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Cover

Cover. Results for the six months ended 30 June 2008 Friday, 25 July 2008. Disclaimer notice.

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Cover

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  1. Cover Results for the six months ended 30 June 2008 Friday, 25 July 2008

  2. Disclaimer notice Certain statements in the presentation, are or may constitute “forward looking statements”. Such forward looking statements involve risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed by such forward looking statements. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. There is no intention, nor is any duty or obligation assumed to supplement, amend, update or revise any of the information contained in this presentation.

  3. Contents Overview 4 Financials 7 Performance 8 Investments 9 Reserves 12 US performance 14 Capital 16 Divisional review 17 Cycle management 26 Outlook 29

  4. Generic title white Overview 4

  5. Overview • Profit before tax at £45.0m (2007: £60.2m) • Gross written premiums down 6% to £407.3m (2007: £434.1m) • Wrote US$139.1m of business through US (2007: US$77.9m) • Rate decrease on renewal portfolio of 8% (2007: 1% decrease) • Prior year reserve releases of £23.4m (2007: £25.2m) • Investment income decreased to £13.2m (2007: £32.6m) • Interim dividend up 10% to 2.2p • £53m distributed to shareholders via dividends and share buyback 5

  6. New organisation Adrian Cox - Head of Specialty Lines Neil Maidment - Head of Reinsurance & Chair of the Underwriting Committee Andrew Horton CEO Andrew Beazley Deputy Chairman David Marock - COO Jonathan Gray - Head of Property Nicholas Furlonge Director of Risk Management Clive Washbourn - Head of Marine Adrian Lewers - Head of Political Risks & Contingency Group 6

  7. Financials Financials 7

  8. Performance 8

  9. Investment income and return 9

  10. Investments 10

  11. Portfolio split 11

  12. Prior year reserve releases 12

  13. Incurred comparison – Specialty Lines * Top slice of bars show 6 months development to 30 June 2008 Ratio is incurred claims as a percentage of premiums net of brokerage and reinsurance costs 13

  14. Premiums written in US 14

  15. Gross written premiums by product in US 15

  16. Capital 16

  17. Divisional review Divisional review 17

  18. Specialty Lines • Largest division representing 42% of our portfolio as a whole • Prior year reserve release of £9.0m (2007 H1 £11.0m) • Minimal exposure to subprime/credit crunch losses due to our decision to avoid financial institutions (14 clients out of 309 lawsuits reported by Advisen) • 2009 outlook: continued growth in our US account to offset reductions in our Lloyd’s business. 18

  19. Political Risks and Contingency • Formerly part of Specialty Lines • Political risk • Contingency • Terrorism • Leading market in Lloyd’s across all 3 lines • Premiums written down principally due to softening terrorism market • Outlook for 2009: political risk rates will selectively harden in response to credit crunch and contingency will continue to grow 19

  20. Property • Premiums down due to non renewal 2 underperforming Homeowner books of business and poor market conditions on Commercial business • First half 2008 has seen an increase in loss activity on our Commercial account. Our exposure to these losses is contained within our planned loss ratio • 2009 outlook: trading conditions will still be difficult. However, large risk sectors effected by recent losses will see some hardening 20

  21. Marine • Gross premiums down due to rate softening. Offshore energy pricing down but still ahead of 2003 • Reinsurance programme is more efficient • Prior year reserve releases of £5.4m (2007 H1 £5.1m) • 2009 outlook: market conditions similar but offset by higher insured values as commodity prices stay high 21

  22. Reinsurance • Represents 12% of Group income and 22% of 2008 interim profits • Short-tail, primarily excess of loss • Focus on larger non-life markets • Objective: a sustainable, renewable portfolio with long-term perspective that helps manage inherent volatility in the account • Long-term approach means deep knowledge of accounts with many clients having been continuous renewals with us for over 15 years 22

  23. Reinsurance – profitable track record Forecast 23

  24. Reinsurance • Gross premiums written are up due to growth particularly in Europe • Prior year reserve releases of £4.0m (2007 H1 £1.2m) • Modest exposure to Chinese earthquake • 2009 outlook similar to 2008 dependent on hurricane season 24

  25. Rates 25

  26. Cycle management Cycle management 26

  27. Integrated cycle management strategy • Product • Geography • Duration • Size of risk Diversity Barriers to entry Application oftechnical skills Expertise Long-termobjectives Over 20 years, Beazley has developed and refined a cycle management strategy that has produced sustainable cross-cycle growth and profits • Stability • Relationships • Service • Pricing • Segmentation • Claims management • Reinsurance • Enterprise risk management • Specialist, not generalist • Underwriter-led management • Teams building toward their vision 27

  28. Cycle management: track record • History of successful soft cycle management (1989-1992 and 1998-2001) • As Beazley has grown, we have worked hard to institutionalise this knowledge. • Underwriter workshop sessions led by underwriting directors to share the knowledge and underwriting experience of our senior underwriters across all teams. • Underwriting Committee has endorsed underwriting and claims management principles for managing the soft parts of the cycle • Team 2009 business plans are being reviewed in August with an in-depth focus on each team’s soft cycle strategy 28

  29. Outlook Outlook 29

  30. Outlook and strategy Outlook Rates continue to fall in most areas Planning for further softening in 2009 – overall 2009 written premiums at this stage expected to be down on 2008. We should still see some growth in the US Claim reserves should continue to develop well Strategy Build on what we’ve got – use our talent Focus on Lloyd’s/US Diversify into smaller scale business as market softens Target small scale acquisitions (teams, MGAs, etc) Implement productivity initiatives Prepare platform for future opportunities 30

  31. Questions? Any questions? 31

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