- Share price rallies on consensus beating earnings
- Combined ratio guidance upgraded for 2022.
- Cyber insurance drives profitability
Shares in insurer Beazley (BEZ) jumped over 10% in early trading after the group reported results ahead of market expectations, and upgraded its combined ratio guidance to the high 80's for 2022 from a previous guidance of around 90%.
Profit before tax of $22.3 million is 41% ahead of consensus ($15.8 million), driven by a better combined ratio of 87%, versus a expectations of 90.4%.
The combined ratio is calculated as expense claims and costs divided by the earned premium, and is a simplified way of measuring an insurance company’s profitability and financial health.
This result marks Beazley’s best first half underwriting result since 2015.
Premiums grew 26% versus a consensus of 23%. Premium rates on renewal have accelerated to 18% marginally ahead of a 17% increase in the first quarter.
CYBER SECURITY A SPARKLING PERFORMER
Cyber performance has been separately disclosed for the first time in today’s first half results.
There has been a striking improvement in the combined ratio for the division, which has fallen to 74% versus a figure of 91% in 2021.
Cyber attacks are becoming an increasing concern amongst corporates with management increasingly aware that their insurance cover is inadequate.
Beazley have established themselves as recognised experts in the cyber insurance market.
Beazley Breach Response is the group’s signature product and protects clients from malware, ransomware and other cyber threats.
It has provided Beazley with a first mover advantage in the sector that has been strengthened by its ability to also offer risk management services.
EXPERT VIEWS
Numis analyst Nick Johnson said ‘Upgrading our profit before tax forecasts today leaves us 25%/26% ahead of consensus for full year 2022/2023.
‘Beazley is our key pick of the Lloyd’s companies’.
Peel Hunt commented: ‘Overall, we see this as a good set of first half results and we reiterate our add recommendation with the shares trading at 1.8x tangible net asset value (TNAV), for returns that are moving towards the high teens’.
