By Christian Moess Laursen
Beazley, the specialty insurer, announced its interim results for the first half of the year. Let’s take a closer look at the key details:
Pretax Profit
Beazley recorded a pretax profit of $366.4 million in the first half-year, a slight increase compared to the prior-year period’s $364.9 million. However, it fell short of the market consensus expectation of $457.6 million. This consensus was derived from an average of twelve broker’s estimates compiled by Visible Alpha.
Insurance Revenue
The FTSE 100-listed group achieved insurance revenue of $2.63 billion, showing growth from $2.36 billion in the previous year and surpassing the consensus expectation of $2.38 billion.
Key Observations
-
Accounting Timing Issues: According to Peel Hunt analysts Andreas Van Embden and Mark Williamson, part of the reason for falling short of the pretax profit market consensus was due to the company’s recent change in accounting regime. They explained that the miss occurred because of higher expenses in the first half, which were related to the timing of IFRS 17 premium earn-through that is partially deferred to the second half. Beazley recently transitioned to the IFRS 17 accounting standard from IFRS 4.
-
Outlook: Despite not meeting the pretax profit consensus expectations, Beazley reaffirmed its full-year guidance. The company expects gross premiums to increase in the mid-teens percentage range and net premiums to increase in the mid-twenties.
-
Capital Position & Solvency II Ratio: Beazley stated that it is on track to complete the deployment of last year’s capital raise in 2024. Moving forward, it plans to disclose surplus capital based on the Solvency II basis. As of the end of the half-year period, the Solvency II ratio stood at 273%, comfortably exceeding the target minimum of 170%. However, it is expected that the ratio will decrease by December 2023 due to projected business growth for 2024, as pointed out by Numis analyst Nick Johnson.
