Past service development
Net past service development saw a
net release of $109.8m in 2023 (2022: net strengthening of $54.9m)
which represented (2.5)% (2022: 1.4%) of insurance revenue less
allocation of reinsurance premiums. Property shows the largest
release of $78.0m (2022: $22.4m) due to favourable attritional
claims experience on the older underwriting years, improvement in
past catastrophe estimates along with the expiry of risk across the
more recent underwriting years. The $28.0m (2022: $4.5m) release on
Digital is driven by a reduction in estimates on specific losses,
favourable attritional claims experience on the cyber business,
along with expiry of risk. Cyber Risks has seen a deterioration of
$9.9m (2022: $0.9m) due to the adverse development arising from
cyber liability claims partially offset by benign claims experience
on recent underwriting years. Specialty Risks shows a release of
$8.1m (2022: strengthening of $65.2m) driven by favourable claims
experience on more recent underwriting years. There has been some
deterioration of older underwriting years partially offsetting this
experience, though this has been mitigated by the aggregate excess
of loss reinsurance protection in place across both Cyber Risks and
Specialty Risks. The release of $5.6m (2022: strengthening of
$15.7m) on MAP Risks is driven by favourable attritional
experience.
Prior year claims
adjustment
|
2023
|
2022
|
Net
|
$m
|
$m
|
Cyber Risks
|
9.9
|
0.9
|
Digital
|
(28.0)
|
(4.5)
|
MAP Risks
|
(5.6)
|
15.7
|
Property Risks
|
(78.0)
|
(22.4)
|
Specialty Risks
|
(8.1)
|
65.2
|
Total
|
(109.8)
|
54.9
|
(Release)/strengthening as a
percentage of insurance revenue less allocation of reinsurance
premiums
|
(2.5)%
|
1.4%
|
Total expenditure
The expense ratio, which under IFRS
17 includes only expenses directly attributed to insurance
activities, remained flat at 32% for 2023 (2022: 32%). For 2023,
non-directly attributable expenses of $365.8m (2022: $217.6m) fall
outside the insurance result. Taking these items together, total
expenses for 2023 totalled $1,728.4m (2022: $1,435.2m).
We continue to focus on our total
expense base, allowing for additional expenses where aligned to
underlying business growth or to enhancement to our business model.
The latter includes execution of our three platform strategy,
modernisation of our underwriting and finance platforms, setting up
of an onshore E&S carrier and digital trading capabilities.
Given the increased focus on the above areas, proportionately more
of the total expenses incurred during the year were recognised
outside the directly attributable than in 2022.
During 2023, we have also recognised
increased remuneration expense due to the substantial increase in
profit.
Foreign exchange
The majority of Beazley's business
is transacted in US dollars, which is the currency we have reported
in since 2010 and the currency in which we aim to hold the
Company's net assets. Changes in the US dollar exchange rate with
sterling, the Canadian dollar and the euro do have an impact as we
receive premiums in those currencies and a material number of our
staff receive their salary in sterling. Beazley's foreign exchange
gain taken through the statement of profit or loss in 2023 was
$4.5m (2022: $17.3m loss).
Investment performance
Our investments generated a return
of $480.2m, or 4.9% in 2023 (2022: a loss of $179.7m, or 2.1%).
This is, by some margin, the highest contribution from investments
in our history. It is partly a consequence of the ongoing growth in
our financial assets, which reached $10.5bn as at 31 December
(2022: $9.0bn). It also reflects the yields available on fixed
income investments, which are much higher than in recent years, as
well as strong returns from equity and credit exposures.
Considering the year as a whole, US
bond yields were little changed at most maturities, so that the
returns achieved on our fixed income portfolio closely reflected
starting yields. Within the year, yields rose significantly in the
first nine months driven by ongoing inflationary pressures and
resilient economic growth. However, within the final quarter,
yields declined as the markets began to anticipate a lower interest
rate environment in 2024. As a result, more than half of our 2023
investment return was generated in the final two months of the
year.
Equity markets were also volatile,
but posted strong gains overall. Our modest equity exposures,
focused on US markets and selected to reflect our responsible
investment commitments, returned more than 26% in 2023, with the
strongest performance again in the final months of the year. High
yield credit exposures also produced good returns as credit spreads
declined, while our alternative investments, which are
predominantly in hedge funds, generated more modest returns. We
continue to build our impact portfolio, targeting up to $100m in
investment opportunities which have measurable social or
environmental benefits. To date, we have made commitments totalling
$31m, to three different impact funds. These investments are at an
early stage, but initial returns are encouraging. From 2024, we
will also be measuring progress against their impact
objectives.
Although yields have declined in
recent months, levels are similar to those at the beginning of
2023: The yield of our fixed income portfolio at 31 December 2023
was 4.8% with a duration of 1.8 years. This suggests that the good
contribution from our investments in 2023 could be repeated in
2024, given stability in financial markets. However, such stability
is likely to remain elusive, as global geo-political risks remain
elevated and forthcoming elections, in the US, UK and elsewhere,
may generate further uncertainty.
The table below details the
breakdown of our portfolio by asset class:
|
31 Dec 2023
|
31 Dec 2022
|
|
$m
|
%
|
$m
|
%
|
Cash and cash equivalents
|
812.3
|
7.8
|
652.5
|
7.3
|
Fixed and floating rate debt
securities
|
|
|
|
|
- Government issued
|
4,469.1
|
42.6
|
5,006.3
|
55.6
|
- Corporate bonds
|
|
|
|
|
- Investment grade
|
3,578.3
|
34.1
|
2,050.5
|
22.8
|
- High yield
|
489.0
|
4.7
|
308.7
|
3.4
|
Syndicate loans
|
34.1
|
0.3
|
32.5
|
0.4
|
Derivative financial
assets
|
10.0
|
0.1
|
34.7
|
0.4
|
Core portfolio
|
9,392.8
|
89.6
|
8,085.2
|
89.9
|
Equity funds
|
282.7
|
2.7
|
159.4
|
1.8
|
Hedge funds
|
582.2
|
5.6
|
530.6
|
5.9
|
Illiquid credit assets
|
220.1
|
2.1
|
222.9
|
2.4
|
Total capital growth assets
|
1,085.0
|
10.4
|
912.9
|
10.1
|
Total
|
10,477.8
|
100.0
|
8,998.1
|
100.0
|
Comparison of return by major asset
class:
|
31 Dec 2023
|
31 Dec 2022
|
|
$m
|
%
|
$m
|
%
|
Core portfolio
|
392.7
|
4.5%
|
(182.8)
|
(2.4)
|
Capital growth assets
|
87.5
|
8.8%
|
3.1
|
0.3
|
Overall return
|
480.2
|
4.9%
|
(179.7)
|
(2.1)
|
Tax
Beazley is liable to corporation tax
in a number of jurisdictions, notably the UK, the US and Ireland.
Beazley's effective tax rate is thus a composite tax rate mainly
driven by the Irish, UK and US tax rates. The weighted average of
the statutory tax rates for the year was 17.6% (2022: 19.0%). The
tax rate of 17.6% is lower than last year due to this year's
composition of profits and losses across the Group.
The effective tax rate has increased
in 2023 to 18.1% (2022: 17.2%).
Balance sheet management
Summary statement of financial position
|
2023
|
2022
|
Movement
|
|
$m
|
$m
|
%
|
Intangible assets
|
165.3
|
128.8
|
28
|
Insurance contract assets
|
101.5
|
84.1
|
21
|
Reinsurance contract
assets
|
2,426.7
|
2,175.3
|
12
|
Other assets
|
494.1
|
326.7
|
51
|
Financial assets at fair value and
cash and cash equivalents
|
10,477.8
|
8,998.1
|
16
|
Total assets
|
13,665.4
|
11,713.0
|
17
|
Insurance contract
liabilities
|
7,992.2
|
7,349.8
|
9
|
Reinsurance contract
liabilities
|
333.5
|
161.2
|
107
|
Financial liabilities
|
554.6
|
562.5
|
(1)
|
Other liabilities
|
903.0
|
684.5
|
32
|
Total liabilities
|
9,783.3
|
8,758.0
|
12
|
Net assets
|
3,882.1
|
2,955.0
|
31
|
Net assets per share
(cents)
|
585.8c
|
444.1c
|
32
|
Net tangible assets per share
(cents)
|
560.9c
|
424.7c
|
32
|
Net assets per share
(pence)
|
468.6p
|
364.2p
|
29
|
Net tangible assets per share
(pence)
|
448.7p
|
348.3p
|
29
|
Number of shares²
|
662.7m
|
665.4m
|
-
|
1
The Group has restated its summary statement of
financial position as at 31 December 2022 following the adoption of
IFRS 17.
2
Excludes shares held in the employee share trust
and treasury shares.
Intangible assets
Intangible assets consist of
goodwill on acquisitions of $62.0m
(2022: $62.0m), purchased syndicate capacity of
$31.3m (2022: $13.7m), US admitted licences of $9.3m (2022: $9.3m)
and capitalised expenditure on IT projects of $62.7m (2022:
$43.8m).
Net
reinsurance contract assets
Net reinsurance contract assets
represent recoveries from reinsurers, and are comprised of the
asset for remaining coverage (ARC) and the asset for incurred
claims (AIC). At 31 December 2023, the ARC was in a net liability
position of $321.9m (2022: $229.8m net liability) as the future
premium payable to the reinsurers was higher than the expected
claim recoveries. The AIC was in a net asset position of $2,415.1m
at 31 December 2023 (2022: $2,243.9m net asset).
The Group's exposure to reinsurers
is managed through:
• minimising risk
through selection of reinsurers who meet strict financial criteria
(e.g. minimum net assets, minimum 'A' rating by S&P). These
criteria vary by type of business (short vs medium
tail);
• timely calculation and
issuance of reinsurance collection notes from our ceded reinsurance
team; and
• regular monitoring of
the outstanding debtor position by our Reinsurance Security
Committee and Credit Control Committee.
Net
insurance contract liabilities
Net insurance contract liabilities
of $7,890.7m (2022: $7,265.7m) consist of two main elements, being
the liability for remaining coverage (LRC) and the liability for
incurred claims (LIC).
Our LRC balance is made up of a
reserve for expected claims, a risk adjustment, a contractual
service margin, provision for onerous contracts and premium
debtors. At 31 December 2023, the LRC balance was $755.4m (2022:
$747.6m). Our LIC has increased by 9% to $7,135.3m (2022:
$6,518.1m).
CSM
Sustainability
The Contractual Service Margin (CSM)
reflects the expected profit of contracts within the
asset/liability for remaining coverage. We have calculated the CSM
sustainability as the closing CSM divided by the opening CSM, and
thus a value of 1 and above shows that the expected profit within
the ARC/LRC is higher than the previous valuation. For more
information on CSM Sustainability, including the calculation,
please refer to the APMs section.
As at 31 December 2023, the gross
CSM sustainability score was 1.01 (2022: 1.79) while the net CSM
sustainability score was 1.17 (2022: 1.27). This is a pleasing
result and shows the strength of the expected profit contained on
the balance sheet has increased on both a gross and net basis
during 2023. This puts us in good stead as we move in to
2024.
Discounting impacts
During 2023, the net finance expense
was $153.4m (2022: net finance income $183.0m), which was broken
down into a $294.7m (2022: $125.2m) unwind of discounting
recognised on existing business, partially offset by $141.3m (2022:
$308.2m) of income from changes in financial
assumptions.
Financial liabilities
Financial liabilities comprise
borrowings and derivative financial liabilities. The Group utilises
two long-term debt facilities:
• in November 2016,
Beazley Insurance dac issued $250.0m of 5.875% subordinated tier 2
notes due in 2026; and
• in September 2019,
Beazley Insurance dac issued $300.0m of 5.5% subordinated tier 2
notes due in 2029.
A syndicated short-term banking
facility led by Lloyds Banking Group plc provides potential
borrowings up to $450.0m. Under the facility $450.0m may be drawn
as letters of credit to support underwriting at Lloyd's, and up to
$225.0m may be advanced as cash under a revolving facility. The
cost of the facility is based on a commitment fee of 0.4725% per
annum, and any amounts drawn are charged at a margin of 1.35% per
annum.
The cash element of the facility
will expire on 25 May 2026, whilst letters of credit issued under
the facility can be used to provide support for the 2023, 2024 and
2025 underwriting years. In 2023 $225.0m has been placed as a
letter of credit as Funds at Lloyd's (FAL).
Other assets
Other assets are analysed separately
in the notes to the financial statements. The items included
comprise:
• amounts due from
syndicates 623 and 4321;
• prepayments and
accrued income; and
• other
receivables.
Capital structure
Beazley aims to hold capital in
excess of regulatory requirements in order to be best placed to
swiftly take advantage of growth opportunities arising outside of
our business plan, as well as to provide additional protection
against downside events.
Beazley has a number of requirements
for capital at a Group and subsidiary level. Capital is required to
support underwriting at Lloyd's, in the US and through our European
branches and is subject to prudential regulation by local
regulators (the Prudential Regulation Authority, Lloyd's, the
Central Bank of Ireland, and the US state level supervisors).
Beazley is subject to the capital adequacy requirements of the
European Union (EU) Solvency II regime (SII).
Further capital requirements come
from rating agencies which provide ratings for Beazley Insurance
Company, Inc., Beazley America Insurance Company Inc., Beazley
Excess and Surplus Insurance Company, Inc., and Beazley Insurance
dac. We aim to manage our capital levels to obtain the ratings
necessary to trade with our preferred client base.
Earlier in the year, we took the
decision to evolve our approach toward capital disclosures. We have
chosen to use the Group Solvency II coverage ratio (Solvency II
ratio) as the key capital measure for the Group going forward. This
measure covers the Group's business across all territories and is
comparable with Solvency II Capital disclosures made by our peers
both in the UK and Europe.
We aim to maintain a Solvency II
ratio in excess of 170% of Solvency Capital Requirement
("SCR").
The amount of surplus capital held
is considered on an ongoing basis in light of the current
regulatory framework, and opportunities for organic or acquisitive
growth and a desire for both prudence and to maximise returns for
investors.
As at 31 December 2023, our Solvency
II coverage is estimated at 218% (31 December 2022: 244%). The
strong ratio is a result of good underwriting performance, enabled
by an equity raise in 2022, and a strong return on investments
driving significant own funds generation. Capital requirement (SCR)
is established using our Solvency II approved internal model
approved by Central Bank of Ireland (CBI) and reflects the business
we expect to write through to the end of 2024 as per our business
plan which is targeting gross growth of high single
digits.
The Group actively seeks to manage
its capital structure. Our preferred use of capital is to deploy it
on opportunities to underwrite profitably. However where we have
surplus capital substantially in excess of the opportunities, we
consider means to return this capital to shareholders. Given the
Company's outstanding performance in 2023, we are pleased to
announce a share buyback programme up to $325m, in addition to the
interim dividend of 14.2p.
The projected year-end Group
Solvency II ratio of 218% takes into account the interim dividend
and foreseeable distributions noted above of $325m.
|
2023
Estimate*
|
2022
|
|
$m
|
$m
|
Eligible Tier-1 capital after
foreseeable distributions
|
3,967.4
|
3,330.5
|
Eligible Tier-2 capital -
subordinated debt
|
520.8
|
506.2
|
Total Solvency II Eligible own
funds
|
4,488.2
|
3,836.7
|
Capital requirement
|
2,058.0
|
1,573.8
|
Group Solvency II ratio
|
218%
|
244%
|
*The final 2023 ratio is subject to
review and audit and will be published in Group 2023 Solvency and
Financial Condition Report (SFCR).
Our funding comes from a mixture of
Tier-1 basic own funds and $520.8m ($550.0m gross of capitalised
borrowing costs and fair value adjustments) of tier 2 subordinated
debt.
Both tier 2 subordinated debt
issuances in 2016 and 2019 are issued by Beazley Insurance
dac, which maintain an Insurer Financial Strength (IFS) rating of
'A+' by Fitch.
Scenario sensitivity analysis
The table below shows the impact on
the Group's estimated Solvency II ratio in the event of the
following scenarios as at 31 December 2023. The impact on the
Group's Solvency II ratio could arise from movements in both the
Group's SCR and own funds.
Scenario
|
Impact on
Solvency II ratio
|
Cyber 1-in-250 Cyber
scenario*
|
(32)%
|
Nat Cat 1-in-250 Combined
scenario
|
(26)%
|
50 bps decrease in interest
rates**
|
(10)%
|
|
|
*Based on Cyber Probabilistic
Model
**This considers the impact on the
SCR in isolation to the impact on eligible own funds
|
|
Consolidated statement of profit or loss for the year ended 31
December 2023
|
2023
|
20221
|
|
$m
|
$m
|
Insurance revenue
|
5,442.4
|
4,848.4
|
Insurance service
expenses
|
(3,592.6)
|
(4,014.0)
|
Allocation of reinsurance
premium
|
(1,127.3)
|
(965.4)
|
Amounts recoverable from reinsurers
for incurred claims
|
528.5
|
953.9
|
Insurance service result
|
1,251.0
|
822.9
|
|
|
|
Net investment
income/(loss)
|
480.2
|
(179.7)
|
Net finance (expense)/income from
insurance contracts issued
|
(169.3)
|
279.5
|
Net finance income/(expense) from
reinsurance contracts held
|
15.9
|
(96.5)
|
Net
insurance and financial result
|
1,577.8
|
826.2
|
|
|
|
Other income
|
78.5
|
32.1
|
Operating expenses²
|
(365.8)
|
(217.6)
|
Foreign exchange
gains/(losses)
|
4.5
|
(17.3)
|
Results from operating activities
|
1,295.0
|
623.4
|
|
|
|
Finance costs
|
(40.6)
|
(39.4)
|
Profit before tax
|
1,254.4
|
584.0
|
|
|
|
Tax expense
|
(227.6)
|
(100.7)
|
Profit after tax for the year
|
1,026.8
|
483.3
|
|
|
|
Earnings per share (cents per
share):
|
|
|
Basic
|
154.7
|
79.0
|
Diluted
|
151.4
|
78.0
|
Earnings per share (pence per
share):
|
|
|
Basic
|
124.8
|
63.4
|
Diluted
|
122.1
|
62.6
|
1
The Group has restated its consolidated statement
of profit or loss for the year ended 31 December 2022 following the
adoption of IFRS 17. The earnings per share for this year has also
been restated - refer to Note 12 for further details.
2 The Group has not presented its impairment losses determined
in accordance with IFRS 9 separately in the statement of profit or
loss as the amounts are not material. These are included within
operating expenses.
Consolidated statement of comprehensive income for the year
ended 31 December 2023
|
2023
|
20221
|
|
$m
|
$m
|
Profit after tax for the year
|
1,026.8
|
483.3
|
|
|
|
Items that will never be reclassified to profit or
loss:
|
|
|
Loss on remeasurement of retirement
benefit obligations
|
(0.1)
|
(12.5)
|
Tax credit on defined benefit
obligation
|
0.7
|
2.7
|
|
|
|
Items that may be reclassified
subsequently to profit or loss:
|
|
|
Foreign exchange translation
gains/(losses)
|
5.7
|
(12.6)
|
|
|
|
Total other comprehensive
income/(expense)
|
6.3
|
(22.4)
|
|
|
|
Total comprehensive income
recognised
|
1,033.1
|
460.9
|
1 Profit after tax for the year and foreign exchange translation
differences have been restated for the year ended 31 December 2022
following the adoption of IFRS 17.
Consolidated statement of changes in equity for the year ended
31 December 2023
|
Share
capital
|
Share
premium
|
Foreign
currency translation reserve
|
Other
reserves
|
Retained
earnings
|
Total
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
Balance as at 31 December
2021
(previously reported)
|
42.9
|
5.3
|
(97.2)
|
(4.0)
|
2,183.8
|
2,130.8
|
IFRS 17 adjustment
|
-
|
-
|
-
|
-
|
59.4
|
59.4
|
Restated balance as at 01 January 2022
|
42.9
|
5.3
|
(97.2)
|
(4.0)
|
2,243.2
|
2,190.2
|
Total comprehensive (expense)
/income
|
-
|
-
|
(12.6)
|
-
|
473.5
|
460.9
|
Dividend paid
|
-
|
-
|
-
|
-
|
(103.0)
|
(103.0)
|
Acquisition of own shares held in
trust
|
-
|
-
|
-
|
(17.8)
|
-
|
(17.8)
|
Issue of shares
|
0.1
|
0.8
|
-
|
-
|
-
|
0.9
|
Equity raise
|
3.6
|
3.6
|
-
|
397.2
|
-
|
404.4
|
Transfer of merger reserve to
retained earnings
|
-
|
-
|
-
|
(397.2)
|
397.2
|
-
|
Equity settled share based
payments
|
-
|
-
|
-
|
15.7
|
-
|
15.7
|
Tax on share option
vestings
|
-
|
-
|
-
|
3.1
|
0.6
|
3.7
|
Transfer of shares to
employees
|
-
|
-
|
-
|
(4.6)
|
4.6
|
-
|
Balance at 31 December
2022
|
46.6
|
9.7
|
(109.8)
|
(7.6)
|
3,016.1
|
2,955.0
|
IFRS 9 adjustment
|
-
|
-
|
-
|
-
|
(1.0)
|
(1.0)
|
Balance at 01 January 2023
|
46.6
|
9.7
|
(109.8)
|
(7.6)
|
3,015.1
|
2,954.0
|
Total comprehensive
income
|
-
|
-
|
5.7
|
-
|
1,027.4
|
1,033.1
|
Dividend paid
|
-
|
-
|
-
|
-
|
(107.7)
|
(107.7)
|
Issue of shares
|
0.1
|
0.9
|
-
|
-
|
-
|
1.0
|
Equity settled share
based payments
|
-
|
-
|
-
|
36.2
|
-
|
36.2
|
Acquisition of own shares held in
trust
|
-
|
-
|
-
|
(33.6)
|
-
|
(33.6)
|
Tax on share option
vestings
|
-
|
-
|
-
|
0.7
|
(1.6)
|
(0.9)
|
Transfer of shares to
employees
|
-
|
-
|
-
|
(8.5)
|
8.5
|
-
|
Balance at 31 December 2023
|
46.7
|
10.6
|
(104.1)
|
(12.8)
|
3,941.7
|
3,882.1
|
Consolidated statement of financial position as at 31
December 2023
|
2023
|
20221
|
|
$m
|
$m
|
Intangible assets
|
165.3
|
128.8
|
Plant and equipment
|
15.9
|
14.9
|
Right-of-use assets
|
59.4
|
60.5
|
Deferred tax asset²
|
46.9
|
30.8
|
Retirement benefit asset
|
4.5
|
4.6
|
Insurance contract assets
|
101.5
|
84.1
|
Reinsurance contract
assets
|
2,426.7
|
2,175.3
|
Financial assets at fair
value
|
9,665.5
|
8,345.6
|
Other assets²
|
354.2
|
204.2
|
Current tax asset
|
13.2
|
11.7
|
Cash and cash equivalents
|
812.3
|
652.5
|
Total assets
|
13,665.4
|
11,713.0
|
Share capital
|
46.7
|
46.6
|
Share premium
|
10.6
|
9.7
|
Foreign currency translation
reserve
|
(104.1)
|
(109.8)
|
Other reserves
|
(12.8)
|
(7.6)
|
Retained earnings
|
3,941.7
|
3,016.1
|
Total equity
|
3,882.1
|
2,955.0
|
Deferred tax liability
|
202.2
|
79.2
|
Financial liabilities
|
554.6
|
562.5
|
Lease liabilities
|
76.6
|
72.7
|
Insurance contract
liabilities
|
7,992.2
|
7,349.8
|
Reinsurance contract
liabilities
|
333.5
|
161.2
|
Current tax liability
|
13.7
|
8.6
|
Other liabilities
|
610.5
|
524.0
|
Total liabilities
|
9,783.3
|
8,758.0
|
Total equity and liabilities
|
13,665.4
|
11,713.0
|
1
The Group has restated its consolidated statement
of financial position as at 01 January 2022 and 31 December 2022
following the adoption of IFRS 17.
2
The Group recognised IFRS 9 expected credit losses
("ECLs") of $1.3m against its other receivables as at 01 January
2023, offset by $0.3m of deferred tax assets.
Consolidated statement of cash flows for the year ended
31 December 2023
|
2023
|
20221
|
|
$m
|
$m
|
Cash flows from operating
activities:
|
|
|
Profit before tax
|
1,254.4
|
584.0
|
|
|
|
Adjustments for non-cash
items:
|
|
|
Interest and dividends receivable on
financial assets
|
(215.3)
|
(101.1)
|
Finance costs payable
|
40.6
|
39.4
|
Net fair value (gains)/losses on
financial assets
|
(325.2)
|
274.4
|
Other non-cash items²
|
45.7
|
62.6
|
|
|
|
Changes in operational assets and
liabilities:
|
|
|
Increase in net insurance and
reinsurance contract liabilities
|
545.9
|
226.7
|
Increase in other
liabilities
|
86.5
|
38.0
|
(Increase)/decrease in other
assets
|
(150.0)
|
33.9
|
Purchases of investments
|
(7,115.9)
|
(6,645.4)
|
Proceeds from sale of
investments
|
6,129.8
|
5,325.3
|
Interest and dividends received on
financial assets
|
207.4
|
94.2
|
|
|
|
Tax paid
|
(110.7)
|
(61.1)
|
Net
cash in/(out)flows from operating activities
|
393.2
|
(129.1)
|
|
|
|
Cash flows from investing
activities:
|
|
|
Purchase of plant and
equipment
|
(4.3)
|
(1.0)
|
Expenditure on software development
and other intangible assets
|
(50.9)
|
(22.7)
|
Net
cash outflows from investing activities
|
(55.2)
|
(23.7)
|
|
|
|
Cash flows from financing
activities:
|
|
|
Acquisition of own shares in
trust
|
(33.6)
|
(17.8)
|
Payment of lease
liabilities
|
(12.0)
|
(11.6)
|
Equity raise
|
-
|
404.4
|
Finance costs paid
|
(37.5)
|
(36.3)
|
Dividend paid
|
(107.7)
|
(103.0)
|
Net
cash (out)/inflows from financing activities
|
(190.8)
|
235.7
|
|
|
|
Net increase in cash and cash
equivalents
|
147.2
|
82.9
|
Opening cash and cash
equivalents
|
652.5
|
591.8
|
Effect of exchange rate changes on
cash and cash equivalents
|
12.6
|
(22.2)
|
Closing cash and cash equivalents
|
812.3
|
652.5
|
1
The consolidated statement of cash flows has been
restated for the year ended 31 December 2022 following the adoption
of IFRS 17.
2
Other non-cash items includes amounts relating to
depreciation, amortisation, and foreign exchange
differences.
1
General information
1a
Nature of operations
Beazley plc (registered number
09763575) is a public company incorporated in England and Wales.
The Company's registered address is 22 Bishopsgate, London, EC2N
4BQ, United Kingdom. The principal activity of the Company and its
subsidiaries ("the Group") is to participate as a specialist
insurer which transacts primarily in commercial lines of business
through its subsidiaries and Lloyd's syndicates. The Group's
consolidated financial statements for the year ended 31 December
2023 comprise the parent company, its subsidiaries and the Group's
interest in associates.
1b
Basis of preparation
The financial information set out
above does not constitute statutory accounts for the years ended 31
December 2023 or 2022 but is derived from those accounts. Statutory
accounts for 2022 have been delivered to the registrar of
companies, and those for 2023 will be delivered in due course. The
Group's external auditor has reported on those accounts; their
reports were (i) unqualified, (ii) did not include a reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
The Group's consolidated financial
statements have been prepared in accordance with UK adopted
International Financial Reporting Standards ("IFRS") and the
requirements of the Companies Act 2006. These are prepared on the
historical cost basis, with the exception of financial assets and
derivative financial instruments which are stated at their fair
value, and the defined benefit pension asset which is measured at
the fair value of plan assets less the present value of the defined
benefit pension obligation. All amounts are presented in US dollars
and millions, unless stated otherwise.
1c
New accounting standards
International Financial Reporting Standard 17, Insurance
Contracts ("IFRS 17")
IFRS 17 replaces IFRS 4 for annual
periods beginning on or after 01 January 2023. The Group has
applied the transitional provisions per Appendix C of IFRS 17 and
taken a fully retrospective approach, restating comparative
information for the year ended 31 December 2022.
International Financial Reporting Standard 9, Financial
Instruments ("IFRS 9")
IFRS 9 was issued by the
International Accounting Standards Board ("IASB") in July 2014 and
became effective for accounting periods beginning on or after 01
January 2018. The Group previously applied the amendment issued by
the IASB which exempted eligible entities from applying IFRS 9
until accounting periods beginning on or after 01 January
2023.
1d
Amendments to existing standards
In the current year, the Group has
applied several amendments to IFRS issued by the IASB and endorsed
by the UK Endorsement Board ("UKEB") that are mandatorily effective
for accounting periods beginning on or after 01 January 2023. Of
these, the following amendments have not had a material impact on
the Group on adoption:
• Amendment to IAS 8 -
Definition of Accounting Estimates;
• Amendment to IAS 1 -
Disclosure of Accounting Policies; and
• Amendment to IAS 12 -
Deferred Tax related to Assets and Liabilities arising from a
Single Transaction.
The Group has also applied the
amendment to IAS 12 - International Tax Reform - Pillar Two Model
Rules from 01 January 2023, as issued by the IASB and endorsed by
the UKEB. This amendment was issued in response to the Pillar Two
framework issued by the Organisation for Economic Co-operation and
Development, which aims to ensure that large multinational
enterprises pay a minimum effective corporate tax rate of 15% on
the income arising in each jurisdiction in which they operate. The
amendment introduces a mandatory temporary exemption from
recognising and disclosing deferred taxes arising from the Pillar
Two rules. For jurisdictions in which legislation has been
substantively enacted, the Group has applied this exemption. Refer
to Note 11 for further details.
The IASB has issued a number of
other minor amendments to standards which are not yet effective at
the reporting date and have not been applied in preparing these
financial statements. These have been endorsed by the UKEB with an
effective date of 01 January 2024 unless noted otherwise below.
None of these are expected to have a material impact on the
Group.
• Amendments to IAS 1 -
Classification of Liabilities as Current or Non-Current and
Non-Current Liabilities with Covenants;
• Amendment to IFRS 16 -
Lease Liability in a Sale and Leaseback;
• Amendments to IAS 7
and IFRS 7 - Supplier Finance Arrangement Disclosures;
• Amendment to IAS 21 -
Lack of exchangeability (not yet endorsed, effective date 01
January 2025); and
• Amendments to IFRS 10
and IAS 28 - Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture (not yet endorsed, effective date
postponed indefinitely).
1e
Going concern
The consolidated financial
statements of Beazley plc have been prepared on a going concern
basis. In adopting the going concern basis, the Board has reviewed
the Group's current and forecast solvency and liquidity positions
for the 12 months from the date that the financial statements are
authorised for issue. The Group's business activities, together
with the factors likely to affect its future development,
performance, and position, are set out in the strategic report
contained in this Annual Report & Accounts. In addition, the
risk report and financial review includes the Group's risk
management objectives and the Group's objectives, policies and
processes for managing its capital.
In assessing the Group's going
concern position as at 31 December 2023, the Directors have
considered a number of factors, including:
• the current statement
of financial position and in particular the adequacy of technical
provisions;
• the Group's strategic
and financial plan, taking account of possible changes in trading
performance and funding retention;
• the Group's capital
forecast, which takes into account the capital requirements of
major subsidiaries and their current external credit rating and
outlook;
• the Group's liquidity
at both a Group and material Subsidiary level;
• stress testing and
scenario analysis assessing the impact of natural and cyber
catastrophe events on the Group's capital and liquidity positions
and reverse stress test scenarios designed to render the business
model unviable; and
• other qualitative
factors, such as the market environment, the Group's ability to
raise additional capital and/or liquidity, and climate
change.
As a result of the assessment, no
material uncertainty in relation to going concern has been
identified. As at its most recent regulatory submission, the
Group's capital ratios and its total capital resources are
comfortably in excess of regulatory solvency requirements, and
internal stress testing indicates that the Group can withstand
severe economic and competitive stresses.
Based on the going concern
assessment performed, the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence over a period of 12 months from the date of this report
being authorised for issue, and therefore believe that the Group is
well placed to manage its business risks successfully. Accordingly,
they continue to adopt the going concern basis in preparing the
consolidated financial statements.
2
Segmental reporting
2a Reporting segments
Segmental information is presented
based on the Group's management and internal reporting structures
which represent the level at which financial information is
reported, performance is analysed and resources are allocated by
the Group's Executive Committee, being the chief operating decision
maker as defined by IFRS 8.
Segment results, assets and
liabilities include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis. Those
items that are allocated on a reasonable basis are split based on
each segment's capital requirement which is taken from the Group's
most up-to-date business plan. The reporting segments do not
cross-sell business to each other.
Finance costs and taxation have not
been allocated to operating segments as these items are determined
at a consolidated level and do not relate to operating
performance.
As a result of the adoption of IFRS
17, comparative information has been restated for the year ended 31
December 2022.
An overview of the Group's segments
is set out below.
Cyber Risks
This segment underwrites cyber and
technology risks.
Digital
This segment underwrites a variety
of marine, contingency and SME liability risks through digital
channels such as e-trading platforms and broker portals.
MAP Risks
This segment underwrites marine,
portfolio underwriting and political and contingency
business.
Property Risks
This segment underwrites first party
property risks and reinsurance business.
Specialty Risks
This segment underwrites a wide
range of liability classes, including employment practices risks
and directors and officers, as well as healthcare, lawyers and
international financial institutions.
2b Segmental information
|
Year
ended 31 December 2023
|
|
Cyber
Risks
|
Digital
|
MAP
Risks
|
Property
Risks
|
Specialty
Risks
|
Total
|
2023
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
Insurance revenue
|
1,174.9
|
224.7
|
1,015.4
|
1,145.2
|
1,882.2
|
5,442.4
|
Insurance service
expenses
|
(802.1)
|
(144.0)
|
(635.5)
|
(643.9)
|
(1,367.1)
|
(3,592.6)
|
Current year claims
|
(565.2)
|
(90.5)
|
(430.8)
|
(470.1)
|
(940.1)
|
(2,496.7)
|
Adjustments to prior year claims
|
(8.9)
|
33.7
|
88.6
|
108.1
|
39.8
|
261.3
|
(Loss on)/reversal of onerous contracts
|
(2.6)
|
2.6
|
1.4
|
(0.1)
|
0.5
|
1.8
|
Insurance acquisition cash flows amortisation and other
directly attributable expenses
|
(225.4)
|
(89.8)
|
(294.7)
|
(281.8)
|
(467.3)
|
(1,359.0)
|
Allocation of reinsurance
premium
|
(308.5)
|
(24.3)
|
(236.1)
|
(198.5)
|
(359.9)
|
(1,127.3)
|
Amounts recoverable from reinsurers
for incurred claims
|
210.1
|
7.1
|
23.9
|
26.4
|
261.0
|
528.5
|
Current year claims
|
211.8
|
13.0
|
107.6
|
57.0
|
294.2
|
683.6
|
Adjustments to prior year claims
|
(1.0)
|
(5.7)
|
(83.0)
|
(30.1)
|
(31.7)
|
(151.5)
|
Share of expenses and other amounts
|
(0.7)
|
(0.2)
|
(0.7)
|
(0.5)
|
(1.5)
|
(3.6)
|
Insurance service result
|
274.4
|
63.5
|
167.7
|
329.2
|
416.2
|
1,251.0
|
|
|
|
|
|
|
|
Net investment income
|
86.6
|
14.8
|
53.5
|
75.2
|
250.1
|
480.2
|
Net finance expense from insurance
contracts issued
|
(17.5)
|
(2.9)
|
(12.6)
|
(10.9)
|
(125.4)
|
(169.3)
|
Net finance (expense)/income from
reinsurance contracts held
|
(1.3)
|
0.5
|
2.1
|
(13.7)
|
28.3
|
15.9
|
Net
insurance and financial result
|
342.2
|
75.9
|
210.7
|
379.8
|
569.2
|
1,577.8
|
|
|
|
|
|
|
|
Other income
|
16.9
|
3.2
|
14.8
|
16.5
|
27.1
|
78.5
|
Other operating expenses
|
(52.7)
|
(19.9)
|
(68.1)
|
(42.5)
|
(182.6)
|
(365.8)
|
Foreign exchange gains
|
1.0
|
0.2
|
0.8
|
0.9
|
1.6
|
4.5
|
Segment result
|
307.4
|
59.4
|
158.2
|
354.7
|
415.3
|
1,295.0
|
Finance costs
|
|
|
|
|
|
(40.6)
|
Profit before tax
|
|
|
|
|
|
1,254.4
|
Tax expense
|
|
|
|
|
|
(227.6)
|
Profit after tax
|
|
|
|
|
|
1,026.8
|
|
|
|
|
|
|
|
Claims ratio
|
42%
|
23%
|
41%
|
35%
|
42%
|
39%
|
Expense ratio
|
26%
|
45%
|
38%
|
30%
|
31%
|
32%
|
Combined ratio
|
68%
|
68%
|
79%
|
65%
|
73%
|
71%
|
|
|
|
|
|
|
|
Insurance assets
|
50.5
|
14.1
|
0.5
|
13.7
|
22.7
|
101.5
|
Reinsurance assets
|
469.0
|
27.5
|
322.6
|
287.2
|
1,320.4
|
2,426.7
|
Other
|
2,411.3
|
368.1
|
1,511.2
|
1,961.7
|
4,884.9
|
11,137.2
|
Total assets
|
2,930.8
|
409.7
|
1,834.3
|
2,262.6
|
6,228.0
|
13,665.4
|
|
|
|
|
|
|
|
Insurance liabilities
|
1,634.8
|
208.8
|
1,006.6
|
1,173.3
|
3,968.7
|
7,992.2
|
Reinsurance liabilities
|
73.2
|
8.7
|
160.2
|
-
|
91.4
|
333.5
|
Other
|
333.8
|
52.5
|
182.2
|
297.3
|
591.8
|
1,457.6
|
Total liabilities
|
2,041.8
|
270.0
|
1,349.0
|
1,470.6
|
4,651.9
|
9,783.3
|
The calculation bases for the
claims, expense and combined ratios are disclosed within the APMs
section.
|
Year
ended 31 December 2022 (restated)
|
|
Cyber
Risks
|
Digital
|
MAP
Risks
|
Property
Risks
|
Specialty
Risks
|
Total
|
2022
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
Insurance revenue
|
1,013.5
|
211.3
|
970.3
|
807.2
|
1,846.1
|
4,848.4
|
Insurance service
expenses
|
(750.9)
|
(161.3)
|
(859.5)
|
(699.5)
|
(1,542.8)
|
(4,014.0)
|
Current year claims
|
(506.3)
|
(104.3)
|
(436.2)
|
(524.0)
|
(974.5)
|
(2,545.3)
|
Adjustments to prior year claims
|
(81.4)
|
9.1
|
(139.4)
|
37.0
|
(102.2)
|
(276.9)
|
(Loss on)/reversal of onerous contracts
|
23.2
|
(0.2)
|
(0.5)
|
1.2
|
0.4
|
24.1
|
Insurance acquisition cash flows amortisation and other
directly attributable expenses
|
(186.4)
|
(65.9)
|
(283.4)
|
(213.7)
|
(466.5)
|
(1,215.9)
|
Allocation of reinsurance
premium
|
(198.3)
|
(27.2)
|
(250.1)
|
(175.7)
|
(314.1)
|
(965.4)
|
Amounts recoverable from reinsurers
for incurred claims
|
208.4
|
21.5
|
296.3
|
108.5
|
319.2
|
953.9
|
Current year claims
|
128.2
|
26.2
|
172.9
|
123.4
|
282.9
|
733.6
|
Adjustments to prior year claims
|
80.5
|
(4.6)
|
123.7
|
(14.6)
|
37.0
|
222.0
|
Share of expenses and other amounts
|
(0.3)
|
(0.1)
|
(0.3)
|
(0.3)
|
(0.7)
|
(1.7)
|
Insurance service result
|
272.7
|
44.3
|
157.0
|
40.5
|
308.4
|
822.9
|
|
|
|
|
|
|
|
Net investment loss
|
(34.5)
|
(8.7)
|
(20.5)
|
(27.1)
|
(88.9)
|
(179.7)
|
Net finance income from insurance
contracts issued
|
30.2
|
4.8
|
45.3
|
24.5
|
174.7
|
279.5
|
Net finance expense from reinsurance
contracts held
|
(9.0)
|
(0.9)
|
(19.6)
|
(5.2)
|
(61.8)
|
(96.5)
|
Net
insurance and financial result
|
259.4
|
39.5
|
162.2
|
32.7
|
332.4
|
826.2
|
|
|
|
|
|
|
|
Other income
|
7.9
|
2.3
|
1.0
|
7.4
|
13.5
|
32.1
|
Other operating expenses
|
(33.7)
|
(9.9)
|
(34.8)
|
(35.5)
|
(103.7)
|
(217.6)
|
Foreign exchange (losses)
|
(3.6)
|
(0.8)
|
(3.5)
|
(2.9)
|
(6.5)
|
(17.3)
|
Segment result
|
230.0
|
31.1
|
124.9
|
1.7
|
235.7
|
623.4
|
Finance costs
|
|
|
|
|
|
(39.4)
|
Profit before tax
|
|
|
|
|
|
584.0
|
Tax expense
|
|
|
|
|
|
(100.7)
|
Profit after tax
|
|
|
|
|
|
483.3
|
|
|
|
|
|
|
|
Claims ratio
|
44%
|
40%
|
39%
|
60%
|
49%
|
47%
|
Expense ratio
|
23%
|
36%
|
39%
|
34%
|
31%
|
32%
|
Combined ratio
|
67%
|
76%
|
78%
|
94%
|
80%
|
79%
|
|
|
|
|
|
|
|
Insurance assets
|
0.4
|
0.0
|
44.1
|
14.0
|
25.6
|
84.1
|
Reinsurance assets
|
308.6
|
26.5
|
327.0
|
430.8
|
1,082.4
|
2,175.3
|
Other
|
2,169.6
|
340.6
|
1,307.0
|
1,436.5
|
4,199.9
|
9,453.6
|
Total assets
|
2,478.6
|
367.1
|
1,678.1
|
1,881.3
|
5,307.9
|
11,713.0
|
|
|
|
|
|
|
|
Insurance liabilities
|
1,285.8
|
198.2
|
1,141.9
|
1,141.9
|
3,582.0
|
7,349.8
|
Reinsurance liabilities
|
17.9
|
2.1
|
82.6
|
3.9
|
54.7
|
161.2
|
Other
|
348.6
|
49.5
|
134.6
|
218.3
|
496.0
|
1,247.0
|
Total liabilities
|
1,652.3
|
249.8
|
1,359.1
|
1,364.1
|
4,132.7
|
8,758.0
|
3
Insurance revenue
Insurance revenue represents the
total changes in the liability for remaining coverage that relate
to services for which the Group expects to receive consideration.
This includes the difference between the claims and other expenses
expected at the beginning of the year versus those actually
incurred (per Note 4), after the loss component
allocation.
|
2023
|
2022
|
|
$m
|
$m
|
Amounts relating to changes in the
liability for remaining coverage:
|
|
|
Expected incurred claims and other
expenses after loss component allocation
|
3,015.7
|
2,723.8
|
Change in risk adjustment for
non-financial risk for the risk expired after loss component
allocation
|
316.8
|
274.7
|
CSM recognised in profit or loss for
services provided
|
691.4
|
565.2
|
Other amounts including experience
adjustments
|
503.7
|
434.6
|
Insurance acquisition cash flows
recovery
|
914.8
|
850.1
|
Total insurance revenue
|
5,442.4
|
4,848.4
|
4
Insurance service expenses
The table below shows the insurance
service expenses recognised on groups of insurance contracts issued
by the Group. These are recognised in the consolidated statement of
profit or loss as they are incurred.
|
2023
|
2022
|
|
$m
|
$m
|
Incurred claims and other directly
attributable expenses
|
2,911.6
|
2,908.6
|
Changes that relate to past service
- adjustments to the LIC
|
(232.0)
|
279.4
|
Losses on onerous contracts and
reversal of those losses
|
(1.8)
|
(24.1)
|
Insurance acquisition cash flows
amortisation
|
914.8
|
850.1
|
Total insurance service expense
|
3,592.6
|
4,014.0
|
5
Net income / expenses from reinsurance contracts
held
The table below shows the net
income/expenses from reinsurance contracts held, comprised of the
allocation of reinsurance premium and amounts recoverable from
reinsurers for incurred claims.
|
2023
|
2022
|
|
$m
|
$m
|
Amounts relating to changes in the
remaining coverage:
|
|
|
- Expected claims and other expenses
recovery
|
(740.5)
|
(731.8)
|
- Changes in the risk adjustment
recognised for the risk expired
|
(105.2)
|
(74.3)
|
- CSM recognised for the services
received
|
(290.8)
|
(195.3)
|
- Other amounts including experience
adjustments
|
9.2
|
36.0
|
Allocation of reinsurance premium
|
(1,127.3)
|
(965.4)
|
Effect of changes in the risk of
reinsurers non-performance
|
4.2
|
(32.6)
|
Claims recovered
|
680.1
|
733.4
|
Other incurred directly attributable
expenses
|
(3.6)
|
(1.7)
|
Changes that relate to past service
- adjustments to incurred claims recovery
|
(152.2)
|
254.8
|
Amounts recoverable from reinsurers for incurred
claims
|
528.5
|
953.9
|
Total net expenses from reinsurance contracts
held
|
(598.8)
|
(11.5)
|
6
Net financial result
Finance income/(expense) from
insurance contracts issued and reinsurance contracts held
represents the interest accreted and the effect of changes in
discount rates and other financial assumptions. The net financial
result is comprised of the Group's net investment income/(loss) and
its net insurance finance income/(expense).
|
2023
|
2022
|
|
$m
|
$m
|
Interest and dividends on financial
assets at fair value
|
215.3
|
101.1
|
Interest on cash and cash
equivalents
|
16.8
|
0.5
|
Net realised fair value losses on
financial assets at FVTPL
|
(69.2)
|
(7.6)
|
Net unrealised fair value
gains/(losses) on financial assets at FVTPL
|
325.2
|
(266.8)
|
Investment income/(expense) from
financial assets
|
488.1
|
(172.8)
|
Investment management
expenses
|
(7.9)
|
(6.9)
|
Net
investment income/(loss)
|
480.2
|
(179.7)
|
Interest accreted
|
(379.1)
|
(153.7)
|
Effect of changes in financial
assumptions
|
209.8
|
433.2
|
Net finance (expense)/income from
insurance contracts issued
|
(169.3)
|
279.5
|
Interest accreted
|
84.4
|
28.5
|
Effect of changes in financial
assumptions
|
(68.5)
|
(125.0)
|
Net finance income/(expense) from
reinsurance contracts held
|
15.9
|
(96.5)
|
Net
insurance finance (expense)/income
|
(153.4)
|
183.0
|
Net
financial result
|
326.8
|
3.3
|
Investment income by category of
financial asset
The tables below show the Group's
investment income/(expense), split by category of financial asset.
Note that 'Other financial assets' includes cash and cash
equivalents and derivative financial assets.
|
Debt
securities and syndicate loans
|
Capital
growth
assets
|
Other
financial
assets
|
Total
|
2023
|
$m
|
$m
|
$m
|
$m
|
Interest and dividends
received
|
208.4
|
3.7
|
20.0
|
232.1
|
Net realised
(losses)/gains
|
(117.8)
|
52.6
|
(4.0)
|
(69.2)
|
Net unrealised fair value
gains
|
291.2
|
34.0
|
-
|
325.2
|
Total investment income from financial
assets
|
381.8
|
90.3
|
16.0
|
488.1
|
|
Debt
securities and syndicate loans
|
Capital
growth
assets
|
Other
financial
assets
|
Total
|
2022
|
$m
|
$m
|
$m
|
$m
|
Interest and dividends
received
|
96.6
|
3.6
|
1.4
|
101.6
|
Net realised
(losses)/gains
|
(93.3)
|
31.9
|
53.8
|
(7.6)
|
Net unrealised fair value
losses
|
(235.6)
|
(30.9)
|
(0.3)
|
(266.8)
|
Total investment expense from financial
assets
|
(232.3)
|
4.6
|
54.9
|
(172.8)
|
7
Other income
|
2023
|
2022
|
|
$m
|
$m
|
Commissions received by Beazley
service companies
|
42.8
|
20.0
|
Profit commissions from
syndicates
|
29.9
|
7.2
|
Managing agent fees from third party
syndicates
|
3.6
|
4.0
|
Other income
|
2.2
|
0.9
|
Total other income
|
78.5
|
32.1
|
Commissions received by Beazley
service companies
Commissions are received from
non-Group syndicates by Group service companies writing business on
their behalf. These are recognised as the services are provided,
and therefore the performance obligations of the contracts are met.
Commission is payable to the Group by syndicate 623 due to Group
service companies writing business on behalf of the syndicate.
While the commercial purpose of the contract is to pass business to
syndicate 623, the remuneration is triggered by incurring expenses,
irrespective of volume of business gained. Fees are recognised as
the services are provided, and therefore the performance
obligations of the contracts are met. In addition, the Group
charges syndicates 5623 and 4321 for a portion of the
profit-related remuneration paid to its underwriting staff. Payment
is therefore triggered by the underlying profitability of the
syndicate.
Profit commissions from
syndicates
Profit commission agreements are in
place between the third party capital syndicates managed by the
Group and their managing agent, Beazley Furlonge Limited. Under
these agreements, the transaction price represents a fixed
percentage on profit by year of account. As such, the profitability
of the syndicates is a performance criterion. No other variable
consideration (for example: discounts, rebates, refunds,
incentives) is attached. The value of each transaction price is
derived at the reporting date from the actual profits made by the
syndicates, and therefore represents the most likely amount of
consideration at the reporting date.
8
Operating expenses
|
2023
|
2022
|
|
$m
|
$m
|
Staff costs
|
527.6
|
355.6
|
Other administrative
expenses
|
401.2
|
325.0
|
Total administrative expenses
|
928.8
|
680.6
|
Recharged to third party
syndicates
|
(115.5)
|
(75.8)
|
Expenses reclassified within the
insurance service result
|
(447.5)
|
(387.2)
|
Total operating expenses
|
365.8
|
217.6
|
Depreciation of $17.1m (2022:
$15.6m) and amortisation of $16.2m (2022: $14.3m) is included
within other administrative expenses.
Net staff costs
|
2023
|
2022
|
|
$m
|
$m
|
Wages and salaries
|
259.8
|
215.8
|
Short term incentive
payments
|
167.5
|
78.1
|
Social security
|
45.3
|
30.0
|
Share based remuneration
|
33.8
|
14.7
|
Pension costs¹
|
21.2
|
17.0
|
Staff costs
|
527.6
|
355.6
|
Recharged to third party
syndicates
|
(78.2)
|
(53.1)
|
Net
staff costs
|
449.4
|
302.5
|
1
Pension costs primarily include contributions made
under the defined contribution scheme.
Average number of
employees
A breakdown by category of employee
is disclosed below.
|
2023
|
2022
|
|
|
|
Directors
|
11
|
10
|
Senior managers
|
145
|
107
|
Other employees
|
1,988
|
1,691
|
Total average number of employees
|
2,144
|
1,808
|
9
Auditor's remuneration
|
2023
|
2022
|
|
$m
|
$m
|
Operating expenses include amounts
receivable by the Group's auditors in respect of:
|
|
|
- audit of the Group's annual report
& accounts
|
6.5
|
1.7
|
- audit of subsidiaries pursuant to
legislation
|
3.6
|
3.1
|
- audit-related assurance
services
|
1.1
|
1.4
|
- other non-audit
services
|
0.9
|
0.7
|
Total auditor's remuneration
|
12.1
|
6.9
|
Other than the fees disclosed above,
no other fees were paid to the Company's auditor. Audit-related
assurance services primarily comprise the review and audit of
regulatory reporting pursuant to legislation and review of the
Group's condensed interim financial statements. Included within the
2023 audit fees are fees of $5.1m (2022: $0.5m) that relate to the
audit of IFRS 17 balances and transition, including the opening
balance sheet and 2022 restated comparatives. Fees incurred for
other non-audit services primarily relate to reporting required by
Regulators and additional assurance work performed on material
included within the annual report.
10
Finance costs
|
2023
|
2022
|
|
$m
|
$m
|
Interest expense on financial
liabilities
|
31.6
|
31.5
|
Interest expense on lease
liabilities
|
3.1
|
3.1
|
Interest and charges related to
letters of credit
|
5.9
|
4.1
|
Equity raise costs not charged to
share premium
|
-
|
0.7
|
Total finance costs
|
40.6
|
39.4
|
11
Tax expense
|
2023
|
2022¹
|
|
$m
|
$m
|
Current tax expense
|
|
|
Current tax expense
|
121.8
|
53.2
|
Prior year adjustment
|
1.5
|
(9.9)
|
|
123.3
|
43.3
|
Deferred tax expense
|
|
|
Origination and reversal of
temporary differences
|
97.3
|
58.5
|
Difference between current and
deferred tax rates
|
6.8
|
(1.0)
|
Prior year adjustments
|
0.2
|
(0.1)
|
|
104.3
|
57.4
|
Tax
expense
|
227.6
|
100.7
|
1
Restated for the year ended 31 December 2022
following the adoption of IFRS 17.
Reconciliation of tax
expense
The Group makes the majority of its
profit in Ireland, the UK and the US. The weighted average of
statutory tax rates based on the profits earned in each country in
which the Group operates is 17.6% (2022: 19.0%), whereas the tax
charged for the year ending 31 December 2023 as a percentage
of profit before tax is 18.1% (2022: 17.2%). The reasons for the
difference are explained below:
|
2023
|
2023
|
20221
|
2022
|
|
$m
|
%
|
$m
|
%
|
Profit before tax
|
1,254.4
|
|
584.0
|
|
Tax calculated at the weighted
average of statutory tax rate
|
221.4
|
17.6
|
111.0
|
19.0
|
|
|
|
|
|
Effects of:
|
|
|
|
|
- non-deductible/(non-taxable)
expenses
|
(2.0)
|
(0.2)
|
1.9
|
0.3
|
- losses not previously
recognised
|
(1.2)
|
(0.1)
|
-
|
-
|
- tax charge/(relief) on
remuneration
|
0.9
|
0.1
|
(1.2)
|
(0.2)
|
- under/(over) provided in prior
years
|
1.7
|
0.1
|
(10.0)
|
(1.7)
|
- Difference between current and
deferred tax rates2
|
6.8
|
0.6
|
(1.0)
|
(0.2)
|
Tax
expense for the year
|
227.6
|
18.1
|
100.7
|
17.2
|
1
Restated for the year ended 31 December 2022
following the adoption of IFRS 17.
2
The Finance Act 2021 provided for an increase in
the UK corporation tax rate from 19% to 25% effective from 1 April
2023. This tax rate change has been reflected in the calculation of
the deferred tax balances as at 31 December 2023.
Global minimum tax rate
The Organisation for Economic
Co-operation and Development ("OECD") released the Pillar Two
framework to ensure that large multinational enterprises pay a
minimum effective corporate tax rate of 15% on the income arising
in each jurisdiction in which they operate. In June 2023, the UK
enacted legislation to implement these new rules in respect of
accounting periods beginning on or after 31 December
2023.
We continue to assess the
development of Pillar Two and expect that the impact will not be
significant as the Group mainly operates in jurisdictions with a
statutory tax rate above 15%. We anticipate the main impact for the
Group will be in Ireland, where the tax rate is 12.5%. In December
2023, Ireland enacted a Qualified Domestic Minimum Top-Up Tax such
that in-scope businesses pay at least a 15% effective tax rate on
their profits. Based on the FY 2023 results, the impact is
estimated to be an additional $18m of corporate income tax payable
in Ireland. The impact on the Beazley Group will depend on the
actual profits in each period.
12
Earnings per share
|
2023
|
2022
|
Profit after tax¹ ($m)
|
1,026.8
|
483.3
|
Weighted average number of shares in
issue (m)
|
663.8
|
611.7
|
Adjusted weighted average number of
shares in issue (m)
|
678.3
|
619.7
|
Basic (cents)
|
154.7c
|
79.0c
|
Diluted (cents)
|
151.4c
|
78.0c
|
|
|
|
Basic (pence)
|
124.8p
|
63.4p
|
Diluted (pence)
|
122.1p
|
62.6p
|
1
The Profit after tax figure has been restated for
the year ended 31 December 2022 following the adoption of IFRS 17.
The adoption of IFRS 9 has not had a material impact on the Group's
basic or diluted earnings per share in the year to 31 December
2023.
Basic earnings per share is
calculated by dividing profit after tax of $1,026.8m (2022:
$483.3m) by the weighted average number of shares in issue during
the year of 663.8m (2022: 611.7m).
Diluted earnings per share is
calculated by dividing profit after tax of $1,026.8m (2022:
$483.3m) by the adjusted weighted average number of shares of
678.3m (2022: 619.7m) in issue. This assumes conversion of dilutive
potential ordinary shares, being shares from equity settled
employee compensation schemes. Share options with performance
conditions attaching to them have been excluded from the weighted
average number of shares to the extent that these conditions have
not been met at the reporting date.
Note that both calculations exclude
the shares held in the Employee Share Options Plan of 9.8m (31
December 2022: 5.7m) until such time as they vest unconditionally
with the employees.
13
Dividends per share
An interim dividend of 14.2p
covering the whole of 2023 (2022: 13.5p) will be payable on 3 May
2024 to Beazley plc shareholders registered on 22 March 2024. The Group expects the total amount to be
paid in respect of the interim dividend to be approximately
£95.5m (2022: £90.6m). These financial
statements do not provide for the interim dividend as a
liability.
14
Financial assets and liabilities
14a Carrying values of financial
assets and liabilities
Set out below are the carrying
values of the Group's 'financial assets at fair value' and
'financial liabilities' per the statement of financial position.
These amounts exclude the following financial assets and
liabilities which are presented separately:
• Cash and cash
equivalents carried at amortised cost (refer to Section d and Note
15); and
• Amounts due from
managed syndicates, other receivables, lease liabilities, and other
payables, all of which are carried at amortised cost (per Section
d).
|
2023
|
2022
|
|
$m
|
$m
|
Debt securities:
|
|
|
- Government issued
|
4,469.1
|
5,006.3
|
- Corporate bonds
|
|
|
- Investment
grade
|
3,578.3
|
2,050.5
|
- High yield
|
489.0
|
308.7
|
Syndicate loans
|
34.1
|
32.5
|
Total debt securities and syndicate
loans
|
8,570.5
|
7,398.0
|
Equity funds
|
282.7
|
159.4
|
Hedge funds
|
582.2
|
530.6
|
Illiquid assets
|
220.1
|
222.9
|
Total capital growth
assets
|
1,085.0
|
912.9
|
Total financial investments at fair value through statement of
profit or loss
|
9,655.5
|
8,310.9
|
Derivative financial
assets
|
10.0
|
34.7
|
Total financial assets at fair value
|
9,665.5
|
8,345.6
|
Investment corporate bonds are rated
BBB-/Baa3 or higher by at least one major rating agency, while high
yield corporate bonds have lower credit ratings. Hedge funds are
investment vehicles pursuing alternative investment strategies,
structured to have minimal correlation to traditional asset
classes. Equity funds are investment vehicles which invest in
equity securities and provide diversified exposure to global equity
markets. Illiquid assets are investment vehicles that predominantly
target private lending opportunities, often with longer investment
horizons. The fair value of these assets at 31 December 2023
excludes an unfunded commitment of $32.0m (2022:
$30.5m).
|
2023
|
2022
|
|
$m
|
$m
|
Tier 2 subordinated debt
(2026)
|
249.5
|
249.4
|
Tier 2 subordinated debt
(2029)
|
298.8
|
298.6
|
Derivative financial
liabilities
|
6.3
|
14.5
|
Total financial liabilities
|
554.6
|
562.5
|
The Group has given a fixed and
floating charge over certain of its investments and other assets to
secure obligations to Lloyd's in respect of its corporate member
subsidiary.
14b Valuation hierarchy
All assets and liabilities for which
fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy described as follows.
If the inputs used to measure the fair value of an asset or a
liability could be categorised in different levels of the fair
value hierarchy, then the fair value measurement is categorised in
its entirety in the same level of the fair value hierarchy as the
lowest level input that is significant to the entire
measurement.
Fair value is the price at which an
orderly transaction to sell an asset or to transfer a liability
would take place between market participants at the measurement
date. Fair value is a market-based measure and in the absence of
observable market prices in an active market, it is measured using
the assumptions that market participants would use when pricing the
asset or liability.
The best evidence of the fair value
of a financial instrument at initial recognition is the transaction
price, i.e. the fair value of the consideration given or received,
unless the fair value of that instrument is evidenced by comparison
with other observable current market transactions in the same
instrument (i.e. without modification or repackaging) or based on a
valuation technique whose variables include only data from
observable markets. When the transaction price provides the best
evidence of fair value at initial recognition, the financial
instrument is initially measured at the transaction price and any
difference between this price and the value initially obtained from
a valuation model is subsequently recognised in profit or loss
depending on the individual facts and circumstances of the
transaction but before the valuation is supported wholly by
observable market data or the transaction is closed out.
Level 1 - Valuations based on quoted
prices in active markets for identical instruments. An active
market is a market in which transactions for the instrument occur
with sufficient frequency and volume on an ongoing basis such that
quoted prices reflect prices at which an orderly transaction would
take place between market participants at the measurement
date.
Level 2 - Valuations based on quoted
prices in markets that are not active, or based on pricing models
for which significant inputs can be corroborated by observable
market data, directly or indirectly (e.g. interest rates and
exchange rates). Level 2 inputs include:
• Quoted prices for
similar assets and liabilities in active markets;
• Quoted prices for
identical or similar assets and liabilities in markets that are not
active, the prices are not current, or price quotations vary
substantially either over time or among market makers, or in which
little information is released publicly;
• Inputs other than
quoted prices that are observable for the asset or liability (for
example, interest rates and yield curves observable at commonly
quoted intervals, implied volatilities and credit spreads);
and
• Market corroborated
inputs. Included within level 2 are government bonds and treasury
bills, equity funds and corporate bonds which are not actively
traded, hedge funds and senior secured loans.
Level 3 - Valuations based on inputs
that are unobservable or for which there is limited market activity
against which to measure fair value. The availability of financial
data can vary for different financial assets and is affected by a
wide variety of factors, including the type of financial
instrument, whether it is new and not yet established in the
marketplace, and other characteristics specific to each
transaction. To the extent that valuation is based on models or
inputs that are unobservable in the market, the determination of
fair value requires more judgement. Accordingly the degree of
judgement exercised by management in determining fair value is
greatest for instruments classified in level 3. The Group uses
prices and inputs that are current as of the measurement date for
valuation of these instruments.
Valuation approach - level 2
instruments
a) For the Group's level 2 debt
securities, our fund administrator obtains the prices used in the
valuation from independent pricing vendors. The independent pricing
vendors derive an evaluated price from observable market inputs.
These inputs are verified in their pricing assumptions such as
weighted average life, discount margins, default rates, and
recovery and prepayments assumptions for mortgage
securities.
b) For our hedge funds, the pricing
and valuation of each fund is undertaken by administrators in
accordance with each underlying fund's valuation policy. Individual
fund prices are communicated by the administrators to all investors
via the monthly investor statements. The fair value of the hedge
fund portfolios are calculated by reference to the underlying net
asset values of each of the individual funds. Our hedge funds are
managed by Falcon Money Management Holdings Limited, an associate
of the Group.
c) Subordinated debt and tier 2
subordinated debt fair value are based on quoted market
prices.
Valuation approach - level 3
instruments
a) Our illiquid fund investments are
generally closed ended limited partnerships or open ended funds.
The Group relies on a third party fund manager to manage these
investments and provide valuations. Note that while the funds
report with full transparency on their underlying investments, the
investments themselves are predominantly in private and unquoted
instruments. The valuation techniques used by the fund managers to
establish the fair values therefore require a degree of estimation.
For example, these may incorporate discounted cash flow models or a
more market-based approach, whilst the main inputs might include
discount rates, fundamental pricing multiples, recent transaction
prices, or comparable market information to create a benchmark
multiple.
b) Syndicate loans are non-tradeable
instruments provided by our Group syndicates to the Central Fund at
Lloyd's in respect of the 2019 and 2020 underwriting years. These
are valued internally using discounted cash flow models provided by
Lloyd's to the market, designed to appropriately reflect the credit
and illiquidity risk of the instruments. Valuation outputs are then
validated using a control model, with the following inputs and
assumptions. Note that these internally valued instruments are
deemed by management to be inherently more subjective than external
valuations.
• Cash flows are
comprised of the notional cost of the loans, annual interest
income, and the final repayment of the loans at the end of the
5-year term. The weighted average interest rate applicable across
all syndicate loans is 3.8% (2022: 3.8%).
• A discount rate of
7.0% (2022: 9.2%) is applied. This is calculated using a
combination of the long-term treasury bond risk-free rate, the
industry/geographic average regression beta, and a selected risk
premium.
There were no changes in the
valuation techniques during the year compared to those described in
the Group's 2022 Annual Report and Accounts.
14c Fair values of financial assets
and liabilities
The following table shows the fair
values of financial assets and financial liabilities, including
their levels in the fair value hierarchy.
|
Level
1
|
Level
2
|
Level
3
|
Total
|
2023
|
$m
|
$m
|
$m
|
$m
|
Financial assets carried at fair
value
|
|
|
|
|
Fixed and floating rate debt securities
|
|
|
|
|
- Government issued
|
3,291.9
|
1,177.2
|
-
|
4,469.1
|
- Corporate bonds
|
|
|
|
|
- Investment
grade
|
1,596.7
|
1,981.6
|
-
|
3,578.3
|
- High yield
|
488.1
|
0.9
|
-
|
489.0
|
Syndicate loans
|
-
|
-
|
34.1
|
34.1
|
Equity funds
|
282.7
|
-
|
-
|
282.7
|
Hedge funds
|
-
|
582.2
|
-
|
582.2
|
Illiquid assets
|
-
|
-
|
220.1
|
220.1
|
Derivative financial
assets
|
10.0
|
-
|
-
|
10.0
|
Total financial assets carried at fair value
|
5,669.4
|
3,741.9
|
254.2
|
9,665.5
|
Financial liabilities carried at fair value
|
|
|
|
|
Derivative financial
liabilities
|
6.3
|
-
|
-
|
6.3
|
Total financial liabilities carried at fair
value
|
6.3
|
-
|
-
|
6.3
|
Fair value of financial liabilities carried at amortised
cost
|
|
|
|
|
Tier 2 subordinated debt
(2026)
|
-
|
241.7
|
-
|
241.7
|
Tier 2 subordinated debt
(2029)
|
-
|
271.9
|
-
|
271.9
|
Total fair value of financial liabilities carried at amortised
cost
|
-
|
513.6
|
-
|
513.6
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
2022
|
$m
|
$m
|
$m
|
$m
|
Financial assets carried at fair value
|
|
|
|
|
Fixed and floating rate debt
securities
|
|
|
|
|
- Government issued
|
4,022.5
|
983.8
|
-
|
5,006.3
|
- Corporate bonds
|
|
|
|
|
- Investment
grade
|
893.8
|
1,156.7
|
-
|
2,050.5
|
- High yield
|
34.2
|
274.5
|
-
|
308.7
|
Syndicate loans
|
-
|
-
|
32.5
|
32.5
|
Equity funds
|
159.4
|
-
|
-
|
159.4
|
Hedge funds
|
-
|
530.6
|
-
|
530.6
|
Illiquid assets
|
-
|
-
|
222.9
|
222.9
|
Derivative financial
assets
|
34.7
|
-
|
-
|
34.7
|
Total financial assets carried at fair value
|
5,144.6
|
2,945.6
|
255.4
|
8,345.6
|
Financial liabilities carried at fair value
|
|
|
|
|
Derivative financial
liabilities
|
14.5
|
-
|
-
|
14.5
|
Total financial liabilities carried at fair
value
|
14.5
|
-
|
-
|
14.5
|
Fair value of financial liabilities carried at amortised
cost
|
|
|
|
|
Tier 2 subordinated debt
(2026)
|
-
|
240.3
|
-
|
240.3
|
Tier 2 subordinated debt
(2029)
|
-
|
265.9
|
-
|
265.9
|
Total fair value of financial liabilities carried at amortised
cost
|
-
|
506.2
|
-
|
506.2
|
14d Financial assets and liabilities
measured at amortised cost
The tables above exclude the
following financial assets and liabilities that are, in accordance
with the Group's accounting policies, measured at amortised cost.
For all of these, the carrying amounts included below are deemed to
be reasonable approximations of fair values at the reporting
date.
|
2023
|
2022
|
|
$m
|
$m
|
Cash and cash equivalents
|
812.3
|
652.5
|
Amounts due from managed
syndicates
|
25.4
|
1.9
|
Other receivables
|
272.1
|
179.9
|
Total financial assets at amortised cost
1
|
1,109.8
|
834.3
|
Lease liabilities
|
76.6
|
72.7
|
Amounts due to managed
syndicates
|
304.3
|
308.0
|
Other payables
|
207.3
|
184.5
|
Total financial liabilities at amortised
cost
|
588.2
|
565.2
|
1
The Group has recognised expected credit losses
("ECLs") of $1.8m against its financial assets held at amortised
cost as at 31 December 2023.
14e Transfers
The Group determines whether
transfers have occurred between levels in the fair value hierarchy
by assessing categorisation at the end of the reporting period. The
following transfers between levels 1 & 2 for the period ended
31 December 2023 reflect the level of trading activities including
frequency and volume derived from market data obtained from an
independent external valuation tool. There were no
transfers into or out of level 3 in the year to 31 December
2023 (2022: no transfers).
|
Level
1
|
Level
2
|
31 December 2023 vs
31 December 2022 transfer from level 2 to level 1
|
$m
|
$m
|
- Corporate Bonds - Investment
grade
|
446.0
|
(446.0)
|
|
Level
1
|
Level
2
|
31 December 2023 vs
31 December 2022 transfer from level 1 to level
2
|
$m
|
$m
|
- Corporate Bonds - Investment
grade
|
(525.3)
|
525.3
|
The values shown in the transfer
tables above are translated using spot foreign exchange rates as at
31 December 2023.
14f Level 3 investment
reconciliations
The table below shows a
reconciliation from the opening balances to the closing balances of
level 3 fair values. All realised and unrealised gains/(losses) are
recognised through net investment income in the statement of profit
or loss (refer to Note 6).
|
2023
|
2022
|
|
$m
|
$m
|
Opening position as at 01
January
|
255.4
|
315.8
|
Purchases
|
21.8
|
13.0
|
Sales
|
(37.4)
|
(81.4)
|
Realised gain
|
20.2
|
13.2
|
Unrealised loss
|
(6.6)
|
(2.7)
|
Foreign exchange
gain/(loss)
|
0.8
|
(2.5)
|
Closing position as at 31 December
|
254.2
|
255.4
|
14g Unconsolidated structured
entities
A structured entity is defined as an
entity that has been designed so that voting or similar rights are
not the dominant factor in deciding who controls the entity, such
as when any voting rights relate to administrative tasks only, or
when the relevant activities are directed by means of contractual
arrangements.
As part of its standard investment
activities the Group holds fixed interest investments in high yield
bond funds, as well as capital growth investments in equity funds,
hedge funds and illiquid assets which in accordance with IFRS 12
are classified as unconsolidated structured entities. The Group
does not sponsor any of the unconsolidated structured entities. The
assets classified as unconsolidated structured entities are held at
fair value on the statement of financial position. As at 31
December the investments comprising the Group's unconsolidated
structured entities are as follows:
|
2023
|
2022
|
|
$m
|
$m
|
High yield bond funds
|
489.0
|
308.7
|
Equity funds
|
282.7
|
159.4
|
Hedge funds
|
582.2
|
530.6
|
Illiquid assets
|
220.1
|
222.9
|
Investments through unconsolidated structured
entities
|
1,574.0
|
1,221.6
|
The majority of our unconsolidated
structured entity exposures fall within our capital growth assets.
The capital growth assets are held in investee funds managed by
asset managers who apply various investment strategies to
accomplish their respective investment objectives. The Group's
investments in investee funds are subject to the terms and
conditions of the respective investee fund's offering documentation
and are susceptible to market price risk arising from uncertainties
about future values of those investee funds. Investment decisions
are made after extensive due diligence on the underlying fund, its
strategy and the overall quality of the underlying fund's manager
and assets.
The right to sell or request
redemption of investments in high yield bond funds, asset backed
securities, equity funds and hedge funds ranges in frequency from
daily to semi-annually. The Group did not sponsor any of the
respective structured entities. The Group's maximum exposure to
loss from its interests in investee funds is equal to the total
fair value of its investments in investee funds and unfunded
commitments.
14h Currency exposures
The currency exposures of our
financial assets held are detailed below:
|
UK
£
|
CAD
$
|
EUR
€
|
Sub
Total
|
US
$
|
Total
|
2023
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
Financial assets at
FVTPL:
|
|
|
|
|
|
|
- Fixed and floating rate debt
securities
|
789.6
|
432.5
|
-
|
1,222.1
|
7,314.3
|
8,536.4
|
- Syndicate loans
|
34.1
|
-
|
-
|
34.1
|
-
|
34.1
|
- Equity Linked Funds
|
-
|
-
|
-
|
-
|
282.7
|
282.7
|
- Hedge funds
|
-
|
-
|
-
|
-
|
582.2
|
582.2
|
- Illiquid assets
|
6.4
|
-
|
45.9
|
52.3
|
167.8
|
220.1
|
- Derivative financial
assets
|
-
|
-
|
-
|
-
|
10.0
|
10.0
|
Cash and cash equivalents
|
125.8
|
51.5
|
93.5
|
270.8
|
541.5
|
812.3
|
Amounts due from managed syndicates
and other receivables
|
27.6
|
9.4
|
51.4
|
88.4
|
209.1
|
297.5
|
Total
|
983.5
|
493.4
|
190.8
|
1,667.7
|
9,107.6
|
10,775.3
|
|
UK
£
|
CAD
$
|
EUR
€
|
Sub
Total
|
US
$
|
Total
|
2022
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
Financial assets at
FVTPL:
|
|
|
|
|
|
|
- Fixed and floating rate debt
securities
|
636.1
|
365.9
|
-
|
1,002.0
|
6,363.5
|
7,365.5
|
- Syndicate loans
|
32.5
|
-
|
-
|
32.5
|
-
|
32.5
|
- Equity Linked Funds
|
-
|
-
|
-
|
-
|
159.4
|
159.4
|
- Hedge funds
|
-
|
-
|
-
|
-
|
530.6
|
530.6
|
- Illiquid assets
|
0.1
|
-
|
46.2
|
46.3
|
176.6
|
222.9
|
- Derivative financial
assets
|
-
|
-
|
-
|
-
|
34.7
|
34.7
|
Cash and cash equivalents
|
93.1
|
53.8
|
83.4
|
230.3
|
422.2
|
652.5
|
Amounts due from managed syndicates
and other receivables
|
9.5
|
3.4
|
32.8
|
45.7
|
136.1
|
181.8
|
Total
|
771.3
|
423.1
|
162.4
|
1,356.8
|
7,823.1
|
9,179.9
|
15
Cash and cash equivalents
|
2023
|
2022
|
|
$m
|
$m
|
Cash at bank and in hand
|
812.3
|
652.5
|
|
812.3
|
652.5
|
Included within Cash and cash
equivalents held by the Group are balances totalling $132.6m (31
December 2022: $184.0m) not available for immediate use by the
Group outside of the Lloyd's syndicate within which they are held.
Additionally, $73.1m (31 December 2022: $66.0m) is pledged cash
held against Funds at Lloyd's, and $13.3m (31 December 2022:
$43.6m) is held in Lloyd's Singapore trust accounts which are only
available for use by the Group to meet local claim and expense
obligations.
16
Deferred tax
|
2023
|
20221
|
|
$m
|
$m
|
Deferred tax asset
|
46.9
|
30.8
|
Deferred tax liability
|
(202.2)
|
(79.2)
|
Net
deferred tax liability
|
(155.3)
|
(48.4)
|
1
Deferred tax amounts as at 31 December 2022 have
been restated on adoption of IFRS 17. Refer below for further
details.
|
Balance
01 Jan 23
|
Recognised
in total comprehensive income
|
Recognised
in equity
|
FX
translation differences
|
Balance
31 Dec 23
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
Plant and equipment
|
(0.8)
|
(0.3)
|
-
|
-
|
(1.1)
|
Intangible assets
|
(1.8)
|
0.5
|
-
|
-
|
(1.3)
|
Underwriting profits
|
7.4
|
(101.6)
|
-
|
-
|
(94.2)
|
Deferred acquisition
costs
|
1.7
|
(1.7)
|
-
|
-
|
-
|
Tax losses carried
forward
|
4.0
|
5.7
|
-
|
-
|
9.7
|
Share based payments
|
8.4
|
1.5
|
(0.9)
|
-
|
9.0
|
Unrealised gains/(losses) on
investments
|
9.9
|
(11.1)
|
-
|
-
|
(1.2)
|
IFRS 17 adjustments
|
(83.7)
|
(3.4)
|
-
|
-
|
(87.1)
|
Other
|
6.5
|
6.8
|
-
|
(2.4)
|
10.9
|
Net
deferred tax asset/(liability)
|
(48.4)
|
(103.6)
|
(0.9)
|
(2.4)
|
(155.3)
|
|
Balance
01 Jan
22¹
|
Recognised
in total comprehensive income
|
Recognised
in equity
|
FX
translation differences
|
Balance
31 Dec 22
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
Plant and equipment
|
(1.2)
|
0.4
|
-
|
-
|
(0.8)
|
Intangible assets
|
(0.5)
|
(1.3)
|
-
|
-
|
(1.8)
|
Underwriting profits
|
14.2
|
(6.8)
|
-
|
-
|
7.4
|
Tax losses carried
forward
|
9.6
|
(5.6)
|
-
|
-
|
4.0
|
Deferred acquisition
costs
|
(7.8)
|
9.5
|
-
|
-
|
1.7
|
Share based payments
|
2.6
|
3.1
|
3.1
|
(0.4)
|
8.4
|
Unrealised gains/(losses) on
investments
|
(1.7)
|
11.6
|
-
|
-
|
9.9
|
IFRS 17 adjustments
|
(13.4)
|
(70.3)
|
-
|
-
|
(83.7)
|
Other
|
1.2
|
4.7
|
0.6
|
-
|
6.5
|
Net
deferred tax asset/(liability)
|
3.0
|
(54.7)
|
3.7
|
(0.4)
|
(48.4)
|
1
Deferred tax amounts as at 01 January 2022 have
been restated on adoption of IFRS 17.
Geographical analysis
Deferred tax assets and deferred tax liabilities relating to the
same tax authority are presented net in the Group's balance sheet.
A geographical analysis has been included below.
|
2023
|
2022
|
|
$m
|
$m
|
UK
|
(152.8)
|
(35.3)
|
US
|
46.7
|
29.8
|
Ireland
|
(38.7)
|
(39.0)
|
Other¹
|
(10.5)
|
(3.9)
|
Net
deferred tax liability
|
(155.3)
|
(48.4)
|
1 Includes Canada, France,
Germany, Spain and Switzerland.
Under IFRS 17, the timing of the
recognition of the Group's profits differs significantly from the
basis on which corporate taxes are levied in the tax jurisdictions
where the Group operates. None of the Group's material profit
making entities pay corporate taxes based on IFRS 17 profits and
therefore significant temporary differences arise. In some
jurisdictions, such as the UK and Ireland, profits are recognised
earlier under IFRS 17 and thus a deferred tax liability is
recognised. The Group expects this to unwind over time as profits
are recognised (offset by new profits on an IFRS 17 basis). In the
US, profits are recognised more slowly on an IFRS 17 basis than
under the US Stat basis on which tax is determined, with the Group
recognising a deferred tax asset of $23.2m (2022: $13.1m). The
Group is of the view that sufficient future profits will arise on
an IFRS 17 basis to realise this deferred tax asset.
The Group has recognised a deferred
tax liability of $94.2m (2022: asset of $7.4m) which relates to
timing differences between the recognition of the Group's share of
syndicate profits and when they are taxed. Profits or losses
arising from membership of a syndicate are deferred for tax
purposes until the year in which the result is declared. Typically,
a year of account lasts for 36 months and is declared the following
year. The deferred tax liability relates to the results of the
2021, 2022 and 2023 Years of Account. The 2020 Year of Account
closed at the end of 2022 and was declared and taxed in
2023.
Additionally the Group recognises
deferred tax assets of $9.7m (2022: $4.0m) which depend on the
availability of future taxable profits to offset tax losses
previously recognised. The Group has concluded that it is probable
that these deferred tax assets will be recovered using estimated
future taxable profits based on approved business plans. The losses
which make up this part of the deferred tax asset can be carried
forward indefinitely and have no expiry date. The Group has no
unrecognised trading losses as at December 31 2023 (2022: nil) and
has unrecognised capital losses of $4.0m (2022: $2.2m).
Pillar Two Taxes
No deferred taxes have been
recognised by the Group in relation to the OECD's project to
implement a global minimum tax rate. Refer to Note 11 for further
details.
17
Subordinated liabilities
In November 2016, the Group issued
$250m of subordinated Tier 2 notes due in 2026. Annual interest, at
a fixed rate of 5.875%, is payable in May and November each year.
In September 2019, the Group issued $300m of subordinated Tier 2
notes due in 2029. Annual interest, at a fixed rate of 5.5% is
payable in March and September each year.
The carrying amounts of the
subordinated liabilities are as follows. The total fair value of
the Group's subordinated liabilities is $513.6m (2022:
$506.2m).
|
Tier 2
subordinated debt (2029)
|
Tier 2
subordinated debt (2026)
|
Total
|
|
$m
|
$m
|
$m
|
Opening balance at 01 January
2022
|
298.4
|
249.2
|
547.6
|
Amortisation of capitalised
borrowing costs
|
0.2
|
0.2
|
0.4
|
Closing balance at 31 December 2022
|
298.6
|
249.4
|
548.0
|
Amortisation of capitalised
borrowing costs
|
0.2
|
0.1
|
0.3
|
Closing balance at 31 December 2023
|
298.8
|
249.5
|
548.3
|
The annual interest expense on the
Group's subordinated liabilities is included in Note 4.
18
Insurance and reinsurance contracts
18a Reconciliations by measurement
component
This section shows how the net
carrying amounts of insurance contracts issued and reinsurance
contracts held by the Group have changed during the year, as a
result of changes in cash flows and amounts recognised in profit or
loss.
i)
Insurance contracts issued
The tables below set out the
estimated present value of future cash flows, the risk adjustment
for non-financial risk and the CSM for insurance contracts
issued.
|
Present
value of future cash flows
|
Risk
adjustment for non-financial risk
|
CSM
|
Total
|
31 December 2023
|
$m
|
$m
|
$m
|
$m
|
Opening insurance contract
assets
|
123.5
|
(12.9)
|
(26.5)
|
84.1
|
Opening insurance contract
liabilities
|
(6,324.0)
|
(711.3)
|
(314.5)
|
(7,349.8)
|
Net
insurance contract liabilities at 01 January 2023
|
(6,200.5)
|
(724.2)
|
(341.0)
|
(7,265.7)
|
|
|
|
|
|
CSM recognised in profit or loss for
services provided
|
-
|
-
|
691.4
|
691.4
|
Changes in the risk adjustment for
non-financial risk for risk expired
|
-
|
316.8
|
-
|
316.8
|
Experience adjustments
|
893.3
|
(285.5)
|
-
|
607.8
|
Total changes relating to current
service
|
893.3
|
31.3
|
691.4
|
1,616.0
|
|
|
|
|
|
Changes in estimates that adjust the
CSM
|
135.0
|
(19.1)
|
(115.9)
|
-
|
Changes in estimates that result in
onerous contract losses or reversal of such losses
|
6.0
|
(1.1)
|
7.5
|
12.4
|
Contracts initially recognised in
the period
|
870.2
|
(264.2)
|
(616.6)
|
(10.6)
|
Total changes relating to future
service
|
1,011.2
|
(284.4)
|
(725.0)
|
1.8
|
|
|
|
|
|
Total changes relating to past
service - adjustments to the LIC
|
16.2
|
215.8
|
-
|
232.0
|
|
|
|
|
|
Recognised in insurance service result
|
1,920.7
|
(37.3)
|
(33.6)
|
1,849.8
|
|
|
|
|
|
Finance (expenses)/income from
insurance contracts issued
|
(190.2)
|
(13.9)
|
34.8
|
(169.3)
|
Foreign exchange
gains/(losses)
|
1.9
|
(0.6)
|
(4.2)
|
(2.9)
|
Other amounts recognised in total comprehensive
income
|
(188.3)
|
(14.5)
|
30.6
|
(172.2)
|
|
|
|
|
|
Premiums received net of insurance
acquisition cash flows
|
(4,526.4)
|
-
|
-
|
(4,526.4)
|
Claims and other directly
attributable expenses paid
|
2,223.8
|
-
|
-
|
2,223.8
|
Total cash flows
|
(2,302.6)
|
-
|
-
|
(2,302.6)
|
|
|
|
|
|
Closing insurance contract
assets
|
103.8
|
(1.2)
|
(1.1)
|
101.5
|
Closing insurance contract
liabilities
|
(6,874.5)
|
(774.8)
|
(342.9)
|
(7,992.2)
|
Net
insurance contract liabilities at 31 December
2023
|
(6,770.7)
|
(776.0)
|
(344.0)
|
(7,890.7)
|
|
Present
value of future cash flows
|
Risk
adjustment for non-financial risk
|
CSM
|
Total
|
31 December 2022
|
$m
|
$m
|
$m
|
$m
|
Opening insurance contract
assets
|
-
|
-
|
-
|
-
|
Opening insurance contract
liabilities
|
(5,628.3)
|
(740.3)
|
(190.9)
|
(6,559.5)
|
Net
insurance contract liabilities at 01 January 2022
|
(5,628.3)
|
(740.3)
|
(190.9)
|
(6,559.5)
|
|
|
|
|
|
CSM recognised in profit or loss for
services provided
|
-
|
-
|
565.2
|
565.2
|
Changes in the risk adjustment for
non-financial risk for risk expired
|
-
|
274.7
|
-
|
274.7
|
Experience adjustments
|
518.4
|
(268.6)
|
-
|
249.8
|
Total changes relating to current
service
|
518.4
|
6.1
|
565.2
|
1,089.7
|
|
|
|
|
|
Changes in estimates that adjust the
CSM
|
57.2
|
61.5
|
(118.7)
|
-
|
Changes in estimates that result in
onerous contract losses or reversal of such losses
|
42.7
|
(3.0)
|
18.5
|
58.2
|
Contracts initially recognised in
the period
|
898.3
|
(324.8)
|
(607.6)
|
(34.1)
|
Total changes relating to future
service
|
998.2
|
(266.3)
|
(707.8)
|
24.1
|
|
|
|
|
|
Total changes relating to past
service - adjustments to the LIC
|
(517.3)
|
237.9
|
-
|
(279.4)
|
|
|
|
|
|
Recognised in insurance service result
|
999.3
|
(22.3)
|
(142.6)
|
834.4
|
|
|
|
|
|
Finance income/(expenses) from
insurance contracts issued
|
261.8
|
29.5
|
(11.8)
|
279.5
|
Foreign exchange gains
|
45.9
|
8.9
|
4.3
|
59.1
|
Other amounts recognised in total comprehensive
income
|
307.7
|
38.4
|
(7.5)
|
338.6
|
|
|
|
|
|
Premiums received net of insurance
acquisition cash flows
|
(4,141.0)
|
-
|
-
|
(4,141.0)
|
Claims and other directly
attributable expenses paid
|
2,261.8
|
-
|
-
|
2,261.8
|
Total cash flows
|
(1,879.2)
|
-
|
-
|
(1,879.2)
|
|
|
|
|
|
Closing insurance contract
assets
|
123.5
|
(12.9)
|
(26.5)
|
84.1
|
Closing insurance contract
liabilities
|
(6,324.0)
|
(711.3)
|
(314.5)
|
(7,349.8)
|
Net
insurance contract liabilities at 31 December
2022
|
(6,200.5)
|
(724.2)
|
(341.0)
|
(7,265.7)
|
ii) Reinsurance contracts held
The tables below set out the
estimates of the present value of future cash flows, risk
adjustment for non-financial risk and CSM for reinsurance contracts
held.
|
Present
value of future cash flows
|
Risk
adjustment for non-financial risk
|
CSM
|
Total
|
31 December 2023
|
$m
|
$m
|
$m
|
$m
|
Opening reinsurance contract
assets
|
1,853.3
|
184.6
|
137.4
|
2,175.3
|
Opening reinsurance contract
liabilities
|
(193.8)
|
12.7
|
19.9
|
(161.2)
|
Net
reinsurance contract assets at 01 January 2023
|
1,659.5
|
197.3
|
157.3
|
2,014.1
|
|
|
|
|
|
CSM recognised in profit or loss for
the services provided
|
-
|
-
|
(290.8)
|
(290.8)
|
Changes in the risk adjustment for
non-financial risk for the risk expired
|
-
|
(105.2)
|
-
|
(105.2)
|
Experience adjustments
|
(139.0)
|
84.2
|
-
|
(54.8)
|
Total changes relating to current
service
|
(139.0)
|
(21.0)
|
(290.8)
|
(450.8)
|
|
|
|
|
|
Changes in estimates that adjust the
CSM
|
91.6
|
(16.1)
|
(75.5)
|
-
|
Contracts initially recognised in
the period
|
(436.3)
|
84.2
|
352.1
|
-
|
Total changes relating to future
service
|
(344.7)
|
68.1
|
276.6
|
-
|
|
|
|
|
|
Adjustments to incurred claims
recovery
|
(110.9)
|
(41.3)
|
-
|
(152.2)
|
Effect of changes in the risk of
reinsurers non-performance
|
4.2
|
-
|
-
|
4.2
|
Total changes relating to past
service
|
(106.7)
|
(41.3)
|
-
|
(148.0)
|
|
|
|
|
|
Recognised in insurance service result
|
(590.4)
|
5.8
|
(14.2)
|
(598.8)
|
|
|
|
|
|
Finance income/(expenses) from
reinsurance contracts held
|
24.0
|
5.7
|
(13.8)
|
15.9
|
Foreign exchange
(losses)/gains
|
(20.6)
|
15.8
|
0.3
|
(4.5)
|
Other amounts recognised in total comprehensive
income
|
3.4
|
21.5
|
(13.5)
|
11.4
|
|
|
|
|
|
Premiums paid net of ceding
commissions and other directly attributable expenses
paid
|
1,080.4
|
-
|
-
|
1,080.4
|
Recoveries from
reinsurance
|
(413.9)
|
-
|
-
|
(413.9)
|
Total cash flows
|
666.5
|
-
|
-
|
666.5
|
|
|
|
|
|
Closing reinsurance contract
assets
|
2,143.4
|
166.2
|
117.1
|
2,426.7
|
Closing reinsurance contract
liabilities
|
(404.4)
|
58.4
|
12.5
|
(333.5)
|
Net
reinsurance contract assets at 31 December 2023
|
1,739.0
|
224.6
|
129.6
|
2,093.2
|
|
Present
value of future cash flows
|
Risk
adjustment for non-financial risk
|
CSM
|
Total
|
31 December 2022
|
$m
|
$m
|
$m
|
$m
|
Opening reinsurance contract
assets
|
1,453.7
|
177.0
|
43.6
|
1,674.3
|
Opening reinsurance contract
liabilities
|
(156.6)
|
13.8
|
3.1
|
(139.7)
|
Net
reinsurance contract assets at 01 January 2022
|
1,297.1
|
190.8
|
46.7
|
1,534.6
|
|
|
|
|
|
CSM recognised in profit or loss for
the services provided
|
-
|
-
|
(195.3)
|
(195.3)
|
Changes in the risk adjustment for
non-financial risk for the risk expired
|
-
|
(74.3)
|
-
|
(74.3)
|
Experience adjustments
|
(29.8)
|
65.7
|
-
|
35.9
|
Total changes relating to current
service
|
(29.8)
|
(8.6)
|
(195.3)
|
(233.7)
|
|
|
|
|
|
Changes in estimates that adjust the
CSM
|
264.4
|
7.1
|
(271.5)
|
-
|
Contracts initially recognised in
the period
|
(646.2)
|
74.1
|
572.1
|
-
|
Total changes relating to future
service
|
(381.8)
|
81.2
|
300.6
|
-
|
|
|
|
|
|
Adjustments to incurred claims
recovery
|
307.8
|
(53.0)
|
-
|
254.8
|
Effect of changes in the risk of
reinsurers non-performance
|
(32.6)
|
-
|
-
|
(32.6)
|
Total changes relating to past
service
|
275.2
|
(53.0)
|
-
|
222.2
|
|
|
|
|
|
Recognised in insurance service result
|
(136.4)
|
19.6
|
105.3
|
(11.5)
|
|
|
|
|
|
Finance expenses from reinsurance
contracts held
|
(82.6)
|
(10.7)
|
(3.2)
|
(96.5)
|
Foreign exchange
(losses)/gains
|
(6.9)
|
(2.4)
|
8.5
|
(0.8)
|
Other amounts recognised in total comprehensive
income
|
(89.5)
|
(13.1)
|
5.3
|
(97.3)
|
|
|
|
|
|
Premiums paid net of ceding
commissions and other directly attributable expenses
paid
|
961.7
|
-
|
-
|
961.7
|
Recoveries from
reinsurance
|
(373.4)
|
-
|
-
|
(373.4)
|
Total cash flows
|
588.3
|
-
|
-
|
588.3
|
|
|
|
|
|
Closing reinsurance contract
assets
|
1,853.3
|
184.6
|
137.4
|
2,175.3
|
Closing reinsurance contract
liabilities
|
(193.8)
|
12.7
|
19.9
|
(161.2)
|
Net
reinsurance contract assets at 31 December 2022
|
1,659.5
|
197.3
|
157.3
|
2,014.1
|
18b Analysis of the liability for
remaining coverage and the liability for incurred claims
i)
Insurance contracts issued
The tables below analyse insurance
contract assets and liabilities between the LRC and the LIC for
insurance contracts issued.
|
LRC
|
LIC
|
Total
|
|
Excluding
Loss Component
|
Loss
Component
|
31 December 2023
|
$m
|
$m
|
$m
|
$m
|
Opening insurance contract
assets
|
87.2
|
-
|
(3.1)
|
84.1
|
Opening insurance contract
liabilities
|
(824.7)
|
(10.1)
|
(6,515.0)
|
(7,349.8)
|
Net
insurance contract liabilities at 01 January 2023
|
(737.5)
|
(10.1)
|
(6,518.1)
|
(7,265.7)
|
|
|
|
|
|
Insurance revenue
|
5,442.4
|
-
|
-
|
5,442.4
|
Insurance service
expenses:
|
|
|
|
|
- Incurred claims and other directly
attributable expenses
|
(86.3)
|
-
|
(2,825.3)
|
(2,911.6)
|
- Changes that relate to past
service - adjustments to the LIC
|
-
|
-
|
232.0
|
232.0
|
- Losses on onerous contracts and
reversal of those losses
|
-
|
1.8
|
-
|
1.8
|
- Insurance acquisition cash flows
amortisation
|
(914.8)
|
-
|
-
|
(914.8)
|
Recognised in insurance service result
|
4,441.3
|
1.8
|
(2,593.3)
|
1,849.8
|
|
|
|
|
|
Finance income/(expenses) from
insurance contracts issued
|
70.8
|
-
|
(240.1)
|
(169.3)
|
Foreign exchange
gains/(losses)
|
4.7
|
-
|
(7.6)
|
(2.9)
|
Other amounts recognised in total comprehensive
income
|
75.5
|
-
|
(247.7)
|
(172.2)
|
|
|
|
|
|
Premiums received net of insurance
acquisition cash flows
|
(4,526.4)
|
-
|
-
|
(4,526.4)
|
Claims and other directly
attributable expenses paid
|
-
|
-
|
2,223.8
|
2,223.8
|
Total cash flows
|
(4,526.4)
|
-
|
2,223.8
|
(2,302.6)
|
|
|
|
|
|
Closing insurance contract
assets
|
101.7
|
-
|
(0.2)
|
101.5
|
Closing insurance contract
liabilities
|
(848.8)
|
(8.3)
|
(7,135.1)
|
(7,992.2)
|
Net
insurance contract liabilities at 31 December
2023
|
(747.1)
|
(8.3)
|
(7,135.3)
|
(7,890.7)
|
|
|
LRC
|
LIC
|
Total
|
|
|
Excluding
Loss Component
|
Loss
Component
|
|
31 December 2022
|
$m
|
$m
|
$m
|
$m
|
|
Opening insurance contract
assets
|
-
|
-
|
-
|
-
|
|
Opening insurance contract
liabilities
|
(688.1)
|
(34.3)
|
(5,837.1)
|
(6,559.5)
|
|
Net
insurance contract liabilities at 01 January 2022
|
(688.1)
|
(34.3)
|
(5,837.1)
|
(6,559.5)
|
|
|
|
|
|
|
|
Insurance revenue
|
4,848.4
|
-
|
-
|
4,848.4
|
|
Insurance service
expenses:
|
|
|
|
|
|
- Incurred claims and other directly
attributable expenses
|
(41.0)
|
-
|
(2,867.6)
|
(2,908.6)
|
|
- Changes that relate to past
service - adjustments to the LIC
|
-
|
-
|
(279.4)
|
(279.4)
|
|
- Losses on onerous contracts and
reversal of those losses
|
-
|
24.1
|
-
|
24.1
|
|
- Insurance acquisition cash flows
amortisation
|
(850.1)
|
-
|
-
|
(850.1)
|
|
Recognised in insurance service result
|
3,957.3
|
24.1
|
(3,147.0)
|
834.4
|
|
|
|
|
|
|
|
Finance income from insurance
contracts issued
|
129.5
|
-
|
150.0
|
279.5
|
|
Foreign exchange gains
|
4.8
|
0.1
|
54.2
|
59.1
|
|
Other amounts recognised in total comprehensive
income
|
134.3
|
0.1
|
204.2
|
338.6
|
|
|
|
|
|
|
|
Premiums received net of insurance
acquisition cash flows
|
(4,141.0)
|
-
|
-
|
(4,141.0)
|
|
Claims and other directly
attributable expenses paid
|
-
|
-
|
2,261.8
|
2,261.8
|
|
Total cash flows
|
(4,141.0)
|
-
|
2,261.8
|
(1,879.2)
|
|
|
|
|
|
|
|
Closing insurance contract
assets
|
87.2
|
-
|
(3.1)
|
84.1
|
|
Closing insurance contract
liabilities
|
(824.7)
|
(10.1)
|
(6,515.0)
|
(7,349.8)
|
|
Net
insurance contract liabilities at 31 December
2022
|
(737.5)
|
(10.1)
|
(6,518.1)
|
(7,265.7)
|
|
|
|
|
|
|
|
|
|
|
| |
ii) Reinsurance contracts held
The tables below analyse reinsurance
contract assets and liabilities between the ARC and AIC for
reinsurance contracts held.
|
ARC¹
|
AIC
|
Total
|
31 December 2023
|
$m
|
$m
|
$m
|
Opening reinsurance contract
assets
|
24.9
|
2,150.4
|
2,175.3
|
Opening reinsurance contract
liabilities
|
(254.7)
|
93.5
|
(161.2)
|
Net
reinsurance contract assets at 01 January 2023
|
(229.8)
|
2,243.9
|
2,014.1
|
|
|
|
|
Expected claims and other expenses
recovery
|
(1,419.8)
|
679.3
|
(740.5)
|
Changes in the risk adjustment
recognised for the risk expired
|
(189.4)
|
84.2
|
(105.2)
|
CSM recognised for the services
received
|
(290.8)
|
-
|
(290.8)
|
Other amounts including experience
adjustments
|
9.2
|
-
|
9.2
|
Allocation of reinsurance
premium
|
(1,890.8)
|
763.5
|
(1,127.3)
|
Effect of changes in the risk of
reinsurers' non-performance
|
(1.3)
|
5.5
|
4.2
|
Claims recovered
|
767.1
|
(87.0)
|
680.1
|
Other incurred directly attributable
expenses
|
(0.5)
|
(3.1)
|
(3.6)
|
Changes that relate to past service
- adjustments to incurred claims recovery
|
-
|
(152.2)
|
(152.2)
|
Amounts recoverable from reinsurers
for incurred claims
|
765.3
|
(236.8)
|
528.5
|
Net
expenses from reinsurance contracts held
|
(1,125.5)
|
526.7
|
(598.8)
|
|
|
|
|
Finance (expenses)/income from
reinsurance contracts held
|
(40.9)
|
56.8
|
15.9
|
Foreign exchange
(losses)/gains
|
(6.1)
|
1.6
|
(4.5)
|
Other amounts recognised in total comprehensive
income
|
(47.0)
|
58.4
|
11.4
|
|
|
|
|
Premiums paid net of ceding
commissions and other directly attributable expenses
paid
|
1,080.4
|
-
|
1,080.4
|
Recoveries from
reinsurance
|
-
|
(413.9)
|
(413.9)
|
Total cash flows
|
1,080.4
|
(413.9)
|
666.5
|
|
|
|
|
Closing reinsurance contract
assets
|
758.4
|
1,668.3
|
2,426.7
|
Closing reinsurance contract
liabilities
|
(1,080.3)
|
746.8
|
(333.5)
|
Net
reinsurance contract assets at 31 December 2023
|
(321.9)
|
2,415.1
|
2,093.2
|
1
Includes loss recovery component of $3.8m at 01
January 2023 and $0.9m at 31 December 2023.
|
ARC¹
|
AIC
|
Total
|
31 December 2022
|
$m
|
$m
|
$m
|
Opening reinsurance contract
assets
|
(29.0)
|
1,703.3
|
1,674.3
|
Opening reinsurance contract
liabilities
|
(223.4)
|
83.7
|
(139.7)
|
Net
reinsurance contract assets/(liabilities) at 01 January
2022
|
(252.4)
|
1,787.0
|
1,534.6
|
|
|
|
|
Expected claims and other expenses
recovery
|
(1,002.1)
|
270.3
|
(731.8)
|
Changes in the risk adjustment
recognised for the risk expired
|
(140.0)
|
65.7
|
(74.3)
|
CSM recognised for the services
received
|
(195.3)
|
-
|
(195.3)
|
Other amounts including experience
adjustments
|
36.0
|
-
|
36.0
|
Allocation of reinsurance
premium
|
(1,301.4)
|
336.0
|
(965.4)
|
Effect of changes in the risk of
reinsurers' non-performance
|
(1.4)
|
(31.2)
|
(32.6)
|
Claims recovered
|
368.3
|
365.1
|
733.4
|
Other incurred directly attributable
expenses
|
5.1
|
(6.8)
|
(1.7)
|
Changes that relate to past service
- adjustments to incurred claims recovery
|
-
|
254.8
|
254.8
|
Amounts recoverable from reinsurers
for incurred claims
|
372.0
|
581.9
|
953.9
|
Net
expenses from reinsurance contracts held
|
(929.4)
|
917.9
|
(11.5)
|
|
|
|
|
Finance expenses from reinsurance
contracts held
|
(22.5)
|
(74.0)
|
(96.5)
|
Foreign exchange
gains/(losses)
|
12.8
|
(13.6)
|
(0.8)
|
Other amounts recognised in total comprehensive
income
|
(9.7)
|
(87.6)
|
(97.3)
|
|
|
|
|
Premiums paid net of ceding
commissions and other directly attributable expenses
paid
|
961.7
|
-
|
961.7
|
Recoveries from
reinsurance
|
-
|
(373.4)
|
(373.4)
|
Total cash flows
|
961.7
|
(373.4)
|
588.3
|
|
|
|
|
Closing reinsurance contract
assets
|
24.9
|
2,150.4
|
2,175.3
|
Closing reinsurance contract
liabilities
|
(254.7)
|
93.5
|
(161.2)
|
Net
reinsurance contract assets/(liabilities) at 31 December
2022
|
(229.8)
|
2,243.9
|
2,014.1
|
1
Includes loss recovery component of $3.4m at 01
January 2022 and $3.8m at 31 December 2022.
18c New business
i)
Impact of insurance contracts issued in the year
The following tables show the impact
of new insurance contracts issued in the period. These are broken
down by contracts which were/were not deemed to be onerous on
initial recognition.
|
Non-onerous contracts originated
|
Onerous
contracts originated
|
Total
|
Year ended 31 December
2023
|
$m
|
$m
|
$m
|
Estimated present value of future
cash outflows:
|
|
|
|
- Insurance acquisition cash
flows
|
(759.3)
|
(68.1)
|
(827.4)
|
- Claims and other directly
attributable expenses
|
(2,489.8)
|
(176.7)
|
(2,666.5)
|
Estimated present value of future
cash inflows
|
4,115.0
|
249.1
|
4,364.1
|
Risk adjustment for non-financial
risk
|
(249.3)
|
(14.9)
|
(264.2)
|
Contractual service
margin
|
(616.6)
|
-
|
(616.6)
|
Net
increase in insurance contract liabilities
|
-
|
(10.6)
|
(10.6)
|
|
Non-onerous contracts originated
|
Onerous
contracts originated
|
Total
|
Year ended 31 December
2022
|
$m
|
$m
|
$m
|
Estimated present value of future
cash outflows:
|
|
|
|
- Insurance acquisition cash
flows
|
(531.9)
|
(112.1)
|
(644.0)
|
- Claims and other directly
attributable expenses
|
(1,720.7)
|
(391.2)
|
(2,111.9)
|
Estimated present value of future
cash inflows
|
3,077.9
|
576.3
|
3,654.2
|
Risk adjustment for non-financial
risk
|
(217.7)
|
(107.1)
|
(324.8)
|
Contractual service
margin
|
(607.6)
|
-
|
(607.6)
|
Net
increase in insurance contract liabilities
|
-
|
(34.1)
|
(34.1)
|
ii) Impact of reinsurance contracts held in the
year
The following table shows the impact
of new reinsurance contracts initially recognised in the period
which were not deemed to originate with a loss recovery component.
Contracts originating with a loss recovery
component are $0.3m (2022: $12.1m).
|
2023
|
2022
|
|
$m
|
$m
|
Estimated present value of future
cash outflows
|
(1,253.5)
|
(1,671.6)
|
Estimated present value of future
cash inflows
|
817.2
|
1,025.4
|
Risk adjustment for non-financial
risk
|
84.2
|
74.1
|
Contractual service
margin
|
352.1
|
572.1
|
Net
increase in reinsurance contract assets
|
-
|
-
|
18d Future CSM release
The tables below show when the Group
expects to release the closing CSM to the profit or loss in
appropriate future time bands. It is presented for both insurance
contracts issued and reinsurance contracts held.
|
2023
|
2022
|
Insurance contracts
issued
|
$m
|
$m
|
Number of years until expected to be
recognised
|
|
|
1
|
299.0
|
301.7
|
2
|
14.7
|
12.5
|
3
|
10.5
|
8.9
|
4
|
7.6
|
6.6
|
5
|
5.1
|
4.8
|
6-10
|
7.1
|
6.5
|
>10
|
-
|
-
|
Total
|
344.0
|
341.0
|
|
2023
|
2022
|
Reinsurance contracts
held
|
$m
|
$m
|
Number of years until expected to be
recognised
|
|
|
1
|
118.7
|
143.0
|
2
|
3.7
|
4.4
|
3
|
2.6
|
3.0
|
4
|
1.8
|
2.2
|
5
|
1.2
|
1.7
|
6-10
|
1.6
|
3.0
|
>10
|
-
|
-
|
Total
|
129.6
|
157.3
|
18e Claims development
The following tables show the
estimates of cumulative ultimate claims for each successive
underwriting year from five years prior to the reporting date,
reconciled back to LIC. This information has been provided on a
gross of reinsurance basis and separately for reinsurance contracts
held. As the Group has not previously published claims development
information on an IFRS 17 basis, only claims development from the
2019 underwriting year onward (being five years before the end of
the annual reporting period in which IFRS 17 was first applied by
the Group) has been disclosed below. In the below tables, historic
periods have been revalued using current exchange rates. The
cumulative estimate of claims and recoveries comprise expected
claims and reinsurance recovery cash flows only and do not include
the risk adjustment, premiums or acquisition costs.
|
Underwriting year
|
Insurance contracts
issued
|
2019
|
2020
|
2021
|
2022
|
2023
|
Total
|
2023
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
At end of underwriting
year
|
1,712.5
|
2,309.3
|
2,699.4
|
3,123.8
|
3,112.0
|
|
1 year later
|
2,205.2
|
2,696.3
|
2,966.1
|
3,030.4
|
|
|
2 years later
|
2,236.2
|
2,802.2
|
2,782.1
|
|
|
|
3 years later
|
2,231.5
|
2,649.2
|
|
|
|
|
4 years later
|
2,221.9
|
|
|
|
|
|
Cumulative gross estimate of
claims
|
2,221.9
|
2,649.2
|
2,782.1
|
3,030.4
|
3,112.0
|
13,795.6
|
Cumulative payments to
date
|
(1,696.9)
|
(1,765.3)
|
(1,319.5)
|
(941.9)
|
(287.3)
|
(6,010.9)
|
Carrying amount relating to 2018 and
prior underwriting years
|
|
|
|
|
|
1,102.7
|
Less liability for remaining
coverage claims only
|
|
|
|
|
|
(1,835.6)
|
Impact of discounting
(LIC)
|
|
|
|
|
|
(555.5)
|
LIC risk adjustment for
non-financial risk
|
|
|
|
|
|
639.0
|
Gross discounted LIC
|
|
|
|
|
|
7,135.3
|
|
Underwriting year
|
Reinsurance contracts
held
|
2019
|
2020
|
2021
|
2022
|
2023
|
Total
|
2023
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
At end of underwriting
year
|
(290.9)
|
(455.4)
|
(700.1)
|
(934.1)
|
(520.9)
|
|
1 year later
|
(412.1)
|
(635.1)
|
(708.9)
|
(884.2)
|
|
|
2 years later
|
(376.4)
|
(700.0)
|
(708.1)
|
|
|
|
3 years later
|
(394.9)
|
(577.1)
|
|
|
|
|
4 years later
|
(423.5)
|
|
|
|
|
|
Cumulative gross estimate of claims
recoveries
|
(423.5)
|
(577.1)
|
(708.1)
|
(884.2)
|
(520.9)
|
(3,113.8)
|
Cumulative payments to
date
|
263.5
|
347.1
|
119.0
|
69.5
|
13.8
|
812.9
|
Carrying amount relating to 2018 and
prior underwriting years
|
|
|
|
|
|
(451.9)
|
Less asset for remaining coverage
claims only
|
|
|
|
|
|
338.7
|
Impact of discounting
(AIC)
|
|
|
|
|
|
190.4
|
AIC risk adjustment for
non-financial risk
|
|
|
|
|
|
(191.4)
|
Reinsurance discounted AIC
|
|
|
|
|
|
(2,415.1)
|
Alternative performance measures ("APMs")
Beazley plc uses APMs to help
explain its financial performance and position. These measures are
not defined under IFRS. The Group is of the view that the use of
these measures enhances the usefulness of our financial reporting
and allows for improved comparison to industry peers.
Information on APMs used by the
Group is set out below. Unless otherwise stated, amounts are
disclosed in millions of dollars ($m). As a result of the adoption
of IFRS 17, comparative information has been restated for the year
ended 31 December 2022. This applies to income statement figures in
addition to net assets (total equity). Amounts which have been
restated are indicated with an asterisk (*).
Insurance written premiums & net insurance written
premiums
Insurance written premiums ($m) is
calculated by deducting the reinstatement premiums and profit
commissions from the gross premiums written. Net insurance written
premiums ($m) is calculated by adding insurance ceded premiums to
this result. These APMs represent management's view of premiums
written in each period, similar to the previous "Gross premiums
written" metric reported under IFRS 4. The primary difference
between insurance written premiums and insurance revenue relates to
the deferral and earning of income over the period in which
coverage is provided.
|
2023
|
2022
|
|
$m
|
$m
|
Insurance written
premiums
|
5,601.4
|
5,246.3
|
Earnings adjustment
|
(159.0)
|
(397.9)
|
Insurance revenue
|
5,442.4
|
4,848.4
|
|
2023
|
2022
|
|
$m
|
$m
|
Insurance ceded premiums
|
(905.2)
|
(1,473.9)
|
Earnings adjustment
|
(222.1)
|
508.5
|
Allocation of reinsurance premiums
|
(1,127.3)
|
(965.4)
|
|
2023
|
2022
|
|
$m
|
$m
|
Insurance written
premiums
|
5,601.4
|
5,246.3
|
Add insurance ceded
premiums
|
(905.2)
|
(1,473.9)
|
Net
insurance written premiums
|
4,696.2
|
3,772.4
|
Claims, expense & combined ratios
Claims ratio (%) is calculated as
insurance service expenses less directly attributable expenses, net
of reinsurance recoveries, divided by insurance revenue net of
reinsurance ceded revenue. Expense ratio (%) is calculated as the
sum of insurance acquisition cash flows amortisation and other
directly attributable expenses, divided by insurance revenue net of
reinsurance ceded revenue. Combined ratio (%) is calculated as
insurance service expenses net of reinsurance recoveries, divided
by the insurance revenue net of reinsurance ceded revenue. This is
also the sum of the claims and expense ratios. The combined ratio
below is shown with and without the impact of
discounting.
|
2023
|
2022
|
Insurance service expenses
($m)
|
3,592.6
|
4,014.0
|
Less directly attributable expenses
($m)1
|
(1,362.6)
|
(1,217.6)
|
Amounts recoverable from reinsurers
for incurred claims ($m)
|
(528.5)
|
(953.9)
|
Net claims ($m)
|
1,701.5
|
1,842.5
|
Insurance revenue ($m)
|
5,442.4
|
4,848.4
|
Allocation of reinsurance premium
($m)
|
(1,127.3)
|
(965.4)
|
Divided by net insurance revenue
($m)
|
4,315.1
|
3,883.0
|
Claims ratio
|
39%
|
47%
|
Directly attributable expenses
($m)1
|
1,362.6
|
1,217.6
|
Divided by net insurance revenue
($m)
|
4,315.1
|
3,883.0
|
Expense ratio
|
32%
|
32%
|
Combined ratio
|
71%
|
79%
|
Effect of discounting
|
3%
|
3%
|
Combined ratio (undiscounted)
|
74%
|
82%
|
1 Directly attributable expenses are comprised of insurance
acquisition cash flows amortisation, other directly attributable
expenses, and share of expenses and other amounts per Note
2.
Net
assets per share & net tangible assets per
share
Net assets per share is the ratio
(in pence and cents) calculated by dividing the net assets or total
equity of the Group by the number of shares in issue at the end of
the period, excluding those held by the employee benefits trust.
Net tangible assets per share excludes intangible assets from net
assets in the above calculation.
|
2023
|
2022
|
Net assets* ($m)
|
3,882.1
|
2,955.0
|
Less intangible assets
($m)
|
(165.3)
|
(128.8)
|
Net tangible assets* ($m)
|
3,716.8
|
2,826.2
|
Divided by the shares in issue at
the period end (millions)1:
|
662.7
|
665.4
|
Net
assets per share (cents)*
|
585.8
|
444.1
|
Net
tangible assets per share (cents)*
|
560.9
|
424.7
|
Converted at spot rate:
|
0.80
|
0.82
|
Net
assets per share (pence)*
|
468.6
|
364.2
|
Net
tangible assets per share (pence)*
|
448.7
|
348.3
|
1
Shares in issue at the period end exclude those
held by the employee benefits trust.
Return on equity
Return on equity (%) is calculated
by dividing the consolidated profit after tax by the average equity
for the period. Average equity for the period was previously
calculated as the monthly weighted average closing equity position.
We have updated our approach to use an average of the opening and
closing equity positions, and this is reflected in both the current
and comparative periods.
|
2023
|
2022
|
Profit after tax* ($m)
|
1,026.8
|
483.3
|
Divided by average total equity*
($m)
|
3,418.6
|
2,572.6
|
Return on equity*
|
30%
|
19%
|
Investment return
Investment return (%) is calculated
by dividing the net investment income by the average financial
assets at fair value and cash and cash equivalents held by the
Group over the period.
|
2023
|
2022
|
Net investment income/(loss)
($m)
|
480.2
|
(179.7)
|
Opening invested assets:
|
|
|
Financial assets at fair value
($m)
|
8,345.6
|
7,283.5
|
Cash and cash equivalents
($m)
|
652.5
|
591.8
|
Invested assets at the beginning of the period
($m)
|
8,998.1
|
7,875.3
|
Closing invested assets:
|
|
|
Financial assets at fair value
($m)
|
9,665.5
|
8,345.6
|
Cash and cash equivalents
($m)
|
812.3
|
652.5
|
Invested assets at the end of the period:
($m)
|
10,477.8
|
8,998.1
|
Divided by average invested assets ($m)
|
9,738.0
|
8,436.7
|
Annualised investment return
|
4.9%
|
(2.1)%
|
ENDS