Beazley plc

Okay, good morning, everyone. First of all, please enjoy your party favors that we have provided this morning. It's a reward for turning up. For those of you who are dialing in online, unfortunately, we will not be able to send you a bag, but thank you for dialing in. Unfortunately, as is always the way, I seem to have picked up a cold in the last couple of days, so if I have to sneeze, please excuse me. I will try to make sure I mute myself before I do so. But I'm delighted to welcome you to our results presentation. following what's been record profits for the second year in a row, with profits of just over $1.4 billion, which allows us to return $700 million to shareholders this year through an increase in our dividend to 25p and a share buyback program this year of $500 million. It has been another challenging year for the industry. and a more normalised attritional loss ratio for us in the second half of the year, alongside an active hurricane season, as well as a number of systemic cyber events. But even with all this as a backdrop, and I'll just move to the highlight slide, we have delivered an undiscounted combined ratio of 79%, which is within our guidance of around 80% that we provided at the half-year deadline. I think that's testament both to our underwriting and our claims handling capabilities and our commitment to growing profitably. We had a good second half, actually, particularly in the fourth quarter, where we grew more than we had for the first three quarters of the year, which meant we were able to deliver year-on-year growth of 10% in all. Part of this does reflect the consolidation into our account of the staff underwriting scheme. And Barbara will provide a little more detail on that later on. But excluding that, our full year growth was still 8.5%, with which we are very pleased. And that's despite the fact that in the second half of the year, we did lose a little rate. And we're in a marketplace where it's getting a little bit more difficult to grow because most insurers are looking to do that. But as in 2024, our property team led the way with a 26% increase in insurance written premiums. following last year's 64% growth. And I think we were tested a little more this year than last, with a $150 billion cat year again, and a windstorm season that was more in line with expectations. And I think that shows that our expansion into the property market has been driven by intelligent underwriting. And Paul will talk a little bit more about that later. It's also been another active year for us in our cyber division, sponsoring a number of new cyber cat bonds, and an ILW that we announced in our capital markets day. We will continue to explore how we can invest in this market in the future. And in addition, the team announced Quantum, which is a new consortium backed by insurers and reinsurance, which allows us to deploy $100 million primary line size, which was very well received in the marketplace. We also brought in-house Beasley Security, which has helped that business grow. and we're very excited about the future of our consulting business. Before I pass over, I just thought I'd talk a little bit about sustainability of performance. This is the second year in a row that we've produced profits of over a billion dollars, so I thought I'd try and put that into some context. We first produced this exhibit last year and thought it would be worth repeating. As you may recall, back in 2024, we benchmarked ourselves against a range of US and Bermudian peers. We see our main competitors as those global specialty insurers or composite insurers with a large specialty division. Those are the people that we compete generally against in the US, in London, and around the world. We see ourselves as a global or an international specialty insurance company based here in London, but with strong franchises in North America and in Europe. So a list of comparable peers. is in the middle line with a list at the bottom of the page as to who they are, with the total shareholder return performance shown in the graph in purple. This year we've also added a line showing our UK specialty insurance, to whom we are often compared. And as you can see, against all our peer groups, we have performed strongly this last year. I thought I'd show an exhibit of our rolling return on equity over the last 10 years. And over the last five, which includes the COVID year, our average return on equity has been 17.7%. And over the last 10 years, which of course also includes the bottom of the last soft market, it's just over 15%. When we talk about capital allocation philosophy and benchmarks for our businesses across the group, we've always mentioned that our target is of a cross cycle return of 15%. Very few teams do this year in year out but over a rolling five or ten year period all our divisions should be able to deliver to this and the exhibit shows the overall performance since 2014 and whilst in any one year the results can be volatile and recognising that insurance is a cyclical business this diversified business that we have and the twin drivers we have of both underwriting and investment profit do give us the levers to deliver to our cross-cycle target. One of the more surprising things, I think, for the market about our results this morning was the increase in our dividend to 25p. We've always said that we have a progressive dividend of between five or 10%. It's generally been about five. But our growth did accelerate sharply since 2019 and the growth levels remain higher than our historical norms. Our view is that the ordinary dividends role is providing a generally predictable and reliable source of funds for our shareholders. And over the long term, it should broadly track premium growth. And you can see from this chart that there had been a gap growing since 2019. So the thinking behind the rebase and rebasing to 25p specifically is to bring those two back into more alignment. This is not something we expect to repeat unless we go through a similar growth spurt again. So we will be intending to return to our usual 5% to 10% growth next year, but now did feel the right time to bring the two back into sync, having successfully begun to harvest the profitable growth of the last few years. And with that, I will hand over to Paul.

Oh, sorry.

Thank you, everyone. Good morning. I'm Paul Bantic. I'm the group CEO. I've been five months in the role, so really excited to be able to talk to you around how the business is performing really well at the moment. Starting off with this slide, and what I really want to talk about here is our platform strategy. We have a product-led underwriting strategy, And underpinning this is our three platforms. And this is something that we've been talking about. And this allows us to really access business where we think we can generate the best returns. Europe is our newest platform. And of the three, we opened this in 2016. And we saw an increase for demand for our products out there. And we are very excited about the future growth potential that we have in Europe. North America, which includes both our admitted and non-admitted paper. And our wholesale platform, which allows us to write global business via Lloyds. We've been invested in Europe, and we actually have seen a lot of underwriters that we've added there in recent times, and we're very excited about around the future generation this will bring for us for growth. For our business written on the ground in the US, we'd previously been accessing the US ENS market via Lloyds. And as part of our platform strategy evolution, we set up our own ENS carrier onshore, which we started writing on last year. And this is something that we spoke to about at the half year as well. This has been going incredibly well for us. It began with our property business, and we're now seeing other lines starting to join and also transition to the E&S carrier. Due to the moving of the writing of our business on our E&S carrier, the proportion that's retained by the group, the growth numbers for America are slightly flattered in this slide, and the wholesale numbers are also slightly muted. So a more true reflection would be that growth in North America was 4%, and wholesale being 13%. I would say this is going to be a feature that you're going to see for a little while, particularly over the next couple of years as the remaining business also transitions. This, as we previously discussed, is going to leave us with a much simpler and more efficient business based around our three platforms, and that is the ultimate goal here. This is a slide where I wanted to talk about the diversification we have within our product suite. which is instrumental in enabling us to manage the market cycle, deploy capital where we see the best risk-reward dynamics. This chart shows how we've managed to evolve our business mix over the last 10 years through the cycle and navigate it. What you'll see at the bottom as well is the growth that we've achieved during this time, so the premiums along the bottom, and you can see that over time we've diversified our books. Our underwriting strategy is product-led, and that's opposed to geographically-led, which is incredibly important. It provides us with a number of benefits, including allowing us to be nimble, react quickly when conditions change, which they can do very quickly. We saw this with the cyber market hardening, the DNO market, the property market more recently. And when we see these moments of dislocation or hardening, we're very able to take advantage of them. You can see that with the cyber business over the years, you can see with the pink at the bottom there, the hard market in 21, 22. And then more recent times, you'll see how that's now moderated. So we're able to lean into the opportunities, drive diversification, and then show the moderation as market conditions change. On to property. Sorry. This really shows the outcomes of the opportunities we've taken advantage in the E&S space, as well as strong growth on our wholesale platform this year. The combined ratio is a little bit higher than last year, but still well within the hurdle rate we set ourselves as a business. Very sadly, we saw an active hurricane season, and post our growth, we're tested by hurricanes Helene and Milton. I would say that our numbers and the ranges that we gave for these remain unchanged from when we discussed them in November and during last year. And this is a testament to the team's not only expertise in this area, but how they've reshaped and reset the business in the property space post all the growth. The market has seen a slowdown in rate increases, and that was expected. And for us, that's looking like the 22% to the 1.3% this year. I would point out this is in line with what we're seeing in the market. Delivering an undiscounted combined ratio of 74% in a year of active hurricanes is a great result, demonstrating that rate adequacy here remains very strong. At this point, though, I would say it's going to be very challenging to say where the market will go on pricing, as conditions, as we've seen in the first two months of the year, are very changeable, especially given the recent sad wildfire activity. I'm going to come on to that in a little bit. So for each of the teams, we're going to show you the platform split, and obviously I spoke around how the transition to our E&S carrier is distorting numbers slightly in certain spots. So as we walk through these, I will also clarify how that's impacting each of our trading teams. This shows split for property. You can see the impact of the moving to the E&S carrier, and it does skew the numbers a little bit. Again, on a more reflective basis, we would have growth of 14% in North America and 24% in wholesale. The small reduction, you'll see it's currently a small share of our premium in Europe. The reduction there is driven by the treaty reinsurance business that we run in Europe. In the last two years, the team's been working very hard to think through our exposure to secondary perils in the property space, such as the recent tragic wildfires. What we've seen is our exposure to these have fallen as our property premiums have grown nearly threefold since the last California wildfire event in 2018. This is because we've been actively thinking about the portfolio and underwriting on a per peril and per location basis. The current view of our exposure, as we said this morning, is in the region of $80 million. The vast bulk of this is in the property reinsurance space for the wildfires. I want to note this is obviously an initial estimate and is not dependent on the final industry loss. This is approximately, and what this chart is showing us, double our loss experience from the 2018 California wildfires. However, our premiums have increased threefold and the industry loss is estimated to be approximately three times higher than 2018, which, as you'll see here, makes the reduction in the implied loss ratio for us. This demonstrates, I think, our ability to lean into the property opportunity, think about the secondary perils, manage our book of business, manage the diversification, and navigate the market well. On to cyber risks. We have continued on our cyber journey, and as Adrian said, there's been a lot of exciting things happening in the cyberspace as well. Another area has seen activity this year. We've seen some systemic events in nature, albeit none of them catastrophic. Our full-spectrum approach to cyber continues to help us navigate the market well, continues to help us support our clients. Beasley Security coming in-house will help us drive more innovation, more products, more solutions to help clients with their needs. We executed the first ever cyber catastrophe bond at the start of last year. We added further bonds this year. We added an ILW this year in 2024. And we've given you details on these. But I think the underlying message for me is that these are showing that we can and continue to build meaningful amounts of catastrophe protection with approximately one billion now placed. This has helped us not only hedge our cyber risk, but also bring more capital and third party capital into the market, which is what the cyber market needs to keep evolving. Another area that Adrian touched on was quantum. We launched quantum this year, which is a consortium of insurers, which can write the primary $100 million line. Our share of that is 50%. And what that ultimately is, is large clients looking for that confidence, looking for large capacity, looking for larger limits from their primary carrier for long-term stability. Because I think a lot of the large clients realize that the risk is constantly changing and morphing, and that cyber is going to be with us for a long time. Despite significant activity, the team has delivered a fantastic undiscounted combined ratio of 68%. We had good premium growth, predominantly driven by Europe, which is what we had expected and we'd been signaling for some time. However, we do think that although we're relatively flat in the US, this is a great result and demonstrates how we can navigate market conditions well. Our rates are more than adequate during the year. One factor that helped us to deliver the combined ratio that you're seeing is the liability reserves we added earlier in recent years. So the liability losses that we've been talking to you about was something called Pixels, which I know we spoke about previously. What you saw in 2023 was a strengthening of our cyber reserves for Pixels. More broadly now, the market is estimating that it's a 3 billion plus loss for Pixels, and we recognize this on our balance sheet early. This means that we're now showing releases in more normal course of business. With that being said, As I've alluded to, things can move incredibly quickly in the cyberspace, and we have to have an agile business. We've been saying that for a long time, and I do think that the market's going to need to grapple with increased frequency and severity. We've been hearing about these are increasing for the market for some time. We are seeing that, but less than the market's seeing. Liability reserves coming through on things like pixels. We've reserved these prudently in prior years. Smaller CAD events, I think we'll continue to see these. We don't have any major impacts from this year, but I'm sure they will continue. Rise in systemic coverage, driven by business interruption coverage, which we know every cyber policy contains. And for that, we need to continue to bring third-party capital into the market to be able to hedge at scale. And geopolitical situation can impact cyber threats. Could be positive, could be negative, but what we do know is geopolitics will increase frequency and severity at certain spots. Based on these, we do believe that market rates will need to show positive movement, which could alter the landscape for the cyber market going forward. But it's going to be a function of how all these different threats come together and crystallize that will drive that. Again, on this slide, you can see the growth in Europe, which the team's incredibly pleased with, and North America again. If we were to normalize this for the movement of business to our E&S carrier, you would see that in North America, we actually had a reduction of about 5%, with wholesale having growth of about 1%. Specialty risks. So as everyone's aware, the DNO and MA market suffered from a competitive rate environment and some demand shock in 2022, which is another good example of how conditions and how challenging they can be and how quickly they can change. In addition, specialty risk is an area of our book which is most exposed to social inflation. We continue to work actively to manage these key lines. It's a big focus for us and we're constantly thinking through how to shape and evolve the book and make sure that we are underwriting correctly for cycle management and social inflation. We have a strong diversified book of business specialty lines and that's the one thing that I've learned over the years. We are able to navigate the challenges because we have other products providing profitable growth at times when certain lines are in cycle management mode. We've been exercising underwriting discipline, taking some risk off the table, deploying capital in areas where conditions are more conductive to delivering our cross-cycle return on equity. And as mentioned by Adrian, at our half-year results, our aggregate reinsurance has an adjustable feature, which has impacted both premiums we paid this year and recoveries booked, which has a negative impact on specialty risks. However, I think it's really important to underscore that this programme remains intact. It's performing the role for which it's intended. And this is very much a one-off impact for us this year. Since the half year, we've seen a reduction in the combined ratio for specialty risks from 98 to 87, which is predominantly driven by prior year releases as we continue to reserve prudently and see reductions in prior years over time. We also, as we discussed, increased the loss pick for the 24, and this was already in the half year numbers. So that further shows how that reduction has come through. When we look at specialty on a platform basis, we can see that actually on a more realistic basis, the growth in North America was 6% and wholesale was 4%. So again, there we have both engines running and providing good growth. The Europe reduction is driven by cycle management, and I think this is a really good example to show good cycle management. We have a big financial lines and D&O book in the European market, and what we've been doing is actively managing that cycle as we see market conditions start to come off. And then finally, MAP. We can see a good demand for our suite of MAP products. Again, it's a very diversified book of business. Includes everything from marine, energy, contingency, satellites. And that increased demand drove growth of 10% without the impact of business to our E&S platform. A higher proportion of MAP business is now seeded to third-party capital providers. And the effect of this is that group premium appears to be down year on year. but the group number is not reflective of divisions underlying performance, which has been excellent in 2024. This is the team where our transition business will be housed, and we have a new renewable team that's joined us recently, and we're very excited about supporting clients with transitions risks and the opportunities for growth that that presents in the future. Some parts of the book are driving more rates than others, but it's very similar to specialty in that respect. Overall, we're very pleased with the performance of divisions. We have some geopolitical uncertainty, and considering that backdrop, this is an incredible performance by the team. And here you can see what MAP looks like on a platform basis. And on a more effective basis, North America and wholesale both grew equally by 9%, which again shows that we have a three platform model where we are actually able to drive our products and growth across all of our platforms. With that, I will hand over to Barbara.