3 | 10.8 | 4.5 | 12.8 | 36.9 |
| Other operating expenses | (21.9) | (11.2) | (27.7) | (24.9) | (51.9) | (137.6) |
| Foreign exchange gains | 0.9 | 0.2 | 0.7 | 0.6 | 1.3 | 3.7 |
| Segment result | 135.8 | 20.4 | 6.9 | 76.9 | 147.7 | 387.7 |
| Finance costs |
|
|
|
|
| (21.3) |
| Profit before tax |
|
|
|
|
| 366.4 |
| Tax expense |
|
|
|
|
| (82.3) |
| Profit after tax |
|
|
|
|
| 284.1 |
| Claims ratio | 50% | 36% | 52% | 46% | 50% | 49% |
| Expense ratio | 24% | 44% | 47% | 36% | 34% | 35% |
| Combined ratio | 74% | 80% | 99% | 82% | 84% | 84% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Year to 31 December 2023 | |||||
|
| Cyber Risks | Digital | MAP Risks | Property Risks | Specialty Risks | Total |
| 2023 | $m | $m | $m | $m | $m | $m |
| Insurance revenue | 1,174.9 | 224.7 | 1,015.4 | 1,145.2 | 1,882.2 | 5,442.4 |
| Insurance service expenses | (802.1) | (144.0) | (635.5) | (643.9) | (1,367.1) | (3,592.6) |
| Current and incurred past service claims | (576.7) | (54.2) | (340.8) | (362.1) | (899.8) | (2,233.6) |
| Insurance acquisition cash flows and directly attributable cash flows | (225.4) | (89.8) | (294.7) | (281.8) | (467.3) | (1,359.0) |
| Allocation of reinsurance premium | (308.5) | (24.3) | (236.1) | (198.5) | (359.9) | (1,127.3) |
| Amounts recoverable from reinsurers for incurred claims | 210.1 | 7.1 | 23.9 | 26.4 | 261.0 | 528.5 |
| Current claims recovered and past service movements | 210.8 | 7.3 | 24.6 | 26.9 | 262.5 | 532.1 |
| Current expense recovered and past service movements | (0.7) | (0.2) | (0.7) | (0.5) | (1.5) | (3.6) |
| Insurance service result | 274.4 | 63.5 | 167.7 | 329.2 | 416.2 | 1,251.0 |
|
|
|
|
|
|
|
|
| Net investment income | 86.6 | 14.8 | 53.5 | 75.2 | 250.1 | 480.2 |
| Finance expense from insurance contracts issued | (17.5) | (2.9) | (12.6) | (10.9) | (125.4) | (169.3) |
| Finance (expense)/income from reinsurance contracts held | (1.3) | 0.5 | 2.1 | (13.7) | 28.3 | 15.9 |
| Net insurance and financial result | 342.2 | 75.9 | 210.7 | 379.8 | 569.2 | 1,577.8 |
|
|
|
|
|
|
|
|
| Other income | 16.9 | 3.2 | 14.8 | 16.5 | 27.1 | 78.5 |
| Other operating expenses | (52.7) | (19.9) | (68.1) | (42.5) | (182.6) | (365.8) |
| Foreign exchange gains | 1.0 | 0.2 | 0.8 | 0.9 | 1.6 | 4.5 |
| Segment result | 307.4 | 59.4 | 158.2 | 354.7 | 415.3 | 1,295.0 |
| Finance costs |
|
|
|
|
| (40.6) |
| Profit before tax |
|
|
|
|
| 1,254.4 |
| Tax expense |
|
|
|
|
| (227.6) |
| Profit after tax |
|
|
|
|
| 1,026.8 |
| Claims ratio | 42% | 23% | 41% | 35% | 42% | 39% |
| Expense ratio | 26% | 45% | 38% | 30% | 31% | 32% |
| Combined ratio | 68% | 68% | 79% | 65% | 73% | 71% |
|
|
|
|
|
|
|
|
3 Insurance revenue
Insurance revenue represents the total changes in the liability for remaining coverage that relate to services for which the Group expects to receive consideration. This includes the difference between the claims and other expenses expected at the beginning of the year versus those actually incurred (per Note 4), after the loss component allocation.
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| Amounts relating to the changes in the liability for remaining coverage: |
|
|
|
| - Expected incurred claims and other expenses after loss component allocation | 1,502.7 | 1,400.8 | 3,015.7 |
| - Change in risk adjustment for non-financial risk for the risk expired after loss component allocation | 137.2 | 146.2 | 316.8 |
| - Contractual service margin ("CSM") recognised in profit or loss for services provided | 349.7 | 320.1 | 691.4 |
| - Other amounts including experience adjustments | 248.0 | 314.8 | 503.7 |
| Insurance acquisition cash flows recovery | 493.0 | 446.2 | 914.8 |
| Total insurance revenue | 2,730.6 | 2,628.1 | 5,442.4 |
4 Insurance service expenses
The table below shows the insurance service expenses recognised on groups of insurance contracts issued by the Group. These are recognised in the statement of profit or loss as they are incurred.
|
| 6 months ended | 6 months ended | Year to |
|
|
| 2024 | 2023 | 2023 |
|
|
| $m | $m | $m |
|
| Current & incurred past service claims | 1,069.5 | 1,355.4 | 2,233.8 |
|
| Insurance acquisition cash flows and directly attributable cash flows | 755.4 | 725.1 | 1,358.8 |
|
| Total insurance service expenses | 1,824.9 | 2,080.5 | 3,592.6 |
|
5 Net expenses from reinsurance contracts held
The table below shows the net expenses from reinsurance contracts held, comprised of the allocation of reinsurance premium and amounts recoverable from reinsurers for incurred claims.
|
| 6 months ended | 6 months ended | Year to |
|
| 2024 | 2023 | 2023 |
|
| $m | $m | $m |
| Amounts relating to changes in the remaining coverage: |
|
|
|
| - Expected claims and other expenses recovery | (228.2) | (377.7) | (740.5) |
| - Changes in the risk adjustment recognised for the risk expired | (32.4) | (51.7) | (105.2) |
| - CSM recognised for the services received | (71.9) | (208.6) | (290.8) |
| - Other amounts including experience adjustments | (2.8) | 99.4 | 9.2 |
| Allocation of reinsurance premium | (335.3) | (538.6) | (1,127.3) |
| Current claims recovered and past service movements | (10.2) | 334.1 | 532.1 |
| Current expense recovered and past service movements | (2.2) | (0.9) | (3.6) |
| Amounts recoverable from reinsurers for incurred claims | (12.4) | 333.2 | 528.5 |
| Total net expenses from reinsurance contracts held | (347.7) | (205.4) | (598.8) |
6 Net financial result
Finance income/(expense) from insurance contracts issued and reinsurance contracts held represents the interest accreted and the effect of changes in discount rates and other financial assumptions. The net financial result is comprised of the Group's net investment income/(loss) and its net insurance finance income/(expense).
|
| 6 months ended 30 June | 6 months ended 30 June | Year to 31 December |
|
| 2024 | 2023 | 2023 |
|
| $m | $m | $m |
| Interest and dividends on financial assets at fair value | 152.8 | 101.4 | 215.3 |
| Interest on cash and cash equivalents | 15.7 | 2.1 | 16.8 |
| Net realised fair value gains/(losses) on financial assets at FVTPL | 59.3 | (49.7) | (69.2) |
| Net unrealised fair value gains on financial assets at FVTPL | 29.1 | 94.2 | 325.2 |
| Investment income from financial assets | 256.9 | 148.0 | 488.1 |
| Investment management expenses | (5.2) | (4.1) | (7.9) |
| Net investment income | 251.7 | 143.9 | 480.2 |
| Interest accreted | (175.8) | (162.8) | (379.1) |
| Effect of changes in financial assumptions | 201.0 | 165.6 | 209.8 |
| Net finance income/(expense) from insurance contracts issued | 25.2 | 2.8 | (169.3) |
| Interest accreted | 42.5 | 39.3 | 84.4 |
| Effect of changes in financial assumptions | (30.2) | (43.5) | (68.5) |
| Net finance income/(expense) from reinsurance contracts held | 12.3 | (4.2) | 15.9 |
| Net insurance finance income/(expense) | 37.5 | (1.4) | (153.4) |
| Net financial result | 289.2 | 142.5 | 326.8 |
Investment income by category of financial asset
The tables below show the Group's investment income, split by category of financial asset. Note that 'Other financial assets' includes cash and cash equivalents & derivative financial assets.
|
| Debt securities and syndicate loans | Capital growth assets | Other financial assets | Total |
| 6 months ended 30 June 2024 | $m | $m | $m | $m |
| Interest and dividends received | 142.9 | 5.6 | 20.0 | 168.5 |
| Net realised gains | 3.4 | 54.7 | 1.2 | 59.3 |
| Net unrealised fair value gains/(losses) | 13.2 | 19.8 | (3.9) | 29.1 |
| Total investment income from financial assets | 159.5 | 80.1 | 17.3 | 256.9 |
|
| Debt securities and syndicate loans | Capital growth assets | Other financial assets | Total |
| 6 months ended 30 June 2023 | $m | $m | $m | $m |
| Interest and dividends received | 94.5 | 3.3 | 5.7 | 103.5 |
| Net realised (losses)/gains | (50.9) | 5.4 | (4.2) | (49.7) |
| Net unrealised fair value gains | 54.3 | 36.0 | 3.9 | 94.2 |
| Total investment income from financial assets | 97.9 | 44.7 | 5.4 | 148.0 |
|
| Debt securities and syndicate loans | Capital growth assets | Other financial assets | Total |
| Year to 31 December 2023 | $m | $m | $m | $m |
| Interest and dividends received | 208.4 | 3.7 | 20.0 | 232.1 |
| Net realised (losses)/gains | (117.8) | 52.6 | (4.0) | (69.2) |
| Net unrealised fair value gains | 291.2 | 34.0 | - | 325.2 |
| Total investment income from financial assets | 381.8 | 90.3 | 16.0 | 488.1 |
7 Other income
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| Commissions received by Beazley service companies | 19.4 | 22.8 | 42.8 |
| Profit commissions and other income received from syndicates | 45.2 | 8.8 | 29.9 |
| Managing agent fees from third party syndicates | 4.7 | 4.8 | 3.6 |
| Other income | - | 0.5 | 2.2 |
| Total other income | 69.3 | 36.9 | 78.5 |
8 Operating expenses
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| Administrative expenses | 526.3 | 456.7 | 928.8 |
| Recharged to third party syndicates | (86.6) | (54.0) | (115.5) |
| Expenses reclassified within the insurance service result | (279.3) | (265.1) | (447.5) |
| Total operating expenses | 160.4 | 137.6 | 365.8 |
9 Finance costs
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| Interest expense on financial liabilities | 15.7 | 15.7 | 31.6 |
| Interest and charges related to letters of credit | 2.3 | 3.8 | 5.9 |
| Interest expense on lease liabilities | 1.5 | 1.8 | 3.1 |
| Total finance costs | 19.5 | 21.3 | 40.6 |
10 Tax expense
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| Current tax expense | 152.7 | 54.5 | 121.8 |
| Prior year adjustment | 8.5 | 0.8 | 1.5 |
| Pillar Two tax expense1 | 8.7 | - | - |
| Current tax expense | 169.9 | 55.3 | 123.3 |
| Origination and reversal of temporary differences | (13.8) | 18.7 | 97.3 |
| Impact of change in UK tax rates | - | 1.1 | 6.8 |
| Prior year adjustments | 1.2 | 7.2 | 0.2 |
| Deferred tax (credit)/expense | (12.6) | 27.0 | 104.3 |
| Tax charge | 157.3 | 82.3 | 227.6 |
1 Pillar Two tax expense relates to Qualified Domestic Minimum Top-Up Tax ("QDMTT") in Ireland.
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| Deferred tax asset | 105.9 | 35.7 | 46.9 |
| Deferred tax liability | (245.6) | (112.0) | (202.2) |
| Net deferred tax liability | (139.7) | (76.3) | (155.3) |
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| UK | (180.5) | (65.5) | (152.8) |
| US | 105.9 | 34.4 | 46.7 |
| Ireland | (51.7) | (39.8) | (38.7) |
| Other¹ | (13.4) | (5.4) | (10.5) |
| Net deferred tax liability | (139.7) | (76.3) | (155.3) |
1 Includes Canada, France, Germany, Spain and Switzerland.
The Organisation for Economic Co-Operation and Development Pillar Two framework seeks to ensure that large multinational enterprises pay a minimum corporate income tax rate of 15% in the countries in which they operate. In 2023 the UK government enacted legislation implementing the rules. Also in 2023, the Irish government enacted a QDMTT which applies a 15% minimum tax rate to in-scope companies. Both sets of rules apply to the Group for the first time from 1 January 2024.
We expect to pay additional tax in Ireland of $8.7m for this period under the QDMTT. We do not expect to pay additional tax in relation to other jurisdictions in which the Group operates as the tax rates in those jurisdictions are above 15%.
The Group has applied the temporary mandatory exemption from accounting for deferred taxes under the Pillar Two rules. Therefore no deferred taxes have been recognised by the Group in relation to the Pillar Two rules.
11 Earnings per share
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
| Profit after tax ($m) | 571.6 | 284.1 | 1,026.8 |
| Weighted average number of shares in issue (millions) | 658.3 | 664.3 | 663.8 |
| Adjusted weighted average number of shares in issue (millions) | 673.9 | 675.0 | 678.3 |
| Basic (cents) | 86.8c | 42.8c | 154.7c |
| Diluted (cents) | 84.8c | 42.1c | 151.4c |
| Basic (pence) | 68.7p | 34.9p | 124.8p |
| Diluted (pence) | 67.1p | 34.3p | 122.1p |
Basic earnings per share is calculated by dividing profit after tax by the weighted average number of shares in issue. Diluted earnings per share is calculated by dividing profit after tax by the adjusted weighted average number of shares in issue. This assumes conversion of dilutive potential ordinary shares, being shares from equity settled employee compensation schemes. Note that both calculations exclude the shares held in the Employee Share Options Plan of 8.8m as at 30 June 2024 (30 June 2023: 7.5m; 31 December 2023: 9.8m) until such time as they vest unconditionally with the employees.
When calculating the weighted average number of shares in issue over the reporting period, the purchases under the share buyback scheme (see Note 15) were considered on a daily basis. The overall effect of the buyback was a reduction by 6.4m in the average number of shares on both a basic and diluted basis, offset by the purchase of 1.9m shares relating to employee share schemes and the Beazley employee benefit trust on a basic basis (3.1m diluted).
Further details of equity compensation plans can be found in the Group's annual report and accounts 2023. Refer to Note 24 as well as in the Directors' remuneration report on pages 127 to 145.
12 Dividends per share
No dividend has been declared in respect of the six months ended 30 June 2024 (6 months ended 30 June 2023: nil).
A dividend of 14.2p per ordinary share was paid to eligible shareholders on 03 May 2024 in respect of the year ended
31 December 2023.
13 Financial assets and liabilities
13a Carrying values of financial assets and liabilities
Set out below are the carrying values of the Group's 'financial assets at fair value' and 'financial liabilities' per the statement of financial position. These amounts exclude the following financial assets and liabilities which are presented separately:
• Cash and cash equivalents carried at amortised cost; and
• Other receivables, lease liabilities, and other payables carried at amortised cost.
|
| 30 June 2024 | 30 June 2023 | 31 December 2023 |
|
| $m | $m | $m |
| Debt securities: |
|
|
|
| - Government issued | 4,166.6 | 4,724.1 | 4,469.1 |
| - Corporate |
|
|
|
| - Investment grade | 3,589.9 | 2,500.9 | 3,578.3 |
| - High yield | 632.4 | 362.7 | 489.0 |
| Syndicate loans | 28.8 | 33.2 | 34.1 |
| Total debt securities and syndicate loans | 8,417.7 | 7,620.9 | 8,570.5 |
| Equity funds | 432.2 | 251.2 | 282.7 |
| Hedge funds | 645.2 | 564.5 | 582.2 |
| Illiquid credit assets | 212.6 | 236.4 | 220.1 |
| Total capital growth assets | 1,290.0 | 1,052.1 | 1,085.0 |
| Total financial investments at fair value through statement of profit or loss | 9,707.7 | 8,673.0 | 9,655.5 |
| Derivative financial assets | 9.6 | 6.8 | 10.0 |
| Total financial assets at fair value | 9,717.3 | 8,679.8 | 9,665.5 |
Investment corporate bonds are rated BBB-/Baa3 or higher by at least one major rating agency, while high yield corporate bonds have lower credit ratings. Hedge funds are investment vehicles pursuing alternative investment strategies, structured to have minimal correlation to traditional asset classes. Equity funds are investment vehicles which invest in equity securities and provide diversified exposure to global equity markets. Illiquid assets are investment vehicles that predominantly target private lending opportunities, often with longer investment horizons.
The fair value of these assets at 30 June 2024 excludes an unfunded commitment of $30.2m (30 June 2023: $30.6m, 31 December 2023: $32.0m).
|
| 30 June 2024 | 30 June 2023 | 31 December 2023 |
|
| $m | $m | $m |
| Tier 2 subordinated debt (2026) | 249.6 | 249.4 | 249.5 |
| Tier 2 subordinated debt (2029) | 298.9 | 298.7 | 298.8 |
| Derivative financial liabilities | 5.9 | 11.4 | 6.3 |
| Total financial liabilities | 554.4 | 559.5 | 554.6 |
13b Valuation hierarchy
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy described as follows. If the inputs used to measure the fair value of an asset or a liability could be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
Fair value is the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date. Fair value is a market-based measure and in the absence of observable market prices in an active market, it is measured using the assumptions that market participants would use when pricing the asset or liability.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e. the fair value of the consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When the transaction price provides the best evidence of fair value at initial recognition, the financial instrument is initially measured at the transaction price and any difference between this price and the value initially obtained from a valuation model is subsequently recognised in profit or loss depending on the individual facts and circumstances of the transaction but before the valuation is supported wholly by observable market data or the transaction is closed out.
Level 1 - Valuations based on quoted prices in active markets for identical instruments. An active market is a market in which transactions for the instrument occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect prices at which an orderly transaction would take place between market participants at the measurement date.
Level 2 - Valuations based on quoted prices in markets that are not active, or based on pricing models for which significant inputs can be corroborated by observable market data, directly or indirectly (e.g. interest rates and exchange rates). Level 2 inputs include:
• Quoted prices for similar assets and liabilities in active markets;
• Quoted prices for identical or similar assets and liabilities in markets that are not active, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly;
• Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves observable at commonly quoted intervals, implied volatilities and credit spreads); and
• Market corroborated inputs. Included within level 2 are government bonds and treasury bills, equity funds and corporate bonds which are not actively traded, hedge funds and senior secured loans.
Level 3 - Valuations based on inputs that are unobservable or for which there is limited market activity against which to measure fair value. The availability of financial data can vary for different financial assets and is affected by a wide variety of factors, including the type of financial instrument, whether it is new and not yet established in the marketplace, and other characteristics specific to each transaction. To the extent that valuation is based on models or inputs that are unobservable in the market, the determination of fair value requires more judgement. Accordingly the degree of judgement exercised by management in determining fair value is greatest for instruments classified in level 3. The Group uses prices and inputs that are current as of the measurement date for valuation of these instruments.
Valuation approach - level 2 instruments
a) For the Group's level 2 debt securities, our fund administrator obtains the prices used in the valuation from independent pricing vendors. The independent pricing vendors derive an evaluated price from observable market inputs. These inputs are verified in their pricing assumptions such as weighted average life, discount margins, default rates, and recovery and prepayments assumptions for mortgage securities.
b) For our hedge funds, the pricing and valuation of each fund is undertaken by administrators in accordance with each underlying fund's valuation policy. Individual fund prices are communicated by the administrators to all investors via the monthly investor statements. The fair value of the hedge fund portfolios are calculated by reference to the underlying net asset values of each of the individual funds. Our hedge funds are managed by Falcon Money Management Holdings Limited, an associate of the Group.
c) Subordinated debt and tier 2 subordinated debt fair value are based on quoted market prices.
Valuation approach - level 3 instruments
a) Our illiquid fund investments are generally closed ended limited partnerships or open ended funds. The Group relies on a third party fund manager to manage these investments and provide valuations. Note that while the funds report with full transparency on their underlying investments, the investments themselves are predominantly in private and unquoted instruments. The valuation techniques used by the fund managers to establish the fair values therefore require a degree of estimation. For example, these may incorporate discounted cash flow models or a more market-based approach, whilst the main inputs might include discount rates, fundamental pricing multiples, recent transaction prices, or comparable market information to create a benchmark multiple.
b) Syndicate loans are non-tradeable instruments provided by our Group syndicates to the Central Fund at Lloyd's in respect of the 2019 (repaid by Lloyd's during the period) and 2020 underwriting years. These are valued internally using discounted cash flow models provided by Lloyd's to the market, designed to appropriately reflect the credit and illiquidity risk of the instruments. Valuation outputs are then validated using a control model, with the following inputs and assumptions. Note that these internally valued instruments are deemed by management to be inherently more subjective than external valuations.
• Cash flows are comprised of the notional cost of the loans, annual interest income, and the final repayment of the loans at the end of the 5-year term. The weighted average interest rate applicable across the two tranches of syndicate loans is 3.7% (30 June 2023: 3.8%, 31 December 2023: 3.8%).
• A discount rate of 9.2% (30 June 2023: 8.5%, 31 December 2023: 7.0%) is applied. This is calculated using a combination of the long-term treasury bond risk-free rate, the industry/geographic average regression beta, and a selected risk premium.
A 10% decrease in the fair value of the Group's level 3 financial assets would have an impact of ($18.9m) on profit after tax / equity (30 June 2023: ($20.9m), 31 December 2023: ($20.8m)).
There were no changes in the valuation techniques during the year compared to those described in the Group's 2023 Annual Report and Accounts.
13c Fair values of financial assets and liabilities
The following tables show the fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. The Group's cash and cash equivalents, other receivables, lease liabilities, and other payables have been excluded from these tables. These instruments are measured at amortised cost, and their carrying values are deemed to be reasonable approximations of fair values at the reporting date.
|
| Level 1 | Level 2 | Level 3 | Total |
| 30 June 2024 | $m | $m | $m | $m |
| Financial assets carried at fair value |
|
|
|
|
| Fixed and floating rate debt securities |
|
|
|
|
| - Government issued | 2,948.9 | 1,217.7 | - | 4,166.6 |
| - Corporate |
|
|
|
|
| - Investment grade | 2,552.1 | 1,037.8 | - | 3,589.9 |
| - High yield | 632.4 | - | - | 632.4 |
| Syndicate loans | - | - | 28.8 | 28.8 |
| Equity funds | 432.2 | - | - | 432.2 |
| Hedge funds | - | 645.2 | - | 645.2 |
| Illiquid credit assets | - | - | 212.6 | 212.6 |
| Derivative financial assets | 9.6 | - | - | 9.6 |
| Total financial assets carried at fair value | 6,575.2 | 2,900.7 | 241.4 | 9,717.3 |
| Financial liabilities carried at fair value |
|
|
|
|
| Derivative financial liabilities | 5.9 | - | - | 5.9 |
| Total financial liabilities carried at fair value | 5.9 | - | - | 5.9 |
| Fair value of financial liabilities carried at amortised cost |
|
|
|
|
| Tier 2 subordinated debt (2026) | - | 245.7 | - | 245.7 |
| Tier 2 subordinated debt (2029) | - | 287.1 | - | 287.1 |
| Total fair value of financial liabilities carried at amortised cost | - | 532.8 | - | 532.8 |
|
| Level 1 | Level 2 | Level 3 | Total |
| 30 June 2023 | $m | $m | $m | $m |
| Financial assets carried at fair value |
|
|
|
|
| Fixed and floating rate debt securities |
|
|
|
|
| - Government issued | 3,544.9 | 1,179.2 | - | 4,724.1 |
| - Corporate |
|
|
|
|
| - Investment grade | 1,656.0 | 844.9 | - | 2,500.9 |
| - High yield | 76.8 | 285.9 | - | 362.7 |
| Syndicate loans | - | - | 33.2 | 33.2 |
| Equity funds | 251.2 | - | - | 251.2 |
| Hedge funds | - | 564.5 | - | 564.5 |
| Illiquid credit assets | - | - | 236.4 | 236.4 |
| Derivative financial assets | 6.8 | - | - | 6.8 |
| Total financial assets carried at fair value | 5,535.7 | 2,874.5 | 269.6 | 8,679.8 |
| Financial liabilities carried at fair value |
|
|
|
|
| Derivative financial liabilities | 11.4 | - | - | 11.4 |
| Total financial liabilities carried at fair value | 11.4 | - | - | 11.4 |
| Fair value of financial liabilities carried at amortised cost |
|
|
|
|
| Tier 2 subordinated debt (2026) | - | 240.8 | - | 240.8 |
| Tier 2 subordinated debt (2029) | - | 275.8 | - | 275.8 |
| Total fair value of financial liabilities carried at amortised cost | - | 516.6 | - | 516.6 |
|
| Level 1 | Level 2 | Level 3 | Total |
| 31 December 2023 | $m | $m | $m | $m |
| Financial assets carried at fair value |
|
|
|
|
| Fixed and floating rate debt securities |
|
|
|
|
| - Government issued | 3,291.9 | 1,177.2 | - | 4,469.1 |
| - Corporate |
|
|
|
|
| - Investment grade | 1,596.7 | 1,981.6 | - | 3,578.3 |
| - High yield | 488.1 | 0.9 | - | 489.0 |
| Syndicate loans | - | - | 34.1 | 34.1 |
| Equity funds | 282.7 | - | - | 282.7 |
| Hedge funds | - | 582.2 | - | 582.2 |
| Illiquid credit assets | - | - | 220.1 | 220.1 |
| Derivative financial assets | 10.0 | - | - | 10.0 |
| Total financial assets carried at fair value | 5,669.4 | 3,741.9 | 254.2 | 9,665.5 |
| Financial liabilities carried at fair value |
|
|
|
|
| Derivative financial liabilities | 6.3 | - | - | 6.3 |
| Total financial liabilities carried at fair value | 6.3 | - | - | 6.3 |
| Fair value of financial liabilities carried at amortised cost |
|
|
|
|
| Tier 2 subordinated debt (2026) | - | 241.7 | - | 241.7 |
| Tier 2 subordinated debt (2029) | - | 271.9 | - | 271.9 |
| Total fair value of financial liabilities carried at amortised cost | - | 513.6 | - | 513.6 |
13d Transfers
The Group determines whether transfers have occurred between levels in the fair value hierarchy by assessing categorisation at the end of the reporting period. The following transfers between levels 1 & 2 for the period ended 30 June 2024 reflect the level of trading activities including frequency and volume derived from market data obtained from an independent external valuation tool. There were no transfers into or out of Level 3 in the 6 months ended 30 June 2024 (30 June 2023: nil, 31 December 2023: nil).
|
| Level 1 | Level 2 |
| 30 June 2024 vs 31 December 2023 transfer from level 2 to level 1 | $m | $m |
| - Corporate Bonds - Investment grade | 1,011.3 | (1,011.3) |
|
| Level 1 | Level 2 |
| 30 June 2024 vs 31 December 2023 transfer from level 1 to level 2 | $m | $m |
| - Corporate Bonds - Investment grade | (284.8) | 284.8 |
| - Government issued | (71.0) | 71.0 |
The values shown in the transfer tables above are translated using foreign exchange rates as at 30 June 2024.
13e Level 3 investment reconciliations
The table below shows a reconciliation from opening to closing of the Group's level 3 investments. All realised and unrealised gains/(losses) are recognised through net investment income in the statement of profit or loss (refer to Note 6).
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| Opening position as at 1 January | 254.2 | 255.4 | 255.4 |
| Purchases | 20.7 | 16.3 | 21.8 |
| Sales | (35.0) | (12.6) | (37.4) |
| Repayment of syndicate loan | (7.7) | - | - |
| Realised gain | 10.5 | 7.0 | 20.2 |
| Unrealised (loss)/gain | (2.0) | 2.8 | (6.6) |
| Foreign exchange gain | 0.7 | 0.7 | 0.8 |
| Closing position | 241.4 | 269.6 | 254.2 |
14 Insurance and reinsurance contract assets and liabilities
14a Analysis by measurement component
i) Insurance contracts issued
The tables below set out the estimated present value of future cash flows, the risk adjustment for non-financial risk and the contractual service margin ("CSM") for insurance contracts issued.
|
| Present value of future cash flows | Risk adjustment for non-financial risk | CSM | Total |
|
| $m | $m | $m | $m |
| Insurance contract assets | 123.5 | (12.9) | (26.5) | 84.1 |
| Insurance contract liabilities | (6,324.0) | (711.3) | (314.5) | (7,349.8) |
| Net balance at 1 January 2023 | (6,200.5) | (724.2) | (341.0) | (7,265.7) |
| Insurance contract assets | 99.3 | (1.7) | (5.4) | 92.2 |
| Insurance contract liabilities | (6,624.6) | (883.0) | (350.7) | (7,858.3) |
| Net balance at 30 June 2023 | (6,525.3) | (884.7) | (356.1) | (7,766.1) |
| Insurance contract assets | 103.8 | (1.2) | (1.1) | 101.5 |
| Insurance contract liabilities | (6,874.5) | (774.8) | (342.9) | (7,992.2) |
| Net balance at 31 December 2023 | (6,770.7) | (776.0) | (344.0) | (7,890.7) |
| Insurance contract assets | 117.5 | (1.0) | (0.5) | 116.0 |
| Insurance contract liabilities | (6,916.1) | (748.9) | (453.7) | (8,118.7) |
| Net balance at 30 June 2024 | (6,798.6) | (749.9) | (454.2) | (8,002.7) |
ii) Reinsurance contracts held
The tables below set out the estimates of the present value of future cash flows, risk adjustment for non-financial risk and CSM for reinsurance contracts held.
|
| Present value of future cash flows | Risk adjustment for non-financial risk | CSM | Total |
|
| $m | $m | $m | $m |
| Reinsurance contract assets | 1,853.3 | 184.6 | 137.4 | 2,175.3 |
| Reinsurance contract liabilities | (193.8) | 12.7 | 19.9 | (161.2) |
| Net balance at 1 January 2023 | 1,659.5 | 197.3 | 157.3 | 2,014.1 |
| Reinsurance contract assets | 2,000.0 | 288.3 | 204.5 | 2,492.8 |
| Reinsurance contract liabilities | (298.3) | (3.5) | 8.2 | (293.6) |
| Net balance at 30 June 2023 | 1,701.7 | 284.8 | 212.7 | 2,199.2 |
| Reinsurance contract assets | 2,143.4 | 166.2 | 117.1 | 2,426.7 |
| Reinsurance contract liabilities | (404.4) | 58.4 | 12.5 | (333.5) |
| Net balance at 31 December 2023 | 1,739.0 | 224.6 | 129.6 | 2,093.2 |
| Reinsurance contract assets | 2,108.3 | 153.3 | 161.1 | 2,422.7 |
| Reinsurance contract liabilities | (487.2) | 21.1 | 76.3 | (389.8) |
| Net balance at 30 June 2024 | 1,621.1 | 174.4 | 237.4 | 2,032.9 |
14b Analysis of the liability for remaining coverage and the liability for incurred claim
i) Insurance contracts issued
The tables below analyse insurance contract assets and liabilities between the liability for remaining coverage ("LRC") and the liability for incurred claims ("LIC") for insurance contracts issued.
|
| LRC | LIC | Total | |
|
| Excluding Loss Component | Loss Component | ||
|
| $m | $m | $m | $m |
| Insurance contract assets | 87.2 | - | (3.1) | 84.1 |
| Insurance contract liabilities | (824.7) | (10.1) | (6,515.0) | (7,349.8) |
| Net balance at 1 January 2023 | (737.5) | (10.1) | (6,518.1) | (7,265.7) |
| Insurance contract assets | 92.0 | - | 0.2 | 92.2 |
| Insurance contract liabilities | (717.8) | (9.7) | (7,130.8) | (7,858.3) |
| Net balance at 30 June 2023 | (625.8) | (9.7) | (7,130.6) | (7,766.1) |
| Insurance contract assets | 101.7 | - | (0.2) | 101.5 |
| Insurance contract liabilities | (848.8) | (8.3) | (7,135.1) | (7,992.2) |
| Net balance at 31 December 2023 | (747.1) | (8.3) | (7,135.3) | (7,890.7) |
| Insurance contract assets | 115.0 | - | 1.0 | 116.0 |
| Insurance contract liabilities | (873.5) | (2.7) | (7,242.5) | (8,118.7) |
| Net balance at 30 June 2024 | (758.5) | (2.7) | (7,241.5) | (8,002.7) |
ii) Reinsurance contracts held
The tables below analyse reinsurance contract assets and liabilities between the asset for remaining coverage and asset for incurred claims for reinsurance contracts held.
|
| Remaining coverage | Incurred claims | Total |
|
| $m | $m | $m |
| Reinsurance contract assets | 24.9 | 2,150.4 | 2,175.3 |
| Reinsurance contract liabilities | (254.7) | 93.5 | (161.2) |
| Net balance at 1 January 2023 | (229.8) | 2,243.9 | 2,014.1 |
| Reinsurance contract assets | 189.6 | 2,303.2 | 2,492.8 |
| Reinsurance contract liabilities | (359.3) | 65.7 | (293.6) |
| Net balance at 30 June 2023 | (169.7) | 2,368.9 | 2,199.2 |
| Reinsurance contract assets | 758.4 | 1,668.3 | 2,426.7 |
| Reinsurance contract liabilities | (1,080.3) | 746.8 | (333.5) |
| Net balance at 31 December 2023 | (321.9) | 2,415.1 | 2,093.2 |
| Reinsurance contract assets | 181.2 | 2,241.5 | 2,422.7 |
| Reinsurance contract liabilities | (422.2) | 32.4 | (389.8) |
| Net balance at 30 June 2024 | (241.0) | 2,273.9 | 2,032.9 |
14c Future CSM release
The tables below show when the Group expects to release the closing CSM to the profit or loss, in appropriate future time bands which are based on calendar years (i.e 1 January to 31 December). It is presented for both insurance contracts issued and reinsurance contracts held.
|
| 30 June 2024 | 30 June 2023 | 31 December 2023 |
| Insurance contracts issued | $m | $m | $m |
| Number of years until expected to be recognised |
|
|
|
| 1 | 294.2 | 241.6 | 299.0 |
| 2 | 116.1 | 82.7 | 14.7 |
| 3 | 15.9 | 10.4 | 10.5 |
| 4 | 10.8 | 7.4 | 7.6 |
| 5 | 7.0 | 5.5 | 5.1 |
| 6-10 | 10.2 | 8.5 | 7.1 |
| Total | 454.2 | 356.1 | 344.0 |
|
| 30 June 2024 | 30 June 2023 | 31 December 2023 |
| Reinsurance contracts held | $m | $m | $m |
| Number of years until expected to be recognised |
|
|
|
| 1 | 127.3 | 113.8 | 118.7 |
| 2 | 100.0 | 82.2 | 3.7 |
| 3 | 3.9 | 4.9 | 2.6 |
| 4 | 2.4 | 3.3 | 1.8 |
| 5 | 1.6 | 2.6 | 1.2 |
| 6-10 | 2.2 | 5.9 | 1.6 |
| Total | 237.4 | 212.7 | 129.6 |
14d Changes in accounting estimates
Insurance and reinsurance contract assets and liabilities included within the Group's statement of financial position are made up of multiple components. The liability for remaining coverage includes an element of the present value of future cash flows, a risk adjustment for non-financial risk and the CSM. The liability for incurred claims includes the remainder of the present value of future cash flows and a risk adjustment for non-financial risk. For portfolios of issued insurance contracts that are onerous, a loss component is included within the LRC and recognised in profit or loss upon initial recognition. No loss component is recorded for reinsurance contracts held.
The present value of future cash flows is sensitive to changes in accounting estimates, in particular the estimation of future cash flows which are made on a best estimate basis, and discount rates. As estimates of premiums, expenses and claims change, this is reflected within the present value of future cash flows, in addition to the incorporation of cash flows relating to new business and crystallisation of expected cash flows relating to in-force business. The risk adjustment changes as amounts are released from in-force business, offset by the recognition of new business and any changes to the cost of capital applied. An explanation of how amounts have moved in the year is set out in Note 2. This includes an accrual for additional premiums and a reduction of recoveries contributing to an overall expense on the amount recoverable from reinsurers for incurred claims following a change in accounting estimate in relation to one of our major reinsurance contracts in the Specialty Risks division.
Future cash flows
The Group has estimated the amount, timing and probability of future cash flows. Estimates are formed by applying assumptions about past events, current conditions and forecasts of future conditions. These have been outlined below:
• Future expected premium cash flows are based on data entered into underwriting systems. These have a level of estimate embedded for certain contracts, with payment/settlement patterns used to determine timing.
• Gross and reinsured claims payments are determined using an approach whereby cash flows are set at a Year of Account and reserving class level based on the latest quarterly reserving exercise.
• Expenses are deemed to be within the contract boundary, and therefore included in the cash flows, when these are directly attributable to fulfilling insurance contracts.
• Lapses/cancellations are projected by applying assumptions determined through statistical measures based on the Group's experience. These vary by product type, policy duration and sales trends.
Discount rates
The discount rates applied to expected future cash flows in measuring insurance contract liabilities have been determined using the bottom-up approach. This method takes the risk-free rates and adjusts for an illiquidity premium. Risk-free rates are derived using government yield curves denominated in the same currency as the product being measured. The illiquidity premium represents the differences in the liquidity characteristics between the financial assets used to derive the risk-free yield and the insurance contract liability characteristics. Judgement has been applied by management in determining these liquidity characteristics. The illiquidity premium is sourced from Moody's and adjusted to reflect the Group's own asset portfolio. The discount rates applied in determining the Group's IFRS 17 results are as follows:
| 30 June 2024 | 1 Year | 3 Year | 5 Year |
| USD | 5.4 % | 4.9 % | 4.7 % |
| CAD | 5.1 % | 4.5 % | 4.3 % |
| GBP | 5.0 % | 4.6 % | 4.4 % |
| EUR | 3.5 % | 3.1 % | 3.0 % |
| 30 June 2023 | 1 Year | 3 Year | 5 Year |
| USD | 5.7 % | 5.0 % | 4.6 % |
| CAD | 5.7 % | 5.0 % | 4.5 % |
| GBP | 6.1 % | 5.8 % | 5.4 % |
| EUR | 3.8 % | 3.4 % | 3.2 % |
| 31 December 2023 | 1 Year | 3 Year | 5 Year |
| USD | 5.1 % | 4.5 % | 4.3 % |
| CAD | 5.3 % | 4.4 % | 4.1 % |
| GBP | 4.9 % | 4.0 % | 3.8 % |
| EUR | 3.5 % | 2.7 % | 2.6 % |
Risk adjustment
Estimation of the risk adjustment for non-financial risk is based on the underwriting risk element of the Solvency II internal model which captures all of the material exposure elements for the Group. IFRS 17 does not prescribe a specific methodology for the calculation of the risk adjustment for non-financial risk and the Group has elected to use a cost of capital approach. The Group's cost of capital represents the return required to compensate for the exposure to non-financial risk, in order to comply with internal economic capital requirements. Under this method the risk adjustment is determined by applying a cost rate to the present value of projected capital relating to non-financial risk. The risk adjustment for insurance contracts is expected to have a reserve confidence level in the 80th to 90th percentile range.
As at 30 June 2024, the reserve confidence level was at the 88th percentile (30 June 2023: 89th percentile, 31 December 2023: 85th percentile), which is based on the outcomes of the recent Q1 2024 reserve review exercise. The results of this reserve review underpin the HY24 IFRS 17 financials.
15 Other reserves
|
| 30 June 2024 | 30 June 2023 | 31 December 2023 |
|
| $m | $m | $m |
| Employee share options reserve | 47.5 | 27.0 | 50.7 |
| Employee share trust reserve | (57.5) | (57.4) | (63.5) |
| Capital redemption reserve | 1.2 | - | - |
| Total other reserves | (8.8) | (30.4) | (12.8) |
On 7 March 2024, Beazley plc announced to the market its intention to return up to $325.0m of surplus capital to its shareholders through a share repurchase programme running to 31 December 2024. Purchases began on 8 March 2024 and at the balance sheet date, 20.5m ordinary shares had been purchased for total consideration of $173.1m, of which 0.8m were held as treasury shares pending cancellation. At 30 June 2024, there were 654.9m ordinary shares in issue.
The price of shares purchased as part of the buyback scheme is recognised through retained earnings. On their cancellation, the nominal value of the ordinary shares is deducted from share capital and the equivalent amount is recognised within the capital redemption reserve.
16 Related party transactions
Aside from the changes noted below, the related party transactions of the Group are consistent in nature and scope with those disclosed in Note 32 of the Group's consolidated financial statements for the year ended 31 December 2023.
• From 1 January 2024, the reinsurance agreement between syndicates 2623 and 623 with 6107 was amended so that only Cyber business was ceded to syndicate 6107.
• From 1 January 2024, syndicate 3623 entered into a reinsurance agreement with syndicate 6107 to cede a portion of Cyber business to that syndicate.
• From 1 January 2024, syndicates 623 and 2623 entered into an agreement to cede a portion of its Property Treaty business to the Group's internal reinsurer, Beazley Insurance dac.
• For the 2024 Year of Account, the Group is providing 20% capacity to syndicate 5623.
17 Subsequent events
From 1 July 2024 until the approval of these interim financial statements on 7 August 2024, Beazley plc purchased 9.0m of its ordinary shares for a consideration of $76.1m pursuant to the Share Buyback programme announced on 8 March 2024. Of these shares, 7.8m were cancelled by 7 August 2024. The remaining 1.2m are held in treasury and will be cancelled in due course.
On 6 August 2024, Beazley plc announced that effective immediately, the Board had appointed Carolyn Johnson as a member of the Nomination and Risk Committees and Bob Stuchbery as a member of the Nomination Committee.
Alternative performance measures ("APMs")
Beazley plc uses APMs to help explain its financial performance and position. These measures are not defined under IFRS. The Group is of the view that the use of these measures enhances the usefulness of our financial reporting and allows for improved comparison to industry peers.
Information on APMs used by the Group is set out below. Unless otherwise stated, amounts are disclosed in millions of dollars ($m).
Insurance written premiums & net insurance written premiums
Insurance written premiums ($m) is calculated by deducting the reinstatement premiums and profit commissions from the gross premiums written. Net insurance written premiums ($m) is calculated by adding insurance ceded premiums to this result. These APMs represent management's view of premiums written in each period, similar to the previous "Gross premiums written" metric reported under IFRS 4. The primary difference between insurance written premiums and insurance revenue relates to the deferral and earning of income over the period in which coverage is provided.
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| Insurance written premiums | 3,123.3 | 2,921.1 | 5,601.4 |
| Earnings adjustment | (392.7) | (293.0) | (159.0) |
| Insurance revenue | 2,730.6 | 2,628.1 | 5,442.4 |
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| Insurance ceded premiums | (536.8) | (571.5) | (905.2) |
| Earnings adjustment | 201.5 | 32.9 | (222.1) |
| Allocation of reinsurance premiums | (335.3) | (538.6) | (1,127.3) |
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
|
| $m | $m | $m |
| Insurance written premiums | 3,123.3 | 2,921.1 | 5,601.4 |
| Add insurance ceded premiums | (536.8) | (571.5) | (905.2) |
| Net insurance written premiums | 2,586.5 | 2,349.6 | 4,696.2 |
Contractual Service Margin ("CSM") sustainability index
The CSM reflects the expected profit of contracts within the liability for remaining coverage. The sustainability index (%) is calculated by dividing the closing CSM by the opening CSM at each period. A ratio of 100% and above shows that the expected profit within the LRC is higher than the previous valuation.
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | 6 months ended 30 June 2023 | Year to 31 December 2023 | Year to 31 December 2023 |
|
| Gross | Net | Gross | Net | Gross | Net |
| Closing CSM ($m) | 454.2 | 216.8 | 356.1 | 143.4 | 344.0 | 214.4 |
| Divided by opening CSM ($m) | 344.0 | 214.4 | 341.0 | 183.7 | 341.0 | 183.7 |
| CSM sustainability index | 132% | 101% | 104% | 78% | 101% | 117% |
Claims, expense & combined ratios
Claims ratio (%) is calculated as insurance service expenses less directly attributable expenses, net of reinsurance recoveries, divided by insurance revenue net of reinsurance ceded revenue. Expense ratio (%) is calculated as the sum of insurance acquisition cash flows amortisation and other directly attributable expenses, divided by insurance revenue net of reinsurance ceded revenue. Combined ratio (%) is calculated as insurance service expenses net of reinsurance recoveries, divided by the insurance revenue net of reinsurance ceded revenue. This is also the sum of the claims and expense ratios. The combined ratio below is shown with and without the impact of discounting.
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
| Insurance service expenses ($m) | 1,824.9 | 2,080.5 | 3,592.6 |
| Less other directly attributable expenses ($m)1 | (757.6) | (726.0) | (1,362.6) |
| Less current claims recovered and past service movements ($m) | 10.2 | (334.1) | (532.1) |
| Net claims ($m) | 1,077.5 | 1,020.4 | 1,697.9 |
| Insurance revenue ($m) | 2,730.6 | 2,628.1 | 5,442.4 |
| Less allocation of reinsurance premium ($m) | (335.3) | (538.6) | (1,127.3) |
| Divided by net insurance revenue ($m) | 2,395.3 | 2,089.5 | 4,315.1 |
| Claims ratio | 45% | 49% | 39% |
| Directly attributable expenses ($m)1 | 757.6 | 726.0 | 1,362.6 |
| Divided by net insurance revenue ($m) | 2,395.3 | 2,089.5 | 4,315.1 |
| Expense ratio | 32% | 35% | 32% |
| Combined ratio (discounted) | 77% | 84% | 71% |
| Effect of discounting | 4% | 4% | 3% |
| Combined ratio (undiscounted) | 81% | 88% | 74% |
1 Directly attributable expenses are comprised of insurance acquisition cash flows amortisation, other directly attributable expenses, and current expense recovered and past service movements per Note 2.
Net assets per share & net tangible assets per share
Net assets per share is the ratio (in pence and cents) calculated by dividing the net assets or total equity of the Group by the number of shares in issue at the end of the period, excluding those held by the employee benefits trust. Net tangible assets per share excludes intangible assets from net assets in the above calculation.
The basis of this calculation has not changed as a result of the share buyback. The share buyback has resulted in a reduction of 19.7m shares in issue over the period (offset by 3.1m of allotments relating to employee share schemes and releases from the EBT). The impact of the share buyback on net assets can be seen in the Condensed Consolidated Statement of Changes in Equity.
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
| Net assets ($m) | 4,180.6 | 3,123.6 | 3,882.1 |
| Less intangible assets ($m) | (178.4) | (134.8) | (165.3) |
| Net tangible assets ($m) | 4,002.2 | 2,988.8 | 3,716.8 |
| Divided by the shares in issue at the period end (millions)1: | 646.1 | 663.5 | 662.7 |
| Net assets per share (cents) | 647.1 | 470.8 | 585.8 |
| Net tangible assets per share (cents) | 619.4 | 450.5 | 560.9 |
| Converted at spot rate: | 0.78 | 0.80 | 0.80 |
| Net assets per share (pence) | 504.7 | 376.6 | 468.6 |
| Net tangible assets per share (pence) | 483.1 | 360.4 | 448.7 |
1 Shares in issue at the period end exclude those held by the employee benefits trust.
Return on equity
Return on equity (%) is calculated by dividing the consolidated profit after tax by the average equity for the period, calculated as the average of the opening and closing equity positions. The basis of this calculation remains unchanged from previous periods following the share buyback.
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
| Profit after tax ($m) | 571.6 | 284.1 | 1,026.8 |
| Divided by average total equity ($m) | 4,031.4 | 3,038.8 | 3,418.6 |
| Annualised return on equity | 28% | 18% | 30% |
Investment return
Investment return (%) is calculated by dividing the net investment income by the average financial assets at fair value and cash and cash equivalents held by the Group over the period.
|
| 6 months ended 30 June 2024 | 6 months ended 30 June 2023 | Year to 31 December 2023 |
| Net investment income ($m) | 251.7 | 143.9 | 480.2 |
| Opening invested assets: |
|
|
|
| Financial assets at fair value ($m) | 9,665.5 | 8,345.6 | 8,345.6 |
| Cash and cash equivalents ($m) | 812.3 | 652.5 | 652.5 |
| Invested assets at the beginning of the period ($m): | 10,477.8 | 8,998.1 | 8,998.1 |
| Closing invested assets: |
|
|
|
| Financial assets at fair value ($m) | 9,717.3 | 8,679.8 | 9,665.5 |
| Cash and cash equivalents ($m) | 945.6 | 964.3 | 812.3 |
| Invested assets at the end of the period ($m): | 10,662.9 | 9,644.1 | 10,477.8 |
| Divided by average invested assets ($m) | 10,570.4 | 9,321.1 | 9,738.0 |
| Annualised investment return | 4.8% | 3.0% | 4.9% |
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