Agenda Introduction – Andrew Horton (Chief Executive Officer) Update on our US Operations – Adrian Cox (Head of Specialty Lines) Update on Europe/Brexit – Adrian Cox & Andrew Pryde (Chief Risk Officer) Outlook – Andrew Horton Q&A
Update on our US Operations/Europe Adrian Cox
3
Agenda • US strategy • Cyber insurance • International strategy
4
Snapshot of US 2015
2016 (F)
58.5
78.8
Professional Liability
134.6
181.9
Management Liability
59.9
59.8
Small Business
47.4
54.8
Cyber small
31.8
44.2
Cyber
144.0
177.3
Total SL
476.3
596.8
Property
142.8
136.6
Healthcare
Marine Political, Contingency & Terrorism
4.1
7.0
17.8
21.9
Life, Accident & Health
14.8
18.5
655.8
780.7
Total US
5
US Strategy • Beazley specialist products underwritten locally • Focus on mid market and SME • Maximising advantages of platform Local Admitted
• Co-ordinated defined distribution strategy • Concentration of footprint
6
US footprint – 2010 - 2016 San Francisco (CA) Underwriters Products
Los Angeles (CA) Underwriters Products
2010 11 3
2010 2 1
Dallas (TX) Underwriters Products
* Excludes Homeworkers
Minneapolis (MN) Underwriters Products
2016 14 8
2010 0 0
2016 2 1
Chicago (IL) Underwriters Products
2010 19 7
2016 23 8
2016 7 6
2010 0 0
2016 7 6
Miami (FL) Underwriters Products
2010 0 0
Boston (MA) Underwriters Products
2010 9 2
2016 5 3
Farmington (CN) Underwriters Products
2010 7 4
2016 6 2
New York (NY) Underwriters Products
2010 15 5
2016 25 8
Philadelphia (PA) Underwriters Products
2010 10 4
2016 13 6
Atlanta (GA) Underwriters Products
2010 11 3
2016 21 9
2016 3 3
Total Underwriters Av. Products per office
2010 84 2.6
2016 126 7
5.5
Distribution • We currently hold 455 broker appointments o Since 2013 we have : Appointed 110 new brokers Terminated 370 broker appointments Instigated managed distribution strategy 2013
2015
All US brokers grew by 12% Top 10 brokers grew by 42%
All brokers grew by 21% Top 10 brokers grew by 54%
2014
2016
All brokers grew by 19% Top 10 brokers grew by 43%
All brokers grew by 17% ytd Top 10 grew by 8% ytd
8
Growth of data breach insurance
Open market
Small Embedded Business
Total
300
2009
13.5
0.0
0.1
13.6
2010
25.2
0.0
1.7
26.8
2011
42.1
1.8
3.1
47.0
2012
62.4
9.6
5.9
77.8
150
2013
84.7
10.7
9.2
104.6
100
2014
117.9
11.0
16.6
145.4
2015
169.1
14.1
28.0
211.2
2016
202.1
33.6
38.1
273.8
250 200
50 0 2009 2010 2011 2012 2013 2014 2015 2016
Data breach & privacy insurance • Response to regulatory environment • BBR is an engineered product • Emergence of malicious breaches • Tail risk • Reinsurance • Opportunities for growth in product and premium
10
Invest in products fit for future • Excluding the impact of cyber liability, 15% of 2016 premium will come from new Product lines Income From New Lines of Business 175.0 150.0 125.0 100.0 75.0 50.0 25.0 0.0 2008
2009
2010 Environmental
2011 Misc Med
2012 HML
2013 R&W
Crime
2014 Surety
2015
2016
International – why now ? • The need for global solutions • Cyber regulation in Europe • M&A Activity is distracting competitors • Some key competitors are struggling with profitability
12
International – what are we doing ? • Converting Beazley Re to Beazley Insurance Company Europe • New FI team – underwriters in UK, France and Germany • Hubs in Spain, Singapore and Miami • Target multiple hundreds of millions of GWP
2016
2017 Management Liability
2018 Cyber
2019 Professional Liability
2020 Healthcare
2021
Small business
13
International – our aspiration for 2020? Oslo
UK
2016
2020
UW’s
11
35
Dublin
2016
2020
UW’s
5
20
2016
2020
UW’s
1
1
Munich
2016
2020
UW’s
4
9
Leeds
Birmingham
Manchester Ipswich
London
Paris
Oslo
Paris
Munich
Singapore
Spain
2016
2020
UW’s
0
7
Barcelona Singapore
2016
2020
UW’s
12
18
14
Update on Brexit Andrew Pryde
15
Thursday 23 June 2016
On Thursday 23 June 2016, the UK held a referendum on the following question:
“Should the United Kingdom remain a member of the European Union or leave the European Union?”
The result was that 51.9% of those who turned out voted to leave the European Union.
16
Brexit - the current challenges The new UK government has yet to set out its proposal… Leading to press agitation and political posturing…
Leading to uncertainty…
Leading to volatility…
However, we still need to take action and prepare…
17
Beazley’s activity
Insurance portfolio Passporting / Licences Exchange rates Asset risk Other
• Beazley – circa £90m (6%) of premium at risk • Reduces to 3% excluding Treaty & Marine
• Monitor Lloyd’s progress • Application to change Beazley Re licence • Assume regulatory regime is unchanged - at least for now… • Benefit for expenses • Increases value of the company given sterling dividends • However, inflation risk…
• Liabilities, and therefore assets, are US focussed • Benefit from the equities rally
• Reviewing wording requirements • Identified potentially affected staff in London • Reviewed contracts with European suppliers
18
Outlook • Expecting a good result in 2016 despite rising interest rates • We have exciting growth opportunities in both the US and Europe/RoW • In particular data breach insurance (cyber) continues to grow • We have bolstered our capital resources with $250m of debt • Our plan expects 2/3% rate reduction in 2017 so RoEs will reduce • Maintain our guidance for 2017 of high single digit premium growth
In summary
Any questions?
• Good performance in 2012, on track against our budgets • The external environment is relatively unchanged • We aim to grow in 2013 in line with our vision with an emphasis on higher margin, short tail classes
