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    Beazley plc trading statement for the three months ended 31 March 2016

    Overview

    • Premiums grew by 7% to $583m (2015: $546m)
    • Premium rates on renewal business decreased by 1%
    • Year to date investment return of 0.7%

    Andrew Horton, Chief Executive Officer, said: 

    "The continued expansion of our underwriting teams, including a London based small business team focusing on healthcare professional liability business, helped us to grow our top line by 7% in the first quarter of the year, despite the continued competitive market conditions which have characterised recent periods.

    We are delighted that our shareholders approved the scheme of arrangement to revise our structure and the group is now run from the UK." 

    31 March 201631 March 2015% increase
    Gross premiums written ($m) 583 546 7
    Investments and cash ($m) 4,329 4,289 1
    Year to date investment return 0.7% 1.0%
    Rate decrease (1%) (1%)

    Premiums

    Gross premiums written for the three months ended 31 March 2016 grew by 7% to $583m when compared to the equivalent period of 2015.

    Specialty lines, our largest division, achieved premium growth of 15% year on year, writing $261m in the first three months of 2016. The acquisition of the portfolio underwritten by our new healthcare small business team contributed a one-off $30m of gross premiums in the first quarter.  Our life, accident and health division has also experienced growth in the US and Australia thus far in 2016.

    Our performance to the end of March 2016 by business division is:

    Gross premiums written
    31 March 2016
    Gross premiums written
    31 March 2015
    % increase / (decrease)Q1 2016 Rate change
    $m$m%%
    Life, accident & health 48 36 33 (3)
    Marine 74 80 (7) (5)
    Political risk & contingency 30 33 (9) (4)
    Property 81 83 (2) (2)
    Reinsurance 89 88 1 (5)
    Specialty lines 261 226 15 2
    OVERALL 583 546 7 (1)

    Rates on renewal business decreased by 1% across the portfolio as a whole.  The rating environment remains highly competitive, particularly in relation to large risk and catastrophe exposed lines of business.  Specialty lines saw rates on renewal business increase by 2% overall in the first quarter of the year, with the main rate increases coming from our technology lines of business and our small business teams.

    Business update

    We continue to be an attractive employer and have grown our underwriting teams in most geographies in addition to adding the new underwriting team mentioned above to our London office. 

    Our shareholders approved a scheme of arrangement in March. This was executed in April, resulting in the movement of our domicile to the UK.  As communicated previously, this re-organisation will have no material effect on the strategy or financial performance of the group.

    Claims update

    The level of claims notifications during the first quarter of the year continued to be encouraging and the group expects the combined ratio for the first half of 2016 to be better than average if this claims trend continues until 30 June.

    Investments

    As at the end of March our portfolio allocation was as follows:

    31 March 201631 March 2015
    AssetsAllocationAssetsAllocation
    $m%$m%
    Cash and cash equivalents 474 10.9 394 9.2
    Sovereign, quasi-sovereign and
    supranational
    1,433 33.1 1,729 40.3
    Corporate debt
    • Investment grade
    • Non-investment grade
    Senior secured loans Asset backed securities
    1,722
    76
    86
    7
    39.7
    1.8
    2.0
    0.2
    1,077
    74
    106
    350
    25.1
    1.7
    2.5
    8.2
    Core portfolio 3,798 87.7 3,730 87.0
    Equity linked funds 97 2.2 139 3.2
    Hedge funds 331 7.7 360 8.4
    Illiquid credit assets 103 2.4 60 1.4
    Overall portfolio 4,329 100.0 4,289 100.0

    Investment income for the three months to 31 March 2016 was $29.6m, or 0.7% (2015 full year investment return: $57.6m, 1.3%). This is a good outcome in the context of low yields and volatile financial markets. The return was driven by falling yields on our fixed income investments and the continued good performance of the hedge fund portfolio.

    The weighted average duration of our fixed income portfolio was 1.5 years at 31 March 2016 (31 December 2015: 1.7 years).