Beazley plc

good morning and welcome to beasley's 2025 q3 trading update if you would like to ask a question during today's call please signal by pressing star 1 on your telephone keypad i will now hand over to chief executive officer adrian cox please go ahead

Thank you. Well, good morning everyone and welcome to Beazley's Q3 IMS. I will cover the key points of the quarter's performance and then move to questions. So our year-to-date growth is now at 1%, and the key drivers of this reduction have been in cyber and property. At the interim presentation in August, I said that in some important segments for us, and I was referring particularly to DNO cyber and property, markets were getting a lot less frothy, and this was anticipated to make it easier to grow in the second half. The evidence for this was that DNO rate reductions were beginning to ease after three years of very public softening, that we had successfully pushed for flat rates during the important North American July renewal season in cyber, which we believe is necessary given the increased levels of cyber crime and liability claims the market has experienced since 2023, and that property rate reductions had also eased following a very aggressive second quarter. However, that prediction did not come true. The DNR property markets are still very competitive. And despite the fact that we believe the US cyber market is now unprofitable, given that very active claims environment, it continues to soften. It is notable, I think, that premium growth in the E&S market as a whole has slowed. For example, E&S stamping premiums in California, Texas, Illinois and Florida were flat year on year in Q3, having been growing increasingly more slowly over the year. We therefore have reacted accordingly, maintaining our underwriting standards, and this has impacted our growth for the third quarter. As such, we are reducing our guidance for the full year to flat to low single digit. We remain confident that we can maintain our margin and seize the opportunity to grow when conditions improve, but we will not do so until then. Alongside the adjustment to our growth, we're also updating our combined ratio guidance to low 80s. Our attritional losses continued to develop favorably, though less so than in previous quarters, and the third quarter CAT activity was less than we had budgeted. The combination of these two factors has allowed us to improve our combined ratio guidance to that low 80s. Going through the teams then, in cyber premiums are now down 8% from 6% at the half year, but the rate reductions have eased from seven to six. As I mentioned just now, the team have been keeping rates flat in our renewal business in North America, and this has improved the year-to-date rate change, but our new business is down. We continue to grow well internationally, and I'll talk about that a little bit more, or rather, Paul will talk about that a little bit more at the CMD this afternoon. We do find the lack of market discipline in North America somewhat surprising, given the claims environment. This does need to adjust if we are to avoid the extreme swings in pricing that we saw in 2021 and 2022. Moving on to property, our year-to-date numbers are relatively consistent with the interims, indicating that the market remains competitive. The lack of hurricane activity during this year's windstorm season, whilst positive for this year's profits, will likely have an impact on market behaviour next year. Rates, though, are still adequate and we continue to eke out growth, and there remains further opportunity to do so in 2026 as we build out our business with the retail brokers there. Historically, our US property business has been exclusively through the wholesale channels. Moving on to MAP, that business continues to have a good year. Demand growth persists, particularly across our contingency political risk and political violence businesses, and that's reflected in the numbers. Moving on to specialty, as we flagged at the half year, growth in specialty risks has moderated in the second half, as we continue to de-risk the parts of the book that we believe are overly exposed through social inflation, particularly in medical malpractice. Encouragingly, the stronger financial markets have driven increased demand for our M&A and transaction business, which is growing nicely. As I mentioned earlier though, the DNO market remains very competitive. Looking forward, we are also planning to open a new venture in Bermuda in early 2026, subject to regulatory approval with $500 million of funding from the group. This business will be quite distinctive with four main elements to it. The first, captives insurance and reinsurance. The second, alternative risk transfer, including parametric products. The third is an ILS business, focusing on cyber reinsurance and insurance. And fourthly, specialty insurance and reinsurance. The first two, Captives and ART, are fast growing markets in which we participate, but currently do not have teams focused on them. And this will allow us to do just that. As we've discussed many times, we believe that a deep cyber catastrophe reinsurance market is essential for the health of the cyber insurance market and we've spent the last few years pioneering such. It is now beginning to blossom and we are well positioned to build a franchise around this and we'll be launching a fund to do so next year. And lastly, Bermuda provides additional access to risk for specialty insurance and reinsurance that we currently write. We believe this is an exciting opportunity for us and for business that is slightly off the mainstream, giving us that idiosyncratic growth in a way that allows us to maintain our underwriting margins. We will, of course, be discussing this in much more detail this afternoon, along with our other exciting plans at our CMD, but I thought it would be useful to outline here the main tenets of our Bermudan strategy. And with that, I'll pass over to Barbara to go through investments and our beloved IFI.

Thank you very much, Adrian. Brings us back to the numbers immediately. But just to remind you, as we've done in previous courses this year, we are providing the Q3 insurance finance income and expense balance, the IFI, to assist you with the modelling. Furthermore, we'll also be placing the yield curves utilised as at the end of Q3 on our investor relations website. The change in financial assumptions in the third quarter has produced an income. Yield curves have decreased in the quarter, creating an expense as well as the discounting unwind expense. The result of these three pillars is a total year-to-date expense of 169 million. When it comes to our investments, our asset portfolio has increased to 11.7 billion from the 11.5 billion we had at half year, returning 458 million year to date at Q3 or 3.9%. This is 1.43% or 146 million in the third quarter. An improvement in the macroeconomic conditions during the year and easing of trade related tensions created a favorable environment for risk assets. Equity indices have risen and corporate bond spread continues to compress. Expectation of a loosening of monetary policy have driven the short-dated treasury yields lower, which contributed positively to fixed income returns. As at the 30th of December, the average yield for fixed income investments is 4%, with an average duration of 1.7 years, which gives a positive backdrop for future investment income. With that, we will open for a Q&A on the current trading, but please remember that we have a capsule market session this afternoon at one.