Beazley plc | Annual report and accounts 2023
Strategic report
Financial statements
165 Consolidated statement of profit or loss
166 Consolidated statement of comprehensive income
167 Consolidated statement of changes in equity
168 Consolidated statement of financial position
169 Consolidated statement of cash flows
170 Notes to the financial statements
246 Company financial statements
253 Alternative performance measures ("APMs")
01
02
03
04
08
10
12
15
17
22
45
Highlights
Key performance indicators
Our strategy
Our business model
Statement of the Chair
Chief Executive Officer’s statement
Chief Underwriting Officer’s report
Performance by division
Responsible business
Task Force on Climate-Related
Financial Disclosures (TCFD) 2023
Non-financial and sustainability
information statement
50 Stakeholder engagement
57 Section 172 statement
Financial review
60
60 Group performance
65 Balance sheet management
67 Capital structure
Risk management & compliance
69
Governance
Governance at a glance
Chair's introduction to governance
Board of Directors
Corporate Governance report
76
78
80
83
100 Nomination Committee
106 Audit Committee
115 Risk Committee
120 Remuneration Committee
122
Letter from the Chair of our
Remuneration Committee
124 Directors’ remuneration report
146 Statement of Directors’ responsibilities
147 Directors’ report
152
Independent auditor’s report
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Highlights
Financial
Insurance written premiums*
Net insurance written premiums*
Insurance service result
$5,601.4m
$4,696.2m
$1,251.0m
(2022: $5,246.3m)
(2022: $3,772.4m)
(2022: $822.9m)
Net investment income/(loss)
Cash and investments
Investment return*
$480.2m
(2022: $(179.7)m)
$10,477.8m
(2022: $8,998.1m)
4.9%
(2022: (2.1)%)
Rate increase on renewals
Profit before tax for the financial year
Undiscounted combined ratio*
4%
(2022: 14%)
$1,254.4m
(2022: $584.0m)
74%
(2022: 82%)
The Group is of the view that some of the above metrics constitute alternative performance measures ("APMs"). These
are indicated using an asterisk (*), with further information included in the APMs section on pages 253-255.
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Beazley | Annual report 2023
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Key performance indicators
Financial
The Group is of the view that some of its KPIs constitute APMs, as indicated by an asterisk (*). With the exception of Dividends
per share, all of the above metrics have been impacted by the adoption of IFRS 17. Further information is included in the
Financial review on page 62 and the APMs section on pages 253-255.
Non-financial
Senior leadership roles held by
women
People of Colour representation in
the workforce
Overall carbon emissions
45%
(2022: 43%)
27%
(2022: 25%)
6,998.8tCO2e
(2022: 5,164.4 tCO2e)
Employee engagement
Employee favourability
86%
(2022: 85%)
80%
(2022: 80%)
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Earnings per share (c)79.0154.720222023020406080100120140160Dividends per share (p)13.514.2Interim20222023051015Net assets per share (c)*424.7560.919.424.9TangibleIntangible202220230100200300400500600Return on equity (%)*19302022202305101520253035Insurance written premiums ($m)*5,246.35,601.42022202301,0002,0003,0004,0005,0006,000Combined ratio (%)*323247397971Expense ratioClaims ratio 20222023020406080100120
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Beazley | Annual report 2023
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Beazley | Annual report 2023
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Beazley | Annual report 2023
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Statement of the Chair
Beazley delivered a record pre-tax profit in 2023 of $1,254.4m representing an increase of
115% on the previous year (2022: $584.0m). This equated to a return on equity of 30%
(2022: 19%) and earnings per share of 154.7c (2022: 79.0c). Our combined ratio reflected an
excellent insurance service result as it improved to 71% (2022: 79%) and 74% on an
undiscounted basis (2022: 82%). These results enable the Board to commit to a share
buyback programme of up to $325m. This is a powerful symbol of our confidence in the
Company, its business model and the future. It reflects hard work over the last 12 months
and I am pleased that we have repaid the confidence that you, our shareholders, place in
us to deliver.
I was proud to take up the role of Chair of the Board of
Directors in April 2023, and I've been impressed by the
teams whom I have worked with across Beazley. Our
colleagues demonstrate intellectual acuity, managerial agility
and are committed to our values: Being Bold, Striving for
Better and Doing the Right Thing. I am sure that, like me, the
545 other new colleagues we welcomed during 2023 will have
recognised these values in their everyday experience. It is this
that drives our competitive difference, enriching all our
stakeholders.
Beazley aims to be a leading global sustainable specialty
insurer. I am pleased to say that 2023 saw us make
significant strides forward to deliver that.
Leading – Our track record is of strong financial results, which
deliver excellent returns for our investors and shareholders,
through insurance solutions that are valued by our clients and
brokers.
Being a leader means both driving things forward and
stepping back when market changes dictate. Leading is not
easy, as the challenges in the cyber market this year have
shown; but when systemic cyber risk needed to be
addressed, Beazley was willing to 'stand up' and lead market
thinking.
Global – We are a global company operating from 25 offices
around the world. Through our wholesale platforms based in
London, Miami and Singapore, we underwrite 53% of our
Group premium. North America and European platforms
contribute 40% and 7% respectively. In 2023, we further
strengthened our global outreach with the appointment of
Fred Kleiterp to lead our future strategic vision for Europe,
plus the establishment of our onshore excess and surplus
(E&S) carrier in the US, which commenced underwriting in
January 2024.
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Beazley | Annual report 2023
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Sustainable – We continue to manage the risk of a changing
climate; harnessed to the real opportunities which energy
transition will bring. I was pleased that we were able to
present more detail on this at our Capital Markets’ Day in late
November 2023.
Our focus is on how, by better understanding the underlying
risks ourselves, we can support clients to adapt in ways that
will not only reduce their business risks but will actively
protect our environment from the worst impacts of climate
change.
Specialty – As a specialty insurer, our business adds most
value where things are complex, volatile or changing.
Evidence of our commercial prowess is seen in the fact that
we lead 87% of the business that our firm underwrites.
For instance, in the last 18 months the property insurance
market has understood that inflationary pressures,
demographics and climate change mean that as a class of
insurance it should no longer be commoditised. Instead
property insurance requires considerable underwriting skill; a
reality that since the start of 2023 has been reflected in
pricing; terms and conditions. This change has seen us lean
into property with Property Risks premiums increasing 64%
year on year. We are grateful to our shareholders who enabled
us to seize this opportunity, by supporting our November
2022 capital raise.
Geopolitical turmoil and economic uncertainty also highlights
the value of our specialist underwriting skills. In our MAP
Risks division, which includes business such as marine,
aviation, contingency and political risk, our team of expert
underwriters add considerable value to our brokers and their
clients, often underwriting policies for extremely difficult
environments such as areas of conflict in Ukraine or the
Middle East, or policies for the use of complex technology
solutions, including putting satellites into space.
Insurer – We have built a global underwriting model which
allows us to capitalise on opportunities or pause when
markets become unprofitable. This protects both our strategic
growth agenda and the interests of our clients.
We have an innovative, disciplined, underwriting led approach
to developing products to solve real world problems. We
combine this with a 'claims ecosystem' that consistently wins
praise. In 2023 we were also proud to win the Gracechurch
award for claims excellence for the eighth time in a row.
IFRS 17
This report marks the culmination of the first year of reporting
under IFRS 17. The Board was kept fully informed of the
progress of implementation throughout the year via regular
updates and interactions through its Audit Committee. It was
clear throughout, that it has been a challenging process and I
would like to thank everyone across the business for their
tireless efforts to ensure the successful introduction of the
new accounting standard.
Beazley is well governed
On 1 March 2024 we welcomed Carolyn Johnson as Chair of
our growing US operations and to the Beazley Plc Board. Her
appointment to the Board is designed to strengthen our
corporate structure with diverse and industry experienced
colleagues of her calibre.
Christine LaSala has signalled her intent to step down from
the Board, where she is the Senior Independent Non-
Executive Director, at the conclusion of the 2024 AGM. I
would like to thank Christine for her valuable input into the
Company and the Board over her tenure, perhaps most
notably when she stepped up as Interim Chair for six months
in late 2022.
Capital management
Our 2023 interim results presentation in September set out in
greater detail how we think about and plan our capital
management. This was a clear statement of our intent to
protect your company by maintaining a prudent capital surplus
above 170% of the Solvency Capital Ratio. We will manage
key underwriting risks’ exposure to equity (for example,
natural catastrophe risk to a 1:250 event) and consideration
of the prospects for profitable deployment of capital
generated into the Company’s future. These considerations
will be balanced versus appropriate returns of excess capital
to shareholders.
Capital return
With this approach to capital management in mind I am
pleased to say that the Board has proposed an ordinary
interim dividend of 14.2p for the full year, we are also
pleased to announce a share buyback programme of up to
$325m.
Risky business
We are an ambitious company that will deliver what we
promise. This is at the core of the Company's commit and
deliver philosophy, based on living up to our values and is the
source of our competitive advantage. It enables our clients to
explore, create and build their businesses, whilst positioning
Beazley for success as a leader in our market.
I want to thank our clients, brokers and shareholders for their
support over the last 12 months. The strength of our financial
result reflects intelligent navigation of the risky world in which
we all live and ensures we are here to support our clients and
brokers in the future. As a leading, global, sustainable,
specialty insurer we are in the risk business, but as shown
this year, with risk comes reward.
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Beazley | Annual report 2023
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Chief Executive Officer’s statement
I am pleased to be reporting a record pre-tax profit of $1,254.4m (2022: $584.0m), a strong
investment return of 4.9% (2022: (2.1)%) and an impressive combined ratio of 71% for
2023 (2022: 79%). Our results demonstrate that the clarity of our strategy across
platforms, products and geographies not only gives good access to risk but when
combined with disciplined underwriting and a responsive claims infrastructure, delivers
sustainable profits for all our stakeholders.
A year of achievement
Beazley achieved its goals in 2023. We successfully deployed
capital across the business to capture opportunities and our
insurance written premiums (IWP) now stands at $5,601.4m
(2022: $5,246.3m). Our net IWP growth of 24% gives a strong
indication of the Company's trajectory during 2023 and I am
pleased we've achieved this despite several headwinds.
Property Risks has had a particularly successful year with
premiums increasing by 64%, taking IWP to $1,351.9m (2022
$823.2m). The key strengths that have led to this positive
result are our expertise-led, specialty underwriting and our
knowledge based, client focused claims service. I would also
like to thank our trading partners, our brokers and our clients
across the world for their support of our business.
Access to high quality risk is delivered via our straightforward
and clear three platform strategy which brings together
Wholesale via Lloyd’s and insurance companies in North
America and Europe. In 2023 this strategy was further
enhanced with the establishment of our dedicated Excess and
Surplus (E&S) carrier in the US, which will open up access to
business that is currently often only available to onshore
carriers.
The appointment in June 2023 of Fred Kleiterp as European
General Manager has brought additional focus and energy to
our underwriting in the region and we look forward to seeing
the roll out of more of the products and services we are known
for across our platform in Europe.
There can hardly have been a more important moment for
Beazley to stand with our clients and deliver specialist
insurance risk management and capital as they address the
challenges of climate change, rapidly advancing digitisation
and a sea change in geopolitics. On all these key issues,
Beazley has made an important contribution during the last 12
months.
It was also great to see our investments team complement
the underwriting result, delivering an investment return of
4.9% (2022: loss of 2.1%). While we are primarily an
insurance company, with assets under management in excess
of $10bn, generating returns from our portfolio is a key focus
for us and it is pleasing to see the effort made in this area
bearing fruits.
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Underwriting for climate change
We moved at speed to be at the forefront of the market as
property insurers adjusted to the impact that climate change
is bringing and which we believe will create a long term
opportunity for Beazley, particularly in North America. We were
able to do this because of the hard work done on risk
selection, property valuations and, importantly, in building a
climate risk framework. This framework seeks to engage with
clients to understand, not just the impact of climate risk
today, but how it is evolving and changing.
This work is part of an ongoing journey to assess a risk that is
not following a linear path of development and to also seek
out the opportunities that the energy transition will bring.
As a specialty insurer we need to support businesses to move
beyond fossil fuels and during 2023 this saw us ramp up our
renewable energy underwriting capabilities and invest in
understanding how we can add further value to the carbon
capture and storage industry.
Leading on cyber
To meet growing demand from clients for cyber insurance we
believe it is vital for the industry to have access to a deep
pool of capital which will allow it to hedge accumulation risk.
We were therefore pleased, in January 2023, to be the first
insurance company to launch a cyber catastrophe bond and to
go further as the year turned with the launch of our first
publicly traded cyber catastrophe bond. We are also seeing
that broad market consensus is being achieved around the
complex subject of cyber war, bringing clarity of purpose to the
cover which is to the benefit of all.
Uncertainty calls for specialty
It is clear to us all that the geopolitical certainties that
persisted for much of the last 80 years have shifted and we
are in a challenging phase while new structures and norms
take hold. Our expertise in understanding global trade flows,
transportation and political uncertainty is actively helping
support clients as they navigate through.
Agile cycle management
We are able to deliver consistent profitability because we
operate a robust and effective approach to managing the
insurance cycle. In 2023 this was demonstrated by our strong
commitment to the Property Risks segment, where a change
in the rating environment offered significant opportunity. In
contrast, the directors and officers (D&O) market is suffering
from excessive competition and so we took the decision to
stand back. This is never easy and I want to commend our
Specialty Risks team for their professionalism and committed
underwriting discipline, noting that this has allowed them
space to creatively explore new and growing niches in the
liability market.
A team that delivers
I want to thank our outstanding team across disciplines and
geographies whose hard work and flexibility this year has
helped deliver our record profit. Their commitment to living our
values of Being Bold, Striving for Better and Doing the Right
Thing, whilst working alongside our broker partners and
supporting clients, is a key differentiator for Beazley and one
that ensures strong retention across the business.
While the contribution of the entire team underpins our
success, I would like to specifically mention some important
changes that have happened in our senior team during the
year. Brenna Westinghouse was promoted to Head of Strategy
and, in January 2024, we welcomed Liz Ashford as Chief
People Officer and Head of ESG.
Finally, I am looking forward to working with our new Chief
Financial Officer (CFO) Barbara Plucnar Jensen, who will join
Beazley on 1 May 2024. Barbara was, until late 2023, Group
CFO at Tryg and she comes with over 25 years of experience
in the financial services industry. Her depth and breadth of
experience, together with her leadership style, will be both a
great cultural fit and an asset to Beazley.
Responsibility
Being a Responsible Business is important to us and, in
2023, we reviewed our approach to further embedding ESG at
Beazley. This work will inform our next round of three year
target setting which is focused on maintaining the diversity of
our workforce where we already see significant progress (45%
senior women and 27% People of Colour) and in reducing our
contribution to carbon emissions which today are 47% lower
compared to 2019 levels when normalised per FTE.
I am pleased that our ESG Consortium, two years since
founding, is building positive momentum and from 1 January
2024 has moved fully to syndicate 5623. It is also exploring
how it can offer capacity via our North American and European
insurance companies, as client demand for ESG solutions
continues to develop.
Our Responsible Business efforts extend to our investment
portfolio and our Impact Investment Fund made a positive
contribution in 2023, by becoming a founding investor of the
Big Issue Social Impact Debt Fund, which will contribute to
housing, care and social infrastructure projects in the UK.
The work we have already concluded in the ESG space,
together with the continuing effort to include climate change
risk in our underwriting, will inform the development of our Net
Zero Transition plan which we will deliver during 2024.
Harnessing AI
2023 saw a leap forward in the capability of Artificial
Intelligence (AI) and in particular, Generative AI. We believe
that this technology will enable the simplification of manual
processes, improve decision making and ultimately improve
product and service offerings to brokers and clients. We are
continuing to expand our use of AI, including piloting
Generative AI in several areas of our business, to help
improve speed, accuracy and to reduce risk.
AI is opening up exciting new horizons where our expert teams
will increasingly be able to make faster and more effective
decisions that will enrich their work by reducing administrative
burdens. It will also improve our ability to grow, as the
technology takes up the operational strain that an expanding
business has historically created.
Getting on with the job
Recent years have seen many external challenges from
pandemic to war and the impact of climate change. At Beazley
we have been adapting to change, ensuring our underwriting
contemplates the evolving risk landscape, increasing our own
resilience and responding to customer needs. As we look
ahead, we continue to operate with one eye on emerging
threats and opportunities, be that AI technology or changes in
the legal environment, while the other is firmly set on ensuring
access for clients and brokers to our specialty products and
services. Our expectation for 2024 is for high single digit
gross IWP growth and an undiscounted combined ratio in line
with our initial guidance for 2023 of low 80s.
We believe that by continuing to focus on what we do best,
underwriting and managing specialty insurance risk, we will
fulfil our purpose of enabling our stakeholders to explore,
create and build and that this approach will deliver the
ongoing profitability that our investors rightly expect of us.
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Beazley | Annual report 2023
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Chief Underwriting Officer’s report
I am proud of our underwriting teams and their success in 2023. They have shown agility
and insight in the delivery of risk management expertise to our clients, whilst retaining a
laser like focus on underwriting profitability. As a result, we have delivered an excellent
Insurance Service Result of $1,251.0m, an increase of 52% on the previous year (2022:
$822.9m) and a combined ratio of 71% (2022: 79%).
This positive result is based on long-term investment into
understanding how risk is evolving so we can seize
underwriting opportunities as they develop and protect our
clients from emerging threats. These strong results are also
testament to the hand in glove partnership our underwriters
have with our award winning claims team, ensuring we have
some of the best underwriting intelligence available in the
market.
2023 saw us continue our work to get under the skin of
climate change risk as our five-pillar climate risk framework
began to be embedded into underwriting. Meanwhile in our
Cyber Risks business we presented our probabilistic
modelling framework externally.
Our underwriting
Our Property Risks team has had a standout year. The
investment they made during the soft cycle of the market paid
off as the rating environment improved, leading to a 64%
increase in IWP to $1,351.9m (2022: $823.2m). We expect
this growth to continue as we head into 2024, although not at
the same pace as we saw in 2023.
Innovation underwriting moved into the business as usual
phase as it became formally embedded within the wider
underwriting function and produced two new parametric
property underwriting products, focused on the risks
associated with severe convective storms in the US.
Generative AI may have hit the headlines this year, but for
some time we have been actively looking across our business
to better understand how AI impacts the risk environment and
where the potential for loss might be. In this effort the work of
our claims team has proved invaluable in identifying how the
risk is emerging and how it is impacting the claims and
litigation environment, ensuring we are able to effectively
respond as the adoption of the technology evolves.
In our Cyber Risks division, our focus is always on
understanding risk to improve our underwriting and protect
against emerging threats. The substantial rate increases of
2021 and early 2022 moderated during 2023 and we expect
this trend to be maintained.
We are confident that with our cyber ecosystem in place,
which provides comprehensive support to clients before,
during and after a cyber attack, the environment remains
attractive and demand-led growth will continue, notably across
our international business and particularly in Europe where we
see strong growth opportunities.
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Active cycle management is at the heart of our underwriting
and while the current conditions mean we are leaning into
property, in contrast we remain cautious in the D&O market.
Here rates remain very competitive and instead we are
rebalancing our Specialty Risk business by focusing on niche
classes.
Geopolitical uncertainty looks here to stay at least looking
ahead for the medium term and this is where our MAP Risks
division has a key role to play in helping to keep businesses
investing and trade moving. The work of our Marine team in
ensuring grain corridors in Ukraine remain open, or our
Political Risks underwriters’ support for clients’ overseas
operations in unstable parts of the world, is critical to this
effort.
We continue to refine and improve our product sets across
the globe. Through a focused roll out this year we have
expanded existing products such as virtual care, product
recall and media liability to new geographies, with Europe as
a region where we saw a step change in our underwriting and
which I expect to see develop further into 2024.
Our goal is to support business so that they can thrive and to
achieve this we seek to stay ahead of where risk is moving
and invest in developing our capabilities to help clients, whilst
retaining our focus on delivering positive returns for our
investors. I believe we lived up to this promise during 2023
and I look forward to continuing on this path in 2024.
Insurance written premiums
Cyber Risks
Digital
MAP Risks
Property Risks
Specialty Risks
Total
Net Insurance written premiums
Cyber Risks
Digital
MAP Risks
Property Risks
Specialty Risks
Total
2023
2022
$m
1,184.3
227.5
964.3
1,351.9
1,873.4
5,601.4
$m
1,157.8
231.7
1,115.2
823.2
1,918.4
5,246.3
2023
2022
$m
912.9
202.4
851.6
1,157.3
1,572.0
4,696.2
$m
839.5
190.6
780.2
603.0
1,359.1
3,772.4
Cyber Risks
Our Cyber Risks team delivered IWP of $1,184.3m, (2022:
$1,157.8m). The rating spike experienced in the previous two
years stabilised and with increased stability competition
entered, particularly in the US market, which led to our growth
predominantly coming from a strong performance by our
international business, particularly in Europe.
2023 was also the moment when the market began to mature
and address the challenges of systemic cyber risk, namely
the possibility that a single cyber event or incident might
trigger widespread failures and harmful impacts across
multiple entities, sectors, or countries. We took a leading
position in this with the robust approach we have
championed, thus succeeding in bringing much needed clarity
to the existing war exclusions. As we enter 2024, we are
seeing broad market consensus.
The innovations Cyber Risks has made over the last 12
months in the development of cyber catastrophe bonds and in
addressing systemic or catastrophic cyber risk, have been
made possible by the team’s ongoing work on modelling cyber
risk. We shared our approach to modelling catastrophic cyber
with the market during 2023, detailing our move to a
probabilistic modelling framework which is underpinned by
third party data and our own models to give greater insight
into cyber catastrophe scenarios.
Looking forward there is growing business demand for cyber
insurance and we are pleased to see that the insurance and
capital markets are responding by providing the additional
capacity the market needs to reach its potential. In particular
we see an opportunity to grow among businesses with
revenues below $250m, where our expertise and experience
of managing cyber risk adds real value to their operations.
Ransomware has not gone away and while we have not seen
any significant uptick in our book at the point of reporting,
there is evidence in other parts of the market that it is
increasing in frequency. We believe we will be able to navigate
an upswing given both the improvements we made in the risk
selection of our book and the investment we continue to
make into threat assessment and risk mitigation strategies.
Digital
Digital's segment result of $59.4m (2022: $31.1m), reflects
our underwriting discipline together with the growing
distribution of our increasingly broad product suite. IWP was
$227.5m (2022: $231.7m) with a combined ratio of 68%
(2022: 76%).
Digital, or our Small Business division, had a successful year
as we increased the number of products we brought to
market. We delivered a profit by maintaining our focus on
underwriting discipline, resulting in the rate of growth being
broadly level with the previous year. We are pleased with the
reception our high quality service offering and claims handling
received from brokers and the way that new products and
digital access points are welcomed by the market.
We are building our Small Business proposition for the long-
term, focused on underwriting discipline and client service.
This approach is valued by brokers, when making a claim or in
needing help with securing cover for their clients. Brokers
increasingly are seeking cyber cover that includes cyber
breach response and our experience in this area is rapidly
becoming a key differentiator for us.
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Beazley | Annual report 2023
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Chief Underwriting Officer’s
report continued
MAP Risks
The MAP Risks division delivered a profitable performance
based on strong demand for our specialist product set and
the market leading expertise of our team. With a combined
ratio of 79% (2022: 78%), IWP for the division decreased by
14% to $964.3m (2022: $1,115.2m) due to the one-off effect
of portfolio underwriting premium being directly written by
external syndicate 5623 rather than being fronted by the
Group.
Geopolitical uncertainty continued through 2023, creating a
heightened risk environment and increasing demand for
insurance across our terrorism, political risk, contingency,
marine and aviation war and cargo lines of business.
2023 saw us recruit a new Head of Hull and War as part of
our Marine underwriting business. Our Marine business is a
key component in the smooth functioning of global trade and
in our cargo account, which is three times larger than it was
five years ago, increasing trade activity following the
pandemic and challenges in supply chains have been
important drivers of demand, while the team’s focus on the
fundamentals has delivered sustainable profits.
Our Contingency business continued to benefit from increased
demand for events post pandemic. We had expected, after an
increase in demand for events immediately after the
pandemic in 2022, that 2023 would see a fall back to the
typical level of demand that we experienced before the
pandemic. It has been pleasing to see that the world
continues to be excited by the prospect of attending a face-to-
face event.
Our ESG Consortium is entering the business as usual phase
of development, having successfully launched the additional
capacity model for businesses that score highly against ESG
criteria in 2022. From 1 January 2024 the consortium will
continue its growth as part of syndicate 5623.
Energy demand and use continues to grow alongside an
increasing pace of transition away from fossil fuels. Our
energy team is actively investing in the fast expanding
renewable sector and with the hire of a new Head of
Renewable Energy.
Property Risks
Property Risks had a highly successful year as we leant into
the opportunity that the turn in the market rating environment
offered. As a result, we increased our IWP to $1,351.9m from
$823.2m the previous year, or 64% growth and a rate
increase of 22%.
This success resulted from hard work over the prior two years,
as we stepped back from growth during a period where
market conditions were unfavourable. This meant that
throughout 2023 we have been able to take up the
opportunity in the property market and were rewarded with
strong growth in both insurance and reinsurance (treaty) with
the property market in the US the significant driver.
Beyond substantial rate increases, we have tightened terms
and conditions and raised attachment points. Importantly, we
have ensured that property values have increased to reflect
higher inflation.
All of the team's underwriting in the US is done in the
specialist E&S lines market. Over the last year this market
has proven to be an excellent environment for us to operate
in as commercial property underwriting has become
increasingly complex and volatile.
Against this backdrop, many brokers have shifted their
client’s non-standard property programs to this market, which
can pivot and adapt to fast changing conditions more
effectively than the admitted market, offering access to new
clients and business that would previously have been
unavailable.
Our reinsurance (treaty) business also had a successful year
with significant rate increases achieved at higher attachment
points. As we expected, the US segment of our business
experienced the strongest market rating environment.
We have seized the potential of this change in conditions
across the property market with enthusiasm.
Specialty Risks
2023 saw the Specialty Risks team continue the
diversification of our book by growing strongly across niche
specialist lines while managing through a softening market in
D&O. This hard work has paid off, leaving the book relatively
flat overall with IWP of $1,873.4m (2022: $1,918.4m).
The headwinds in D&O - pricing pressure and high competition
- saw us actively pull back from risks we considered
unsustainably priced and as a result, D&O reduced from just
over 35% of the division’s total IWP to less than 30%. We
remain committed to our position in the D&O market,
supporting our clients, but have made tough decisions to pull
back when pricing is not adequate. We are actively investing
in our other product lines where the reward better reflects the
risk.
Across the board we have over 27 trading teams in Specialty
Risks with the vast majority seeing positive market
conditions. We have ramped up our niches and growing areas
and this has delivered through 2023.
Looking ahead, we are hopeful that the market will begin to
return to equilibrium in D&O during 2024. We will continue to
build our brand in Europe and Asia Pacific, ensuring that our
diverse business continues to prosper around the globe.
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Performance by division
Strong underwriting performance across all of our divisions
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Responsible Business
Our vision is to be the highest performing sustainable specialty insurer.
We will not achieve our goal without setting ourselves a series
of measurable and bold targets that incorporate ESG thinking
into every aspect of our business. We know that we are on a
journey and that it will take time to deliver but we are
committed to building better resilience for our clients, staff,
our communities, the environment and all our stakeholders.
Our Responsible Business strategy is based around four
central pillars. These pillars are supported by nine key areas
across the organisation which are detailed within the outer
ring of our responsible business wheel, which is designed to
demonstrate the interconnected nature of our approach to
responsible business.
We set metrics against which we can measure our
performance, these are regularly reviewed by our Executive
Committee and Board. Beazley’s Responsible Business
Steering Group is responsible for challenging the progress and
development of the strategy and providing support to the
business as it addresses ESG issues and climate related risk.
A summary of key metrics for responsible business are
summarised on page 19.
On pages 22 to 44 you can read our disclosures made as part
of Task Force on Climate-Related Financial Disclosures
(TCFD), which will give you an in depth overview of how
Beazley is addressing the challenges of climate change. On
our Responsible Business and culture and values pages of
our website you will find detailed information and our key
policies and disclosures are contained within the Responsible
Business Report 2023. In the following pages we have set out
our key responsible business metrics for 2023.
Building a responsible culture
Our business is underpinned by our shared values and
culture. Attracting diverse talent, building multidisciplinary
teams and creating an inclusive culture true to our values is
how we create success now and for the future. Put simply, our
values inspire the way we work, how we engage with
stakeholders and colleagues, the design of our workspaces,
and form the basis of our service to customers, ensuring our
behaviour is that of a responsible business.
We are proud of our culture, and a mark of our success in
building it from the inside out is the high score in our
employee engagement surveys. By attracting and nurturing
curious people. We have built a company that values
constructive challenge and has a collaborative approach to
problem solving.
Together our people and culture make it easy to do business
with Beazley.
Inclusion and diversity
Inclusion and diversity are key elements of being a
responsible business. Beazley’s inclusion and diversity
strategy is focused on setting, meeting and then stretching
our targets to achieve the talented and diverse team that
together will deliver outstanding results for our business.
We set two bold representation targets to achieve by the end
of 2023 and are pleased to report these were achieved.
At the end of 2023, 45% of Beazley’s senior leadership team
were women. We have now set ourselves a maintenance goal
ensuring that at any given time not less than 45% of our
leadership team are women and not less than 45% are men.
We also aimed for at least 25% of the Company to be People
of Colour by the end of 2023, with a quarter of that figure
specifically to be Black people. We achieved this goal a year
early, at the end of 2022, and by the end of 2023, 27% of the
Company were People of Colour, maintaining the goal that a
quarter of the Group be Black people specifically. Our goal is
to reflect the communities we operate in and serve, and we
are now aiming for a third of the Company, or 33%, to be
People of Colour by March 2028.
We also remain focused on increasing the representation of
People of Colour in our senior leadership team, aiming for at
least 17% by March 2028. We started at 11% in 2022 and
are currently at 12% today.
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Beazley | Annual report 2023
17
To support our ambitions we have not only set robust targets
for inclusion and diversity but actively encourage our staff to
play their part via our employee networks. These networks
ensure that colleagues right across the Company have clear
channels through which their voices can be heard and they
can help the business tackle some of the complex issues that
will lead to a more equitable and inclusive culture.
• Beazley Families – Supporting parents and parents-to-be
• Beazley Proud – Our LGBTQ+ employee network
• Beazley RACE – Focused on promoting understanding and
celebrating People of Colour
• Beazley SHE – Our women’s network
• Beazley Wellbeing – creates supportive content to help
break the stigma around talking about mental health
In 2023, we launched 3 more employee networks:
• Beazley Neurodiversity – supporting diverse ways of thinking
and working
• Beazley Veterans - supporting our veterans and active duty
military colleagues
• Beazley Young Professionals – involving, connecting and
informing young professionals
Each of our networks are run for our employees, by our
employees, and have a senior sponsor connecting their
activities to business strategy and lending their voice and
influence to promote their activities.
Climate change
As a specialty insurer, we underwrite in areas that are
vulnerable to the impact of climate change, with Property
Risks particularly exposed. Our response to climate change
needs to reflect both effective management of the risk and
our responsibility to play our part in mitigation. You can read
more about how we look at climate change by reading our
Task Force on Climate-related Financial Disclosures (TCFD)
report. For more information please see page 22.
Supply chain
Ensuring that our supply chains are responsible is vital for us
to deliver a seamless service to clients. With much of our
supply chain focused mainly on services, products are only a
significant part of the mix when associated with an office fit
out, the procurement of office supplies, or the delivery of
events. During 2023 we continued to use our environmental
management system and leveraged ESG data to appraise and
inform our procurement decisions. Our focus now is on
embedding this approach beyond our operations and into our
claims supply chain.
Human rights
We continue to be committed to supporting and respecting
internationally proclaimed human rights and seek to avoid
complicity in human rights abuses. To achieve this, we adhere
to the principles as defined by the United Nations (‘UN’)
Guiding Principles on Business and Human Rights, the UN
International Bill of Human Rights and the International Labour
Organisations (ILO) Declaration on Fundamental Principles and
Rights at Work. We are a signatory to the UN Global
Compacts.
Investments
Beazley believes that companies committed to a sustainable
business strategy gain long-term competitive advantages,
enabling them to generate stronger and more stable returns.
This belief is reflected in our responsible investment policy,
which incorporates ESG considerations and ratings into
investment analysis, decision-making, and ownership
practices. By doing so, we aim to positively impact the
financial value of our investments and recognise the broader
influence investment strategies can have on the world.
Impact investing
To demonstrate our commitment to doing the right thing, we
have allocated up to $100m from our asset portfolio to impact
investments. These investments focus on opportunities that
have measurable social or environmental impact, as well as a
financial return. Our investments aim to improve outcomes in
both local communities near our offices and in developing
countries overseas. So far, we have made commitments
totalling $31m to three different impact funds. In 2023, we
became a founding investor in our third fund, the Big Issue
Social Impact Debt Fund. This fund specifically targets
housing, care, and social infrastructure projects in the UK.
Although our impact investments are still in their early stages,
we are encouraged by the initial returns. In 2024, we will
continue to measure progress against our impact objectives.
Charity
Our charity initiatives are focused on supporting our charitable
partner, World Central Kitchen, raising money through match
funding or grant nominations and responses to disaster relief
efforts. Our charity committee is responsible for the delivery of
initiatives that support our charity partner.
Community
Our community initiatives, often delivered in partnership with
charitable organisations, are focused on the communities
around our employees’ homes and offices. Beazley offers up
to 2.5 days of charity leave during the year, and the promotion
of an annual Make a Difference month, which focuses on
encouraging employees as individuals and teams to support
charity and community initiatives. Beazley’s Community
Committee is made up of representatives from each of our
offices to ensure that these initiatives are dispersed right
across the Company.
The future
We continue to evolve and improve our approach to ESG and
Responsible Business and during the next 12 months we
expect to update our ESG targets and goals and to produce
our first net zero transition plan.
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19
Gender/ sex diversity1, 3 as at 31 December 2023
Number of
senior
positions
on the
Board
(CEO, GFD,
SID and
Chair)
2
2
Number of
Board
members
6
5
Percentage
of the
Board
54 %
46 %
Number in
Executive
Management
9
6
Percentage of
Executive
Management
60 %
40 %
Percentage
of
Beazley's
senior
leadership
team2
55 %
45 %
Percentage
of Executive
Committee
and direct
reports5
55 %
45 %
Number of
senior
managers
of the
Company in
accordance
with the
Companies
Act 20066
Number of
all
employees6
29 1,088
19 1,234
Percentage
of all
employees
47 %
53 %
—
— %
—
—
— %
— %
— %
4
2
— %
Men
Women
Not specified/prefer
not to say
Ethnic diversity1, 3 as at 31 December 2023
Number of
senior
positions
on the
Board
(CEO, GFD,
SID and
Chair)
Number in
Executive
Management
Percentage of
Executive
Management
Percentage
of
Beazley's
senior
leadership
team2
Percentage
of Executive
Committee
and direct
reports5
Number of
senior
managers
of the
Company in
accordance
with the
Companies
Act 2006
Number of
all
employees
Percentage
of all
employees
Number of
board
members
Percentage
of the
board
9
82 %
White British or
other white
(including minority-
white groups)
Mixed/multiple
ethnic groups
Asian/Asian British
Black/African/
Caribbean/Black
British
Other ethnic groups,
including Arab
Not specified/prefer
not to say
4
—
0
— %
18 %
— %
—
— %
—
— %
—
—
2
—
—
—
13
86 %
79 %
80 %
40
1,364
65 %
0
0
1
—
1
— %
— %
7 %
— %
7 %
1 %
5 %
3 %
3 %
9 %
1 %
8 %
—
3
5 %
1 %
5 %
2
1
5
72
211
146
140
154
4 %
10 %
7 %
7 %
7 %
Beazley's ethnicity targets as at 31 December 2023
In 2021, Beazley set the target to ensure that at least 25% of our global population, in the locations we are able to track the
data, would be People of Colour by the end of 2023. The term People of Colour is used to describe the collective group of
people who identify as part of; American Indian, Alaskan Natives, Arab, Asian, Black, Chinese, Hispanic, Latinx, Hawaiian,
Pacific Islanders, Indian or mixed and multiple racial identities, or other racial identities excluding those who identify as White.
Singapore's ethnicity data is not included when we calculate progress against our public diversity targets as it paints a more
favourable diversity picture than is reflective of the journey still to be made across the other offices. We include the data for all
other seniority splits for completeness and transparency.
People of Colour4
Number of
board
members
2
Percentage
of the
Board
18 %
Number of
senior
positions
on the
Board
(CEO, GFD,
SID and
Chair)
0
Number in
Executive
Management
1
Percentage of
Executive
Management
7 %
Percentage
of
Beazley's
senior
leadership
team2
12 %
Percentage
of Executive
Committee
and direct
reports5
14 %
Number of
senior
managers
of the
Company in
accordance
with the
Companies
Act 2006
6
Number of
all
employees
569
Percentage
of all
employees
27 %
1 The gender and ethnicity data in columns 1 to 5 is provided pursuant to the UK Listing Rule 9.8.6(10). For the purposes of the Listing Rules Executive
Management includes the members of Beazley's Executive Committee (the most senior executive body below the Board) and the Company Secretary, but
excluding administrative and support staff.
2 Beazley's senior leadership team is defined as the most senior group of individuals from which succession for the Executive Committee could likely be sourced.
They are the individuals who make up the Company's strategy and performance group and those who receive extended long-term incentive awards as part of their
remuneration. These individuals drive and influence business strategy and performance or are those leading or directly participating in strategic projects. We use
this group when tracking and monitoring the inclusion and diversity of our leadership population for our own targets and monitoring. The % reported are from the
global senior leadership team.
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3 Our approach to gathering, holding and reporting on demographic diversity data is consistent across all of our locations, and in accordance with relevant local
laws. We currently hold gender data for all our global locations, and ethnicity data for permanent employees based in the UK, USA, Ireland and Singapore.
Singapore's ethnicity data is not included when we calculate progress against our public diversity targets as it paints a more favourable diversity picture than is
reflective of the journey still to be made across the other offices. Beazley uses the HR system Oracle to collect, hold and report ethnicity and gender data
securely. Where we collect this data, employees are able to self-report their gender and/or ethnicity or prefer not to say. The reporting options provided are based
on government census options in each country and grouped according to the categories prescribed in the UK listing rules. Any ethnicities not aligned with those
prescribed categories are included in the 'other ethnic groups' row.
4 At Beazley, the term People of Colour is used to describe the collective group of people who identify as part of; American Indian, Alaskan Natives, Arab, Asian,
Black, Chinese, Hispanic, Latinx, Hawaiian, Pacific Islanders, Indian or mixed and multiple racial identities, or other racial identities excluding those who identify
as White. This ethnicity data is for all permanent employees in the US, UK and Ireland.
5 This figure is provided pursuant to the UK Corporate Governance Code 2018 requirement to confirm the gender balance of those in senior management and their
direct reports. The Code defines senior management as the Executive Committee and the Company Secretary. We have also disclosed the ethnicity data for the
same group.
6 The number of senior managers and the number of employees of each sex is disclosed for the purposes of section 414 (8) of the Companies Act 2006. In
accordance with section 414(9) and 414(10), senior management is comprised of the executive committee and the directors of subsidiaries included in the
Beazley plc consolidated accounts. We have also disclosed the ethnicity data for the same groups. Note that the Companies Act 2006 definition of senior
management includes directors of subsidiaries, and some of our subsidiary directors are not employees.
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21
Task Force on Climate-related
Financial Disclosures (TCFD) 2023
Our climate-related responsibilities are something we take very seriously at Beazley. They are central to our vision – to be “the
highest performing sustainable specialty insurer”; align with our values – Being bold, Striving for better, and Doing the right
thing; and are embodied in the ‘Responsible business’ pillar of our corporate strategy.
This report details the governance, strategy, scenario analysis, risk management, and metrics we have in place to deliver on our
responsibilities.
1. Governance
1.1 Board oversight on climate-related risks and opportunities
1.1.1 Plc Board oversight
The plc Board and supporting committees maintain active oversight of climate-related issues, by discussing the topic regularly,
factoring it into decisions, and receiving papers, training and awareness. Further, specific detail on our approach to governance
is shown below (and a summary of our corporate governance structure is on page 84).
Board/ Committee
Plc Board
Description of how climate-related matters are considered
The plc Board tracks progress on climate-related goals via: papers and reports from the responsible business, investments, risk, and
underwriting functions; and a metrics dashboard aligned to our risk appetite statements and risk management framework, produced
by the Risk team. The dashboard includes three specific climate-related metrics, and detailed information is provided for any rated
amber or red.
Climate-related matters are also considered as part of the annual process to approve:
• the risk appetite statements;
• the Group’s corporate business plan, including capital adequacy and the own risk and solvency assessment (ORSA);
• updates to the Group's Responsible Business Strategy;
• the Responsible Investment Policy;
• the Investment strategy;
• annual report and accounts, including the TCFD report
Beazley plc Audit
Committee
The Audit Committee is responsible for TCFD reporting and receives regular updates (three in 2023). It is involved in signing off and
approving annual TCFD disclosures. The metrics in this report were proposed and approved by the committee in spring 2023.
Beazley plc Risk
Committee
Beazley plc Nomination
Committee
The plc Board has delegated oversight of the risk management framework to the Risk Committee. The committee’s responsibilities
include overseeing the effectiveness of the risk management framework at Beazley, of which climate-related risk is one element.
NomCo considers the current and future leadership needs of the business, and recommends the annual board knowledge and training
plan which includes climate-related matters.
Beazley plc Remuneration
Committee
RemCo is responsible for ensuring that remuneration frameworks for Directors and senior management, and policies for the Group,
incentivise performance while promoting effective risk management. As part of this, climate-related risk is actively considered in
executive remuneration and documented in each executive director’s remuneration scorecard. The remuneration policy approved at the
2023 AGM also introduced ESG metrics into executive director LTIP awards. Remuneration is reviewed on an annual basis.
1.1.2 Training and awareness
The Culture and People team maintains skill matrices and annual training plans for the plc board. The training provided is
shaped by current and emerging trends, stakeholder expectations, and regulatory demands. In 2023, the Board received
detailed training on: different types of climate risk; our climate risk strategy; our Climate Risk Working Group plan; and climate
related opportunities.
1.1.3 Subsidiary Board oversight
Beazley has four key subsidiary entities: Beazley Furlonge Ltd (BFL), Beazley Insurance Designated Activity Company (BIDAC),
Beazley Insurance Company, Inc. (BICI), and Beazley America Insurance Company, Inc. (BAIC), each with their own Board and
supporting Committees. The responsibilities of these Boards mirror those set out at a plc Board level, to ensure it is operating
in accordance with both legal and regulatory requirements, as well as relevant Beazley Group policies and procedures. These
entities are more insurance-risk-focused when compared to the plc Board, therefore the impact of climate-related risk on
underwriting is considered in greater detail. Climate-related matters are also considered during their annual risk framework and
ORSA approval process, with further updates provided via the Responsible Business report.
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1.2 Summary of management’s role on climate-related matters
1.2.1 Key individuals at Beazley for climate-related issues
Responsibility for ensuring climate-related issues are appropriately managed by the business is designated across a range of
roles:
Responsible individual
Chief Executive Officer
(CEO)
Chief Risk Officer (CRO)
How climate-related matters are managed
In addition to being an Executive Director and a member of both the plc Board and Executive Committee, the CEO chairs the
Responsible Business Steering Group.
The CRO sits on the Executive Committee, and is ultimately responsible for our risk management framework, of which climate-related
risk is a key part. They provide updates on risk matters, including climate-related risk, to the plc Board, Executive Committee, Audit
Committee and Risk Committee. They also split the role of senior management function (SMF) for climate-related risk with the Chief
Underwriting Officer.
Group Finance Director
(GFD)
The GFD is an Executive Director, and a member of both the plc Board and Executive Committee. They have responsibility for the
financial performance of the Company, and provide updates throughout the year to the Board, Executive Committee, Audit Committee
and Risk Committee.
Chief Underwriting Officer
(CUO)
The CUO sits on the Executive Committee and is responsible for ensuring climate-related matters are embedded within the underwriting
process. The Head of Financial Climate Risk and Head of Exposure Management report into them, and they own the outputs of the
Climate Risk Working Group and ESG in Underwriting project.
The CUO provides updates on the underwriting performance of the Company, including matters arising from climate-related exposures,
progress against climate-related risk objectives, and Exposure Management, to the plc Board, the Risk Committee and the Executive
Committee. They also split the role of senior management function (SMF) for climate-related risk with the CRO.
Chief Operating Officer
(COO)
Group Head of Strategy
The COO is a member of the Executive Committee and has responsibility for ensuring we consider climate-related matters across our
business operations, including office energy consumption, the use of data centres, and procurement.
The Group Head of Strategy oversees Beazley's business strategy and updates the plc Board on progress, and is a member of the
Responsible Business Steering Group. On 1 November 2023, there was a personnel change in this role. The former Group Head of
Strategy led the development of Beazley's new ESG strategy, which is now the responsibility of the Chief People Officer and Head of
ESG.
Chief Investments Officer
(CIO)
The CIO reports to the GFD and is responsible for all investment activity within the Beazley Group, including the development of
investment strategy, delivery of appropriate investment returns, and the effective management of investment risks. Managing climate
risks to our investment portfolio is a key aspect of this role.
Head of Culture and
People
Head of Capital
Head of Responsible
Business
From the 1st November 2023, ESG oversight has moved to the Head of Culture and People who is an Executive Committee member
and part of the Responsible Business Steering Group. The Head of Responsible Business and Head of Social Impact now report into
this role.
The Head of Capital provides quarterly updates to the Risk and Regulatory Committee on capital allocation for potential climate-related
events and insurance claims. They oversee the assessment of climate-related capital requirements using modelled and non-modelled
information to determine the impact of climate change on the business.
The Head of Responsible Business is responsible for the delivery of the environmental objectives set within the Responsible Business
Strategy. From a climate perspective, their role is focused on climate-related responsibility matters.
Head of Financial
Climate Risk
They provide updates through the year (three in 2023) on responsible business matters to the Executive Committee and plc Board.
These updates include progress against the objectives and targets set out within the Responsible Business Strategy, covering climate-
related risk, climate-related responsibility, and an overview of items discussed at the responsible business steering group. The Head of
Responsible Business is also responsible for curating the annual TCFD disclosures.
The Head of Financial Climate Risk oversees the integration of climate-related risk into underwriting, coordinates climate risk initiatives,
and provides expertise to strengthen Beazley's climate risk management. This role reports to the CUO and provides quarterly updates
to the Underwriting Committee and Responsible Business Steering Group.
Head of Social Impact
The Head of Social Impact role was newly created in 2023 to deliver social-related objectives within the responsible business strategy.
They are a member of the Responsible Business Steering Group, and support the alignment of social and environmental issues.
Head of Compliance and
compliance department
The Head of Compliance is responsible for overseeing the compliance function at Beazley. This includes ensuring that we conduct
business in accordance with all applicable laws and regulations we operate a Group-wide compliance framework designed to measure
risk exposure, govern decision-making and monitor performance. Our framework consists of a number of systems and controls,
including:
• Senior management oversight;
• Risk assessments;
• Staff training and awareness;
• Compliance monitoring; and
• Compliance reporting.
Beazley is mandated to ensure compliance with the following climate-related requirements:
• Annual disclosure against the TCFD reporting framework; and
• Adherence with SS3/19.
Group Head of Internal
Audit and internal audit
department
Head of Exposure
Management
The Head of Compliance reports into the CRO.
The Head of Internal Audit ensures appropriate audits are undertaken to support our climate-related objectives, including underwriting
functions, investments and TCFD disclosures.
The Head of Exposure Management leads the team responsible for developing approaches to monitoring the aggregation of exposure
to natural catastrophes. The exposure management team reports to the CUO, who in turn provides regular updates to the Board on
these matters. The Head of Exposure Management is the chair of the Physical Damage exposure management group (PDEMG). The
exposure management team is supported by the Head of Financial Climate risk.
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23
TCFD 2023 continued
1.2.2 Summary of management-level reporting structure
To help the business address climate-related issues, the roles outlined above (section 1.2.1) sit on or provide updates to to a
number of different management committees, steering groups and working groups (shown below).
A brief description of these committees, steering groups and
working groups is as follows:
Executive Committee
The Executive Committee is our central decision-making and
oversight body responsible for shaping our strategic direction,
policies and operations. They receive regular updates on
climate-related and ESG issues from sub-committees and
working groups, including KPI and KRI dashboards collated by
the Corporate Strategy and Risk teams. These dashboards
contain climate-related metrics that provide insight into
business performance and inform decision making.
Responsible Business Steering Group (RBSG)
The RBSG, a sub-committee of the Executive Committee,
oversees the delivery of responsible business across Beazley,
and monitor progress against our objectives. It met 10 times
in 2023, with agenda items including: progress updates from
the climate risk working group and ESG in underwriting project;
reviewing the emerging transition plan, metrics for disclosure
in the TCFD report, and progress against key climate-related
KPIs; and the annual responsible business strategy refresh.
The primary purpose of the committee is to provide
recommendations to decision-making fora, including the
Executive, Underwriting, and Investment Committees. The
dialogue between the RBSG and these committees further
embeds responsible business matters across the
organisation.
The RBSG is chaired by the CEO and attended by the Group
Head of Strategy, Head of Responsible Business, Head of
Financial Climate Risk, Chief People Officer and Head of ESG,
Head of Procurement, and a representative from the Claims
team. It also invites four Non-Executive Directors to attend
quarterly as observers, to provide a further link between
management and the plc Board on these issues.
Investment Committee
Chaired by the Group Finance Director, the Investment
Committee oversees our investment strategy and ensures it
can be delivered in alignment with business risk appetite.
To further promote sustainability and climate-related matters,
Beazley has a responsible investment policy. This policy sets
out how we have incorporated ESG issues into our investment
analysis and decision-making process, and our approach to
the management of climate change risk within the investment
portfolio. The Investment Committee, in conjunction with the
RBSG, also oversees progress against the investment-related
objectives within the responsible business strategy. The
Investment Committee continues to review and approve the
portfolio of impact investments held which have a measurable
social and/or environmental impact as well as a financial
return.
Underwriting Committee
The Underwriting Committee, chaired by the CUO, monitors
progress and ensures delivery of underwriting, claims, and
reinsurance business plans. It includes representation from
the underwriting teams, the Group Head of Claims, the Group
Actuary, CRO, Group Head of Strategy, and Digital Head of
Underwriting. The Committee is charged with ensuring the
efficient implementation of ESG in underwriting, with
prominence given to climate risk and opportunities. It has
ultimate decision-making power on climate-related risk
matters and receives updates from the Head of Financial
Climate Risk and Head of Responsible Business. It reports
monthly to the Executive Committee.
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Risk and Regulatory Committee
The plc Board has assigned oversight of the risk management
department to the Executive Committee and the plc Risk
Committee. The Executive Committee has further delegated
direct supervision to the Risk and Regulatory Committee,
which meets monthly and is chaired by the CRO. The risk
section discusses the roles, responsibilities and oversight of
this Committee in more detail.
Training
In January 2023, two mandatory e-learning training modules
were introduced for the underwriting teams. The first module
focused on ESG basics, whilst the second provided an
introduction to climate risk.
Targeted training was also provided to specialty lines and
property underwriting teams, where climate-related matters
are considered to be more prevalent. For our property
underwriters, the training supported the delivery of climate
risks tools for better assessing the physical climate-related
risks associated with properties. The content of this training
included a focus on climate change metrics, catastrophe
management and optimization, and climate risk underwriting
questions. For some of our Specialty Risk lines of business,
the training was provided in support of the introduction of ESG
underwriting guidelines and questions.
Additionally, a third-party workshop helped key individuals
across the business better understand climate-related
litigation risk. This informed the appraisal of our current
approach and the development of business strategy on the
matter.
Underwriting sub working groups
Feeding into the Underwriting Committee are the following
working groups:
Physical damage exposure management group (PDEMG)
The PDEMG monitors the natural catastrophe risk appetite set
by the plc Board; risk appetites assigned to Beazley Group
companies (including Beazley plc, BIDAC, BFL and BICI); and
the physical damage RDS plan agreed by Lloyd’s. The PDEMG
reviews, on a monthly basis, the modelled loss output by the
team and the overall Group total showing utilisation of the
plan and provides challenge where there is a variance to plan.
Its remit includes responsibility for the Group view of physical
damage catastrophe risk written within the underwriting
teams, and climate change analysis. The PDEMG monitors the
utilisation of the Natural Catastrophe Risk Appetite & the 3
Lloyd's Natural Catastrophe RDS on a monthly basis.
Casualty and Cyber Management Group (CCMG)
The CCMG, chaired by the Underwriting Strategy Manager, is
responsible for the Group view of Cyber and Casualty risk,
including the impact of climate change on underwriting. It
governs climate litigation scenario development and
monitoring, and reports monthly to the Underwriting
Committee.
Climate risk working group (CRWG)
The CRWG, chaired by the CUO in 2023, was established to
embed climate-related risk into the underwriting process. Its
work is part of the climate risk strategy approved by the plc
Board. The Group's membership includes the Head of
Exposure Management, the Head of Financial Climate Risk,
the Head of Responsible Business, the Lead Pricing Actuary -
Property Risks, and underwriting representatives from each of
the divisions. It meets monthly to oversee climate risk
projects and activities, and is involved in decision-making on
climate-related matters and approved the metrics included in
this report. The CRWG reports quarterly to the Underwriting
Committee and RBSG.
ESG in underwriting project group
This group was established to oversee the further embedding
of ESG matters within underwriting. Its work includes:
• Enhancing underwriting data collection to gather carbon
emissions and transition-related information;
• Improving data gathering within the underwriting process on
ESG matters; and
• Enhancing colleagues’ knowledge on both ESG and climate-
related issues through the delivery of training modules.
The project group reports to the CUO and provides regular
updates to the Underwriting Committee and RBSG. Its
members include the Head of Financial Climate Risk, the
Head of Responsible Business, and underwriting
representatives from each division.
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TCFD 2023 continued
2. Strategy
2.1 Climate-related risks and opportunities
2.1.1 Definitions of time horizons
Beazley considers risk across three broad time horizons for climate-related risks. These time horizons are reflective of our
approach to business planning, the type of products Beazley provides, and the investment decisions the Company makes. A
summary of climate-related issues which could potentially have a material financial impact on the Company within each
timeframe are shown below, based on a review of external research and information. The processes by which we have reached
these conclusions, and the opportunities which may arise as a result, are discussed further on in the report.
Time horizon
Short term
(1 year)
Description
Beazley’s performance is evaluated on the results of each financial year and the business plan is developed on this basis. Most of
Beazley’s underwriting business is in short-tail classes. The impact of physical climate-related events occurring through the year are
reflected in Beazley’s approach to underwriting and pricing. Specific climate-related issues arising within this time horizon could
include:
• liability-related claims relating to greenwashing;
• reputational incidents arising from the underwriting of, or investment in, companies which have a significant impact on climate
change;
• impact of green technology;
• failure of Beazley to act as a responsible business on these matters; and
• possibility for increased claims arising from natural catastrophes.
Medium term
(1 to 5 years)
Some of Beazley’s underwriting business is in medium-tail classes, whilst investment in larger projects and platform developments
may run over multiple years. Emerging risks can also crystallise over the medium term. Through this time horizon, the issues
identified within the short term are likely to persist. Acute impacts of natural catastrophes is expected to increase in frequency and
severity, and liability-related claims for failure to prepare for climate change will rise. Transitional issues from policy, market, or
technology changes will also likely emerge.
The five-year time horizon is aligned with the development of Beazley’s medium-term plan (MTP). This plan sets out, at a high level,
the growth ambitions for the business across the underwriting divisions. The MTP aims to provide a bottom-up view of the business,
covering both the underwriting ‘demand’, and the operational ‘supply’, culminating in a financial plan and a sense of operational
dependencies covering 2023-2027. It complements the Annual Underwriting Plan by building a view of what the business can deliver
to support the underwriting ambitions
Long term
(5+ years)
Beazley’s strategy and strategic objectives are generally set over multiple years. Mega trends and slow-moving emerging risks may
crystallise over many years. From a climate risk perspective there will be an increased trend in the acute physical climate-related
risks, whilst longer term and more chronic impacts may also begin to be realised.
From a material financial impact perspective, the issues identified within the short term are likely to persist. The frequency and
severity with which acute impacts of natural catastrophes are felt is expected to begin to increase. The chronic impacts of climate
change are also expected to begin to feature. Liability claims associated with a failure to prepare or adapt to climate change are
expected to increase in severity and likelihood.
2.1.2 Process to identify climate-related risks with a material financial impact
In 2021, Beazley took part in the PRA’s Climate Biennial Exploratory Scenario (CBES) stress test. The exercise covered
modelling of physical, transition and liability (litigation) risk over a 30-year time horizon within three different scenarios. The
learnings from this exercise enabled us to further understand which climate-related risks could be material to the business. A
number of actions were triggered as a result of the exercise, which have informed the basis for further developing our approach
to embedding climate-related matters into our business, strategy, and planning.
Identification of physical climate-related risks
In 2023, to help address strategic priorities identified in the 2022 focus group business plans, Beazley focused on assessing
and understanding physical climate-related risks, especially those with a material financial impact. This has been achieved
through the implementation of a three phase climate-related risk assessment framework. The framework enables us to identify
the risks, and also supports defining the actions needed to manage them (e.g. model validation, model adjustment, actions to
pricing and underwriting).
This assessment will be refreshed on an annual basis to reflect changes of exposure and developments in climate science, and
allow us to prioritise our efforts on risk assessment of material perils.
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The three phases of the framework are as follows:
Phase 1
Identification of all climate-
related risks arising in
each time horizon
Phase 1 involves the collation of the outputs from a number of different tools and processes by which physical climate-related risk
are brought together. This helps to create an initial indication of the potential impacts of physical climate-related risks on Beazley.
The processes used include:
Climate change research
An extensive literature review of scientific journals is undertaken to ascertain the climate change impact
on key parameters within each of our signifiant perils. The outputs of the review help Beazley to rank
each peril in terms of confidence in climate change signal, and materiality to Beazley.
Stress and scenario
testing
Scenario analysis completed as part of ORSA submissions, and realistic disaster scenario (RDS)
monitoring completed by PDEMG allow for regular monitoring of Beazley’s exposure to various climate
risks. Additional scenario analysis from the Climate Risk team helps to assess the future materiality of
key climate risk perils. This work helps quantify the potential losses of different risks, which informs the
assessment of materiality
Underwriting Engagement Regular engagement with underwriting teams helps to identify potential material climate-related risks.
Emerging risk
identification
Whilst this engagement comes in many forms, the ESG Underwriting leads are important in ensuring
product line specific climate-related risks are highlighted. The ESG in Underwriting project team, and the
CRWG are two of the mechanisms by which this information is shared. This engagement builds on a
series of ‘deep dives’ the ESG in Underwriting project team conducted in 2022 across all underwriting
teams.
Beazley uses a two-pronged approach to identify, assess, manage, and report on emerging risks. The
macro, which considers high-level risks that may impact our industry and markets, using tools such as
PESTLE analysis (Political, Economic, Social, Technological, Legal and Environmental); and the micro,
which focuses on risks specific to our business and functions. Climate change is captured as an
emerging risk and is assessed based on how it could impact Beazley and that mitigation measures are
in place. The Emerging Risk Working Group (ERWG) meets quarterly to continually monitor the evolving
landscape of emerging risks.
Monitoring of exposure
aggregation
Beazley's Physical Damage Exposure Management Group (PDEMG) issues monthly physical peril
exposure reports to monitor our exposure to various climate risks. These reports serve as a mechanism
for managing risk and are used to update knowledge of climate-related risks in each time horizon.
Phase 2
Assessment of materiality
Once all climate related items have been identified, an assessment of materiality is undertaken to understand which items will be
most impactful to Beazley’s business activities. The purpose of materiality assessment is threefold:
1) Monitoring exposure;
2) Linking materiality analysis to climate change impact of perils; and
3) Guiding and helping prioritise actions of Beazley projects on climate risk/opportunity.
The individual physical risk perils for each country are then examined using a combination of modelled losses and aggregate
exposure for each peril by country. This is to identify the region/perils most material to Beazley.
Phase 3
Plan to mitigate the risks
Once the most material risks to Beazley are identified, a number of steps may be undertaken to manage and mitigate these risks.
Given that these risks are likely to be accompanied with a business opportunity, these steps are usually not undertaken in isolation.
The linkage between the risks and opportunities, and the actions Beazley is taking are outlined in the subsequent sections.
Identification of climate-related litigation risk
Climate-related litigation could be a material risk to Beazley,
given our exposure to Specialty Risks. Beazley began to
undertake projects in 2023 to identify and quantify our
exposure to this risk.
In June 2023, Beazley held a climate-related litigation
workshop with a third-party partner to discuss the latest
trends and developments in climate-related litigation and their
potential impact on coverage and exposure. The workshop
used insights from external experts to identify potential
climate-related liabilities we could face and developed a
climate litigation work plan with prioritised projects and future
plans.
In accordance with this work plan, we are now reviewing our
greenwashing scenario, as well as assessing our exposure to
climate-related litigation by business line, sector, and
jurisdiction. The exposure assessment will allow us to identify
hot spots in our exposure to climate litigation risk, set triggers
for any future scenario development, and consider any
underwriting actions.
Identification of transition-related climate-related risks
Climate transitional-related risk could be a material risk to
Beazley, so in autumn 2023 we began researching to further
understand the risks arising by sector and geography. This
work will continue in 2024 and builds on the transition related
opportunities already identified (which are discussed further
on in the report).
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TCFD 2023 continued
2.1.3 Process to identify climate-related opportunities with a material financial impact
In addition to the approach to identify climate-related risks, there are also a number of processes by which Beazley identifies
climate-related opportunities which have a material financial impact. These are detailed below:
Method of identification
Description
Identified as a result of
determining a risk
Incubation process
The methods used to determine a risk also enable identification of an opportunity. The development of an opportunity, where
underwriting-related, will be delivered using one of the three processes described below.
The Incubation Underwriting team develops new products which sit outside of existing underwriting team business plan and appetite.
New product opportunities can be sourced from brokers, InsurTechs, Beazley underwriting teams and internally from within the
incubation team itself. When reviewing a new product opportunity, and thus its potential materiality, the Incubation team will
consider: the addressable market; buyer urgency; market saturation; product economics; and customer interests.
Should the opportunity warrant further investigation the incubation team will engage with experts within Beazley - including
underwriting, actuarial, wordings, conduct, claims and others as necessary, before reviewing the opportunity with the head of
underwriting strategy. Following feedback from these internal stakeholders, a decision paper is prepared and presented to the head
of underwriting strategy. This is then presented by the Incubation team to the CUO and/or the underwriting committee.
Opportunities are launched in pilot periods, typically to maximum aggregate limits, to test the opportunity. Progress is reported to the
underwriting committee. If suitably ‘proven’ in the underwriting pilot, and following the required approvals, the opportunity will be
handed over to an existing Beazley team, where suitable.
Currently the Incubation team is investigating solutions related to climate risk and the carbon transition. Their work is monitored by
the underwriting committee.
Business planning process Underwriting focus group leads are responsible for developing the annual business plan, in which they may identify an area of
business in which to either enter or expand their portfolio. They will document their strategy within their business plan. This could
include the type of products/services they will insure, and the size of the market and the opportunity for Beazley. This work is
supported by input from specialists. One such example of this approach is the work being undertaken to develop a business plan for
renewable energy, with a view to the energy team decarbonising its energy portfolio over the long term. This will align with the metric
currently disclosed for the premium generated from low and zero carbon technologies.
Extension to an existing
product or service
Additional underwriting
opportunities
Due to the specialist nature of Beazley’s products and services, there may be several existing products and services which can be
used to cover similar risks in new settings. Where this occurs, the relevant underwriting team use their knowledge and expertise to
ensure any adjustments to the policy wording are implemented. This work is supported by the product development team.
The development and deployment of climate risk metrics within Beazley allows for opportunities to share climate risk insights with
clients. Engagement with underwriters can identify useful metrics to enhance our client’s understanding of their exposure to physical
climate risks.
2.1.4 Summary of opportunities identified
Physical climate-related opportunities
Based on the 2023 physical risk materiality assessment, the US was determined the most material geographical location in
which the Group operates and underwrites. US hurricane was found to be the most material peril, followed by US wildfire, US
inland flood, US severe convective storm & US winterstorm. Outside the US, high materiality was found for European windstorm
and flood, as was Japan tropical cyclone, both of which are material to our Property and Treaty underwriting business.
The opportunities related to these areas for Beazley lie, in the first instance, internally as we further develop our understanding
of these perils and the impact they may have on the business.
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The initiatives through which we further understand physical perils are outlined in the table below. In turn, this approach helps
to improve the quantification of this risk.
Risk mitigation measure
Description
Developing climate risk
adjusted pricing
Portfolio optimisation
Capital management
Location level climate
change metrics
Developing climate
conditioned forward-looking
view of risks
Climate risk questions
For certain risks that are affected by climate change, adjustments may be made to the pricing model to accurately reflect their risk
profile. This is done by investigating the historical loss trends of the risk and conducting a review of scientific literature on the impact
of climate change on it. In 2022, this approach was introduced for US Wildfire, Inland Flood, and Hurricane. In 2023, reviews were
also completed for US Hail, Tornado, and Winterstorm, and the findings were incorporated into the pricing models.
Underwriters are provided with tools, metrics, and training to help them manage climate risk in their portfolios. When future-state
climate models are available, regional scenario analyses can be conducted to show how different regions may be affected by climate
risks over time. By sharing the results of these analyses with underwriters, they can make informed decisions when selecting risks
and prioritize regions with lower future climate risk.
The capital modeling process takes into account the impact of climate change. Adjustments are made to the capital model to reflect
our forward-looking view of risk, including assumptions about the frequency and severity of events based on the RMS Climate
Conditioned Hurricane model. The model also accounts for the increasing trend in US wildfire losses due to climate change.
Underwriting tools are implemented to help identify and mitigate physical climate risks. These tools allow underwriters to better
understand their exposure to climate risks, the tools encourage better risk selection and underwriting performance. By sharing this
information with clients, they can become more aware of which of their assets are at greatest risk. This enables them to target
mitigation measures to increase resilience and reduce future losses.
For highly material modelled physical perils, we look to develop a climate-change conditioned view of risk and implement it in
catastrophe modelling of any affected assets. To do so, we prepare a study examining the impact of climate change on the scientific
underpinnings of the peril. The study then assesses the potential implementation of these climate-change impacts in the models
currently in use by Beazley and determines a final adjustment/model alteration to use. We also engage external experts in this
process. The view of risk is reviewed by several internal working groups and committees before implementation. In 2022, we
developed and implemented a climate change conditioned view of risk for US hurricane. In 2023, we developed our climate change
conditioned view of risk for US inland flood and US wildfire. Alongside catastrophe modelling, the forward-looking view feeds into our
exposure aggregation monitoring and capital management, to support the assessments of capital requirements and exposure
appetites.
A series of climate risk questions have been rolled out for property underwriters who are writing risks identified as possessing a high
degree of climate risk. For these risks, underwriters liaise with clients to understand whether they are aware of the climate related
risks they are exposed to, and what protection measures and emergency responses are in place. By ascertaining how well clients
understand and are responding to climate risk, underwriters can both encourage better resilience for our clients and better
understand and account for their own exposures to climate risk.
Climate-related litigation opportunities
As mentioned earlier in this report, we’re continuing to evolve
our understanding of the risks associated with climate
litigation. By gaining a better understanding, we expect to
identify new opportunities for products and services. This work
will continue in 2024.
Transition-related climate opportunities
It's important to us that we support a just transition to a net-
zero world. While there are risks associated with this
transition, there are also opportunities . These include
developing our own transition plan, incubating products which
provide coverage for emerging risks and technology, and
supporting clients as they begin their own transition journey.
From an investment perspective, seeking to align our
investment portfolio with a 1.5-degree Celsius pathway by
2028 is important, and work continues to achieve this.
2.2 Impact of climate-related risks and
opportunities on business strategy and
financial planning
Our insureds are the most important part of our value chain.
We do not see this value just in being their insurer, but also in
supporting them as they address climate-related risks.
Beazley's climate risk strategy and responsible business
strategy outline how we manage material climate-related risks
and opportunities. The following section provides a summary
of our approach to climate-related matters across
underwriting, investments, and operations, and how they
inform our strategy.
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Investments
For our investments, our initial transition plan focuses on
aligning our publicly listed corporate bonds (investment grade
and high yield) and publicly listed equities with a less than 2-
degree Celsius pathway by 2028. For our externally managed
assets, we have moved most of our equity exposure into
funds with an ESG approach and a decarbonization
benchmark. For the remaining outsourced portfolios of in-
scope assets, we are working with external managers to
encourage the development of ESG compliant funds with a
decarbonization target, with the intention of switching our
funds when suitable products are available.
Details of the carbon footprint and temperature alignment of
our portfolio are published in the Metrics section of this
report. For other assets that are currently out-of-scope, we will
expand reporting as new guidance is published for asset
classes not currently covered by existing methodologies.
2.2.2 Climate risk strategy for underwriting
Our climate risk strategy forms the basis for the planning the
actions the business will take, in the short term, to further
embed climate change into our business as usual approach to
managing climate-related issues. The strategy covers four key
areas below and was communicated externally for the first
time as part of our 2022 TCFD disclosures:
• Embedding climate risk into underwriting;
• Underwriting product opportunities;
• Risk mitigation; and
• Financial stewardship
TCFD 2023 continued
2.2.1 Developing our transition plan to net
zero
The transition to a net zero world is a crucial topic for Beazley,
and affects our operations, investments and underwriting. We
are currently developing the first iteration of our net zero
transition plan, which will be a key part of our strategic
approach to ESG and climate-related matters. This plan can
be divided into three key areas:
Underwriting
During our exploration of setting carbon emission reduction
targets for Beazley's underwriting portfolio and our work with
the Sustainable Markets Initiative (SMI), we realized that a
collaborative effort is needed to facilitate the transition to net-
zero. At the centre of this effort is the need for businesses to
commonly report carbon emission data and for a consensus
to be reached on common sector frameworks for assessing
the transition to net-zero. As a result, our transition plan for
the underwriting element of Beazley's operations will focus on
two main areas:
• Improving the availability of carbon emission data for the
clients we insure so that we can set reduction targets in the
future. We plan to achieve this through client engagement,
collaboration with third parties, and industry initiatives; and
• Delivering products and services that best support our
clients as sectors begin to transition to net zero. An
example of this is our business plan to develop our
renewable energy underwriting capacity at Beazley. An
action which can be tracked through the underwriting
premium from low and zero carbon technologies, cited in
the Metrics section of this report.
Operations
Although the carbon footprint from our operations is small
compared to the emissions from our investment and
underwriting portfolios, it is the area where Beazley employees
can have the most influence. The operations element of our
transition plan will focus on reducing carbon emissions from
the offices we lease by working with our landlords and
encouraging the use of renewable electricity.
This approach builds on our current targets for reducing
carbon emissions from our operations. For 2023, we aim to
reduce our normalized carbon emissions by 50% compared to
the 2019 baseline (progress is reported in the Metrics section
of this report). Beazley's GHG emissions mainly come from
our Scope 2 and 3 emissions, as detailed in our GHG
emissions disclosures.
As part of our ongoing project to incorporate ESG matters into
our procurement process, we will also explore how we can
support our supply chain in transitioning to net-zero and
develop a detailed plan for this area of the business.
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Embedding climate risk into underwriting
Led by the CRWG, we’re continuing to build on the work undertaken to date to further integrate climate-related matters into our
underwriting approach. The focus has been on addressing the risks and opportunities outlined earlier in this report. A summary
of our progress so far is below.
Initiative
Summary of progress and plan for 2023
1. Development of physical
risk materiality assessment
framework
In 2023, Beazley enhanced its approach to identifying material physical risk perils by incorporating scientific research into its
physical risk materiality assessment. The assessment framework links the materiality of physical risk perils at present with their
future climate change impacts. This materiality is then assessed based on factors such as premium, modelled losses, risk
aggregation, and claims history. Future climate change impacts were then determined through a thorough scientific literature review
led by our Natural Hazard Research team. The material assessment outputs allowed us to prioritize our efforts in developing climate
risk tools.
2. Strengthen catastrophe
modelling capabilities and
develop forward looking
view of risk
Our ongoing efforts to develop a climate change-conditioned view of risk allow us to take a forward-looking approach to managing risk
from material perils. In 2022, we validated and implemented a US hurricane model that takes into account the elevated risk due to
climate change. This model is used as our view of risk for 2023 and is implemented in portfolio management, pricing, and capital
setting. At the end of 2022, we also validated a US wildfire model, which was introduced into portfolio management and capital
setting at the beginning of 2023. We have also validated a US inland flood model and are developing a climate change-conditioned
view of risk for US inland flood and US wildfire.
3. Develop climate
adjusted pricing for key
perils
At the end of 2022, we introduced climate loss trends in pricing for US wildfire and US inland flood, and in January 2023, we did the
same for US hurricane. During 2023, we reviewed climate loss trends for US hail, US tornado, and US winter storm, and
implemented climate-adjusted pricing for these three perils into our pricing models. This climate-adjusted pricing allows for improved
risk selection and management of catastrophe line deployment.
4. Climate risk underwriting
questions
5. Develop underwriting
climate change metrics
In 2023, Beazley developed climate risk underwriting questions and guidance, which are currently being tested in Property and
Specialty lines. The underwriting questions and guidance were created to explore the impact of a changing climate on the
underwriting risk of these business lines, to assess the insureds' awareness of their climate risk, and to determine what steps they
have taken to mitigate them. To support this pilot, we provided training to underwriting teams to implement the questions and
guidance into the underwriting process. We are working to gain a better understanding of the use of the questionnaire and guidance,
the ease of collecting the information, and any opportunities for refinement. Ultimately, they will help us better understand the risks
and make more informed underwriting decisions.
In 2022, Beazley developed a climate change metric for US hurricane risk and implemented it into our key property pricing tool in
2023. This metric was developed using a third-party tool that provides climate change projections for a list of physical risk perils. The
US hurricane climate change metric was validated and implemented first because it is the most significant peril. It helps underwriters
understand the future impact of climate change on their portfolio, supporting their decision-making. At this stage, it will not affect the
modelled premium as this is already captured in the hurricane climate-adjusted pricing. To support the integration of this metric into
the underwriting process, we provided training to underwriting teams and are working closely with underwriters to support the use of
the metric. The metric is used to select accounts that are most exposed to hurricane risk and helps identify where the climate risk
underwriting questions need to be completed.
6. Portfolio management:
develop and implement
catastrophe optimisation
framework and tools
In 2022 we developed, and in January 2023 implemented, a catastrophe optimization framework and tool, enabling underwriters to
refine and manage their US Property Risks portfolios using risk appetite and performance metrics, and make decisions on where to
expand or retract our exposure. A Catastrophe Management and Optimization Group was established at the beginning of 2023 to
oversee the implementation, meeting monthly to review risk appetite and performance metrics.
7. Physical climate risk
scenario analysis
During the year we progressed the development of physical climate risk scenario analysis. We conducted climate scenario analysis
for US hurricane, our most material peril, under a number of temperature scenarios to assess the climate change impact on our
property portfolios. The analysis is planned to be repeated at an agreed frequency, with results shared with underwriters. This will
allow them to monitor their future hurricane risk exposure and help embed scenario analysis in their process for monitoring
catastrophe risk. The results will also aid the business and medium-term planning processes next year.
The exercise also enabled Beazley to identify the challenges
to underwriting green/clean tech, including a lack of available
historical data and difficulty in predicting which green
technologies will be most successful or how quickly they will
be adopted.
The development of these product opportunities continued to
progress in 2023.
Underwriting product opportunities
Beazley considers the impact of climate risk on end-to-end
insurance operations, which drives opportunities for new and
changes to existing products and propositions. The processes
we have in place, as discussed in section 2.1.3, facilitate the
development of product opportunities.
In 2022, we undertook a review on how Beazley's current and
planned product suite applies to industries and sub-industries
that are key to the green/clean technology element of the
transition to net zero. As part of the review, we gathered
information from our underwriting teams on both their appetite
and demand for coverage for these industries. There is clearly
a demand for products and services for renewable energies
(wind, solar, hydro-electric, wave & tidal, geo-thermal, and
hydrogen), as well as being demand for green technology
(carbon capture & storage, battery technology, recycling) and
green services, (green consulting, technical services, green
finance).
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TCFD 2023 continued
change. These investments are under the oversight of the
Investment Committee.
Over the next 12 months, we will focus on developing our plan
for transitioning to net zero and further analysing the transition
and physical risks of climate change, and the financial impact
of different climate scenarios on our portfolio. This will help us
monitor and manage our exposure to climate risk across our
investments.
For our internally managed investment-grade fixed income
portfolios, we will monitor the progress of our investee
companies towards net zero and reduce our exposure to those
not making sufficient progress towards decarbonization. Given
the size and nature of our investments, we believe this
approach is appropriate, as we are not able to effectively
engage directly with the companies we invest in. Our equity
investments, which make up a small proportion of our
portfolio, are managed by external investment managers. We
require these managers to exercise our voting rights and
engage with our investee companies on climate issues. We
continually monitor our investments to ensure that we are
invested in the most sustainable options and engage with our
managers to make changes to the mandate where possible.
2.2.4 Operations
Carbon travel budget
Business travel is a major contributor to our scope 3
emissions. To address this, we have implemented a carbon
budget system, similar to a financial budget. Each division is
allocated a specific amount of carbon that they can "spend"
on greenhouse gas emissions resulting from business travel.
Performance updates are provided throughout the year,
allowing teams to track their carbon spending. This budget
system, and the resulting changes in travel patterns, has
helped Beazley achieve reductions in normalised carbon
emissions, as outlined in the Metrics section of this report.
Financial stewardship
For Beazley, a crucial part of the transition to net-zero is
ensuring that it occurs justly, balancing the short-term social
needs of energy security against the longer-term needs to
reach net-zero by 2050. At the beginning of 2022, we adopted
a policy of not underwriting any new thermal coal, oil tar
sands, or arctic energy exploration projects, or businesses
generating more than 5% of their revenues from these areas.
However, in November, due to the ongoing war in Ukraine, we
revised the exclusion for thermal coal. This revision applies
only to our Marine and Political Risk underwriting classes,
where Beazley is prepared, until June 2024, to insure new
clients transporting thermal coal from existing coal mines.
This approach supports the need for energy security, as
several global countries are increasing their use of thermal
coal plants to provide electricity.
We aim to support as many of our clients as we can during
their transition to net zero. We believe that this can be
delivered through a combination of education on the need for
a smooth and just transition; knowledge sharing from the
learnings we gain during our own transition journey; and the
provision of products and services in this space. Our approach
to the just transition will evolve, as we work to further
understand how best to support it.
Working with brokers
Brokers play a crucial role in connecting Beazley with our
clients. As such, our collaboration with brokers is essential in
addressing climate-related issues. Beazley works closely with
several strategic broker partners on various topics, including
climate-related matters. We engage with these partners, who
have the capability to work with us, to establish initiatives that
benefit them, our clients, and Beazley. This includes the
development of new products and services.
For our Incubation team, the relationship with brokers is a vital
part of the process of developing new products and services
that address climate-related opportunities. The nature of this
relationship may vary depending on the specific product being
developed. Engagement with brokers could be influenced by
factors such as their involvement in the development of the
new product, their ability to assist with the placement of
delegated agreements, or their capacity to source business
for our new product.
2.2.3 Investments
Beazley's Responsible Investment Policy outlines how we
incorporate ESG factors and climate risk into our investment
decision-making process. In 2021, Beazley committed to
investing up to $100m in impact investments, which generate
both a financial return and a measurable positive social and
environmental impact. Since then, we have invested in three
impact funds, including a renewable energy fund managed by
a member of the Natural Capital Investment Alliance, an
emerging markets microfinance fund, and the Big Issue Fund
IV, which targets health and social care, affordable housing,
and social infrastructure in the UK. We have a pipeline of
potential investments and will be working towards our
investment target of $100m over the next year. It is intended
that when fully invested, broadly half of the positive impact will
be focused on the environment and mitigation of climate
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3. Scenario analysis
3.1 Overview
Climate scenario analysis is a valuable tool to assess financial risks from climate change and inform strategic and business
decision making. By measuring the future financial impacts of climate risk to our business, we can adjust our strategy
accordingly to ensure resilience. Our approach to scenario analysis has evolved, with key initiatives being as follows:
Year
2021
2022
Outline of initiative
Bank of England Climate Biennial Exploratory Scenario (CBES) stress test
The exercise covered modelling of physical, transition and liability (litigation) risk over a 30-year time horizon within three different
scenarios – Early Action (EA), Late Action (LA), and No Additional Action (NAA). The scenarios were based on those established by the
Network for Greening the Financial System (NGFS).
The exercise focused on both assets and liabilities, taking a view, based on end-of-year 2020 balance sheets, of what might happen
depending on future climate-related policies, technological advancements and consumer behaviour to limit greenhouse gas emissions. It
was determined that the overall balance sheet impact was material over the long term, particularly in the NAA scenario which sees
greater physical and transitional risk. However, in no scenario was Beazley rendered unviable as an organisation.
On physical risk, the biggest impact on loss occurred in the NAA scenario, specifically the US perils (i.e. US windstorm, US inland flood,
US wildfire, US severe convective storm, and US winter storm). On transition risk, the largest asset portfolio loss occurred in the NAA
scenario and the smallest in the EA scenario.
Internal scenario analysis development
Likely future state scenario
In 2022, we developed a 'likely future state' scenario which ensures that all areas of the business are aligned in terms of views on likely
future scenarios and what ‘degree world’ we are operating in and planning for. The scenario is based on future emissions pathways set
out by the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), and the Intergovernmental Panel on
Climate Change (IPCC) scenarios. The proposed ‘Beazley most likely’ scenario parameters are:
• Future emissions follow the RCP 4.5 emissions pathway
• A very late and more aggressive policy transition. Assumes annual emissions do not decrease to 2030.
The 'likely future state' scenario parameters have been used to inform the decision on developing climate change conditioned view of
risk for material physical risk perils and location level climate change metrics.
Greenwashing scenario
In 2022, following completion of CBES 2021, we developed a Greenwashing RDS scenario, assessing our exposure to a scenario in
which a number of insureds across several exposed business lines faced greenwashing claims for overstating their green credentials.
The RDS considered the degree to which the different insured industry sectors and firm sizes of insureds are likely to be subject to
Greenwashing litigation, as well as how the frequency and severity of claims may differ between countries.
3.2 Developments in 2023
In 2023, we have developed a new series of scenarios for
physical risk, whilst pursuing projects which will guide future
scenario developments for climate-related litigation risk.
3.3.1 Physical Risk
Scenario scope and peril choice
Based on the results of our materiality assessment, and given
that hurricanes are our most significant peril, we have
developed a climate scenario analysis for US hurricanes. This
analysis examines the impact of climate change on various
property lines under different temperature scenarios in the
future. The focus is solely on physical climate risk, and the
analysis assesses the impact of climate change on each
property line at different future temperatures. This allows us
to evaluate the effects of further global warming on our
property portfolio.
Methodology and key parameters
Our climate scenario analysis used Global Mean Surface
Temperature (GMST) temperature increase as the
independent variable, with scenarios modelled for three
temperatures. Each temperature corresponded to a different
business and strategic planning horizon over the short,
medium, and long terms.
The decision to use temperatures as the key parameter was
based on making results easy to communicate with
stakeholders, compared to the alternative of using a
combination of time horizon and future emissions pathways.
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Additionally, the use of a temperature allows results to be given with a range of time horizons, as each temperature may be
reached by different points in the future according to how future emissions develop. This helps communicate the uncertainty
inherent in predicting future climate states and encourages stakeholders to keep this uncertainty in mind.
The table beneath shows the three temperatures selected, and the reasoning behind them:
GMST increase
+1.4 °Celsius
Time horizon
2025-2030
+2.0°Celsius
2035-2060
+3.0 °Celsius
2060 onwards
Reason for selection
Short term medium business planning
In line with Paris agreement (aggressive mitigation efforts required to limit warming to here)
Long term strategic planning
Required by regulators
Warming is likely to reach this extent in all but the most aggressive mitigation scenarios
Exploratory ‘stressed’ scenario
Required by regulators
Parameter in ‘Beazley most likely’ scenario
Hot house scenario
Current policies put us on place to reach this extent by 2100.
Beazley conducts business planning over short to medium-
term time horizons, evaluating its performance based on the
results of each financial year and developing an annual
business plan accordingly. Since some of Beazley's
underwriting business involves medium-tail classes or longer-
term projects and developments, medium-term considerations
must also be taken into account during business planning.
Beazley's strategy and strategic objectives are set over
multiple years, and therefore must consider mega trends and
slow-moving emerging risks that may materialize over time.
For each temperature scenario, we performed a scenario
analysis using a climate change conditioned catastrophe
model. The event rates within the model were adjusted to
reflect the future conditions at each temperature. The
modelling was conducted at both national and regional levels,
allowing us to see losses on a regional basis.
Findings, assumptions and limitations
The results of our climate scenario analysis showed the
percentage increase in modelled losses, with a focus on
average annual losses and losses for a 250-year return
period. For regionalised losses, all modelled property lines
experienced the largest increases in losses in Gulf states
such as Texas, Alabama, Mississippi, Louisiana, and Florida,
as well as significant increases in the Carolinas. The higher
temperature scenarios had more significant impacts, with a
higher overall increase in losses for each portfolio and a wider
range of loss increases across all states.
It's important to note that this scenario analysis was
conducted under the assumption that our future exposure and
local mitigation measures will remain the same as they are
today. As a result, there are limitations to the results,
particularly for the higher temperature scenarios associated
with longer time horizons. These limitations contribute to
increasing uncertainty at longer time horizons, due to
unmodelled variables such as changes in exposure and local
adaptation measures, as well as inherent uncertainty
regarding the impact of temperature increase on hurricane
impacts.
Business use cases and governance
The primary purpose of our physical scenario analysis is to aid
in business planning. By evaluating the regional impact of
climate change on property focus groups, underwriters can
understand the potential impact on their portfolios and identify
the regions that will be most affected.
This scenario analysis is planned to be repeated and will be
presented to the Catastrophe Management Optimisation
Group, before being shared with the relevant underwriting
teams. By repeating scenario analysis underwriters can
monitor how their exposure to future climate risk changes as
their portfolios evolve, enabling them to make informed
decisions about managing or growing their underwriting book.
This also helps to integrate scenario analysis into our
processes for monitoring catastrophe risk.
We are also developing an additional use case for capital
management, which will assess the impact of stressed
scenarios on our capital requirements and help us understand
the potential impact of climate change on our capital needs.
Next steps on physical risk scenario analysis development
In 2024, we will look to extend physical scenario analysis to
additional high-materiality climate perils, with US flood and
wildfire the next most material after hurricane. We will
continue to build use cases for scenario analysis.
3.3.2 Climate litigation risk
Greenwashing scenario review
Beazley instigated an independent review of our internal
greenwashing scenario, challenging the assumptions and
methodology used. This scenario review had the aim of
informing us on how we can improve future scenarios we run
for climate litigation, allowing us to refine our approach to
scenario analysis and continue to develop our capabilities in
the field.
Climate-related litigation portfolio assessment
We are exploring an assessment of our portfolio to determine
our exposure to climate litigation. The results of this
assessment will inform the development of future scenarios
for climate litigation. The assessment will define various
forms of climate litigation and allow us to evaluate our
exposure to each form across different industries and
jurisdictions. Our goal is for the assessment to help us
understand where our key exposures to climate litigation risk
lie. After the assessment is completed, we may develop
further scenario analyses, prioritizing the portfolios and types
of litigation identified as being most at risk.
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4. Risk management
4.1 Risk management framework
4.1.1 Overview of Beazley’s risk management framework
Beazley’s risk management framework establishes our approach to identifying, measuring, mitigating and monitoring the
Group’s key risks, including climate risk. See additional detail on the risk management framework in the strategic report which
starts on page 1.
4.2 Identification and assessment of climate-related risks
We use the key mechanisms set out below to identify and assess a range of climate-related risks relevant to Beazley, whether
that be by geographical location, sector or product line.
Key mechanism
Scenario Analysis
Natural Catastrophe
Modelling
Description
Scenario analysis includes stressing the scenarios of the first line or developing additional scenarios to consider climate related
risks.
Beazley utilises physical damage catastrophe models, such as those created by Moody's proprietary modelling system RMS, to
help understand the implications of physical events. The modelling of physical events with a climate-adjusted view, i.e. models that
enable us to review potential changes in physical risk as a result of a changing climate, is a discipline in its infancy. The Group has
licensed, and validated, the RMS climate-adjusted model for our most material peril and expects to review and validate more
climate-adjusted models released in 2023.
Deterministic Scenarios
The primary purpose of the tool is to gather data from the underwriting portfolio and provide loss-related information about pre-
defined events, such as Lloyd's RDSs. However, it is also used to assist with determining rate adequacy and as a key input in
portfolio management decisions; for example, in terms of diversification and geographical spread.
The modelling enables the impact of climate-related risk to be reviewed from the following perspectives:
• regional variation;
• different climate risk scenarios; and
• different loss perspectives
Beyond this modelling, we also engage with other data and tool providers to review potential changes in physical perils at an
individual location level.
Beazley runs RDSs in order to determine the impact of different risks. The natural catastrophe RDS and climate litigation RDS are
run on a regular basis. This modelling process is overseen by the exposure management team, who have developed a complex and
emerging underwriting risks protocol. This sets out the activity in place to review potential, complex, and/or emerging risks relating
to underwriting. There are approximately 60 Deterministic Realistic Disaster Scenarios (D-RDS) used to monitor the most
significant.
These scenarios are either modelled, using data drawn from third-party modelling partners, or non-modelled, where experts across
Beazley collaborate to determine the impact. An example of our approach to non-modelled risks is wildfires, an increasingly
common event due to the impacts of climate change. The modelling approach, meanwhile takes into account the impact of sector,
geography and business segment, in order to determine Beazley’s exposure. This helps to determine the relative significance of
the climate-related risk in relation to other risks. In turn this informs decision-making across the business.
Climate-related strategic
risks
The Board identifies and analyses emerging and strategic risk on an annual basis for discussion at The Board level. Climate-
related matters may form part of these discussions, where applicable.
Strategic emerging risks are reviewed by the risk team as part of the emerging risk assessment process. These reviews are a
collaborative effort with all the Risk team, management and the business functions. It is an opportunity to identify and assess
emerging risks, and provide appropriate mitigation measures to reduce/manage the risk. The emerging risk assessment is
undertaken at a micro-level and macro-level, (please see the table in section 2.1.2 for more information). This assessment is also
where Beazley captures its own response to climate change, and refers to the appropriate action being taken to improve the risk
and control framework.
Identification of emerging
risks, trends and regulatory
requirements
Regular scanning of the horizon for emerging trends, regulatory requirements and stakeholder perspectives is undertaken. Key
elements which are looked for include:
• Understanding the perspectives of stakeholders, whether they be investors, activists or our employees, through regular
dialogue;
• Determining current and emerging legal requirements, whether they be mandated or voluntary. This includes compliance with
regulatory demands and legislation. It also extends to voluntary initiatives Beazley is a member of, such as the UN Principles for
Sustainable Insurance; and
• Understanding the evolving reputational risks associated with our activities.
Regular communication on these matters occurs across the teams identified in section 1.2 in order to ensure Beazley’s approach
to responsible business meets stakeholder expectations. Where necessary, proposals are put to the responsible business
steering group for further discussion or clarification and recommendations for any appropriate action. Last year the Group
committed to setting a net zero target for 2050.
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4.3 Management of climate-related risks
4.3.1 Consideration of climate-related risk within the Risk Management Framework
Climate financial risk is a pervasive risk which spans multiple risk categories and owners; however it is also viewed as a
standalone risk in its own right. Below is a brief outline of how climate-related matters are reflected in the relevant principal risk
categories of the risk register.
Insurance risks
Risk type
Attritional and large claims
Relevance to climate-related matters
This is the risk that claims costs may be higher than expected leading to material losses. It includes the risk of systematic
mispricing of the medium-tailed Specialty Risks business, which could arise due to a change in the US tort environment, changes
to the supply and demand of capital or companies using incomplete data to make decisions. In the context of climate-related
matters, liability risks could manifest themselves, especially in relation to accusations of greenwashing. Transitional risk may also
play a part in claims arising from market cycle risks.
The Group uses a range of techniques to mitigate this risk including sophisticated pricing tools, analysis of macro trends, analysis
of claim frequency and the expertise of our experienced underwriters and claims managers.
Natural catastrophe
underwriting risk
This is the risk of one or more large events caused by nature affecting several policies and therefore giving rise to multiple losses.
Given Beazley’s risk profile, such an event could be a hurricane, major windstorm, earthquake or wildfire.
Climate financial risk
Reserve risk
This risk is monitored using exposure management techniques to ensure that the risk and reward are appropriate, and that the
exposure is not overly concentrated in one area.
This relates to potential financial risks that may result from the physical impact and transition requirements of a changing climate
on Beazley’s underwriting and investment portfolios. This could be due to systemic mispricing of climate-related exposures,
mismanagement of our aggregate exposures, or greater claims costs than expected resulting in financial loss and/or reputational
damage.
The Group mitigates this in a number of ways, including having a clearly defined and documented underwriting and investment
strategy. There is training and guidance on related risks as part of the business planning process. Pricing models are regularly
reviewed and updated to include/reflect climate-risk-related information. Exposure management processes are in place, which
includes stress and scenario analysis.
This is the risk that established reserves are not sufficient to reflect the ultimate impact climate change may have on paid losses.
This includes unanticipated liability risk losses arising from our client’s facing litigation if they are held to be responsible for
contributing to climate change, or for failing to act properly to respond to the various impacts of climate change. With support
from our Group actuarial team, claims teams and other members of management, the Group establishes financial provisions for
our ultimate claim’s liabilities. The Group maintains a consistent approach to reserving to help mitigate the uncertainty within the
reserve’s estimation process.
Market, credit and liquidity risks
Risk type
Market risk
Relevance to climate-related matters
This is a risk of investment loss, in any period, sufficient to impact capital and/or cause reputational damage. Beazley’s
investment portfolio could suffer detrimental returns following drops in the share prices of investments following a climate-risk-
related incident.
Reinsurance credit risk
To mitigate this risk, an approved investment strategy is in place that provides guidance on appetite. In addition, adherence to the
investment strategy is monitored through ongoing review, oversight and audit work.
In the event material natural catastrophe events, there would be a risk that our reinsurance counterparties are unable to pay
reinsurance balances due to Beazley. If the frequency or severity of these events is increased due to climate change, this could
cause a corresponding increase in credit risk. An important consideration when placing our reinsurance programme is evaluation
of our counterparty risk. Every potential reinsurer is evaluated through a detailed benchmarking exercise which considers financial
strength ratings, capital metrics, performance metrics and other considerations.
Liquidity risk
There is a risk that losses resulting from unprecedented natural disasters or extreme weather could erode our ability to pay
claims in a timely manner, due to unavailability (or not having access to) the necesary financial resources to meet obligations.
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Strategic risk
Risk type
Environmental, social, and
governance (ESG)
Relevance to climate-related matters
ESG is the umbrella term for environmental, social and governance factors that are used to measure the sustainability and ethical
impact of a business. The risk is that we fall short of the expected standard of ESG in relation to our stakeholders. For example,
this could stem from failing to understand and keep pace with ESG related thinking (that continues to gain momentum) and
consequently not taking appropriate actions to address Beazley’s stance and exposure in those areas. This could result in actual,
or a potential, material negative impact and/or reputation of Beazley, arising from an adverse sustainability impact.
We mitigate this risk by ensuring there is a clearly defined and documented ESG strategy driven by the executive team, that
includes targets and milestones which are communicated to all staff. This is primarily governed via the Responsible Business
Steering Group to ensure we take a consistent approach across the Group. Sustainability initiatives are incorporated into the
business planning process.
Strategic direction
The Group’s performance would be affected in the event of making strategic decisions that do not add value.
Reputation
The Group mitigates this risk through the combination of recommendation and challenge from Non-Executive directors, debate at
the Executive Committee and input from the Strategy and Performance Group (a group of 30+ senior individuals from across
different disciplines at Beazley).
Although reputational risk is a consequential risk, i.e. it emerges upon the occurrence of another risk manifesting, it has the
potential to have a significant impact on an organisation. Beazley expects its staff to always act honourably by doing the right
thing.
Talent management and flight
risk
From a climate-related risk perspective, reputational risk manifests itself in the decisions we make on climate matters. This
includes our approach to the transition to net zero, our approach to underwriting and investments, particularly in carbon-intensive
sectors, and performance against the objectives we have set within our Responsible Business Strategy.
There is a risk that employees, including senior management, could be overstretched or could fail to perform, which would have a
detrimental impact on the Group’s performance and ability to meet its strategic objectives.
The performance of the senior management team is monitored by the CEO and Culture and People team and overseen by the
Nomination Committee. Climate-related objectives are built into senior management remuneration packages. This ensures
progress can be measured and reported against.
Regulatory and legal risk
Risk type
Regulatory and legal
Relevance to climate-related matters
Regulators, legislators, investors and other stakeholders are becoming increasingly interested in companies’ responses to
climate change. Failure to appropriately engage with these stakeholders and provide transparent information could result in the
risk of reputational damage or increased scrutiny. The Group regularly monitors the regulatory and legislative landscape to ensure
that we adhere to any changes in relevant laws and regulations. This includes making any necessary regulatory or statutory filings
with regard to climate risk.
Operational risk
Risk type
Business, technology and
cyber resilience
Third party risk
Relevance to climate-related matters
This is the risk that the physical impact of climate-related events has a material impact on our own people, processes and
systems, leading to increased operating costs or the inability to deliver uninterrupted client service. The Group has business
continuity plans in place to minimise the risk of interrupted client service in the event of a disaster.
The Group aims to minimise where possible the environmental impact of its business activities and those that arise from the
occupation of its office spaces. As we operate in leased office spaces, our ability to directly influence the building's environmental
impacts is limited. However, we do choose office space with climate change mitigation in mind, and engage with our employees,
vendors and customers in an effort to reduce overall waste and our environmental footprint.
4.3.2 Processes for managing climate-related risks
Beazley’s risk management philosophy is to balance the risks the business takes on with the associated cost of controlling
them, while staying within the risk appetite set by The Board. The Company continuously monitors its risk profile to ensure it
stays within this appetite and takes advantage of opportunities as they arise. As a specialist insurer, Beazley underwrites
several classes of business that are vulnerable to the effects of climate change. To manage these risks, the Company has four
options: accept the risk, avoid it, mitigate it, or transfer it.
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Tools to help manage climate-related risks
Beazley employs a variety of tools to help manage climate-related risks. These are as follows:
Tools used
Stress and scenario
framework
Description of use
The stress and scenario framework is a key element of the risk management framework, enabling senior management to form an
understanding of the vulnerabilities of the business model. There are two levels of stress and scenario tests conducted at
Beazley, which ensures there is coverage of the key risks facing us and ownership at the appropriate management level.
Monitoring of aggregation of
exposure
Capital modelling
Risk appetite
Single-pillar stress and scenario tests such as RDSs are performed as part of normal business processes, with RDSs for natural
catastrophes run on a regular basis in order to determine the impact of different risks.
In addition, multi-pillar testing is conducted as part of the Own Risk and Solvency Assessment (ORSA) process, to ensure that
tests continue to develop and reflect the evolving risk environment.
The Exposure Management team has the responsibility for developing approaches to monitor the aggregation of exposure to
natural catastrophes. Part of this work involves assessing the latest views on climate change and reporting to the business on
the impacts any changes could have to the insurance portfolios. The Exposure Management team reports to the Chief
Underwriting Officer, who in turn provides regular updates to The Board on these matters. The Exposure Management team is
supported by the Head of Financial Climate Risk.
The Head of Capital provides an update to The Board, using modelled and non-modelled information, to help determine the impact
of climate change on the business. An example of this is the internal modelling the capital team undertook to determine the
impact of wildfires, which are becoming increasingly prevalent as a result of climate change. They also set out a view on the more
material hurricane risk as part of this process.
On an annual basis, Beazley’s risk appetite is reviewed and is informed by outputs from the RDS, capital model, and credit risk
assessment, as well as input from the trading teams. This helps guide the underwriting teams for the following year, before being
reviewed against the capacity available.
This appetite is agreed and set by the Board, before being tracked by the exposure management team on a monthly basis, who
flag up to the business any areas where we are close to the limits the business has set. Capacity is impacted by the number of
physical weather events which occur throughout any given year, and therefore the impact of climate change is considered when
deciding on risk appetite.
During 2022, Beazley’s risk appetite statements (RAS) and associated key risk indicators (KRIs) were materially enhanced for all
risks, including financial climate risk. The RAS and KRIs now include qualitative statements and metrics relating to the
effectiveness of the CRWG and the investment portfolio temperature alignment. These have been monitored and reported on a
frequent basis across 2023 to the Risk and Regulatory Committee, plc Risk Committee and Board; and this will continue in 2024.
Detailed risk assessment
On a periodic basis, as part of a core element of the risk management framework, the Risk function undertakes a detailed risk
event assessment of climate financial risk. The aim of the assessment is to review the risk ownership and governance; the
inherent and residual risk scores; the risk appetite; and the control environment.
Quantitative and qualitative assessment of climate-related risks within the Risk Management Framework
The Board-level Key Risk Indicators (KRIs) are monitored as part of Beazley's risk management framework and are outlined in
the risk appetite statements. These KRIs are designed to provide early warning signals that can be addressed through the
Company's governance structure. They use a red, amber, and green (RAG) rating system to indicate whether a risk is within the
Company's appetite and whether any escalation is necessary. The KRIs related to climate change are as follows:
Area of the business
Key Risk Indicator
Underwriting
Investments
Operations
Natural catastrophe aggregate exceedance probability and occurrence exceedance probability metrics (at multiple return periods)
Progress in meeting the objectives of the Climate Risk Working Group.
Compliance with responsible investment policy and transition risk.
Reduction in carbon emissions for our operations compared to the 2019 baseline of 40% in 2022, and 50% in 2023.
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5. Metrics
We use a number of metrics to monitor our progress on
climate-related matters.
5.1 Enhancing our approach
The CRWG was established in 2022 to improve Beazley's
approach to climate-related issues in underwriting. The
Group's progress is measured using two quantitative metrics:
the number of perils with a climate change-conditioned view of
risk, and the number of perils with climate loss trends
incorporated into pricing model calibration. These metrics are
monitored and reported in more detail below.
Number of perils with climate- change- conditioned
view of risk
Beazley is researching climate change-conditioned models and
updating its understanding of the impact of climate change on
physical risk perils through dedicated research. This will help
the Company develop a forward-looking view of risk that takes
climate change into account.
A peril is defined as a weather hazard event or circumstance
that results in property damage losses to Beazley. For a peril
to be considered to have a Climate Conditioned View of Risk,
the following must have been undertaken:
• The Exposure Management team have prepared a study
examining the impact of climate change on the scientific
underpinnings of the peril;
• The implications of these impacts on the models currently
in use by Beazley has been reviewed; and
• The determination of a final adjustment/model alteration to
use has been undertaken. This is implemented for pricing,
but not portfolio management.
We introduced a climate-change conditioned view of risk for
US hurricane in 2022. In 2023, whilst we worked on
implementing a view of risk for US Wildfire and US Inland
Flood, it is yet to conclude. We expect to deliver a climate-
change-conditioned view of risk for these perils in 2024.
Number of perils with climate loss trends introduced
into pricing model calibration
To integrate climate-related matters into underwriting, it is
important to incorporate climate loss trends into pricing model
calibration. Beazley is currently working on including climate
trends for key perils into the model calibration for pricing
property risk.
A peril is defined as a weather hazard event or circumstance
that results in property damage losses to Beazley. The trend
is measured as a per annum percentage increase in the
expected losses. The climate loss trend is considered as
having been introduced into the pricing model calibration,
when the following has occurred:
• Climate trended pricing is built into the pricing model by an
actuary;
• The incorporation into the pricing model has been reviewed
by a senior actuary; and
• The pricing trend has been incorporated into the rating tool.
In 2022, we reviewed climate loss trends for US hurricane, US
wildfire, and US inland flood. In December 2022, US Flood
and US Wildfire were introduced into the pricing tool for the
North America Commercial Property and Open Market Property
lines. US hurricane then followed in January 2023.
Subsequently US tornado, US hail, and US winterstorm were
introduced in December 2023. A summary of progress is as
follows:
2021
0
2022
2 (US wildfire, US inland
flood)
2023
4 (US hurricane, US
tornado, US hail, US
winterstorm)
5.2 Underwriting
Net Estimate Premium Income arising from low and
zero carbon technologies
The sum of net estimated premium income (net EPI) arising
from low and zero carbon technologies underwritten across
the last three years is as outlined in the table below. The net
EPI is calculated from data on the line slip, or in the case of
binders, the estimate of the declarations as estimated by the
broker and / or underwriter, as documented in notes. The
metric is based on an estimate, therefore, could be subject to
change as premiums are adjusted through the life of the
policy.
The Net EPI disclosed in this report is the total estimated
premium incepted in 2023, and as measured at the end of
2023. The data has been collected from the information
entered into Beazley’s underwriting systems. Where exchange
rates have needed to be applied, for EUR and USD these have
been applied at the date of entry into the underwriting system.
For lesser used currency conversions occur prior to entry.
For 2023, the scope of reporting is limited to offshore and
onshore wind, and onshore solar. The totals are as follows:
2021
$4.5m
2022
$8.0m
2023
$5.9m
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Beazley | Annual report 2023
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TCFD 2023 continued
5.3 Investments
For the purpose of reporting of climate metrics, our portfolio of
publicly listed corporate bonds and publicly listed equities are
considered to be in-scope. This combined represents 45.8%
of the market value of our total portfolio as at 31 December
2023. The individual methodologies to estimate the
investment related climate metrics are outlined in the section
below. The common inputs and processes across each
metrics are as follows:
The GHG emissions data is based on Scope 1 and 2
emissions only and is sourced from S&P CAP IQ pro, S&P
collect and report GHG emission data for companies within
their platform. Where they cannot, an estimated carbon
emissions amount is used. The carbon emission data used in
the calculation of the metric will reflect a 12-month period.
The 12th month period is dependent on the financial year of
reporting for the individual company. The data is reported as
at 31st December 2023.
The investment grade corporate bond portfolio is managed
internally with portfolio and security level holding data
maintained by an investment administration system provided
by Clearwater. All other publicly listed securities are
outsourced to external managers who provide look-through
data. Security holdings are maintained on the S&P platform
for the calculation of climate metrics based on a share of
financing basis (enterprise value including cash).
The calculation of the metrics are based on the assumption
that the data contained within S&P CAP IQ Pro is correct, and
the calculation methodology used by S&P is reflective of the
calculations outlined in their methodology document. Beazley
uses data from Standard & Poor's Market Intelligence Capital
IQ pro (S&P CAP IQ pro) to calculate the following investment
portfolio metrics:
Total apportioned GHG emissions arising from
our investments
This is the total Carbon Emissions apportioned to Beazley's in-
scope assets and is the starting point for calculating the
carbon footprint of our investments. It follows a share of
financing methodology and is consistent with the GHG
Protocol accounting standard, allocating emissions based on
enterprise value including cash (EVIC) basis.
The calculation is the value of investment divided by the
issuers share of financing before this figure is multiplied by
the issuers scope 1 and 2 GHG emissions. This sum is
undertaken for each in scope security and totalled to provide
an overall apportioned GHG emission figure.
In 2022 we reported apportioned carbon emission data for our
publicly listed equity holdings only. During 2023 we
increased allocation to equities from 1.8% to 3% of total
assets, resulting in an increase to our overall apportioned
emissions despite an improvement in the energy efficiency of
our exposures. To provide a like-for-like comparison, a
normalised number showing apportioned carbon per $1m
exposures has been included.
Apportioned GHG emissions (tCO2e) arising from
our investments (Publicly listed equities only)
Normalised apportioned GHG emissions (tCO2e)
arising from our investments (Publicly listed equities
only) per $m of holdings
Reporting coverage of listed equities by market
value (%)
2022
2023
2,359.3 3,955.0
14.8
14.0
90.2
99.8
In 2023 we expanded our coverage to include publicly listed
corporate bonds in addition to our publicly listed equity
holdings. The total market value of these holdings is $4,253m
representing 45.8% of our total assets.
Apportioned GHG emissions (tCO2e) arising from
publicly listed equities and corporate bonds
Carbon reporting coverage for publicly listed equities
and corporate bonds (%)
2023
76,298
97.6
Weighted average carbon intensity (WACI)
The weighted average carbon intensity (WACI) of our publicly
listed equity and corporate bond portfolios is set out in the
table below. The WACI is calculated by taking the sum of the
GHG emissions (Scope 1 and Scope 2) for the holding and
dividing by the total revenue of each holding. This figure is
then multiplied by its investment weight (the value of the
holding divided by value of the total holdings, both as at 31st
December 2023). The GHG emissions data is sourced from
S&P CAP IQ. Emissions have been reported for 97.6% of the
market value of in-scope assets.
WACI (tCO2e/$m sales) arising from
our investments
2021
2022
2023
75.5
49.9
44.4
Temperature alignment of our investment portfolio
The reporting of the temperature alignment of Beazley's
portfolio is based on the methodology set out by the S&P Cap
IQ. The methodology apportions the value of holdings with
regards to the ‘under/over 2°C budget’ metric which is
produced by S&P annually for every company. This is
calculated by multiplying the ‘under/over 2°C budget’ figure by
the investor’s value of holdings and then dividing this value by
the total enterprise value of that particular company. The
individual values are then summed across the entire portfolio
in order to either give a negative figure (aligned) or positive
figure (misaligned). The scope of the reporting is limited to the
GHG emissions arising from our publicly listed corporate
bonds (investment grade and high yield) and publicly listed
equities. The data was reported as at 31st December.
Temperature alignment metrics have been reported in respect
of 96.7% of the market value of in-scope assets.
The reporting of Beazley's current pathway alignment is the
starting point from which future comparisons will be made.
Beazley has set an objective to align its investment portfolio
with a 1.5 degree Celsius pathway by 2028 and will continue
to work towards this in 2024.
Current Temperature Pathway
Alignment
2022
2-3 degree
Celsius
2023
2-3 degree
Celsius
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Beazley | Annual report 2023
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5.4 Beazley’s operations
5.4.1 GHG emissions
The Greenhouse gas (GHG) emissions are calculated and in accordance with the Greenhouse Gas Protocol, Corporate Reporting
and Accounting Standard including the amended GHG Protocol Scope 2 Guidance, and HM Government, Environmental
Reporting Guidelines, using the applicable UK Government’s (BEIS) GHG Conversion Factors for Company Reporting unless
otherwise indicated. The full methodology, including limitations, for calculating the GHG emissions is available on Beazley's
Responsible Business pages on Beazley's website, as is the full breakdown of carbon emissions across each of the three
Scopes of emissions. Where revisions to GHG emissions in previous years have been made due to a change in calculation
methodology, these changes are detailed in the full methodology document.
The parameter of Scope 1 and Scope 2 reporting in 2023 includes 22 sites covering London (UK), Birmingham (UK), Dublin
(Ireland), Munich (Germany), Paris (France), Barcelona (Spain), Singapore (Asia), Atlanta (US), Boston (US), Chicago (US), Dallas
(US), Farmington (US), New York (US), San Francisco (US), Philadelphia (US), Denver (US), Houston (US), Los Angeles (US),
Miami (US), Vancouver (Canada), Toronto (Canada), Montreal (Canada), and one third party cloud-based data centre service
provider called Equinix). This equates to 95.5% of Beazley employees including contractors. Business travel (Scope 3) is
included for all employees.
Beazley’s two US subsidiaries, Lodestone (Lewisville) & BHI (Miami), are excluded.
Energy consumption for the charging of electrical vehicles in scope 2 is included and calculated based on maximum distance
specified in terms of car lease agreements.
Reporting is based on operational control. Beazley Group does not have operational control over the building infrastructure and
plant at its offices due to the presence of facility management companies and shared tenancy; as a result, emissions primarily
fall within Scope 2 and 3 of the Greenhouse Gas Protocol.
5.4.2 Location-based GHG emissions
Our GHG emissions normalised for Beazley's full-time equivalent (FTE) (including contractors) were 2.82 tonnes carbon dioxide
equivalent (tCO2e/ FTE) in 2023. This equates to a normalised (per FTE) 46.8% reduction when compared to our 2019 baseline.
Total emissions, prior to normalisation, have reduced by 16.8% when compared to the 2019 baseline. The largest proportion of
our reported emissions comes from Beazley's business travel. Emissions in 2020 and 2021 were impacted by reduced
business travel due to the COVID-19 pandemic. The Scope 2 and Scope 3 data for 2019 to 2022 has been revised from
previously stated emissions. This is due to the receipt of actual data, rather than relying on estimates to calculate emissions.
2022 saw a return to face to face contact with stakeholders, however, the early months of the year were considered to be still
impacted by the pandemic. The 2023 Scope 1 emissions saw a reduction from 2022, driven by no refrigerating top ups
occurring which are very carbon intensive.
Location- based GHG Emissions (tCO2e)
Scope 1
Scope 2
Scope 3
Total tCO2e
2019
2020
2021
2022
21.08
1,672.53
6,725.81
8,419.42
16.50
1,425.88
1,636.96
3,079.34
8.23
1,236.09
863.94
2,108.26
65.20
946.81
4,152.40
5,164.41
2023
2.13
829.72
6,166.96
6,998.81
Total tCO2e/FTE
5.30
1.87
1.15
2.44
2.82
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Beazley | Annual report 2023
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TCFD 2023 continued
5.4.3 Market-based GHG emissions
Beazley Group’s market-based GHG reporting for 2023, taking into account the procurement of 743,423kWh of electricity from
certified renewable sources, is summarised in the table below. Renewable electricity was procured for our London, Dublin and
San Francisco offices. Biogas is used in our London office. This equates to renewable electricity being 29.1% of Beazley's
overall in scope electricity use, and biogas being 26.75% of Beazley's overall in scope imported heat use. The energy for the
data centres was also procured from renewable sources. The procurement of renewable energy resulted in a saving of 211.05
tonnes of CO2 equivalent for scope 2, and a further 208.90 tonnes of CO2 equivalent for scope 3.
The market-based emissions, which take into account the carbon emission reductions achieved through the use of renewable
energy in four of Beazley's offices, are set out in the table below, and lead to an overall 50% reduction when compared to the
2019 baseline. The Scope 2 and Scope 3 data for 2019 to 2022 has been revised from previously stated emissions. This is
due to the receipt of actual data, rather than relying on estimates to calculate emissions.
Market-based GHG Emissions (tCO2e)
Scope 1
Scope 2
Scope 3
Total tCO2e
Total tCO2e/FTE
2021
8.23
861.45
863.94
1,733.62
2022
65.20
770.32
3,940.07
4,775.59
2023
2.13
618.67
5,958.07
6,578.87
0.95
2.25
2.65
5.4.4 Detailed breakdown of emissions
SCOPE 1
Our Scope 1 emissions arise from company car use, refrigerant top ups of air conditioning systems and back-up generator use
for our Dublin office. Emissions for 2023 were 2.13 tC02e, all of which were within the UK.
SCOPE 2
Beazley Group does not have operational control over the building infrastructure and plant at its offices due to a combination of
shared tenancy and the presence of facility management companies. Beazley offices are heated/ cooled by the building’s
central HVAC systems, which are managed by the landlord or landlord’s agent. This does influence the options we have for
procuring energy. Our Scope 2 emissions can be broken down by region. The Scope 2 data for 2019 to 2022 has been revised
from previously stated emissions. This is due to the receipt of actual data, rather than relying on estimates to calculate
emissions.
UK
Total location-based GHG Emissions (tCO2e)
Total market-based GHG Emissions (tCO2e)
2019
826.59
826.59
2020
586.17
144.86
2021
439.87
140.82
2022
246.95
114.76
2023
224.64
43.65
REST OF WORLD
Total location-based GHG Emissions (tCO2e)
Total market-based GHG Emissions (tCO2e)
2019
71.52
71.52
2020
69.91
69.91
2021
70.77
70.77
2022
69.02
69.02
2023
26.59
26.59
USA
Total location-based GHG Emissions (tCO2e)
Total market-based GHG Emissions (tCO2e)
2019
653.35
653.35
2020
653.35
653.35
2021
624.26
624.26
2022
568.91
568.91
2023
529.67
517.96
EUROPE
Total location-based GHG Emissions (tCO2e)
Total market-based GHG Emissions (tCO2e)
2019
121.07
121.07
2020
116.45
22.17
2021
101.19
25.60
2022
61.93
17.63
2023
48.82
30.47
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SCOPE 3
Our overall Scope 3 emissions are as detailed below. We have provided further details of how the market-based emissions
factors also impact our overall emissions. The Scope 3 T&D data for 2019 to 2022 has been revised from previously stated
emissions. This is due to the receipt of actual data, rather than relying on estimates to calculate emissions.
Location based emissions
Air travel
Rail travel
Hotel stays
Car hire use
Electricity transmission & distribution losses
(location-based)
Taxi use
Personal car use
Electric vehicle charging transmission &
distribution losses
Imported heat transmissions & distribution losses
Data centres
Total
Market based emissions
Air travel
Rail travel
Hotel stays
Car hire use
Electricity transmission & distribution losses
(location-based)
Taxi use
Personal car use
Electric vehicle charging transmission &
distribution losses
Imported heat transmissions & distribution losses
Data centres
Total
2019
(tCO2e)
6,074.04
107.65
183.22
23.52
93.84
165.11
73.92
—
4.51
—
6,725.81
2019
(tCO2e)
6,074.04
107.65
183.22
23.52
93.84
165.11
73.92
—
4.51
—
6,725.81
2020
(tCO2e)
1,437.70
5.69
34.74
3.24
72.57
59.13
19.11
0.28
4.50
—
1,636.96
2020
(tCO2e)
1,437.70
5.69
34.74
3.24
72.57
59.13
19.11
0.28
4.50
—
1,636.96
2021
(tCO2e)
527.39
4.20
30.81
2.74
58.42
22.68
19.15
0.26
4.50
193.79
863.94
2021
(tCO2e)
527.39
4.20
30.81
2.74
58.42
22.68
19.15
0.26
4.50
193.79
863.94
2022
(tCO2e)
3,666.49
11.93
96.13
9.56
43.42
99.97
7.79
0.28
4.50
212.33
4,152.40
2022
(tCO2e)
3,666.49
11.93
96.13
9.56
43.42
99.97
7.79
0.28
4.50
—
3,940.07
2023
(tCO2e)
5,661.32
17.17
130.73
12.25
38.19
49.36
58.09
0.34
4.56
194.95
6,166.96
2023
(tCO2e)
5,661.32
17.17
130.73
12.25
24.25
49.36
58.09
0.34
4.56
—
5,958.07
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Beazley | Annual report 2023
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TCFD 2023 continued
5.4.5 Carbon offsets
Beazley has not purchased carbon offsets in 2023. Beazley is
currently reviewing different carbon offset options, with a view
to using offsets as part of a range of measures to help reduce
Beazley’s carbon footprint.
5.6 Remuneration
As set out within the remuneration dashboard on page 125, a
section of executive compensation is linked to the
achievement of ESG objectives. The score-card, and the
degree to which it has been achieved, is determined by the
Remuneration Committee.
Compliance with TCFD Requirements
Beazley has included on pages 22 to 44 in the Strategic
Report a climate-related financial disclosures consistent with
the TCFD’s Recommendations and Recommended
Disclosures, with the exception of the following:
Strategy 2a: Organisations should describe the climate-
related risks and opportunities the organisation has identified
over the short, medium, and long term.
Beazley has partially disclosed against this requirement.
Beazley is currently exploring the climate-related risks and
opportunities as part of ongoing work on climate-related
matters. This is being undertaken in a manner which will best
align with our strategy. At the point of disclosure, it was
considered that the work currently in progress is not
sufficiently completed to meet the requirement of the
disclosure recommendation.
Strategy 2b: Organisations should describe the impact of
climate-related risks and opportunities on the organisations
business, strategy and financial planning.
Beazley’s responses to this requirement are still developing, it
is not possible to consider all possible future outcomes when
determining asset and liability valuations, and timing of future
cash flows, as these are not yet known. Nevertheless, the
current management view is that reasonably possible changes
arising from climate risks would not have a material impact on
asset and liability valuations at the year-end date. Our TCFD
disclosures are to be updated on an annual basis, therefore,
we will be able to set out our progress as part of our 2024
TCFD disclosure.
Beazley has partially disclosed against the supplementary
requirements for insurance companies and asset owners.
Beazley is working to further develop our approach to climate-
related matters. At the point of disclosure, it was considered
that the work currently in progress is not sufficiently
completed to meet the requirement of the disclosure
recommendation.
Strategy 2c: The organisation should describe how resilient
their strategies are to climate-related risks and opportunities,
taking into consideration a transition to a low-carbon economy
consistent with a 2°C or lower scenario.
Beazley’s responses to this requirement are still developing, it
is not possible to consider all possible future outcomes when
determining asset and liability valuations, and timing of future
cash flows, as these are not yet known. Nevertheless, the
current management view is that reasonably possible changes
arising from climate risks would not have a material impact on
asset and liability valuations at the year-end date. Our TCFD
disclosures are to be updated on an annual basis, therefore,
we will be able to set out our progress as part of our 2024
TCFD disclosure.
Metrics and Targets 4a: Organisations should disclose the
metrics used by the organisation to assess climate-related
risks and opportunities in line with its strategy and risk
management process.
Beazley partially complies with this requirement and is
currently working to develop an appropriate tranche of data
metrics by which to further monitor climate-related risks,
particularly in respect to the transition to net zero. Once
developed these metrics will compliment the metrics already
reported. At the point of disclosure, it was considered that the
work currently in progress is not sufficiently completed to
meet the requirement of the disclosure recommendation.
Supplementary requirements for insurers and asset owners
For the supplementary requirements, our status is as follows:
Strategy 2c: Beazley has partially disclosed against the
supplementary requirements for insurance companies and
asset owners.
Risk 3a: Beazley is partially compliant with the supplementary
requirements for asset owners and insurance companies.
Risk 3b: Beazley is partially compliant with the supplementary
requirements for insurers, but is not compliant with the
supplementary requirements for asset owners.
Metrics and Targets 4a: Beazley partially complies with the
supplementary requirements for asset owners, but does not
comply with the supplementary requirements for insurers.
Metrics and Targets 4b: GHG emissions and related risks
Beazley does not comply with the supplementary requirements
for insurers, but partially complies with the supplementary
requirements for asset owners.
For these areas of the supplementary requirements, Beazley
is working to further develop our approach to climate-related
matters. At the point of disclosure, it was considered that the
work currently in progress is not sufficiently completed to
meet the requirement of the disclosure recommendation.
Our TCFD disclosures are to be updated on an annual basis,
therefore, we will be able to set out our progress as part of
our 2024 TCFD disclosure.
Transition Plan
Beazley has not published a transition to net zero plan. As
referred to in the TCFD disclosure, the plan will be approved
by the Plc board, before then being published in 2024.
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Non-financial and sustainability
information statement
Beazley presents its non-financial and sustainability information statement in compliance with section 414CA and 414CB of the
Companies Act 2006.
As a company listed on the London Stock Exchange and subject to the Listing Rules, Beazley publishes an annual statement in
accordance with the Task Force on Climate-related Financial Disclosures (TCFD). The new sustainability and climate-related
financial information required by section 414CB(1) of the Companies Act 2006 is included in our TCFD statement. Other
required non-financial information disclosures are set out elsewhere in our Strategic Report. The table below sets out where the
information can be found, including for climate-related information, the most relevant sections of the TCFD statement.
Reporting requirement
Non-financial reporting information
A description of Beazley’s business model
Section and page reference
Our business model and strategy (pages 3-7)
Principal risks relating to the non-financial matters set out in section 414CB(1)(a) to (e)
arising in connection with Beazley’s operations, likely impacts from any such principal risks,
and how they are managed
Risk management and compliance (pages 69-74)
TCFD statement (climate-related risks) (pages 26-32)
Non-financial performance indicators
Key Performance Indicators (KPI's) (page 2)
Responsible Business metrics (page 19)
Sustainability and climate-related financial information
The governance arrangements in relation to assessing and managing climate-related risks
How Beazley identifies, assesses and manages climate-related risks and opportunities
How processes for identifying, assessing and managing climate related risks are integrated
into Beazley’s overall risk management process
A description of the principal climate-related risks and opportunities arising in connection with
Beazley’s operations; and the time periods by reference to which those risks and
opportunities are assessed
The governance arrangements to assess and manage climate-
related risks and opportunities is outlined in the Governance
section of Beazley’s TCFD disclosure.
TCFD Statement: Section 1 (Governance), pages 22-25
Beazley’s approach to identifying, assessing and managing
climate-related risks and opportunities is set out in Section 2,
3 and 4 of Beazley’s TCFD disclosures.
TCFD statement: Section 2 (Strategy), pages 26-32; Section 3
(Scenario Analysis), pages 33 to 34; and Section 4 (Risk
Management), pages 35-38
Beazley’s approach to identifying, assessing and managing
climate-related risks and opportunities is set out in Section 4
of Beazley’s TCFD disclosures.
TCFD statement: Section 4 (Risk Management), pages 35-38
The risks and the expected timelines they arise for Beazley are
summarised in section 2.1.1 and 2.1.2 of Beazley’s TCFD
disclosures. The related opportunities are documented in 2.1.3
and 2.1.4. The opportunities arising from climate-related
matters, particularly in respect to liability and transition related
risk are still emerging. Beazley has identified that we can
provide products and services which will help support our
insureds manage their risks associated with both liability and
transitional related matters. These products and services will
differ depending on the nature of the underwriting policy, and
the sector in which the insured is operating.
TCFD statement: Section 2.1.1-2.1.4 (climate related risks and
opportunities), pages 26-29.
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Beazley | Annual report 2023
45
Reporting requirement
A description of the actual and potential impacts of the climate-related risks and opportunities
on Beazley’s business model and strategy
Section and page reference
The actual and potential impacts of climate-related risks and
opportunities on the business strategy and model are set out
in section 2.2.1 to 2.2.4 of Beazley’s TCFD disclosures. As an
insurer the physical climate-related risks are considered
material, with transition and liability risks beginning to emerge.
The opportunities, lie in the short-term, in better understanding
the risks and how Beazley can better support our insureds in
the future. A key part of this process will be delivering products
and services.
TCFD statement: Sections 2.2.1 to 2.2.4 (impact of climate-
related opportunities on business strategy and financial
planning), pages 30 to 32
An analysis of the resilience of Beazley’s business model and strategy, taking into
consideration of different climate-related scenarios
The Scenario Analysis performed by Beazley is outlined in
Section 3 of the TCFD disclosures.
Targets used by Beazley to manage climate-related risks and to realise climate-related
opportunities and performance against those targets
TCFD statement: Section 3 (Scenario Analysis), pages 33 to 34
In 2023, Beazley set and communicated via our website, the
following targets to manage climate risks and realise the
opportunities.
This included:
• Targeting a 50% reduction in CO2e emissions against a
2019 baseline;
• Aligning the investment portfolio (publicly listed corporate
bonds (investment grade and high yield) and publicly listed
equities) with a 1.5 degree pathway by 2028;
• Improving pricing adequacy by incorporating climate risk
trends in pricing for 3 more material perils; and
• Introduce a climate change conditioned forward looking view
of risk for 2 additional material perils.
Beazley’s Key Performance Indicators used to assess progress against targets used to
manage climate-related risks and realise climate-related opportunities and a description of the
calculations on which those Key Performance Indicators are based
Performance against these targets is outlined in Section 5 of
Beazley’s TCFD disclosures. A summary of the methodology
used is also outlined in section 5.
TCFD statement: Section 5 (Metrics), pages 39-44
Due diligence
We have a range of policies in relation to environmental matters, employees, social matters, human rights, and anti-corruption
and anti-bribery, that support our strategy and business model and ensure good outcomes for our stakeholders. Our
performance against our non-financial KPIs is an important way in which we measure the effectiveness of our strategy and
associated policies. There is an overall due diligence process in place for all of our policies. The Board ensures that the
relevant policies are in place, remain appropriate, and are operating effectively through setting a review cycle for key policies.
The Board determines which policies it must approve, and which policies may be delegated to its Committees or to
management level committees. As part of the agreed due diligence process, the key policies are reviewed by an individual
within Beazley who is a subject matter expert and listed as responsible for the continued maintenance and development of the
policy. This may include obtaining external advice, where appropriate. The Board also reviews and approves the key policies
annually or as agreed, as well as reviewing non-financial information, KPIs, and other monitoring data through regular reporting.
All policies are kept centrally and accessible via our intranet site so that employees can access them at any time. Training is
carried out for all employees on key policies through our regular compliance training programme and on an ad hoc basis where
required. Additional training on policies, procedures and controls is carried out with employees in specific roles. New policies
and procedures are supported by communication to employees to make them aware of any new requirements on them.
Our key non-financial policies, a brief description of their purpose and any important outcomes from our due diligence
processes during 2023, are set out in the table below.
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Relevant non-financial
KPIs and other metrics
Weighted average
carbon intensity of
corporate bond and
equity portfolios
Further information
TCFD statement (page
40)
Overall carbon
emissions
Key Non-Financial KPIs
(page 2)
Greenhouse gas
emissions per full time
equivalent
Responsible Business
(page 19)
Reduction in
greenhouse gas
emissions
Female representation
in senior leadership
roles
People of Colour
representation in the
workforce
Employee engagement
score
Employee favourability
score
Responsible Business
(page 19)
Other data is included
in the TCFD statement
and Directors' Report.
Non-financial KPIs
(page 2) and
Responsible Business
(page 19)
Non-financial KPIs
(page 2)
People of Colour
representation in senior
leadership roles
Responsible Business
(page 17)
Also see: investing in
and rewarding the
workforce
Governance report
(page 93)
Non-financial and sustainability
information statement continued
Reporting requirement
Environmental matters
Our long-term commitment
to sustainability and
playing our part in
addressing the issue of
climate change and
reducing our impact on the
environment is a key
competitive advantage.
Policy or standard, its purpose, and outcomes
Responsible business strategy
Our responsible business strategy ensures that we act responsibly across every
aspect of our business and includes our approach and objectives across the areas
of environment, employees, human rights, society and anti-bribery and corruption.
We started a process to review and refresh our strategy during 2023 and our
updated strategy will be approved by the Board in 2024.
Environmental policy
This policy sets out our high-level approach and commitments to environmental
matters aligned with ISO14001:2015 and is reviewed every two years. In line with
our strategy refresh, the policy will be reviewed by the Board in 2024.
Responsible investment policy
This financial policy sets out how environmental, social and governance matters
are incorporated into investment analysis and decision-making processes.
The Company’s
employees
Our people are a key pillar
within our business model
and our values of being
bold, striving for better
and doing the right thing
inspire the way we work
and deliver value for our
stakeholders.
Group and Board inclusion and diversity policies
These policies are reviewed and approved annually. They cover Beazley’s
commitment to creating a truly inclusive environment that operates with zero
tolerance of discrimination or harassment, fully supports and celebrates
differences, and represents the communities we operate in and serve. The Board’s
inclusion and diversity policy specifically sets out how the Board can use its
influence in meeting our diversity objectives. These policies help us identify and
remedy racial, gender or other disparities in our employment, recruitment and
promotion practices. We always seek to hire the most suitable candidate for the
role and the Company. The Responsible Business report sets out the outcomes
from our inclusion and diversity activities, including progress against our goals.
Conflicts of interest policy
This policy ensures we have effective systems in place to prevent conflicts of
interest wherever possible and that potential conflicts of interest are identified and
addressed across Beazley plc, its subsidiaries, and syndicates.
Beazley Code of Conduct
Our code of conduct sets out the minimum standards required of all employees in
their dealings in and on behalf of Beazley and is aligned with our values and ways
of working.
Employee handbooks
Our employee handbooks set out all policies and procedures for employees globally
as well as in their local jurisdiction and include items such as our inclusion and
diversity policy, employee complaints procedures and how to deal with bullying and
harassment, policy for employees with disabilities, and parental and other leave
policies amongst others. The employee handbooks are owned by the Chief People
Officer and Head of ESG and are kept up to date and compliant with changing
legislation globally through annual review both internally and through external legal
counsel.
Health and safety policy
This policy details how health and safety matters are managed for our workforce,
contractors, service providers and others impacted by the Group’s activities, and
ensures we adhere to all health and safety regulations in the jurisdictions in which
we operate. The Board annually reviews health and safety policy alongside an
annual health and safety report, including any incidents. No significant health and
safety issues were highlighted to the Board in the 2023 report. All employees
receive health and safety induction training and refresher training where required.
www.beazley.com
Beazley | Annual report 2023
47
Relevant non-financial
KPIs and other metrics
The Board does not
monitor any non-
financial KPIs in relation
to human rights,
however it receives
reporting in relation to
these policies and
matters including the
Modern Slavery Act
statement.
Positive procurement is
part of the Responsible
Business strategy.
Further information
Responsible Business
(pages 17-21)
Stakeholder
engagement –
suppliers (page 55)
Modern Slavery Act
statement - available
on our website
(www.beazley.com)
Reporting requirement
Human rights
Beazley is committed to
respecting human rights
and human rights are
integrated across our
responsible business
strategy.
Policy or standard, its purpose, and outcomes
Human rights policy
This policy explains how we fulfil our commitment to respecting human rights and
how we aim to uphold the standards set by the United Nations and International
Labour Organisation in respect of human rights. It applies to all Beazley Group
entities, employees, contractors, and third-party suppliers. It covers how we
respect human rights as an employer, investor, business partner and insurer and
incorporates other policies operated by the Group which help support our
approach. The policy sets out our commitment to prevent adverse impacts on
human rights and remedy any adverse impact if it occurs. We also seek to promote
awareness and respect along our value and supply chains. The policy is owned and
governed by our Responsible Business Steering Group.
Supplier code of conduct and procurement policies
Our supplier code of conduct and procurement policy are referenced in our Human
rights policy. They help us ensure that our suppliers are aware of and follow
applicable standards. Our supplier due diligence and RFP questionnaires require
confirmation of compliance with human rights legislation and the UK Modern
Slavery Act 2015 (where applicable), and that suppliers have appropriate policies
in place. We continue to introduce responsible business principles into our supply
chain in accordance with Beazley’s business priorities.
Modern slavery
Beazley Group complies with the UK Modern Slavery Act 2015. In accordance with
the requirements of the Act, we release an annual Beazley Group Statement on
Modern Slavery, which outlines the actions we have taken in seeking to identify
and address the risks of modern slavery and human trafficking in our operations
and supply chain. The statement is approved by the Board.
Responsible business strategy
See above under environmental matters.
Social matters
Charity and community
and making a difference in
our local communities is
important to Beazley and a
component of our
responsible business
strategy.
Charity and community donation policy
Our employees are encouraged to raise money and donate time to volunteering
opportunities in our local communities. The policy sets out the approach taken to
charity and community donations, including matched funding, granting employees
charitable leave, and ensuring organisations receiving donations are registered
charities and do not operate discriminatory policies. The policy is approved by
the Board.
Number of hours
volunteered and
charitable donations.
Responsible Business
(page 19)
Stakeholder
engagement - our
communities
(page 54)
Responsible business strategy
See above under environmental matters. We aim to use our community investment
and asset investments to achieve positive outcomes for society and our
community. As described in the Responsible Business report we have donated
over $600,000 to our charity partners and allocated up to $100m from our asset
portfolio to impact investments which focus on investing in projects with
measurable social or environmental impact.
48
Beazley | Annual report 2023
www.beazley.com
Non-financial and sustainability
information statement continued
Reporting requirement
Anti-corruption and anti-
bribery matters
We operate a zero-
tolerance approach to
bribery, corruption and
fraud and protecting our
stakeholders is a key pillar
of our strategy. Adhering
to our values helps protect
Beazley, our stakeholders
and our communities from
financial crime.
Policy or standard, its purpose, and outcomes
Financial crime policy
This policy is reviewed and approved annually by the Board. It sets out that we do
not tolerate criminal activity of any kind both within the business or by our
business partners and third-party suppliers, and we are committed to doing the
right thing and acting within the law. It covers six broad areas of anti-bribery and
corruption, anti-money laundering, sanctions, fraud, market abuse and anti-tax
evasion facilitation.
The policy sets out how our values and culture, systems and controls,
management oversight and reporting, assurance monitoring and record keeping
create an ethical environment which helps ensure the effectiveness of our policy.
Our controls require due diligence to be completed in accordance with the Group’s
due diligence guidelines, which are maintained by our Compliance function. Any
exceptions must be reported to and approved by Compliance.
Relevant non-financial
KPIs and other metrics
The Board does not
monitor any non-
financial KPIs in relation
to these policies.
However, the Board
Risk Committee
receives quarterly
reporting on a suite of
regulatory Key Risk
Indicators, including in
relation to financial
crime and sanctions, to
monitor these topics.
Further information
Risk management and
compliance (page 69)
Risk Committee (page
115)
All employees have an important role to play in helping to detect, prevent and deter
financial crime and our mandatory annual compliance training program ensures
that our workforce is aware of our policies, how to implement them in their day-to-
day roles, and how to report any breaches or suspicions. Policies and training
modules are maintained by our Compliance function, are reviewed annually, and
are available in our policy depository on the intranet.
Sanctions policy
Our sanctions policy is incorporated into our Financial Crime policy and is vital in
keeping our business protected during a time of increased geopolitical uncertainty
and sanctions in connection with ongoing global conflicts. To ensure that Beazley
and any agents or third parties do not violate any sanctions requirements in the
jurisdictions in which we operate, we also utilise third party screening and subject
third parties to regular sanctions screening.
Gifts and hospitality policy
This policy aims to prevent conflicts of interest arising in the ordinary course of
business and avoid situations that may be perceived as such. This protects the
Company’s reputation and also ensures employees are protected and able to
conduct their business with integrity. All gifts and hospitality over the prescribed
thresholds are duly logged as part of the requirements of the policy.
Whistleblowing policy
We operate a Whistleblowing policy which sets out how any concerns relating to
wrongdoing, malpractice, or danger in connection with Beazley, should be reported,
as well as the safeguarding measures in place to protect any employees who
report concerns.
An independent whistleblowing hotline acts as an additional method for the
workforce and others to report concerns. The whistleblowing policy is included in
the annual compliance training program. The Audit Committee has overall
responsibility for the effectiveness of the whistleblowing policy and procedures and
the policy is approved by the Committee annually. The Chair of the Audit
Committee is the whistleblowing champion.
www.beazley.com
Beazley | Annual report 2023
49
• Culture review: This year, the Board has undertaken a
specific externally led review of culture and outcomes and
plans to address the findings have been agreed. More
information is included in the Corporate Governance report
on page 83.
• Dedicated Non-Executive Director: In accordance with the
Corporate Governance Code 2018 (the Code), we have a
dedicated Non-Executive Director, Fiona Muldoon, who is
responsible for gathering the views of the workforce and
sharing them with the Board on a regular basis. Fiona has
participated in Executive coffee sessions with several
groups of employees during the year, and also attended our
‘NexCo’ (see below) on two occasions. She shared
information from these sessions with the Board. Other
Directors are also encouraged to engage with our
employees and take opportunities to join events during the
year. In September, the Chair spent time with our strategy
and performance group, to discuss various strategic topics
and to share ideas with the group.
• NexCo: The NexCo is an alternative Executive Committee of
high potential employees from across the business which
runs in parallel to the usual Executive Committee meetings.
The NexCo receive Executive Committee papers and discuss
topics from the agenda. Representatives from the NexCo
attend our monthly Executive Committee meetings and
provide their input on the agenda items they have
discussed, providing two-way engagement on strategy and
other operational matters.
• Employee networks: We have eight employee networks,
with seven of them sponsored by an Executive Committee
member and one sponsored by another senior leader. The
networks are chaired and run by individuals from across the
business in different roles and locations. Each network is
focused on raising awareness of different areas of our
inclusion and diversity strategy or areas of employee
interest. As well as organising events and other activities,
these networks also act as channels for feedback from
employees who may have specific concerns. The networks
are also consulted on relevant matters. Members of Beazley
RACE network were integral in setting and communicating
our race targets both initially and during their evolution this
year. You can find more information on our employee
networks in our Responsible Business report on page 17.
• How are we doing live?: Each year we hold a series of
Company-wide events across all our locations, at which the
Chief Executive and other members of the Executive
Committee speak to and hear from our people about our
vision, culture, values, strategy and performance. It also
typically includes interactive and social activities as well as
Q&As with the Executive Committee members. This year the
event was hosted from 23 different office locations globally
with Executives attending in person at 19 of the events.
Stakeholder engagement
Our key stakeholders
Beazley is focused on achieving long-term sustainable growth
that delivers real value to all our stakeholders. The Board is
committed to engaging with each of our stakeholder groups to
help inform our strategy, annual plans and specific decision
making. Across the organisation there are many examples of
stakeholder engagement influencing day-to-day activities and
strategy and impacts on stakeholders are considered in
business decisions made across the Group, underpinned by
our values and culture.
This section of the report provides further information on how
Beazley and the Board engage with our stakeholder groups,
the outcomes of this engagement in 2023, and how the views
of stakeholders have been considered during the year. Further
information on how the Board has taken stakeholder views
into account is included by way of specific examples of
decisions taken by the Board in our section 172 statement on
pages 57-59.
During 2023, the Board reviewed the groups it determines to
be its key stakeholders, and added community and
environment. The key stakeholder groups are aligned with our
strategic pillars: our people, our clients and broker partners,
our shareholders, our regulators and community and the
environment. The Board also continues to recognise suppliers
as an important stakeholder group.
Our people
Why we engage
Our people are fundamental to Beazley’s long-term success
and are the central pillar of our strategy. We are very proud
and protective of our people-centric culture, and as such
prioritise honesty and transparency in all our interactions with
our employees and contractors. We do this through a range of
engagement activities, which, to us, means regularly bringing
people together, asking how they feel, listening to what they
say, and acting on what they need.
How does Beazley engage
• Employee surveys: We gather feedback from employees
regularly to assess their level of engagement. There is a
formal annual engagement survey, and the results of the
survey are shared with both the Executive Committee and
the Board, leadership teams and the broader organisation.
We emphasise celebrating what we are doing well, and
identifying, implementing, and tracking actions to make
improvements at the Group and divisional level in
development areas raised by our people.
• Leadership survey: We also engage with employees
regarding their views on their line managers and wider
leadership. This process includes soliciting feedback on
areas for improvement which are shared with the Executive
Committee and the Nomination Committee. This feedback
is also shared with managers, anonymously, as part of the
performance review process.
50
Beazley | Annual report 2023
www.beazley.com
• Chief Executive engagement: The Chief Executive regularly
engages with the workforce through emails, podcasts, and
by hosting in-person and virtual events. There is a monthly
podcast which updates the workforce on the discussions
and outcomes from the Executive Committee meetings.
Chief Executive led employee events in 2023 have included:
a Q&A with Clive Bannister, our new Chair who joined in
2023; a farewell session with one of our founders who was
retiring; and updates explaining strategy, performance and
remuneration setting. The Chief Executive also hosted in-
person events in our New York, Atlanta, Dublin, and
Barcelona offices as well as the regular events from
London, during 2023.
• Parental leave support: In 2022 we introduced equal
parental leave for all employees from day one of their
employment and the impact of the policy has been closely
monitored via feedback from employees and the Beazley
Families network. Support offered to new parents going on
parental leave and their managers has been enhanced
during 2023.
• New employee networks: During 2023, three new employee
networks in relation to neurodiversity, young professionals,
and veterans were set up by colleagues in response to
interests in these issues, which are sponsored by senior
leaders from the business.
• Executive team engagement: The Executive leadership
• Re-introduction of well-being days: Following feedback
team support the overall approach to engagement through
hosting regular ‘Executive coffee’ sessions, which are
hosted virtually and provide an opportunity for people
across the business to discuss and ask questions about
anything on their mind. They are also used as an
opportunity for two-way engagement, with the Executive
team keeping our people updated on what is happening
across the business, as well as using the sessions to
gather any feedback. Members of the Executive Committee
also regularly contribute to group and divisional
communications including emails, intranet articles, live
panel sessions and podcasts as well as sponsoring and
participating in events run by our employee networks. Senior
leaders also host regular ‘Welcome calls’ for new joiners.
More informally, the Executive team attend our offices when
travelling and meet with employees as an opportunity for in
person engagement with different people across the
organisation.
• Whistleblowing: There is a formal whistleblowing policy and
independent hotline in place for employees to raise in
confidence any specific concerns which cannot be raised
through usual channels. Any concerns raised through this
channel are investigated fully and shared with the Audit
Committee and Board.
What is important to our people?
Our 2023 engagement survey had 80% participation across
the Group, and our engagement events are typically well
attended, showing the importance our people place in these
activities. The survey showed our people continue to be highly
engaged, with an overall engagement score of 86% (an
increase on 1% from 2022, and putting us in the top quartile
of our external benchmark). Our people also expressed that
they would recommend Beazley as a place to work, feel
trusted, and that the work they do has a positive impact on
their stakeholders.
Observations from Fiona Muldoon through her engagement
activities are also reported to the Board and Fiona has noted
that employees are interested in environmental, social and
governance matters; change and growth of Beazley and
strategic projects; and that there is an appreciation of the high
level of Executive engagement and openness.
Outcomes from engagement with our people in 2023
Various steps have been taken during 2023 in response
to our engagement with the workforce including:
from employee engagement surveys and Executive coffee
sessions about increased workload and pressure, employee
well-being days were offered in 2023. This allowed
employees to take an additional day of leave at any time
during the year to support their well-being.
• Responding to feedback from the 2022 engagement
survey: Following feedback from the 2022 survey, we:
refined the questions asked in 2023 to be more concise
and focused on driving tangible actions; increased the
visibility of our Executive team members through hosting
of informal sessions, social events and Inclusion and
Diversity Network activities; and introduced deep-dive
sessions providing insight into the business.
Clients and broker partners
Why we engage
Respecting and listening to the needs of our clients is a
stated key pillar of our strategy to enable Beazley to deliver
its purpose of helping our clients explore, create and build.
We strive for two-way dialogue with our clients and brokers
to help us develop products and insurance solutions to best
meet their needs. As Beazley has primarily an intermediated
business model, our broker partners play a vital role in helping
us engage and connect with our ultimate clients as well as
being a vital stakeholder in their own right.
How does Beazley engage
• Day-to-day engagement activities and feedback:
– Direct engagement with our insureds and broker
partners is fundamental to how we do business. There is
constant engagement by our underwriters with brokers
and clients to fully understand specific risks and
requirements and by claims teams to ensure
responsiveness, fair claims outcomes and excellent
service.
– When we receive feedback from our brokers on our
expertise and service, we use this insight to improve our
offerings wherever possible. In 2023, we scored highly
in the broker surveys and outperformed our peers in the
market across underwriting, pricing, service and claims.
We are extremely proud that in 2024, for the 8th year
running, we were awarded the Outstanding Service
Quality Marque for claims service by Gracechurch
Consulting, and we won the highly regarded Gracechurch
London Market Bench Strength Awards for the 3rd year
running.
www.beazley.com
Beazley | Annual report 2023
51
Stakeholder engagement
continued
– Coordinated engagement with our broker partners takes
place via our dedicated Broker Relations team. This
global team engages with our broker partners to ensure
that we align initiatives with our growth and distribution
strategies and underwriting appetite.
• Beazley and industry events:
– We hold our own broker engagement events and
participate in key industry events, which included
over 330 events during 2023.
– We attended 115 conferences, including BIBA (a UK
insurance and broker conference), the CIAB (a US
meeting for commercial property and casualty brokers
and insurers), the Monte Carlo Rendez-Vous de
Septembre for Reinsurance and Insurance markets, and
RIMS which is attended by risk managers across all
industries. We staged over 100 of our own events for
brokers, including nine product-led broker retreats. These
events afford us the opportunity to meet with our brokers
and key clients, present our products and services,
discuss broker and client evolving needs, and receive
feedback.
• Engagement by the Chief Executive: The Chief Executive
is actively engaged with key broker partners and clients
globally and brings the insight he receives to Board
discussions. Maintaining good relationships with our broker
partners is a key priority of the Chief Executive, and his
engagement takes the form of discussions on specific and
general topics at industry events and conferences and
through other formal and informal settings. In 2023, the
Chief Executive held 75 meetings with broker partners.
• With the support of the Broker Relations team, the Chief
Executive and other Executive leaders actively seek
feedback from our broker partners on the markets in which
we operate and on our performance by meeting with our
brokers located across North America, Europe, Latin
America, and Asia Pacific as well as in the UK. These local
meetings allow us to understand local market dynamics,
and how Beazley can offer products which meet the needs
of clients locally.
• Thought leadership: We publish thought leadership in the
form of research and specialist articles that enhance our
broker and client relationships and our position as experts.
This includes our ‘risk and resilience’ reports which, in
2023, covered topics such as Business Risk, Environmental
Risk and Cyber Risk. These reports solicit views from over
1,000 insurance professionals across the globe. In
addition, we conduct industry specific and country specific
research. In 2023, we published focused insights on the
Healthcare and Cyber sectors, and market reports on
France, Germany and Singapore.
• Client engagement: We continue to invest in our ‘closer to
the client’ strategic initiative which is specifically focused
on our insureds and strategic client partnerships. This
approach creates an open dialogue with our clients to keep
abreast of their needs, how we can best respond in terms
of product, innovation, and sharing of knowledge. We
continue to give clients the opportunity to meet directly
with our wider Executive leadership team.
The Board receives reports on key areas of client and broker
engagement via reporting from the Chief Executive, Chief
Underwriting Officer, and other teams, which they can take
into account in their decision making. Some of our Non-
Executive Directors maintain contact with broker networks
from their previous Executive roles and are able to bring
insights to the boardroom on relevant discussions.
What is important to our clients and broker partners?
Our ultimate clients want us to have clear and fair policies and
help them find efficient risk solutions, and this is also a
priority of our broker partners. We partner with our clients and
broker partners to offer risk solutions, expertise and
knowledge, in order to allow our clients to focus on running
their businesses.
Outcomes from our engagement with clients and broker
partners during 2023
• Our engagement with brokers and key clients during 2023,
has highlighted an appreciation of our leading role in Cyber;
creating a more sustainable position on cyber war and
addressing the challenges of systemic cyber risk; working
towards achieving a broader market consensus; and
protecting our ultimate clients by bringing clarity to the
existing war exclusions.
• We have engaged with our local partners in Europe to
ensure our European strategy meets the needs of the
European market and clients.
• We held four marquee events for Brokers in London, New
York, Atlanta and Chicago, which were attended by close to
1,500 of our brokers. Such events help cement Beazley as
a market leading insurer. After these events, we
experienced an increase in the number of submissions
received from our brokers.
Our shareholders
Why we engage
The ongoing support of our shareholders, and our ability to
attract new investment, is essential as we continue to grow
the business. It is vital that shareholders understand and
have confidence in not only our strategy and ability to deliver
it, but also in the responsible and sustainable way in which we
run our business – helping us to become the highest
performing sustainable specialty insurer.
At Beazley, we therefore are committed to proactive
engagement with our current shareholders and with potential
future investors and we recognise the needs of our
shareholders, which range from individuals to large
institutions.
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Beazley | Annual report 2023
www.beazley.com
How does Beazley engage
Feedback and themes from our formal and informal
engagement activities are shared with the wider Board through
the Chief Executive’s report and regular reports from the Head
of Investor Relations. Engagement methods and activities
which were reported to the Board during 2023 included:
• Formal engagement: We communicate formally with our
entire shareholder base through regulatory news, results
announcements, and the Annual Report. Our shareholders
are also able to access useful information on the Company
through our website. The Annual General Meeting (AGM)
provides a formal opportunity for engagement by
shareholders with the Board. Shareholders are also able to
contact the Head of Investor Relations or Company
Secretary to ask questions or discuss any concerns, which
are shared with the Board through reporting. Shareholders
are able to meet with senior leadership formally and
informally throughout the year.
• Investor roadshows: During 2023, we held investor
roadshows following the release of the 2022 annual results
and the 2023 interim results, and an additional roadshow in
early August following the trading update. There were 30
one to one meetings and three group calls held across the
three roadshows. These were attended by the Chief
Executive, with the Group Finance Director and Chair
attending for some meetings. These roadshows provide an
opportunity for investors and analysts to meet with Directors
and Executive leadership and discuss aspects of the
results.
• Capital markets day: In November 2023, we hosted our
annual capital markets day for institutional investors which
this year covered an overview of Property Risks including our
approach to pricing to consider the impact of changing
weather patterns; and an update on Cyber Risks including
an overview of catastrophic cyber. The Capital Markets Day
was attended by the Chief Executive, Chief Underwriting
Officer and Executive Committee members responsible for
Property and Cyber, who met with our investors. The details
on the Capital Markets Day are shared with all investors via
regulatory announcement and the presentations are made
available on our website.
• Investor conferences: The Chief Executive and/or Group
Finance Director have also attended three investor
conferences during the year.
• Engagement by the Chair: In addition to attending some of
the investor roadshow meetings, as part of his induction
process and to gain an understanding of key matters of
importance to our shareholders, the Chair embarked on a
series of four meetings with our top ten investors. The Chair
is also available any time to discuss any feedback with
shareholders and has done so during 2023. The Chair was
also part of activities to engage with investors on the
reasons that the two special resolutions in relation to
disapplying pre-emption rights did not receive sufficient
support to pass at the 2023 AGM. More information
regarding this process is included in the Corporate
Governance report on page 83.
• Engagement by Committee Chairs: Committee chairs
engage with shareholders on significant matters related to
their areas of responsibility, when required. Following
discussions at the Remuneration Committee meeting
towards the end of 2023, the Chair of the Remuneration
Committee sought feedback from shareholders on a
specific matter relating to the impact of our transition to
IFRS 17 on our incentive plans for 2023 and subsequent
years. The process and the outcome of this engagement is
described below. More information on the impact of IFRS 17
on incentive arrangements is included in the Directors’
Remuneration Report on page 129. In addition, at the start
of 2023, we engaged in consultation with our shareholders
on the Remuneration Policy, which was submitted to the
2023 AGM for approval. We also took the opportunity to
consult with our shareholders on the increase to the Chief
Executive’s salary for 2023. The activities and outcomes
from this engagement exercise were presented on page 90
of our 2022 Annual Report, which is available on our
website.
What is important to our shareholders?
Our shareholders are interested in seeing Beazley grow
profitably and are keen to understand how our three platform
diversified strategy delivers growth. However, they continue to
be mindful that growth is carried out in a responsible and
sustainable way to help ensure the long-term success of the
Company. The Board is very much aligned with shareholders in
these priorities. Key focuses in 2023 included topics such as
the successful deployment of the additional capital raised in
November 2022 and the clear articulation of our capital
strategy and position; ability to deliver growth forecasts; and
cyber pricing given lower growth prospects.
Outcomes from engagement with our shareholders
in 2023
Examples of actions taken in response to dialogue with
shareholders during 2023 included:
Helping shareholders to understand the evolution of our
capital strategy:
During 2023, the Board decided to evolve our approach
towards capital disclosures and chose to use Group Solvency
Coverage Ratio as the key capital measure in future. There
was also informal feedback from investors regarding the
capital surplus in the 2022 results. In response, a spotlight
on capital and Chief Executive Q&A was included in our half
year results announcement. This included answers to
frequently raised questions by investors such as changes to
our capital management strategy; how the capital raise fits in
with the capital strategy; whether the capital raise had been
fully deployed; and why we decided to change our approach.
Feedback suggested that the change to using the Solvency
Coverage Ratio and the clarity provided around capital strategy
and deployment of capital were received positively. More
information on the Board’s decision to change the approach
to our capital disclosures is included in the section 172
statement on page 58.
Helping shareholders understand the impact of IFRS 17 on
our reporting:
During 2023, we provided updates to investors
regarding the impact of the transition of IFRS 17 on our
reporting during our engagement activities. We also held a
detailed IFRS 17 education session for investors in May
2023. The presentation from the session was released by
regulatory announcement and was made available on the
website for all shareholders to understand the impacts on
reporting and how and when information is disclosed.
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53
Stakeholder engagement
continued
Seeking shareholder feedback on pre-emption rights:
More information on this process and the outcomes of the
engagement is included in the Corporate Governance report
on page 83.
Seeking shareholder input on the approach to be taken in
relation to incentive arrangements:
The Chair of the Remuneration Committee wrote to circa
40 of our investors to seek input in relation to the impact
of Beazley's transition to IFRS 17 on our incentive plans,
including annual bonuses and Long-Term Incentive Plans.
The purpose of the engagement was to seek feedback on
our proposed approach for ensuring that employees did not
unduly benefit from nor were unduly penalised by the
transition to IFRS 17. The letter resulted in six meetings with
our shareholders. Some shareholders also shared detailed
written feedback. Shareholders who responded were
appreciative of the opportunity to engage with the Company on
this topic and generally supportive of the proposed approach,
which was set out in the letter. The agreed approach is
explained in the Directors' Remuneration Report on page 129.
Our regulators
Why we engage
At Beazley, we recognise the key role played by our regulators
in protecting our customers. The Group seeks to maintain a
positive and transparent relationship with each of its
regulators, as a key element in carrying out its business
effectively and living to its value of ‘doing the right thing’.
Our global regulators include the Prudential Regulation
Authority (PRA), Financial Conduct Authority (FCA), Central
Bank of Ireland (CBI), Lloyd’s, the Connecticut Insurance
Department (CID) and other US state regulators, and
regulators in other jurisdictions where Beazley operates and
holds licences.
How does Beazley engage
Our Compliance function coordinates the Group’s regulatory
relationships, engaging with each of its regulators on a
frequent basis helping the Group meet each regulator’s
expectations.
There are regular scheduled meetings with the supervisors of
the Group’s key regulators, including an annual meeting with
supervisors from the PRA, CBI and CID and the Group’s Chief
Executive, Group Finance Director, Chief Underwriting Officer
and Chief Risk Officer. Regulators may also request meetings
with the Board and the Directors of our regulated subsidiaries,
individuals with regulatory roles and other members of senior
management as part of the Group’s supervision.
Beazley also engages with regulators through discussions on
certain topics and business activities, participates in industry-
wide thematic reviews, core risk assessments, thought
leadership and providing industry feedback. The engagement
is two-way and may be initiated by the regulator or by Beazley.
The Beazley plc Board and its Committees receive reports on
regulatory priorities and regulatory engagement, including any
reviews, requests and responses. This information is
considered in discussions and decision-making. The regulated
subsidiary Boards and their Committees also receive regular
reports which focus on the activities and views of their
respective regulators.
As mentioned, our regulators request meetings with our Board
Directors, including Non-Executive Directors as required to
support their overall supervision. Following such meetings,
outcomes and feedback are shared with the wider Board.
Regulators also meet regularly with the Directors and senior
managers of our regulated subsidiaries.
What is important to our regulators?
Our regulators are primarily concerned with the safety and
soundness of the firms which they regulate, the protection of
customers, and ensuring the stability of the wider economy.
This is managed through regulation and oversight of a firm’s
activities.
Outcomes from engagement with regulators during 2023
During 2023, we engaged with our regulators on a range of
thematic reviews and other assessments including climate
risk, outsourcing and its impact on firms in the financial
services sector, operational resilience, cyber underwriting and
the European Insurance and Occupational Pensions
Authority’s (EIOPA) third country branch consultation. We also
work closely with industry bodies to provide feedback or
responses to regulators as appropriate. As part of our general
supervisory relationship meetings, we can provide information
or updates about our material strategic and operational
projects, Digital Operational Resilience Act (DORA) and in
Ireland, the Central Bank (Individual Accountability Framework)
Act 2023.
In 2022 the Group participated in the PRA’s General
Insurance Stress Test. During 2023, the results were issued
on the topics of financial resilience, risk management and
reinsurance risk and Beazley took part in a PRA roundtable
to discuss the feedback. Also in 2022, the PRA undertook a
voluntary exercise with firms, including Beazley, to conduct its
London Market Cyber Review. Participants received feedback
from the PRA in late 2023 on topics including exposure
management, pricing, claims, reserving and underwriting.
Beazley continues to work closely with the regulators on
any outcomes from the annual meeting of the College of
Supervisors, the PRA’s annual periodic summary meeting,
and the CBI’s core risk assessments.
Our Communities and Environment
Why we engage
Beazley is committed to being a responsible business that
does the right thing for our people, our partners, and our
planet. Our Responsible Business strategy is incorporated into
every aspect of our business. We recognise that we are on a
journey, and we are committed to building better resilience
for our communities, the environment, and our other
stakeholders. During 2023, the Board took the opportunity
to review our key stakeholder groups and decided that
community and the environment should be recognised as a
key group. This aligns our stakeholder groups with our vision
to be the leading sustainable specialist insurer and our
strategy, which incorporates being a responsible business
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as a key pillar. The success of our business in the long term
depends both on the impacts of environmental change on
our business and reducing the impact of our own operations.
employees. This year both in-person local activities and virtual
activities were available. We also donated $10 to our global
charity partner and local foodbanks per hour of time donated.
How do we engage
The Board actively encourages, supports, and monitors
progress against our Responsible Business strategy and our
agreed targets through the regular reporting it receives. Our
Responsible Business strategy, which is approved by the
Board, is based around four central pillars and nine key areas
of focus, which represent the interconnected nature of our
approach, and include ESG and climate-related matters. The
Board is responsible for approving policies connected with our
communities and environment such as our Charity and
Community Donation Policy, our Inclusion and Diversity policy
and our Human Rights policy. The development and
implementation of the strategy is overseen by the RBSG which
is chaired by the Chief Executive, and supported through the
work of the global inclusion and diversity, charity, and
community committees, and the environmental working group.
A Non-Executive Director from the Board attends the RBSG
meetings on a quarterly basis, to provide a strong link
between the Board and the Executive leadership on our
Responsible Business strategy. The Chief Executive and
leadership look to engage and partner with all our stakeholder
groups on ESG matters as the topic impacts on all areas of
the business.
During 2023 we commenced work to review and refresh our
ESG strategy for 2024. This process included undertaking a
double materiality assessment to help Beazley to determine
the ESG topics that are most material for Beazley. As part of
the double materiality assessment, we engaged with internal
and external stakeholders to understand our impacts on
people, the planet and society; the risks and opportunities;
and which elements of our strategy are most material and
should be prioritised. We engaged with diverse groups
including the Beazley plc Board, employees from different
teams across the business, as well as clients and brokers.
The Responsible Business report commencing on page 17
contains more information on the strategy, how it is
implemented, and our objectives and achievements during
2023. We also publish a more detailed Responsible Business
report, which is available on our website.
Communities
Beazley is committed to actively engaging with and supporting
the communities in which it operates. Community engagement
and charity were core parts of our enhancing livelihoods pillar
in our ESG strategy during 2023.
Beazley’s charitable efforts are overseen by the Global Charity
Committee and support charitable work both in our local
communities and globally. Beazley operates in a significant
number of local communities globally, and employees are
encouraged to engage in their communities throughout the
year.
Make a Difference is Beazley’s annual community volunteering
campaign where employees are given up to one day to
volunteer. Since launching in 2014, Beazley has donated
thousands of hours to support our communities in need, from
supporting the elderly, maintaining local community parks to
feeding the homeless. This programme encourages all
employees to devote one working day a year to volunteering,
and Beazley also matches charitable funds raised by our
In 2023, Beazley organised over 35 global activities including
distributing meals for those in need in Singapore, educating
local young people about careers in insurance in London,
running a school supplies drive in Barcelona, cooking meals
in Boston, building homes in Hartford and much more.
Members of our Executive Committee joined employees in
gardening, reading and painting activities to benefit local
communities.
In 2023, our global charitable efforts have been focused on
our partnership with World Central Kitchen, which was
selected by our employees as our partner for 2023 and 2024.
Our charity partner provides meals to communities impacted
by natural disasters and during prolonged humanitarian crises.
Please see the Responsible Business report for more
information.
Environment
Our environmental engagement is focused on being an active
member of relevant industry groups and being a signatory to,
or member of, initiatives such as Climatewise and the
Sustainable Markets Initiative Taskforce.
We consider the environment from several angles, including
the impact of our operations on the environment and how to
reduce this; understanding our suppliers' approach to
managing environmental impacts, and considering climate-
related matters within our underwriting and investments. We
also look to be innovative in seeking opportunities to develop
new products or services which could support the transition
to net zero. To achieve this, we look to partner with other
stakeholder groups.
Outcomes during 2023
For more information on our Responsible Business strategy,
including the outcomes from our 2023 objectives, please see
our Responsible Business report on pages 17 to 21. We also
publish a more detailed Responsible Business report on our
website.
Other stakeholder groups
The Board also recognise suppliers as an important
stakeholder.
Suppliers
We actively engage with our suppliers and recognise the
important role they play in helping us run our business and
deliver strategic business value. Engagement is underpinned
by a desire to maintain and foster equitable relationships
so that both Beazley and our suppliers benefit from our
relationship. The Board has limited direct engagement with
our suppliers but delegates this engagement and oversight
to the Executive leadership team.
Prior to any new engagement, we carry out thorough due
diligence, including on values and cultural alignment, service
expectations, contractual terms, and business practices. We
expect our suppliers to adopt the same standards of ethical
business practice that we expect from ourselves, which
includes respecting human rights and preventing modern
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55
Stakeholder engagement continued
slavery and human trafficking. Further information on the steps taken by Beazley to eradicate modern slavery in its supply chain
are contained in Beazley’s Modern Slavery Act statement which is available on our website.
We undertake a structured supplier management approach with our strategic and critical providers to ensure both performance,
and practices, continue at a high standard. This provides an opportunity for value focused engagement.
During 2023, we have refreshed our procurement and outsourcing policies to ensure alignment with evolving business and
regulatory expectations. We continue to introduce responsible business principles into our supply chain and encourage our
suppliers to help identify ways to reduce the environmental impact arising from our operations.
We continue to encourage our suppliers to raise any concerns they have through Beazley’s independent whistleblowing hotline.
In further promoting equitable supplier relationships, Beazley is a willing follower of the Prompt Payment Code and publishes its
average supplier payment times twice a year.
The Board is kept informed of material supplier matters through updates from the Chief Operations Officer and other reports.
The Board is also made aware of any supply chain risks via the Risk Committee. The Audit Committee received updates during
2023 regarding how we will ensure that the Committee has oversight of Beazley’s relationships with other audit firms, following
the Financial Reporting Council’s new guidance on the external audit. More information is included within the Audit Committee
report on page 111.
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Section 172 statement
The Board of Directors confirm that during the year ended 31 December 2023 they have discharged their duties to act in a way
that they believe promotes the long-term success of the Company for the benefit of its members as a whole, whilst having
regard to the matters set out in Section 172 of the Companies Act 2006. Further information is provided in this statement on
how these duties have been discharged.
The table below sets out where information can be found about the Board's approach to each of the matters, including:
Duty to promote the success of the Company with regard to:
For further details see:
(a) the likely consequences of any decision in the long term
(b) the interests of the Company's employees
(c) the need to foster the Company's business relationships with suppliers,
customers and others
(d) the impact of the Company's operations on the community and the
environment
The Group’s purpose and strategy on pages 3 to 7
Principal decisions 1, 3, 4 and 5
Stakeholder engagement report (our people) pages 50 to 51
Culture review page 92
Principal decisions 4 and 5
Stakeholder engagement report (clients and brokers and regulators) pages 51
to 52 and page 54
Customers and others (broker partners): principal decision 4
Others (regulators): principal decisions 1, 2, 3 and 4
Stakeholder engagement report (our communities and the environment)
pages 54 to 55
Responsible Business report pages 17 to 21
TCFD statement from page 22
(e) the desirability of the Company maintaining a reputation for high standards
of business conduct
(f) the need to act fairly as between members of the Company
The Company's values: page 5
Principal decisions 2 and 3
Stakeholder engagement report (our shareholders) pages 52 to 54
The Board has determined the Company’s key stakeholder
groups to be its employees, clients and broker partners,
shareholders, regulators, communities and the environment.
The approaches to engagement with these stakeholder groups
and the impact of such engagement on the outcomes of
certain key Board decisions are set out in the Stakeholder
Engagement report. The views of these stakeholders are
considered by the Board when principal decisions are taken.
Information is provided below on the principal decisions taken
by the Board during the year and how key stakeholders and
other matters set out in Section 172 were considered by the
Board in making these decisions. The overriding duty to
promote the success of the Company for the benefit of the
Company's members is considered in all decision making, as
described in all of the principal decisions.
Board decision making in action
Principal decision 1: Approval of the dividend in respect
of the 2022 financial year
In March 2023, the Board approved an interim dividend of
13.5p per share in respect of the year ended 31 December
2022. The payment was in line with a new dividend strategy of
paying a single annual dividend payment based on the full
year results. The intention is to grow the level of dividend
annually while recognising that some earnings fluctuations are
to be expected. When approving the dividend, which
represented a 5% increase from the total amount paid in
respect of the 2021 financial year, the Board considered the
level of reserves and the capital position, including the impact
of the capital raise in 2022, future investment and growth
opportunities and ability to generate cash flows. The Board
considered the capital deployment plans and agreed that the
dividend was appropriate, and would ensure continued
balance sheet strength and reduced volatility post dividend
payment. The Directors considered whether certain
shareholders might expect no dividend would be paid in
respect of the 2022 financial year, given the Company raised
capital in November 2022. The Board determined that the
dividend payment was reasonable given growth expectations
at the time of approval, that it was in line with the dividend
policy, it would signal the Board's confidence in the ability to
execute on the opportunities presented, and that no
statement had been made regarding future dividend payments
during the capital raise. The Directors had regard to the
interests of both shareholders and regulatory and legal
considerations in determining the amount to be paid.
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57
Principal decision 2: The Board’s response to the Net
Asset Value per share calculation error in the 2022
Annual Report
A version of Beazley's Annual Report and Accounts for the
year ended 31 December 2022 was originally approved by the
Board on 1 March 2023 and Beazley announced its results for
the year ended 31 December 2022 on 2 March 2023. The
results reported an alternative performance measure of net
assets per share (NAVps) that had been calculated using the
weighted average of shares for the year. This alternative
performance measure was used by the Group in the
calculation to determine the vesting percentages of the Long
Term Incentive Plan (LTIP) awards that were included in the
Directors' Remuneration Report. It had been intended that the
alternative performance measure would be calculated using
the number of shares at 31 December 2022, rather than
using the weighted average of shares for the year. On 7 March
2023, Beazley made an announcement entitled ‘Alternative
Performance Measure correction NAVps’, which provided
updated information on the net asset value per share
calculation. The Board, having taken advice, determined that
the Annual Report and Accounts as initially approved by the
Board on 1 March 2023 were neither sent or supplied to
shareholders in accordance with the provisions of the
Companies Act 2006, nor were such accounts as a matter of
fact, laid before a general meeting of the Company or filed
with Companies House. The Board therefore rescinded its
approval of the version of the accounts that were approved on
1 March 2023 and, in their place, approved a new version of
the accounts as the 2022 Annual Report and Accounts on 12
March 2023 which reflected the updated calculation and
revised LTIP awards vestings.
The initial discussion of the Board focused on the immediate
impact of the error on our stakeholders and correcting the
error in accordance with legal requirements. The Board asked
the Remuneration Committee to oversee any corrections
required to the LTIP vestings, as the vesting percentages were
revised following the correction of the NAVps and the
percentage of awards vesting were reduced accordingly.
The Board focused on learnings that could be taken from the
error. While there were no financial sanctions resulting from
the error, the Board was mindful of the requirement to ensure
that controls are operating effectively and that the Company
maintains a reputation for high standards. The Board ensured
that a comprehensive review was undertaken by the Risk
function with the support of the Group’s financial controls
team to establish the underlying causes of the error. The
review also considered the steps required to ensure the
accuracy of future reporting and that the control environment
was effective. The Board was reassured by the reporting
received that the control environment is effective, however
actions would be taken to enhance the overall control
environment, focusing specifically on reporting. The Audit
Committee took responsibility for overseeing the review, and
monitoring both the actions from this review and ongoing work
to enhance the Group's control framework. The Audit
Committee also engaged with and sought the views of the
External Auditor regarding the error. Any error in annual
reporting or other financial publications by the Company is
unacceptable. The Board openly discussed the reasons for the
error and the ‘lessons learned’ exercise undertaken at the
Company’s AGM in 2023 and shareholders were able to
discuss any concerns with the Head of Investor Relations, the
Chief Executive, and the Chair at meetings held for other
engagement purposes during the year.
Principal decision 3: Approval of the SCR in place of ECR
in our solvency KPI
As Beazley continues to execute its strategy of achieving a
successful intersection of platforms and products by growing
its business in the US and Europe, the Board agreed that the
approach toward capital disclosures should be evolved. For
the interim report, the Board approved a change to the key
performance indicator which would be used to communicate
the capital surplus, from the surplus over Lloyd’s ECR, to the
Group Solvency II Coverage Ratio (SCR), which is subject to
the capital adequacy requirements of the European Union
Solvency II regime.
The Board considered that the SCR metric better relates to
the Group's business as a whole. In addition, the SCR was
more aligned with market practice, would be better
understood by a wider audience of investors and analysts, and
would enable external parties to more effectively compare
Beazley’s business against our peers.
In taking this decision, the Board considered the views of
shareholders received through engagement between the Head
of Investor Relations and Chief Executive during the year. The
Board also considered the Group’s regulators and took the
view that the EU Solvency II regime was widely accepted and
in line with market practice. The Board also received a risk
opinion which was supportive of the change, but noted some
possible risks which were being mitigated. The Board noted
the importance of communicating the change to stakeholders,
including the minimum targets Beazley intended to set for the
revised solvency risk metric. The change of approach to
capital disclosures was explained at investor events following
the release of the interim results in September 2023,
amongst other topics, and the presentation was made
available on the Company's website.
Principal decision 4: Approval of steps in our long-term
strategic projects
In 2023, the Board provided oversight of and made decisions
to drive forward Beazley’s long-term strategic initiatives to
strengthen and simplify the business by building a diversified
offering focused on three platforms: Lloyd’s Wholesale, North
America, and Europe. Throughout this process, the Board
were focused on the long-term consequences of the decisions
made, and also considered impacts on any stakeholders. In
May 2023, Beazley established a US domestic excess and
surplus lines carrier, Beazley Excess and Surplus Insurance,
Inc., to complement the North American platform, with the aim
of underwriting excess and surplus lines insurance originating
from the US on the domestic carrier in 2024. The Board
ensured that the rationale for establishing Beazley Excess and
Surplus Insurance, Inc. was clear, and customers would
continue to be served well through the new entity and the
existing US admitted carriers, Beazley Insurance Company, Inc
and Beazley America insurance Company, Inc. The overall
long-term benefits would be driven by simplification of the
underwriting structure and better diversification, which should
promote the long-term success of the Company for the benefit
of its members.
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Section 172 statement
continued
The strategy to simplify the business also involved transferring
business already written within Beazley’s managed syndicates
to Beazley Excess and Surplus Insurance, Inc., subject to
obtaining necessary approvals. The Board considered options
in relation to this process, and considered how customers
would be protected with various potential outcomes. Certain
decisions were required to be approved by the Group’s Lloyd’s
Managing Agency company, Beazley Furlonge Limited. The
Board received updates regarding the plans to prepare for
writing new business and transferring renewal business to
Beazley Excess and Surplus Insurance, Inc. for selected
products from 1 January 2024. Engagement was undertaken
by the Broker Relations team with our strategic broker
partners regarding the new US insurance carrier, to ensure
their understanding and support.
The Board also considered the capital and tax implications
and ensured that changes to Group's reinsurance
arrangements were carried out for the benefit of the Group as
a whole. The Board ensured that further work to derive the
long-term benefits from the simplified structure would
continue throughout 2024.
In addition, as a result of engagement activities by Fiona
Muldoon in her role as Non-Executive Director responsible for
'Employee Voice', the Board noted that employees were
interested in understanding key strategic projects and other
change projects. The Board were satisfied that employees had
received updates about the long-term strategy and its
progress, as well as other key operational change projects,
from the Chief Executive, through a targeted internal
communications plan, and through the ‘How are we doing
live?’ annual employee event.
Principal decision 5: New Share Incentive Plans
The Remuneration Committee on behalf of the Board keeps
under review arrangements to encourage employees to own
shares in the Company, allowing employees to share in the
long-term growth and success of the Company, and to help
align employee interests with those of shareholders.
The Committee received a report on a review of Beazley’s
current reward offerings in February 2023, examining their
effectiveness from an internal and external stakeholder
perspective. On the basis of the review and its
recommendations, the Committee considered that introducing
an all-employee Share Incentive Plan (SIP) to operate
alongside the existing Save As You Earn (SAYE) scheme would
help further enhance share ownership by our people, and the
associated benefits for employees and shareholders. A UK
and an international scheme were proposed. The schemes
would be tax-advantaged in both the UK and France. This
decision was taken on the basis of feedback from French
employees that there were mechanisms for implementing tax
efficient schemes within France. It was noted that the SAYE
was popular amongst eligible employees, with the Beazley
scheme having a higher take up rate than typical for the
insurance and financial services sector and that offering more
choice would benefit a wide population of the Group's
employees. The Committee considered, and recommended to
the Board, plan rules which were drafted to provide flexibility
and discretion to ensure fair outcomes for all shareholders.
The Committee considered the benefits for employees and
any impact on the SAYE scheme and were satisfied that the
different schemes were complementary. The SIP offered more
choice and the opportunity for employees to buy more shares
in Beazley with the featured benefits of free shares and
matching shares available.
The rules of the UK and International SIPs were approved by
shareholders at the AGM in 2023.
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Beazley | Annual report 2023
59
Financial review
Group performance
Beazley delivered a profit before tax in 2023 of $1,254.4m (2022: $584.0m), an
excellent result consisting of a combined ratio of 71% (2022: 79%) and
investment return of 4.9% (2022: (2.1)%).
Result
Profit before tax in 2023 was $1,254.4m (2022: $584.0m).
This was achieved through a substantial insurance service
result of $1,251.0m (2022: $822.9m) driven by a combined
ratio of 71% (2022: 79%). This was complemented by an
investment result of $480.2m (2022: ($179.7m)) which
represents an investment return of 4.9% (2022: (2.1%)).
Premiums
Insurance written premiums increased by 7% in 2023 to
$5,601.4m (2022: $5,246.3m). Rates on renewal business
on average increased by 4% across the portfolio (2022:
increased by 14%). Strong growth was seen in our Property
Risks division, where we have taken advantage of the
improving underwriting conditions, with growth of 64%.
Our net insurance written premiums increased by 24% in
2023 to $4,696.2m (2022: $3,772.4m). The higher growth
in net premium compared to gross is primarily due to two
reasons: Firstly, the change in relationship with syndicate
5623 for our Portfolio Underwriting business. In 2022 this
was underwritten by the Group and reinsured out to syndicate
5623, however, from 2023, syndicate 5623 directly
underwrote this business as a standalone entity. Secondly,
we have actively purchased less proportional reinsurance
within our Cyber Risks and Specialty Risks divisions,
further increasing our net insurance written premiums.
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Financial review
Group performance continued
Statement of profit or loss
Insurance service result
Net investment income/(loss)
Net insurance finance (expense)/income
Net insurance and financial result
Other income
Operating expenses
Foreign exchange gains/(losses)
Finance costs
Profit before tax
Income tax expense
Profit after tax
Claims ratio
Expense ratio
Combined ratio
Rate increase
Investment return
2023
$m
1,251.0
480.2
(153.4)
1,577.8
78.5
(365.8)
4.5
(40.6)
1,254.4
(227.6)
1,026.8
39 %
32 %
71 %
4 %
4.9 %
20221
$m
822.9
(179.7)
183.0
826.2
32.1
(217.6)
(17.3)
(39.4)
584.0
(100.7)
483.3
47 %
32 %
79 %
14 %
(2.1) %
1 The Group has restated its summary statement of profit or loss for the year ended 31 December 2022 following the adoption of IFRS 17.
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61
Insurance service result
The Group saw strong growth in the insurance service result of
52% leading to a total of $1,251.0m (2022: $822.9m).
Insurance revenue of $5,442.4m (2022: $4,848.4m), a 12%
increase, reflected the growth of the business during 2023.
Insurance service expense reduced year on year by $421.4m.
2023 was a benign year for insured catastrophes and this led
to an improved claims experience for the Group in 2023
leading to a claims ratio of 39% (2022: 47%). Directly
attributable expenses increased by 12% in line with the growth
of the business.
The allocation of reinsurance premium increased to
$1,127.3m (2022: $965.4m) while amounts recoverable from
reinsurers for incurred claims decreased to $528.5m (2022:
$953.9m). As prior year gross claims estimates have
decreased, a reduction in the amounts recoverable from
reinsurers and a benign year for catastrophes has led to lower
recoveries than the prior year. Reinsurers share of directly
attributable expenses has increased to $3.6m (2022:
$1.7m).
Combined ratio
The combined ratio of an insurance company is a measure of
its performance from transacting (re)insurance contracts.
Under IFRS 17 this represents the ratio of its insurance
service expense less directly attributable expenses and
amounts recoverable from reinsurers for incurred claims, to
the total insurance revenue less allocation of reinsurance
premium. This is all on a discounted basis and excludes
operating expenses which are non-directly attributable and
excluded from the insurance service result.
A combined ratio under 100% indicates a profit on the
insurance service result. Consistent delivery of operating
performance across the market cycle is clearly a key objective
for an insurer. Beazley’s combined ratio improved in 2023 to
71% (2022: 79%) primarily driven by a much improved claims
experience. For further information please see the APMs
section on pages 253-255.
Other income
Other income grew by 145% to $78.5m (2022: $32.1m),
reflecting increases in profit commissions and general
commissions received from syndicate 623 compared to the
prior year.
Reserve confidence level
Beazley has a consistent reserving philosophy, with initial
reserves being set to include a risk adjustment that may be
released over time as and when any uncertainty reduces.
With the move to IFRS 17 from IFRS 4, we took the
opportunity to revisit our reserving strategy. Under IFRS 17, we
have moved to a preferred confidence level range of between
the 80th and 90th percentile. This percentile indicates the
strength of reserves held across the best estimate and risk
adjustment for non-financial risk. IFRS 17 outlines the key
principles in order to calculate the risk adjustment for non-
financial risk. There are two principles that are particularly
important, and thus worth highlighting. First, the level needs
to be consistent with how risk is managed, contracts are
priced and the portfolios are managed. The second principle
states that the risk adjustment level should make the firm
neutral to running off the obligations or selling them.
At the end of 2023, our confidence level was at the 85th
percentile (2022: 85th percentile).
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
Net
Cyber Risks
Digital
MAP Risks
Property Risks
Specialty Risks
Total
(Release)/strengthening as a
percentage of insurance revenue
less allocation of reinsurance
premiums
2023
$m
9.9
(28.0)
(5.6)
(78.0)
(8.1)
(109.8)
2022
$m
0.9
(4.5)
15.7
(22.4)
65.2
54.9
(2.5) %
1.4 %
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Beazley | Annual report 2023
www.beazley.com
Financial review
Group performance continued
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.
www.beazley.com
Beazley | Annual report 2023
63
The table below details the breakdown of our portfolio by asset class:
Cash and cash equivalents
Fixed and floating rate debt securities
– Government issued
– Corporate bonds
– Investment grade
– High yield
Syndicate loans
Derivative financial assets
Core portfolio
Equity funds
Hedge funds
Illiquid credit assets
Total capital growth assets
Total
Comparison of return by major asset class:
Core portfolio
Capital growth assets
Overall return
31 Dec 2023
$m
812.3
31 Dec 2022
%
7.8
$m
652.5
%
7.3
4,469.1
42.6 5,006.3
55.6
3,578.3
489.0
34.1
10.0
9,392.8
282.7
582.2
220.1
1,085.0
10,477.8
4.7
0.3
0.1
34.1 2,050.5
308.7
32.5
34.7
89.6 8,085.2
159.4
530.6
222.9
912.9
100.0 8,998.1
2.7
5.6
2.1
10.4
22.8
3.4
0.4
0.4
89.9
1.8
5.9
2.4
10.1
100.0
31 Dec 2023
31 Dec 2022
$m
392.7
87.5
480.2
%
4.5
8.8
4.9
$m
(182.8)
3.1
(179.7)
%
(2.4)
0.3
(2.1)
Tax
Beazley is liable to corporation tax in a number of jurisdictions, notably the UK, the US and Ireland. Beazley’s effective tax rate
is thus a composite tax rate mainly driven by the Irish, UK and US tax rates. The weighted average of the statutory tax rates for
the year was 17.6% (2022: 19.0%). The tax rate of 17.6% is lower than last year due to this year’s composition of profits and
losses across the Group.
The effective tax rate has increased in 2023 to 18.1% (2022: 17.2%).
64
Beazley | Annual report 2023
www.beazley.com
Comparison of returns - major assets classes ($m)87.5392.73.1(182.8)20232022Capital growth portfolioCore portfolio-200-1000100200300400Beazley group funds ($m)5,0535,8516,6727,8758,99810,478Group funds including funds at Lloyd'sSyndicates 2623, 3623 and 3622 2018201920202021202220230200040006000800010000
Financial review
Balance sheet management
Summary statement of financial position
Intangible assets
Insurance contract assets
Reinsurance contract assets
Other assets
Financial assets at fair value and cash and cash equivalents
Total assets
Insurance contract liabilities
Reinsurance contract liabilities
Financial liabilities
Other liabilities
Total liabilities
Net assets
Net assets per share (cents)
Net tangible assets per share (cents)
Net assets per share (pence)
Net tangible assets per share (pence)
Number of shares²
2023
$m
165.3
101.5
2,426.7
494.1
10,477.8
13,665.4
7,992.2
333.5
554.6
903.0
9,783.3
3,882.1
585.8c
560.9c
468.6p
448.7p
662.7m
20221
$m
128.8
84.1
2,175.3
326.7
8,998.1
11,713.0
7,349.8
161.2
562.5
684.5
8,758.0
2,955.0
444.1c
424.7c
364.2p
348.3p
665.4m
Movement
%
28
21
12
51
16
17
9
107
(1)
32
12
31
32
32
29
29
—
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.
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Beazley | Annual report 2023
65
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 APM section on pages 253 to 255.
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.
66
Beazley | Annual report 2023
www.beazley.com
Financial review
Capital structure
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.
Eligible Tier-1 capital after
foreseeable distributions
Eligible Tier-2 capital -
subordinated debt
Total Solvency II Eligible own
funds
Capital requirement
Group Solvency II ratio
2023 Estimate*
$m
2022
$m
3,967.4 3,330.5
520.8
506.2
4,488.2 3,836.7
2,058.0 1,573.8
244%
218 %
*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
Cyber 1-in-250 Cyber scenario*
Nat Cat 1-in-250 Combined scenario
50 bps decrease in interest rates**
Impact on
Solvency II
ratio
(32) %
(26) %
(10) %
*Based on Cyber Probabilistic Model
**This considers the impact on the SCR in isolation to the impact on eligible
own funds
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Beazley | Annual report 2023
67
Financial review
Capital structure continued
Group structure
The Group operates across Europe, Asia, Canada and the US
through a variety of legal entities and structures. As at 31
December 2023, the main entities within the legal entity
structure are as follows:
• Beazley plc – Group holding company, listed on the London
Stock Exchange;
• Beazley Ireland Holdings plc – intermediate holding
company;
• Beazley Underwriting Limited – corporate member at Lloyd’s
providing all capital to syndicates 2623, 3622 and 3623,
and approximately 18% of capital to 5623 for the 2023 year
of account;
• Beazley Furlonge Limited – managing agency for the seven
syndicates managed by the Group 623, 2623, 3622, 3623,
4321, 5623 and 6107;
• Beazley Insurance dac – insurance company based in
Ireland that acts as an internal group reinsurer, and also
writes business directly in Europe;
• Syndicate 2623 – a Lloyd’s syndicate through which the
Group underwrites its general insurance business excluding
life and portfolio underwriting. Business is written in parallel
with syndicate 623;
• Syndicate 3622 – a Lloyd’s syndicate through which the
Group underwrites its life insurance and reinsurance
business;
• Syndicate 3623 – a Lloyd’s syndicate through which the
Group underwrote its personal accident, BICI reinsurance
business and portfolio underwriting business until 2022;
• Syndicate 5623 – a Lloyd’s syndicate through which the
Group underwrites across a diverse mix of classes via its
portfolio underwriting business;
• Syndicate 4321 – a Lloyd's syndicate in a box focussing on
writing business on a consortium basis led by syndicate
2623/623 based on ESG scores of insureds;
• Syndicate 623 – a Lloyd’s syndicate which has its capital
supplied by third party names;
• Syndicate 6107 – special purpose Lloyd's syndicate writing
property reinsurance and cyber business ceded from
syndicates 623 and 2623 on behalf of third party names;
• Beazley America Insurance Company, Inc. (BAIC) – admitted
insurance company regulated in the US.
• Beazley Insurance Company, Inc. (BICI) – admitted
insurance company regulated in the US. Licensed to write
insurance business in all 50 states;
• Beazley USA Services, Inc. (BUSA) – service company based
in Farmington, Connecticut. Underwrites business on behalf
of Beazley syndicates, 2623 and 623, BICI and BAIC;
• Beazley NewCo Captive Company, Inc. – provides internal
reinsurance to BICI on older accident years; and
• Beazley Excess and Surplus Insurance, Inc. – insurance
company regulated in the US to write surplus lines business
from 2024.
68
Beazley | Annual report 2023
www.beazley.com
Risk management
We pride ourselves on understanding the drivers of risk
across Beazley. The risk management function supports
and challenges management on managing those risks.
During the year, we continued to enhance and roll out
elements of the risk management framework. We have
continued working with our colleagues across the first and
second lines of defence to support the Group’s strategy,
including delivering a new E&S carrier, challenging the
oversight of climate-related risks and journey in
digitisation.
Our approach to managing the risks arising from climate
change are set out within the TCFD section of this report.
Our latest report to the Beazley plc Board confirmed that
the control environment identified no significant failings or
weaknesses in key processes. The report confirmed that
Beazley plc was operating within risk appetite as at 31
December 2023, with the systems having been in place
for the entirety of 2023.
The business operates a control environment which supports
mitigating risks to stay within risk appetite. The risk
management function reviews and challenges the control
environment through various risk management activities. In
addition, the risk management function works with the capital
model and exposure management teams, particularly in
relation to validation of the internal model, preparing parts of
the ORSA, monitoring risk appetite and the business planning
process.
The risk management plan considers, among other inputs, the
inherent and residual risk scores for the risks in the registers.
The risk management function also includes results from
internal audits into its risk assessment process. The internal
audit function considers the risk management framework in its
audit universe to derive a risk-based audit plan.
The Group's approach to identifying, managing and mitigating
emerging risks includes inputs from the business, analysis of
lessons learned post-risk incidents and industry thought
leadership. The approach considers the potential materiality
and likelihood of impacts, which helps prioritise emerging
risks which the Group monitors or undertakes focused work
on. Key emerging risks in 2023 included geopolitical, artificial
intelligence, large cyber attack, legal and regulatory risk,
human capital, and climate change. The Board carries out a
robust assessment of the Group's emerging risks at least
annually.
Risk management
and compliance
The risk management and compliance
functions have supported the Group's
achievements through effective risk
oversight and challenge.
Risk management oversight
and framework
The Beazley plc Board delegates direct oversight of the risk
management function and framework to its Risk Committee,
and the primary regulated subsidiary Boards and their (Audit
and) Risk Committees. The Beazley plc Board delegates
executive oversight of the risk management function and
framework to the Executive Committee, which fulfils this
responsibility primarily through its Risk and Regulatory
Committee.
Beazley takes an enterprise-wide approach to managing risk.
The risk management framework establishes the approach to
identifying, measuring, mitigating, monitoring, and reporting on
principal risks. The risk management framework supports the
Group strategy and objectives.
Beazley leverages the ‘three lines of defence’ model, in which
the risk management function is part of the second line of
defence. Ongoing communication and collaboration across the
three lines of defence ensures that the Group identifies and
manages risks effectively.
A suite of reports from the risk management function support
senior management and the Beazley plc Board in discharging
their oversight and decision-making responsibilities throughout
the year. The risk management function's reports include
updates on risk appetite, risk profiles, stress and scenario
testing and analysis, reverse stress testing, emerging and
heightened risks, a report to the Remuneration Committee,
and the Own Risk and Solvency Assessment (ORSA) report.
The Beazley plc Board approves the Group risk appetite
statements at least annually and receives updates on
monitoring against risk appetites throughout the year. This
includes an assessment of principal risks.
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Beazley | Annual report 2023
69
Risk appetite
Within
Trending outside
Outside
Risk outlook
Increasing
Stable
Decreasing
Principal risks the Group faces
We carefully assess the principal risks facing us. Our
principal risks are under continuous review with ongoing
risk assessments. Consideration is given to new regulations
including Consumer Duty, and the Digital Operational
Resilience Act (DORA). Insurance, Strategic and Operational
risks outlook increases from macroeconomic changes,
enhancements in technology, people and processes which
deliver great benefit, but also introduce risk during and post
implementation. The table below summarises the principal
risks the Group faces, and the control environment,
governance and oversight that mitigate these risks.
Principal risks and summary descriptions
Insurance
The risk arising from inherent uncertainties about the
occurrence, amount and timing of insurance premium, and
claims liabilities. This includes risk from underwriting such as
market cycle, catastrophe, reinsurance and reserves.
• Market cycle: potential systematic mispricing of medium- or
long-tailed business that does not support revenue to invest
and cover future claims;
• Catastrophe: one or more large events caused by nature (e.g.
hurricane, windstorm, earthquake and/or wildfire) or mankind
(e.g. coordinated cyber-attack, global pandemic, losses linked
to an economic crisis, an act of terrorism or an act of war
and/or a political event) impacting a number of policies, and
therefore giving rise to multiple losses;
• Reinsurance arrangements: reinsurance may not be available
or purchases not made to support the business (i.e.
mismatch); and
• Reserving: reserves may not be sufficiently established to
reflect the ultimate paid losses.
Market
The value of investments may be adversely impacted by
financial market movements in the value of investments,
interest rates, exchange rates, or external market forces.
Expected asset returns may not align to risk and capital
requirements.
Credit
This risk of failure of another party to perform its financial or
contractual obligations in a timely manner. Exposure to credit
risk from reinsurers, brokers, and coverholders, of which the
reinsurance asset was the largest exposure for the Group.
Mitigation and monitoring
Beazley uses a range of techniques to mitigate insurance risks
including pricing tools, analysis of macro trends and claim
frequency including alignment with pricing and ensures
exposure was not overly concentrated in any one area,
especially lines of business with higher risk.
The strategic approach to exposure management and a
comprehensive internal and external reinsurance programme
helps to reduce volatility of profits in addition to managing net
exposure by the transfer of risk.
The prudent and comprehensive approach to reserving ensures
that claims covered by the policy wording were paid, delivering
good customer outcomes. High calibre claims and underwriting
professionals deliver expert service and claims handling to
insureds. The Underwriting Committee oversees these risks.
Beazley carries out periodic analysis to identify significant areas
of concentration risk across our business and monitors
solvency regularly to ensure Beazley is adequately capitalised.
Insurance risk outlook continues to be stable as the Group
manages the market cycle across all the lines of business.
Beazley operates a conservative investment strategy with a view
to limiting investment losses that would impact Beazley’s
financial results. Beazley mitigates this risk by carrying out
asset liability matching as per the investment constraints
specified in the investment strategy. More detail on climate-
related risks and mitigations impacting the investment strategy
can be found in the TCFD part of this report. The Investment
Committee oversees the investment strategy and its
implementation.
Market risk outlook continues to face headwinds across
investment yields and foreign currency due to the global and
political economic environment.
Beazley trades with strategic reinsurance partners over the long
term to support Beazley through the insurance cycle despite
potentially catastrophic claim events. The Group ensures
reinsurers meet internal approval criteria overseen by the
Reinsurance Security Committee. Credit risk arising from
brokers and coverholders continues to be low, as the Group
relies on robust due diligence processes, credit monitoring and
ongoing monitoring of aged debts.
Credit risk outlook continues to be stable as the Group
manages ceded reinsurance, broker and coverholder credit risks
with low levels of aged and bad debt.
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Risk management and compliance continued
Principal risks and summary descriptions
Group
The risk of an occurrence in one area of the Group, which
adversely affects another area in the Group, resulting in
financial loss and/or reputational damage. This also includes a
deterioration in culture which leads to inappropriate behaviour,
actions and/or decisions including dilution of culture or negative
impact on the Group brand.
Liquidity
Investments and/or other assets are not available or adequate
in order to settle financial obligations when they fall due.
Regulatory and legal
Non-compliance with regulatory and legal requirements, failing
to operate in line with the relevant regulatory framework in the
territories where the Group operates. This may lead to financial
loss (fines, penalties), sanctions, reputational damage, loss of
confidence from regulators, regulatory intervention, inability to
underwrite or pay claims.
Mitigation and monitoring
Group risk culture centres on principles of transparency,
accountability, and awareness. This helps maintain a strong risk
culture that supports an embedded risk management framework
within Beazley. An effective risk culture reflects a maturing risk
management function, encourages sound risk taking, creates
an awareness of risks and emerging risks. The Executive
Committee and the Beazley plc Board oversee this risk.
Group risk outlook continues to be stable as the Executive
Committee manages culture through continuous improvement
and monitoring.
By managing liquidity Beazley maximises flexibility in the
management of financial assets, including investment strategy,
without incurring unacceptable liquidity risks over any time
horizon. In doing so, this helps ensure that clients and creditors
were financially protected. The Group periodically assesses the
liquidity position of Beazley which is overseen by the Risk
Committee. This includes a benchmarking view from a third-
party assessment.
Liquidity risk outlook continues to be stable as the Group
manages above sufficient levels of liquidity and capital.
The control environment supports the nature, exposure, scale
and complexity of the business overseen by the Risk and
Regulatory Committee. The Group maintains a trusting and
transparent relationship with regulators, ensuring coordinated
communication and the following of robust processes, policies
and procedures in the business. In addition, key staff,
particularly those who hold defined roles with regulatory
requirements, are experienced and maintained regular dialogue
with regulators. The Group horizon scans for regulatory and
legal matters and considers their potential impacts on the
business.
Being Beazley includes considering the needs of our clients in
everything our business does. We deliver good customer
outcomes to our clients throughout the product lifecycle. The
Conduct Review Group oversees this risk. The Group aims to do
the right thing to minimise reputational risk via stakeholder
management and oversight through governance.
Regulatory and legal risk outlook continues to increase as the
Group manages evolving regulatory requirements and legislative
changes globally.
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Principal risks and summary descriptions
Mitigation and monitoring
Operational
Failures of people, processes and systems or the impact of an
external event on operations (e.g., a cyber-attack having a
detrimental impact on operations), including transformation and
change related risks.
Beazley attracts and nurtures talented colleagues who
champion diversity of thought, creating a culture of
empowerment, collaboration and innovation to build an
environment of employee wellbeing. The Group employs high
calibre, motivated, loyal, and productive people with sufficient
competence to perform their duties.
Strategic
Events or decisions that potentially stop the Group from
achieving its goals or danger of the Group strategic choices
being incorrect, or not responding effectively to changing
environments in a timely manner leading to inadequate
profitability, insufficient capital, financial loss or reputational
damage. Pervasive risks impacting multiple areas of the Group
(e.g., reputation, and ESG) occurring through real or perceived
action, or lack of action taken by a regulatory body, market and/
or third-party used by the business. A negative change to
Beazley’s reputation would have a detrimental impact to Group
profitability and public perception.
The Group invests in technology and re-engineering processes
to support the operation of activities which are overseen by the
Operations Committee. Beazley has policies and procedures
across the organisation which ensure effective and efficient
operations. This drives productivity and quality across our
people, processes and systems to continue to enable scalable
growth.
The business continuity, disaster recovery and incident
response plans, help ensure that processes and systems
enable our people to deliver the right outcomes for clients and
overall productivity. During 2023, there were effective controls
in the day-to-day operations around information security, data
management, operational resilience including cyber resilience,
etc. to mitigate the damage that loss of access to data or the
amendment of data can have on the ability to operate.
Operational risk outlook continues to be stable as the Group
manages evolving manual processes and controls into digitised
processes along with technological and cyber resilience which
are continuously evolving risks.
Beazley continuously addresses key strategic opportunities and
challenges itself to be the highest performing sustainable
specialist insurer. Beazley ensures it recognises, understands,
discusses, and develops a plan of action to address any
significant strategic priorities in a timely fashion whilst ensuring
continuity of operational effectiveness and brand reputation.
Beazley creates an environment that attracts, retains and
develops high performing talent with diversity of thought to
explore, create and build, through investing in understanding
the complexity of the risks clients face and deploying expertise
where the Group can create value. The Executive Committee
and the Beazley plc Board oversee these risks.
Beazley maintains coverage above regulatory capital to a target
level, ensuring sufficient capital to facilitate meeting the
business plan and strategic objectives in the short, medium and
long term.
Beazley aims to strategically create a sustainable business for
our people, partners and planet through its responsible
business goals. Beazley embeds ESG principles and ambitions
and it focuses on reducing its carbon footprint (refer to more
detail on climate related risks and mitigations in the TCFD
report), contributing appropriately to its social environment, and
enhancements to governance. Note that while Beazley
considers market practice, it does not necessarily move with
every prevailing market trend, considering these for potential
opportunities and risks.
Strategic risk outlook continues to be stable as the Group
embeds its achievements from 2023.
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Risk management and
compliance continued
Viability statement
The Board assesses the viability of the Group within the long-
term plan over a five-year period. A period of five years is
considered short enough to be reasonably assessable, given
the dynamic nature of the business that we underwrite as a
specialist insurer, with the need to adapt capital and solvency
in response to changing markets and emerging opportunities.
However, it is also long enough to reflect the Group's risk
profile of a portfolio of diversified short-tailed and medium-
tailed insurance liabilities.
Assessment of principal risks over the period
The business planning process tests and demonstrates the
ongoing viability of the business. This includes a base view of
profit and growth so that the reinsurance requirements and
capital surplus can be projected. As a specialist insurer, we
manage several risks as listed above; however the principal
risk that could undermine the business model is insurance
risk. The Group seeks insurance risk as its core business, and
the Beazley plc Board has set the largest risk appetite for
insurance risk. Downside risk is managed using a number of
risk appetite KRIs. This includes setting and monitoring
against 1 in 250 year event Board level risk appetites for both
natural and cyber catastrophe risk using probabilistic models.
The Group is subject to volatility in catastrophes, the market
cycle, reinsurance, reserving, and the impact of emerging risks
(e.g. social and economic inflation, and climate change).
The business plan sets out a view of the emerging risks that
impact this area and how the business will respond to these
trends. The business planning process also considers key
risks: for example, natural catastrophe risk and cyber risk is
compared to the expected profit and capital surplus. The
macroeconomic environment, including inflationary and
recessionary factors, are of key consideration within the
business planning process, with appropriate loadings included
within pricing, reserving, and capital.
The Group has developed its analysis of climate change this
year. Climate change trends are allowed for in the business
plan, and key Property peril loss trends have been
incorporated into pricing models. Further scenario
quantification has taken place for the largest peril of US
Hurricane, with a range of temperature scenarios into the
future. For climate litigation, the claims environment and
exposure to a greenwashing scenario is actively monitored.
These developments are described in more detail on pages
33 and 34.
The Risk Management Function provides a Risk Opinion on the
current year business plan. Further assessment of key risk
themes is conducted within the ORSA, presented to the Board
and summarises the short-term and long-term risks to the
Group and the capital implications.
Stress and scenario testing
A range of stresses, scenarios and modelled exposures are
reported by the business throughout the year. These help to
monitor aggregations across our key insurance risk
exposures, such as casualty, cyber and natural catastrophe,
as well as potential reserve deteriorations and investment risk
stresses. The five most material realistic disaster scenarios
relating to our casualty and cyber exposures are reviewed and
approved by the Beazley plc Board on an annual basis.
The business planning process includes the testing of
scenarios that allow for a range of gross rates, revenue
volumes, and reinsurance rates and availability. Key stress
and scenario testing is further included within the annual
ORSA. These capture key risks including cyber catastrophes,
natural catastrophes and climate change, the market cycle,
macroeconomic uncertainty, and geopolitical risk. Assessment
concludes that in these scenarios, the Group would be solvent
and viable following the use of mitigation actions.
We also consider several reverse stress tests, which identify
extreme scenarios which could trigger unviability (either
through insolvency or a loss of stakeholder confidence) and
the possible mitigation actions. Based on our risk profile, this
has considered the following events:
• Natural Catastrophe - An above appetite natural catastrophe
year, driven by a clustering of significant events with
severity heightened by climate change trends.
• Cyber Catastrophe and Resilience - A globally systemic
ransomware or cloud down event, resulting in several weeks
of system downtime and associated business interruption
losses. Beazley's internal systems also face an operational
resilience impact.
• Financial Crises and Specialty Risk - While recessions are
ordinarily deflationary, this extreme scenario assesses the
impact of a financial crises while inflationary trends remain
heightened. Specialty Risk loss estimates increase
significantly from the combination of recessionary claims,
increased inflation trends, and new legal precedents.
Additionally, there is a fall in the market value of
investments, as credit spreads increase to 2008 financial
crises levels.
• Combined Catastrophes - Combined losses from the above
Natural Catastrophe and Cyber Catastrophe events.
• Major Operational Incidents - A combination of major
operational risk incidents, including an internal fraud event.
Alongside the primary stated impacts of these events, the
reverse stress testing assessment considers resulting
implications to insurance revenue, reinsurance availability and
recoveries, and operational costs. In these scenarios,
mitigation options are available to limit the impact to the
Group's solvency position, while the Group's financial and
operational control reduce the likelihood of these scenarios
taking place.
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Conduct has been a core aspect of our business. We pride
ourselves on knowing our clients well, meeting their needs,
managing our business responsibly and ensuring we transact
only with reputable intermediaries, agents and suppliers.
There is a robust approach to information security and privacy
controls designed to safeguard data and the rights of data
subjects. There were no cases of a data breach that were
material to our clients or the Group during 2023.
Anti-financial crime controls
Given the Group operates as a global organisation, financial
crime is a key risk. The Group has no appetite for being used
as a vehicle for financial crime. As a responsible business, we
adhere to ethical practices and believe in doing the right thing.
We monitor sanctions developments closely and are primed to
respond when changes occur. To ensure compliance with
applicable regimes, the Group embeds anti-financial crime
controls and procedures into its underwriting, claims,
payments, gifts and hospitality processes, and more widely
throughout the business.
Whistleblowing
In line with our values, we promote a culture that encourages
employees to speak up and escalate concerns. In support of
this, we operate a whistleblowing policy and an independent
hotline, managed by Safecall, that allows for anonymous
reporting of concerns without fear of reprisal, harassment,
retaliation or victimisation. We received training from Safecall
to ensure we appropriately handle any concerns raised
through the hotline. All concerns have been treated with the
utmost confidentiality and in accordance with all applicable
legal and regulatory requirements. The Beazley plc Board
received reports affirming the effectiveness and operation of
our whistleblowing procedures.
Beazley plc’s Audit Committee has overall responsibility for
the effectiveness of our whistleblowing policy and procedures,
with the Committee reviewing and approving the policy
annually. The Chair of the Committee is the Whistleblowing
Champion.
Strategic report approval by the Board of
Directors
The strategic report set out on pages 1 to 74 is approved
by the Board of Directors.
Signed on behalf of the Board of Directors
Clive Bannister
Chair of the Board
Mitigation contingency options
Beazley aims to maintain a Group solvency ratio in excess of
170%. In the unlikely event that solvency falls below this
amount, additional capital may be available from a number of
sources. The Group maintains a list of mitigation options
available to improve its position in the event of liquidity or
capital distress. The financial and corporate actions available
to Beazley are monitored on an ongoing basis. The available
mitigation options following an extreme event include:
• Underwriting action to exit certain lines, or reduce planned
growth;
• Stopping or delaying infrastructure investment to reduce
expense costs;
• Sell off business units to raise own funds and reduce
capital requirements;
• Suspension of dividends or share buyback programmes;
• Additional reinsurance purchases to reduce capital
requirements;
• Posting of available unutilised letter of credit as funds at
Lloyd’s; and
• Accessing additional external capital via debt or equity
markets.
Conclusion on viability
The Board has concluded, based on the business plan,
scenario and ORSA reporting, that there is a reasonable
expectation that the Group will be able to continue to operate
and meet its liabilities as they fall due over the five year
period of assessment.
Regulatory compliance
To ensure that we conduct business in accordance with
all applicable laws and regulations, we operate a Group-
wide compliance framework designed to consider the
risk, govern decision-making, ensure the best for our
clients and monitor performance. Our compliance
framework consists of processes, policies and controls,
including senior management oversight, training, risk
assessments, monitoring and reporting.
There continues to be top-down commitment of senior
management to ensure a good culture of regulatory
compliance across the Group. This is embedded within our
compliance framework and supported by training, controls,
policies, periodic risk assessments and monitoring. Key areas
of focus within the compliance framework include:
Culture, controls, training and oversight
A mandatory annual employee training programme covers
topics such as financial crime, underwriting due diligence,
conduct, and information security. We provide training to
employees upon joining Beazley and annually thereafter to
ensure that we continue to operate in a responsible manner
and in line with Group expectations.
Monitoring of regulatory risks provides assurance on the
performance of regulatory controls and enables us to identify
areas for improvement. Through regular reporting of our
monitoring activities, we ensure that senior management
maintain oversight of regulatory risk, including conflicts of
interest across the Group.
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Governance
Governance at a glance
Chair's introduction to governance
Board of Directors
Corporate governance report
76
78
80
83
100 Nomination Committee
106 Audit Committee
115 Risk Committee
120 Remuneration Committee
122 Letter from the Chair of our Remuneration Committee
124 Directors' remuneration report
146 Statement of Directors' responsibilities
147 Directors' report
152 Independent auditor's report
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Governance at a glance
Board composition and diversity*
Board composition
Board gender balance
Board ethnic diversity
*all data as at 31 December 2023.
As at our reference date of 31
December 2023, we have met the
Listing Rule 9.8.6R(9) targets of:
• at least 40% of the Board Directors
being women; and
• at least one of the senior positions on
the Board being held by a woman: our
Group Finance Director and Senior
Independent Director are both women.
Targets were also met throughout
the year.
As at our reference date of 31
December 2023, we have met the
Listing Rule target of at least one Board
member being from a Black, Asian or
ethnic minority background: two of our
Directors throughout 2023 were from
an ethnic minority background (Rajesh
Agrawal and Cecilia Reyes Leuzinger).
The numerical data required by Listing
Rule 9.8.6R(10) on both the ethnic
background and gender of the Board
and Executive Management as at the
reference date of 31 December 2023
are included on page 20, together with
an explanation of our approach to
collecting data.
Committee diversity
The Board also aims to ensure that each Committee is diverse, where possible. The Chairs of the Risk Committee and
Remuneration Committee are women. The diversity of each Committee as at 31 December 2023 is set out below:
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Governance at a glance continued
Non-Executive Director tenure*
*Pierre-Olivier Desaulle is included within 0-3 years tenure, as the data is at 31
December 2023, but entered his second term on 1 January 2024.
Director domicile
The Board is also mindful of geographic diversity and ensuring
the Board is comprised of individuals with global experience to
complement our three-platform strategy, focused on Lloyd's
Wholesale (London, Singapore and Miami), US and Europe.
Planned Board changes for 2024:
• Carolyn Johnson was appointed as an independent Non-
Executive Director on 1 March 2024.
• Christine LaSala will step down from the Board and as
Senior Independent Director at the conclusion of the 2024
AGM. A new Senior Independent Director is being selected
and will be confirmed by the AGM.
• Sally Lake will step down from the Board and as Group
Finance Director in 2024.
• A new CFO, Barbara Plucnar Jensen, will be appointed in
2024.
Key activities in 2023
Monitored strategic delivery of key projects
Board activities: pages 87 to 91
Section 172 statement (principle decision 4): page 58
Considered Board and senior leadership succession
Nomination Committee report: from page 100
Approved change to capital surplus metrics
Board activities: page 89
Section 172 statement (principle decision 3): page 58
Implementation of IFRS 17
Audit Committee report: page 106
Financial review: from page 60
Engagement with shareholders: pages 52 to 54
Skills to support delivery of strategy for the long-term success of Beazley
A collective view of the skills of the Board as assessed by the Nomination Committee during 2023, as part of the Board
evaluation and self-assessment by the Directors of their knowledge and skills.
Area of skill
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Chair's introduction to governance
2023, taking over from our Interim Chair, Christine LaSala.
I would like to thank Christine for her excellent stewardship
of the Board and for helping make my transition to Chair
seamless. At the conclusion of the 2023 Annual General
Meeting (AGM), Christine resumed her role as Senior
Independent Director. Christine has decided not to stand for
re-election as a Non-Executive Director and will therefore retire
from the Board at the conclusion of the 2024 AGM. I would
like to emphasise my thanks to Christine for her dedication
and contribution to Beazley during her eight-year tenure. We
have all benefited from her extensive leadership experience,
US market insights and principled commitment to the
organisation. We expect to announce the Director who will
succeed Christine as Senior Independent Director prior to
the AGM.
We were pleased to announce on 22 February 2024 the
appointment of Carolyn Johnson as an independent Non-
Executive Director of Beazley plc, with effect from 1 March
2024. Carolyn has extensive US insurance and financial
experience as well as UK listed experience through her Non-
Executive role at Legal & General Group plc, which will
strengthen the Board. Carolyn will also be appointed as the
Chair of our US subsidiary, Beazley Holdings Inc. More
information on the process to select the new Non-Executive
Director is included on page 102.
More information regarding appointments made during the
year and the considerable work that the Nomination
Committee has done to identify the skills and experience
required by the Board and its Committees can be found in the
Nomination Committee report on pages 100 to 105.
The governance report describes our governance
arrangements, the focus of the Board during 2023, and how
the Board provides effective leadership to ensure the long-
term success of Beazley. We believe in the importance of
good corporate governance and report under the UK Corporate
Governance Code 2018 (the Code).
In my statement on pages 8 to 9, I comment on Beazley’s
performance, and how we have made progress in 2023
against our vision to be the highest performing sustainable
specialty insurer: a year of geopolitical turmoil and economic
uncertainty. Our focused, flexible approach to underwriting
allowed us to perform well, seize opportunities, and deliver
for all our stakeholders.
Beazley's success is underpinned by a robust governance
framework, which helps the Board contribute effectively to
the Company's long-term strategy, and ensures that Beazley
operates with the highest standards of integrity and
accountability. Our governance framework is a key enabler
of our strategy; ensuring that the Board and its Committees
support Executive management in the development,
refinement and successful execution of our strategy.
The Board provides independent oversight and valuable input,
whilst allowing the space needed by Executive Management
to execute the strategy. This is evidenced by the Board's
involvement in our key strategic project deliveries in 2023,
including the establishment of a US Excess and Surplus lines
carrier.
I am pleased to confirm that the Company has complied with
all of the principles and provisions of the Code throughout the
year. The Board remains highly engaged in fulfilling its
principal task of leading the Company and overseeing the
governance of the Group.
Board changes
The Board takes seriously its responsibility for and oversight
of effective succession planning for Board and senior
management positions. I assumed my role as Chair of the
Board and Nomination Committee with effect from 25 April
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Group Finance Director succession
During 2023 Sally Lake expressed her intent to step down as
Group Finance Director during 2024. I would like to thank Sally
for her significant contribution to Beazley’s success in her
formidable 18-year career with the Group. Sally has been an
outstanding role model within the business. She is a valued
leader as Group Finance Director and has displayed
professionalism and leadership throughout her tenure. More
information about the search for a successor for Sally Lake is
included in the Nomination Committee report on page 102.
Board performance
We have a strong Board comprising individuals of diverse
experience, background and skills. In addition, there is a good
balance of new and more established Directors. In line with
the Code, the 2023 internal Board performance evaluation
concluded that the Board continues to operate effectively, and
that each Director is contributing to the Board’s overall
effectiveness. We report further on the process and outcomes
from the Board and Committee performance evaluation on
pages 97 to 98.
2023 Annual General Meeting (AGM)
At the AGM in 2023, two of the special resolutions proposed
did not receive sufficient support to be passed. The Company
engaged with shareholders to understand their views on these
resolutions. The response, including the impact on the
resolutions to be proposed at the AGM in 2024, is set out on
page 93 in accordance with provision 4 of the Code.
Stakeholder engagement
The Board is committed to engaging with its stakeholders. The
Board identifies our shareholders, people, clients and broker
partners, regulators, and community and the environment as
its key stakeholders. During 2023 the Board reviewed the key
stakeholder groups. Following this review, ‘community and the
environment’ have been included as an additional key
stakeholder group for 2023. The Board recognised that the
inclusion of this group further aligned key stakeholders with
Beazley’s strategy. On pages 57 to 59, we discuss how these
stakeholder groups have been considered in key decisions
taken by the Board during the year and our Stakeholder
Engagement report beginning on page 50 describes our
engagement activities. The Board has arranged its 2024
itinerary to ensure that the Board (or individual Directors) will
visit international offices to meet with colleagues globally.
Culture and our people
At Beazley we define our culture by what "we actually do". We
are bold, strive for better and intend to "do the right thing".
Our values inspire the way we work, from how we engage with
our stakeholders and colleagues, to how we design our
workspaces, treat our customers and behave as a responsible
business. Retaining and enriching our strong culture is key for
Beazley. During 2023, the Board undertook an independent
review of our culture.The outcome of the review was positive.
Our culture was found to be valued by colleagues and
consistent with the findings our our engagement survey. You
can find out more about the culture review in the Corporate
Governance report on page 92, as well as our regular
activities to monitor culture and ensure it remains aligned with
our values.
Inclusion and Diversity
The Board remains committed to promoting inclusion and
diversity in all its forms. We are pleased to have met the new
Listing Rule requirements in relation to Board diversity.
However, we understand that our work in this area is never
done. In line with our Board diversity policy, the Board
continued to ensure an inclusive environment, aligned to the
Company’s strategy. The governance at a glance on pages 76
to 77 sets out our key metrics on Board diversity. During
2023, we agreed to increase some of our goals around
ethnicity within our workforce to more accurately reflect the
markets and communities in which we operate. Further details
on our decision and approach to inclusion and diversity is
included in the Responsible Business Report from page 17.
The Nomination Committee report from page 100 also sets
out further information regarding the Board’s approach to
ensure an inclusive and diverse organisation.
Board activities during 2023
It was another busy year for the Board and a summary of our
key activities is set out from page 88. A key development
during the year was the diversification of our business by
building out our three platforms. More information about which
is set out in the Strategic Report. During the Board’s annual
strategy day, we met in person and discussed topics including
the Group's business strategy, Artificial Intelligence,
technology and modernisation, with focus on the underwriting
opportunities created as the world moves away from fossil
fuels. We received valuable insights from external parties
such as specialist consultants, our bankers and brokers.
Looking ahead
Given the continued changes to the Board, a key priority
during 2024 will be the smooth transition of responsibilities
between Sally Lake and her successor Barbara Plucnar Jensen
as well an effective induction for Carolyn Johnson. We will also
carry out activities to ensure that the Board members
maintain effective working relationships with each other and
the Executive leadership team during these times of
transition, and that our governance and oversight will remain
strong. We look forward to undertaking an independent
external evaluation of the Board’s performance during 2024.
As ever, we welcome all engagement with our shareholders
either via our AGM, our presentations throughout the year and
via our website. All Directors expect to attend this year’s AGM,
which will again provide an opportunity for all shareholders to
hear more about our performance and to ask key questions of
the Board. Where it is not possible for Directors to attend in
person, arrangements will be in place for these individuals to
attend virtually.
I would like to thank all my Beazley and my Board colleagues
for their contributions during the year.
Clive Bannister
Chair
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79
Board of Directors
The Beazley Board is comprised of highly skilled professionals who bring a diverse range of skills, perspectives, and corporate
experience to the boardroom. Their broad range of leadership experience makes the Board well placed to oversee the delivery
of Beazley’s strategic plans in line with its purpose, vision and values and maintain the long-term success of the Company.
On the Board, our two Executive Directors ensure the maintenance of a strong direct link between the business and the
Non-Executive Board members. The Non-Executive Directors each bring specific, in-depth areas of expertise to the Board.
On 8 February 2023, it was announced that Clive Bannister had been appointed as Chair Designate and as a Non-Executive
Director with immediate effect. Clive assumed the role of Chair at the conclusion of the Company's AGM on 25 April 2023.
1. Clive Bannister
Chair and Independent
Non-Executive Director
Appointed: 8 February 2023. Appointed as Chair 25
April 2023
Experience and contribution: Clive was Chief
Executive of Phoenix Group plc from 2011 until
retiring in March 2020. Clive's experience at Phoenix
Group, at which he led the transformation of the
Group and progression to the FTSE 100 brings
considerable leadership experience to the Board as
well as knowledge of the UK listing environment,
capital markets and investor relations. Prior to that
Clive had a long and distinguished career at HSBC
Group, including leadership roles in private banking
and insurance. He has previously held several non-
executive directorships as well as his current
external chair roles.
Skills: significant strategy, transformation
experience, mergers and acquisitions, commerce,
banking and insurance, leadership and governance.
Committee: NC (Chair)
Key external appointments: Chair of Rathbones
Group plc and the Museum of London
2. Adrian Cox
Chief Executive
3. Sally Lake
Group Finance Director
Appointed: 6 December 2010*. Appointed as Chief
Executive April 2021
Experience and contribution: Prior to his appointment
as Chief Executive in April 2021, Adrian was Chief
Underwriting Officer at Beazley from January 2019.
Adrian has vast leadership and underwriting
experience gained throughout his career at Beazley,
which he joined in 2001. He began his career at Gen
Re in 1993. Adrian has a deep understanding of the
Group’s platforms and strategy, has considerable
underwriting experience and market knowledge and
effectively leads the Executive Committee to
contribute to the long-term success of Beazley.
Skills: insurance, management, international
business development, strategy, leadership, people
management, stakeholder management and
governance
Committees: EC, DC
Key external appointments: None
Appointed: 23 May 2019
Experience and contribution: Prior to her appointment
as Group Finance Director in May 2019, Sally served
as Group Actuary from 2014 to 2019. She was a
Reserving Manager from 2012 to 2014. A Fellow of
the Institute of Actuaries since 2004, Sally joined
Beazley in 2006 in the Specialty Lines division. Sally
oversees a number of areas including finance,
actuarial, investments, investor relations, and
corporate governance and brings valuable insight to
the Board through her role. She has a deep
understanding of the strategy and is a valuable
contributor to both the Board and Group.
Skills: finance change and transformation, reserving
and actuarial pricing, capital modelling and
management, investments, strategy, leadership,
people management and governance
Committees: EC, DC
Key external appointments: None
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4. Rajesh Agrawal
Independent Non-Executive Director
6. Nicola Hodson
Independent Non-Executive Director
8. Fiona Muldoon
Independent Non-Executive Director
Appointed: 1 August 2021
Experience and contribution: Raj currently serves as
the Senior Vice President and Chief Financial Officer
of Arrow Electronics, Inc. Before his appointment at
Arrow, he was the Executive Vice President and Chief
Financial Officer at Western Union from 2014 until
2022 and a member of the executive team
responsible for leading Western Union’s global
finance organisation. Raj’s considerable finance
leadership experience brings financial strength to the
Board, and a commercial viewpoint, as well as
knowledge of the US market and environment. During
2023, Raj was also appointed as an independent
Non-Executive Director on one of Beazley’s US
subsidiary Boards.
Skills: finance, financial reporting and planning,
strategy, operations, international business
development and investor relations
Committees: AC, RC
Key external appointments: Senior Vice President
and Chief Financial Officer at Arrow Electronics, Inc
Appointed: 10 April 2019
Experience and contribution: Nicola was appointed
as the Chief Executive Officer of IBM, for the UK and
Ireland division in January 2023. Nicola was
previously Vice President of Field Transformation, for
Microsoft Global Sales and Marketing and prior to
this chief operating officer for Microsoft UK. Nicola
was formerly a Non-Executive Director at Ofgem, a
Board member at the UK Council for Child Internet
Safety and at the Child Exploitation and Online
Protection Group. Nicola brings varied and diverse
skills to the Board through her executive role in the
technological sector, with a focus on transformation
and technology. She is skilled in engaging with
various stakeholders and public bodies. She also
has extensive UK listed company knowledge and
experience to contribute through her other non-
executive role. Nicola demonstrates the required
skills, knowledge, and attributes to effectively chair
the Remuneration Committee and was appointed
permanently to this role during 2023.
Skills: strategy, leadership and management,
business and digital transformation, information
technology, and sales and marketing
Committees: RIC, RC (Chair)
Key external appointments: Chief Executive officer of
IBM, UK and Ireland (a private limited company),
Non-Executive Director of Drax Group plc and
remuneration committee chair
Appointed: 31 May 2022
Experience and contribution: Fiona has over 30
years’ experience in the insurance industry. Fiona
was the Chief Executive of FBD Holdings plc, a listed
general insurer in Ireland, from 2015 to 2020. Prior
to that Fiona was Director of Credit Institutions and
Insurance Supervision at the Central Bank of Ireland,
the Irish regulator. Fiona spent 17 years of her
career with XL group in various progressively senior
finance and general management positions. Fiona
brings knowledge of the global P&C insurance
industry, regulatory knowledge, and strong leadership
skills to the Board, through her executive career and
non-executive positions. Fiona demonstrates the
required skills and attributes to effectively chair the
Risk Committee and was appointed to this role
during 2023. Fiona was also appointed as Employee
Voice of the Board in November 2022.
Skills: insurance, strategy, stakeholder management,
regulatory knowledge, governance, finance, capital
management and leadership
Committees: AC, RIC (Chair)
Key external appointments:
Non-Executive Director of the Bank of Ireland group
on both the group Board and on the Board of New
Ireland Life Assurance, a wholly owned subsidiary,
until 30 September 2023. On 2 October 2023 Fiona
was appointed as an Independent Non-Executive
Director of Admiral Group plc.
5. Pierre-Olivier Desaulle
Independent Non-Executive Director
7. Christine LaSala
Senior Independent
Non-Executive Director
Appointed: 1 January 2021
Experience and contribution: Pierre-Olivier served as
Chief Executive of Hiscox Europe until 2017 and has
held a number of other executive roles within the
(re)insurance industry including at Marsh. He began
his career in insurance with Marsh assisting with the
integration of a leading French broker. Pierre-Olivier
was more recently until February 2024, the Chief
Insurance Officer at the InsurTech start-up, Pattern
Insurance. He remains a director of Pattern and is
active in the InsurTech market as an adviser and
angel investor. Pierre-Olivier brings considerable
insurance industry experience to the Board, as well
as strategy and leadership skills and first-hand
knowledge of the InsurTech market. He has been a
Non-Executive Director of Beazley Insurance dac
since 2017 and has chaired the Beazley Insurance
dac Board since 2021.
Skills: insurance, reinsurance, strategy, operations
and distribution
Committees: RIC, NC
Key external appointments: Director of Pattern
Embedded SAS (France)
Appointed: 1 July 2016
Experience and contribution: Christine was Interim
Chair of the Board from 21 October 2022 until 25
April 2023. She was the Senior Independent Director
prior to assuming the role of Interim Chair and
resumed this role on 25 April 2023. Christine was
previously chair of Willis Towers Watson North
America. Christine held Board and leadership roles
at Johnson & Higgins and Marsh and was for 10
years the Chief Executive of the WTC Captive
Insurance Company. Christine has substantial
experience and insight into the US insurance
industry, as well as extensive leadership experience
which she contributes to the Board. She also brings
her skills to provide leadership of external
recruitment searches for non-executive directors and
her personal attributes and diplomacy aid her in her
role as Senior Independent Director. Christine is also
a Non-Executive Director of one of Beazley’s US
subsidiary Boards.
Skills: leadership and management, client
leadership, financial experience, distribution,
strategy, risk management, regulatory knowledge,
governance and talent and leadership development
Committees: NC, RC
Key external appointments: Non-Executive Director of
Sedgwick
9. John Reizenstein
Independent Non-Executive Director
Appointed: 10 April 2019
Experience and contribution: John has more than 30
years’ experience in financial services. He was Chief
Financial Officer of Direct Line Insurance Group plc,
until 2018 when he retired. Prior to that he held
senior positions in insurance and banking at Co-
operative Financial Services and in investment
banking at Goldman Sachs and UBS. Through his
previous role as the Chief Financial Officer of a FTSE
100 company and his non-executive directorships,
John brings considerable financial leadership,
corporate governance and capital markets
experience to the Board and its Audit Committee.
Through recent and relevant financial experience and
his knowledge of Beazley, he is able to effectively
chair the Audit Committee and challenge
management on financial reporting and internal
control matters. John is also a Non-Executive
Director of Beazley Furlonge Limited.
Skills: finance, strategy, leadership, investment and
mergers and acquisitions
Committees: AC (Chair), RIC, NC
Key external appointments: Non-Executive Director of
Scottish Widows, a member of the Takeover Panel
and chair of Farm Africa.
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10. Cecilia Reyes Leuzinger
Independent Non-Executive Director
11. Robert Stuchbery
Independent Non-Executive Director
12. Carolyn Johnson
Independent Non-Executive Director
Appointed: 31 May 2022
Experience and contribution: Cecilia has more than
30 years’ experience in banking, asset management
and insurance covering Europe, Asia Pacific, and the
Americas with a focus on investment management
and risk. Cecilia held senior roles in risk, as group
chief risk officer and group chief investment officer
during her 17-year career with Zurich Insurance
Group. Prior to this, Cecilia spent her career at ING
Barings, ING Asset Management and Credit Suisse
Group in various senior roles. Cecilia also brings
insurance industry experience to the Board, and
considerable risk management and investments
insight to Board discussions.
Skills: risk management, insurance investment
management, strategy, leadership and management,
responsible investment strategy
Committees: AC, NC, RIC, RC
Key external appointments: Member of the
Supervisory Board and risk committee chair of NN
Group NV, Non-Executive Director and
investment committee chair of Riverstone
International Holding Ltd
Appointed: 11 August 2016
Experience and contribution: Robert served as the
president of international operations of The Hanover
Group until May 2016, when he retired. Prior to this
he was Chief Executive Officer of Chaucer until
2015. Before his appointment to the Chaucer Board,
Robert held numerous management roles at the
company for over 25 years. Robert has previously
served as a member of the London Market Group,
was deputy chairman of the Lloyd’s Market
Association Board and is currently a Liveryman of
The Worshipful Company of Insurers. Robert brings
extensive insurance industry insight to the Board,
particularly Lloyd’s market knowledge, as well as
leadership and strategy skills. Robert has made
significant contributions to the Board since his
appointment in 2016 and continues to provide
valuable contributions to the wider Group. During
2023, he was appointed Chair of Beazley Furlonge
Limited, having already been a Non-Executive
Director. He also acted as the Employee Voice of the
Board until November 2022 and took on the role of
interim Senior Independent Director from 21 October
2022 until 25 April 2023.
Skills: insurance, risk management, distribution,
operations and strategy, deep Lloyd’s market
knowledge
Committees: AC, RIC, RC
Key external appointments: None
Appointed: 1 March 2024
Experience: Carolyn has worked for over 40 years in
the insurance industry with extensive leadership
experience, and a particular focus on the US market.
In her last executive management role, Carolyn was
Chief Transformation Officer at AIG where she
successfully led an ambitious modernisation and
cost reduction programme. Since standing down
from this role, Carolyn has built a portfolio of non-
executive roles, including currently serving as a Non-
Executive Director of Legal & General Group plc,
where she is a member of their audit, risk and
nominations and corporate governance committees.
She also serves on the board of Kuvare, a private
insurance holding and asset management company.
Carolyn will bring deep leadership and
transformational management experience to the
Board as well as strengthening the Board's US
insurance market knowledge, as we fulfil our strategy
of growing the US platform. Her existing non-
executive directorship of Legal & General also means
she understands our obligations as a listed insurer.
Skills: transformation and change, leadership and
management, strategy, insurance (particularly US).
Key external appointments: Non-Executive Director of
Legal & General Group plc, Non-Executive Director of
Kuvare Holdings
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Corporate Governance
report
Statement of compliance
The Board is committed to high standards of corporate
governance and continues to be guided in its approach
through the application of the Financial Reporting Council’s
2018 UK Corporate Governance Code (the Code). The Code
can be viewed on the Financial Reporting Council’s website at
www.frc.org.uk.
Application of UK Corporate Governance Code principles
Code principle and application
Board leadership and company purpose
A
The role of the Board
High standards of corporate governance provide confidence to
our stakeholders in the effective and sustainable delivery of
our strategy. For the year ended 31 December 2023, the
Board confirms that the Company has applied all the
principles and complied with the provisions set out in the
Code throughout the year. The governance report describes
how the Board and its Committees have applied the main
principles of the Code and complied with its detailed
provisions. The disclosures which evidence the Board’s
approach are included in the corporate governance report,
with cross references used where supporting information is
outside of this report.
See further information
Chair’s introduction to governance (pages 78 to 79)
Board biographies (pages 80 to 82)
Governance framework (page 84)
Role of the Board and the Board’s key activities during 2023 (pages 86 to 91)
Section 172 statement (pages 57 to 59)
Purpose, values, strategy and culture
Our purpose, values, strategy and business model (pages 3 to 7)
Resources and controls
Shareholder and stakeholder engagement
Workforce policies and practices
Division of responsibilities
F
The role of the Chair
Board composition and division of responsibilities
B
C
D
E
G
H
CEO statement (pages 10 to 11) and CUO statement (pages 12 to 14)
The Board’s activities in assessing and monitoring culture (pages 91 to 92)
Risk management framework and controls – Risk Management and compliance
report (from page 69)
Risk Committee report (from page 115)
Approach to stakeholder engagement and activities during the year, including
activities of the Director responsible for employee voice – Stakeholder
Engagement report (pages 50 to 56)
Shareholder engagement including engagement in relation to the 2023 AGM
and the resolutions which did not pass (pages 92 to 93)
Non-Financial and Sustainability Information statement - employees (page 47)
Stakeholder engagement report (our people) (pages 50 to 51)
Investing in and rewarding the workforce (page 93)
Governance framework (page 84)
Division of responsibilities (page 94)
Governance at a glance (pages 76 to 77)
Board biographies (pages 80 to 82)
Division of responsibilities (page 94)
Role of the Non-Executive Directors
Board biographies including other appointments (pages 80 to 82)
Ensuring the Board functions effectively and efficiently
I
Composition, succession and evaluation
J
K
Succession planning for the Board
Skills, experience and knowledge of The Board
Board evaluation
L
Audit, risk and internal control
M Ensuring the independence and effectiveness of the Internal and
External audit
Division of responsibilities (page 94)
Board evaluation report (pages 97 to 98)
Board evaluation report (pages 97 to 98)
Nomination Committee report (pages 100 to 105)
Governance at a glance - key skills chart (page 77)
Board biographies (pages 80 to 82)
Nomination Committee report (pages 100 to 105)
Board evaluation report (pages 97 to 98)
Audit Committee report (pages 106 to 114)
N
O
Fair, balanced and understandable assessment
Audit Committee report (page 109)
Risk management and internal controls
Audit Committee report (internal financial controls) (page 114)
Remuneration
P
Q
R
Designing remuneration policies
Executive remuneration
Remuneration outcomes and independent judgement
Risk Committee report (risk management and internal controls framework
including compliance and operational controls) (pages 115 to 119)
Audit, risk and internal controls (page 99)
Remuneration Committee report (page 120)
Directors’ Remuneration report (page 127)
Directors' Remuneration report (page 126)
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Board Composition
At 31 December 2023, the Board comprised 11 Directors
including the Chair (who was deemed independent on
appointment), two Executive Directors and eight further
independent Non-Executive Directors. An additional
independent Non-Executive Director was appointed on 1
March 2024 bringing the total to 12 board Directors and nine
independent Non-Executive Directors at the date of this report.
None of the Non-Executive Directors have served on the Board
for more than nine years. The Board considers all the Non-
Executive Directors to be independent and free of any
relationship which could materially interfere with the exercise
of their independent judgement. In accordance with the Code,
the Board has recommended that all Directors should submit
themselves for election or re-election on an annual basis and
as such all Directors will stand for election or re-election at
the forthcoming AGM, with the exception of Christine LaSala
who intends to stand down from the Board at the conclusion
of the AGM.
At the beginning of 2023, the Board was led by the Non-
Executive Interim Chair Christine LaSala, who was
independent on appointment. Christine chaired the Board
whilst the search for a new Chair was being conducted.
Following the conclusion of the 2023 AGM, Clive Bannister
assumed the role of Chair of the Board. Clive was appointed
to the Beazley plc Board on 8 February 2023 as a Non-
Executive Director and Chair Designate. Information about the
process to identify and select the new Chair was included in
our 2022 Annual Report.
The Company operates through the main Board and four
Committees. During 2023, those Committees were the Audit,
Risk, Nomination, and Remuneration Committees and details
of their main responsibilities and activities in 2023 are set
out in the Committee reports on pages 100 to 121. With
effect from 1 January 2023, the combined Audit and Risk
Committee was replaced by separate Audit and Risk
Committees. The Board has also established the Disclosure
Committee with responsibility for matters relating to the
control and disclosure of inside information. This Committee
is led by the Executive Directors and includes the Chief Risk
Officer and the Company Secretary. The Board evaluates the
membership of its individual Board Committees on at least an
annual basis, as well as when required during the year. The
Board Committees are governed by terms of reference which
detail the matters delegated to each Committee and for which
they have authority to make decisions. The terms of reference
for the Board Committees can be found at www.beazley.com.
Adrian Cox is the Chief Executive and chairs the Executive
Committee which acts under delegated authority from the
Board. The Executive Committee usually meets monthly and
is responsible for implementing the Group’s strategy and
managing all operational activities of the Group. The Executive
Committee is comprised of individuals who are experts in their
respective disciplines, supporting the creation of a strong,
well-diversified business. The Executive Committee members
and their roles within Beazley are described on our website:
www.beazley.com
The Senior Independent Director will, if required and as took
place during 2022 and 2023, deputise for the Chair. Their role
is to act as a sounding board for the Chair and as an
intermediary for other Directors. They are available to talk to
shareholders if they have any issues or concerns or if there
are any unresolved matters that shareholders believe should
be brought to their attention. Following the conclusion of the
2023 AGM held on 25 April 2023, Christine LaSala, resumed
her role as the Senior Independent Director, upon stepping
down as Interim Chair of the Board on the same date. Robert
Stuchbery undertook the role of Interim Senior Independent
Director until 25 April 2023. Christine will be stepping down
from the Board at the conclusion of the 2024 AGM, and a
successor for this role is expected to be appointed prior to
the AGM.
Following the conclusion of the 2023 AGM, Clive Bannister in
addition to becoming Chair of the Board, assumed the role of
Chair of the Nomination Committee. On 9 May 2023, the
Board appointed Nicola Hodson as the permanent Chair of the
Remuneration Committee. On 29 September 2023, the Board
appointed Fiona Muldoon as Chair of the Risk Committee, and
Cecilia Reyes Leuzinger as an additional member of the
Nomination Committee. Robert Stuchbery stepped down as
Chair of the Risk Committee with effect from the same date
but remained a member.
The governance framework of the main Board and its
Committees is shown in the diagram on page 84.
Biographies of current Board members appear in the Board
of Directors section on pages 80 to 82.
The division of roles and responsibilities is set out on
page 94.
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Beazley | Annual report 2023
85
Board leadership and Company
purpose
• Corporate Governance: including the overall corporate
governance arrangements, major changes to employee
share schemes, approval of principal policies, and board
performance evaluation.
The role of the Board
In accordance with the Code, the role of the Board is to
promote the long-term sustainable success of the Company,
generate value for shareholders and contribute to wider
society by overseeing the delivery of strategy and activities
and ensuring that the Company’s culture remains aligned with
the stated purpose, values, and strategy. The Board maintains
high standards of governance and taking decisions which take
into consideration impacts on a diverse range of stakeholders.
This is integral to good governance.
The independence of the Board is important in providing
constructive challenge, strategic guidance, offering specialist
advice and holding management to account against agreed
objectives. The Chair regularly holds meetings with the Non-
Executive Directors without the presence of the Executive
Directors and management at the conclusion of every
scheduled Board meeting.
The Board ensures that the necessary resources are in place
to support the business model and for the organisation to
meet its objectives and measure performance against these.
The Board has established a Risk Committee and Beazley
operates three lines of defence model which allows for a
strong governance framework of internal controls and
managing risk. More information on how Beazley manages risk
can be found in the Risk management and compliance report
from page 69. If any Director has concerns about the running
of the Group or a proposed course of action, they are
encouraged to express those concerns which are then
recorded in the minutes of the meeting. No such concerns
were raised during 2023.
Matters reserved for the Board
The Board has a schedule of matters reserved for its decision.
This is monitored by the Company Secretary and reviewed by
the Board on an annual basis. The matters reserved are
available on the Company's website: www.beazley.com
Key matters reserved for the Board include:
• Management: including Board appointments and terms of
reference of the Board Committees, Executive Committee
and principal subsidiaries.
• Stakeholders: including ensuring effective engagement with
stakeholders using appropriate mechanisms.
• Strategy: including setting purpose, values and strategy,
culture, monitoring of strategy and objectives and long-term
commercial success, acquisitions and disposals over a
certain quantum, strategic alliances and joint ventures, and
capital management.
• Risk Management and Internal Controls: including setting the
Group's risk appetite, assessments of principal and
emerging risk (including climate-related risks), ultimate
oversight of risk management and controls, with input from
its Committees.
• Finance: including financial statements and dividends, review
of business plans, tax strategy, investment strategy, and
capital and revenue expenditure over a certain quantum.
Key subsidiary Boards
At Beazley we have a strong governance framework which
includes governance of the relationship between the Group
Board and the Boards of our key subsidiaries. These principal
subsidiaries align with the three platforms of Beazley’s
strategy as described in our business model and strategy on
pages 3 to 7, and Chief Executive statement on pages 10 to
11. A Beazley plc Director chairs each of the principal
subsidiary Boards. Pierre-Olivier Desaulle chairs the Beazley
Insurance dac Board, Robert Stuchbery chairs the Beazley
Furlonge Limited Board and Carolyn Johnson was appointed
as Chair of the Board of the US holding company, Beazley
Holdings, Inc, with effect from 1 March 2024. Other
independent Non-Executive Directors and Executive
management are Directors on the key subsidiary Boards. The
subsidiary governance framework provides an important link
between the Group Board and principal subsidiary Boards and
helps ensure effective information flows and collaboration
across the Group. The Board encourages positive and
collaborative relationships between the Boards and further
enhancements continue to be made to the framework. For
information regarding the selection of the new independent
Non-Executive Director to Chair the US Holding Company
Board, see pages 102 to 103 of the Nomination Committee
report.
Board meetings and attendance
To effectively fulfil its role, the full Board meets at least five
times each year and more frequently where business needs
require. In 2023, there were six scheduled Board meetings.
The attendance at these meetings is set out in the table
below, along with Committee meeting attendance.
During the year, there were ten additional Board meetings,
most of which were attended by the full Board where the
Board had not established a Sub-Committee to approve or
consider a specific matter. The meetings were held to
consider topics such as: the appointment of the new Chair;
the correction to the 2022 Annual Report; updates and
decisions in relation to the key strategic project to set up the
new US excess and surplus insurance company, including
consideration of implications for the Group’s capital position
and intra-group reinsurance arrangements; consideration of
the release of financial information such as the trading
statement for quarter one, the half-year trading statement, the
release of the unaudited 2022 comparatives under IFRS 17,
and the half-yearly results; and approval to participate in a
Lloyd’s capacity auction. There is also a scheduled joint
meeting of the Boards and Committees of Beazley plc and the
principal Group subsidiaries to consider updates on strategic
projects of relevance to entities across the Group as well as
various policy updates, risk, compliance and internal audit
assurance plans, and environmental, social and governance
matters.
All the Beazley plc Directors also attend an annual strategy
day. All Committees also had additional meetings as required
to discuss specific matters, and details are included in the
Committee reports.
At each Board meeting the agenda is structured to allow
sufficient time for the Committee Chairs to report on the
substantive discussions, and any recommendations to the
Board which require approval.
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Board leadership and company purpose continued
Board and Committee meeting attendance table
Director
Rajesh K Agrawal3
Clive Bannister4
Adrian P Cox
Pierre-Olivier Desaulle
Nicola Hodson5
Sally M Lake
Christine LaSala6
Fiona Muldoon7
A John Reizenstein
Cecilia Reyes Leuzinger8
Robert A Stuchbery9
Board
Audit
Committee
Risk
Committee
Remuneration
Committee
Nomination
Committee
No. of
meetings1
6
6
6
6
6
6
6
6
6
6
6
No.
attended2
6
6
6
6
6
6
6
6
6
6
6
No. of
meetings
10
–
–
–
–
–
–
10
10
10
10
No.
attended
8
–
–
–
–
–
–
10
10
10
10
No. of
meetings
–
–
–
4
4
–
–
4
4
4
4
No.
attended
–
–
–
4
4
–
–
4
4
4
4
No. of
meetings
4
–
–
–
4
–
4
–
–
4
4
No.
attended
4
–
–
–
2
–
4
–
–
4
4
No. of
meetings
–
3
–
4
–
–
4
–
4
1
–
No.
attended
–
3
–
4
–
–
4
–
4
1
–
1 Number of meetings: There were 10 additional Board meetings, 5 additional Audit Committee meetings, 2 additional Nomination Committee meetings and 2
additional Remuneration Committee meetings during the year. The purpose of these meetings is explained above for the Board and in the Committee reports.
2 Where a Director joined or stood down from the Board or Board Committee during the year only the number of meetings following appointment or before standing
down are shown.
3 Rajesh Agrawal was unable to attend two Audit Committee meetings. One of the meetings was rescheduled at short notice and Rajesh was unable to attend and
the other was due to an unavoidable scheduling conflict.
4 Clive Bannister assumed the role of Chair of the Board and Chair of the Nomination Committee at the conclusion of the AGM held on 25 April 2023.
5 Nicola Hodson was appointed Chair of the Remuneration Committee on 9 May 2023 (but was Interim Chair prior to that). Prior to Nicola’s appointment as Chair
of the Remuneration Committee, Nicola had some unavoidable scheduling conflicts for the early 2023 Remuneration Committee meetings.
6 Christine LaSala stepped down as Interim Chair of the Board at the conclusion of the AGM held on 25 April 2023.
7 Fiona Muldoon was appointed Chair of the Risk Committee on 29 September 2023 (and was a member prior to that).
8 Cecilia Reyes Leuzinger was appointed as a member of the Nomination Committee on 29 September 2023.
9 Robert Stuchbery stood down as Chair of the Risk Committee on 29 September 2023 but remained a member.
Key activities of the Board during 2023
Our vision to be the highest performing sustainable specialty
insurer is underpinned by our values and culture of being bold,
striving for better and doing the right thing. These values
enable us the freedom and confidence to question the status
quo, dare to be different and explore bold possibilities to
create innovative outcomes for our stakeholders, consistently
strive for the best and act with integrity in a straightforward
way. Our vision, values and culture generate value for our
shareholders through delivering long-term consistent
underwriting performance. For more information see the
business model description on pages 4 to 7.
At each scheduled meeting, the Board receives reports from
the Chief Executive and Group Finance Director on the
performance and results of the Group and also receives
reports from the Chief Underwriting Officer and the Chief Risk
Officer. The Chairs of the Board’s Committees provide an
update on their activities and discussions, as well as the
Chairs of the principal subsidiaries on matters related to the
subsidiaries and their respective platform. In addition, the
Board receives regular updates on operational matters and
key projects, culture and people, ESG strategy and activities,
investor relations and corporate governance. For 2024, the
Board has developed a schedule of deep dives on specific
areas of the business to be received over the year including
each of the three platforms and areas such as brokers,
clients, reinsurance and strategic partners, and innovation
and growth.
There is an annual schedule of rolling agenda items to ensure
that all matters are given due consideration and are reviewed
at the appropriate point in the financial and regulatory cycles.
Meetings are structured to ensure that there is sufficient time
for consideration and debate on all matters. During the year,
the Board has spent time on the following key areas.
Key to stakeholder
C – Clients and/or brokers
S – Shareholders
E – Employees
R – Regulators
Co – Communities
En – Environment
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Beazley | Annual report 2023
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Activity
Strategy & Purpose
Approved investment strategy
Assessed and approved steps in
relation to our three-platform
operating model
For more information see the section
172 statement (pages 57 to 59)
Received updates on Cyber Risks
Held the annual Board strategy day
Received updates on engagement
with shareholders and investors
For more information see page 93
Reviewed strategic opportunities
Outcomes
Link to
stakeholders
Timeline
Considered and approved the investment strategy, including linking the strategy to the
responsible investment policy.
S, En, Co
Feb
Considered the continued implementation of the three-platform strategy (as explained in
our Strategic Report on page 10) to promote the long-term success of the Group through
continued simplification and de-risking. The Board challenged and approved proposals at
various stages throughout the year. The proposals included realigning the business
flows into the London wholesale and US markets. To achieve this, it was necessary to
obtain approval from our subsidiary Boards and also from Lloyd’s syndicate 623 Names
to a change in business mix. The Board also approved the establishment of a new US
surplus lines carrier (Beazley Excess and Surplus Insurance Inc). The Board considered
the implications for capital and intra-group reinsurance arrangements and considered
various options in relation to these matters.
During late 2022 and early 2023, Beazley took the lead in addressing systemic cyber
risk by clarifying cyber war exclusions in our Cyber Risk policies and making these
exclusions clearer for clients. The Board received regular updates on the deployment of
the endorsement and monitored any impact to the business. The Board received
updates regarding efforts to engage with our brokers and reinsurance partners to
communicate the rationale and engagement with Lloyd’s to help encourage a broad
market consensus.
In addition, the Board received regular updates from the Chief Underwriting Officer on
monitoring cyber threats arising from the geopolitical environment and from
technological advancements such as Artificial Intelligence.
The Board received updates from both internal and external subject matter experts at
their strategy day in May. Various topics were discussed, such as:
• Perspectives about Beazley and market positioning including market and competitor
comparative analysis and insurance market outlook, a shareholder perception study,
and views of analysts
• Climate risk and ESG covering climate related risks and opportunities for Beazley in
underwriting, including climate litigation risk, views on climate change and
sustainability and shifts required within the insurance industry to support the
transition; and the case for climate adaptation
• A deep dive on Artificial Intelligence and the emerging risks and opportunities arising
– a session facilitated by external experts
Received updates on shareholder engagement activity following the failure of Special
Resolutions 22 (general dis-application of pre-emption rights) and 23 (dis-application of
pre-emption rights in connection with an acquisition or specified investment) to pass at
the April AGM.
Reviewed strategic opportunities throughout the year including approving the
participation in the capacity auctions for Lloyd’s syndicate 623 to grow the Group’s
share of this business, reviewing opportunities for innovation and growth presented
during the year, and gaining an understanding of the work undertaken by the incubation
underwriting team to develop new products.
C, S, R
Feb, Apr, Jun
C, R
Feb, May.
Aug, Sep, Nov
C, S, E, Co, En May
S
May, Sep
C, E, S, R
Aug, Sep, Oct,
Nov
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Beazley | Annual report 2023
www.beazley.com
Activity
Financial
Approved 2023 Group GAAP budget
Implementation of IFRS 17
For more information see the Audit
Committee report (pages 106 to
114)
Approved financial reporting including
the 2022 Annual Report, quarterly
trading statements and the 2023
interim results
Approved correction to the 2022
Annual Report
For more information see the section
172 statement (page 58) and the
Audit Committee report (page 108)
Outcomes
Approved the 2023 Group GAAP budget having considered the underlying assumptions.
The Board also considered impacts arising from the change to IFRS 17, the new
reporting standard for the Group from 1 January 2023.
With input from the Audit Committee, the Board monitored the implementation of IFRS
17. The Board reviewed, challenged, and approved the release of information in relation
to the adoption of IFRS 17, including market and stakeholder communications, indicative
comparatives, and the effects of IFRS 17 on reserving.
Link to
stakeholders
Timeline
C, S
Feb
C, S, E, R
Feb, Jul
Reviewed and approved the 2022 Annual Report, the 2023 interim results and quarterly
trading updates, following recommendations from the Audit Committee.
C, S, E
Mar, May, Jul,
Nov
Examined and debated the error in the NAVps figure disclosed in the 2022 Annual
Report. Following in-depth discussions, the Board approved the release of an
explanatory market announcement and corrected and republished the 2022 Annual
Report. The impact of the error on the Executive Directors' share award outcomes, was
corrected. A comprehensive risk review was presented on lessons learned in relation to
the reporting error.
S, E
Mar
Recommended and approved an
interim dividend
Recommended the 2023 interim dividend to shareholders, in line with the dividend
strategy, which was approved at the 2023 AGM.
S
Apr
For more information see the section
172 statement (page 57)
Approved change to the metric used
to communicate capital surplus to be
based on our Solvency II ratio
For more information see the section
172 statement (page 58)
Approved changes to the Internal
Model
For more information see the Risk
Committee report (pages 115 to
119)
Approved the 2024 Group business
plan
Reviewed, challenged, and approved the change of Beazley’s external capital KPI from
Lloyd’s based ECR to Group Solvency II Coverage Ratio (‘SCR’). The Board considered
feedback from investors on our capital strategy. The Board agreed that the SCR is better
understood by a wider audience of investors and analysts, better reflects Beazley’s
entire business and is used across the insurance industry.
S, R
Aug
Reviewed, considered, and approved a major model change to Beazley’s Internal Model.
As part of their review, the Board considered the triggers for the change, and whether
they constituted a major change rather than ongoing updates to the model, and whether
the model remained appropriate for Beazley’s risk profile. The governance process for
the major model change was reviewed. The Board also considered the impact of the
change on solvency capital requirements.
Considered and approved the final version of the 2024 Group business plan, including
growth forecasts, changes in risk appetites linked to the business plan and risk
management’s view of the plan.
S, R
Sep
C, S, E, R
Nov
www.beazley.com
Beazley | Annual report 2023
89
Board leadership and company purpose continued
Activity
Risk Management
Assessed and reviewed the
effectiveness of financial, risk
management and internal controls
For more information see the Risk
management report (from page 69),
the Audit Committee report (from
page 106), and the Risk Committee
report (page 115 to 119)
Received updates on Cyber and
Information Security
Analysed Beazley’s emerging,
strategic and principal risks
For more information see the Risk
management report (from page 69)
Approved risk management
framework including risk appetite,
risk appetite statements and risk
governance framework
For more information see the Risk
Committee report (pages 115 to
119)
Reviewed and approved the Own Risk
and Solvency Assessment (ORSA)
and ORSA policy
Culture & People
Approved the appointment of a new
Chair
Outcomes
Link to
stakeholders
Timeline
Received regular updates regarding Beazley’s systems of risk management and internal
controls, including enhancements being made to the control environment, and agreed
that the risk management framework and internal controls (including financial,
compliance and operational controls) continued to be effective.
C, S, E, R, En
Feb and
throughout the
year
Received regular updates from the Chief Operating Officer on cyber security maturity and
operational resilience. In May and November, the Board also received in depth updates
from the Chief Information Security Officer regarding programmes to further enhance
Beazley’s cyber security maturity, develop a new security strategy for 2024 to 2026, to
further educate the workforce to enhance resilience, and progress made in relation to
the implementation of the Digital Operational Resilience Act. This was complemented by
Board training on cyber and information security during the year.
Analysed the potential impact of emerging, strategic and principal risks. Discussed,
challenged and approved the principal risks and risk management disclosure in the
Annual and Interim Reports.
C, S, E, R
Feb, May,
Aug, Nov
C, S, E, R, En
Mar, May
Reviewed, provided challenge on and approved risk appetite for 2023 together with the
2023 risk appetite statements and approved the 2024 overall risk appetite. Reviewed
and challenged new risk taxonomy and reviewed and approved risk governance
framework.
C, S, E, R
May, Nov
Reviewed the outputs from the 2023 ORSA process including the material risks and
outcomes. The ORSA provides a detailed assessment of the short- and long-term risks
faced by the Company and Group and assesses the solvency requirements of the Group
through analysis of different stresses and scenarios. The Board also annually review and
approve any changes to the ORSA policy.
S, R
May
Discussed, reviewed, and approved the appointment of Clive Bannister as a Non-
Executive Director and Chair Designate of the Beazley plc board effective 8 February
2023. Information regarding this process was included in the 2022 Annual Report.
C, S, E, R, Co,
En
Jan, Feb
Discussed employee engagement
feedback
Discussed key themes arising from the employee engagement survey undertaken in
2022 and assessed the outcomes from the work undertaken to address the feedback.
For more information see the
Stakeholder Engagement report
(pages 50 to 51)
Approved a new Share Incentive Plan
For more information see the section
172 statement (page 59)
Engaged with the workforce,
including employee voice updates
For more information see the
Stakeholder Engagement report
(page 50 to 51) and page 91
Approved the implementation of a new share incentive arrangement for all employees,
globally. Rules for the new share incentive plan were subsequently approved by
shareholders at the 2023 AGM.
The dedicated ‘Employee Voice’ Non-Executive Director, Fiona Muldoon, provided bi-
annual updates to the Board on the views and feedback from employees that she had
gathered through attending various events that were arranged for this purpose. These
views and feedback were contemplated by the Board in their decision-making throughout
the year.
E
E
E
Feb
Feb, Apr
May, Nov
Assessed and monitored culture and
employee well-being
Received dedicated updates on people and culture and discussed various initiatives
aimed at supporting employees, including employee well-being. Received, assessed and
discussed the results of an independent culture review.
E, R
May, Sep
For more information see the culture
review (pages 91 to 92)
Culture & People continued
Board and Executive succession
planning
For more information see the
Nomination Committee report (pages
100 to 105)
Board and Committee evaluations
For more information see the Board
Evaluation report (pages 97 to 98)
Reviewed, discussed, challenged and approved Board succession plans including the
renewal of appointments of Non-Executive Directors coming to the end of their terms.
Reviewed and received updates on changes to the Executive Committee.
C, S, E, Co, En
Nov
Reviewed, discussed, and provided feedback on the suggested priorities and actions,
based on the outcome and results of the Board and Committee effectiveness reviews.
C, S, E, Co, En
Nov
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Link to
stakeholders
Timeline
C, S, E, R, Co,
En
Feb, May, Aug
Activity
Outcomes
Environmental, Social and Governance ('ESG')
Received updates on responsible
business activities
For more information see the
Responsible Business report (pages
17 to 21) and TCFD statement (from
page 22)
Considered, examined and provided oversight and challenge of various responsible
business activities throughout the year, such as:
• development of the net zero transition plan;
• oversight and challenge of Beazley’s compliance with the Task Force on Climate-
Related Financial Disclosures ('TCFD'), including receiving an independent review of
Beazley’s TCFD disclosures;
• consideration of steps Beazley would take to meet the requirements of new climate-
related legislation globally, such as the EU’s Corporate Sustainability Reporting
Directive; and
• the implementation of ESG elements (carbon emission, inclusion and diversity and
governance) into the supply chain.
These activities enabled the Board to monitor Beazley’s performance against its
Responsible Business Strategy.
The Board also received updates and provided feedback on the process and stakeholder
engagement activities which took place in 2023 in order to develop an updated ESG
strategy. The updated strategy will be published later in 2024.
Considered the Responsible
Business Report
Approved the responsible investment
policy
Examined and approved the 2022 Responsible Business Report (RBR) which was
contained within the 2022 Annual Report.
Reviewed, challenged and approved the responsible investment policy, including
consideration of the commitment to adopt the Science Based Targets initiative
framework with regards to the decarbonisation of assets.
C, S, E, R, Co,
En
C, S, E, Co, En May
Mar
Purpose, values and culture
Our purpose sets out why we exist and how we help our
stakeholders. Our strategy guides what we do, and our culture
determines how we do what we do. As a result, our culture is
very important to us, and sets us apart from our competitors.
The Board and Executive Committee focus on it regularly and
view it as critical to maintaining an inclusive environment that
attracts, engages and retains talented people with diverse
backgrounds and experiences at all levels.
Our culture is founded upon our values – being bold, striving
for better and doing the right thing. They guide how our people
work together, treat our clients and stakeholders, and act
together as a responsible business.
More information on our purpose, values and culture and how
they help us deliver our strategy is set out in the Strategic
Report.
Monitoring our culture
The Board and senior leadership understand the importance
of setting the tone from the top and ensuring our culture is
aligned to the Group’s purpose, values and strategy, and is
embedded throughout the organisation.
The Board regularly reviews and assesses our culture utilising
a number of mechanisms, including:
• Regular reports from the Culture & People team on:
engagement surveys (which include cultural metrics and
industry benchmarks); inclusion and diversity; and
whistleblowing;
• Attendance at employee events (e.g. Townhalls; Exec Q&As;
and new joiner welcome calls);
• Regular meeting with senior leadership and inviting
employees to present at Board and Committee meetings;
• A Non-Executive Director with responsibility for Employee
Voice (appointed in line with the UK Corporate Governance
Code requirements) – who meets informally with groups of
employees throughout the year to capture feedback and any
concerns; and
• Internal Audit reports, which periodically review aspects of
our culture.
www.beazley.com
In addition, our Executive Committee members sponsor our
Group-wide inclusion and diversity networks, enabling them to
experience, monitor and steer our culture from different
perspectives. The current networks are as follows:
• Beazley SHE (Successful, High Potential, Empowered
Women in Insurance) - Lou Ann Layton (Group Head of
Broker Relations and Marketing)
• Beazley RACE - Rob Anarfi (Chief Risk Officer)
• Beazley Wellbeing - Beth Diamond (Chief Claims and
Litigation Officer))
• Beazley Neurodiversity - Troy Dehmann (Chief Operating
Officer)
• Beazley Families - Bob Quane (Chief Underwriting Officer)
• Beazley Veterans - Tim Turner (Group Head of Marine,
Accident and Political)
• Beazley Proud (LGBTQ+) - Ian Fantozzi (CEO - Beazley
Digital)
• Beazley Young Professionals network – Jeremie Saada
(Head of US Executive Risk, a senior leader within the
business reporting into an Executive Committee member)
More information regarding our employee networks is included
in our Stakeholder Engagement report on page 50 and
Responsible Business report on page 17 to 18.
Beazley | Annual report 2023
91
Board leadership and
company purpose continued
What our people say about our culture
We are confident our people feel empowered to share their
thoughts with leadership, as demonstrated by the 80%
participation rate in our latest engagement survey (Q4 2023),
a 5% increase from 2022. We scored 80% in terms of overall
favourability (a measure of how satisfied employees are with
their holistic experience at Beazley) and an engagement score
of 86% (a measure of whether employees are willing to ‘go
above and beyond’ for the business). Both results were above
the global benchmark.
The survey also confirmed our culture as one of our biggest
strengths with employees describing it as “friendly”, “open”,
“inclusive” and “flexible".
Assessing our culture – independent culture review
The Board recognises the importance of assessing and
monitoring our culture and ensuring it remains aligned with
Beazley’s purpose, values and strategy as the business
evolves. During 2023, the Board engaged an independent
third party to carry out an assessment of our culture to provide
us with more formal, detailed, and independent insight. As
part of the independent review:
They collected data…
90 documents were reviewed including Culture & People
policies, corporate communications, employee survey results,
training materials, demographic and diversity data, talent
management and succession planning information.
They listened…
43 colleagues were interviewed representing a mix of gender,
ethnicity, geographical location, team, age, seniority, and
tenure.
They observed…
Meetings of various decision-making committees were
attended including the Executive Committee.
They found…
• A strong sense of shared culture at Beazley with 100% of
colleagues asked confirming they would recommend
Beazley as a place to work
• A friendly and supportive culture, where people feel
empowered to deliver their commitments and to innovate
• Recognition of strong leadership support for culture and role
modelling of positive Beazley behaviours by leaders
• High levels of commitment to inclusion and diversity
principles and strategies
• Flexibility in terms of how and where people work and high
levels of trust
• High levels of psychological safety indicating the workforce
feel able to ask questions, make suggestions and challenge
• A culture they described as “friendly,” “collaborative,”
“hard-working” and “flexible”; which is consistent with how
it was described by our people in the 2023 engagement
survey.
Protecting our culture
Much good work has already been done, and the culture was
found to be positive and valued. The culture review highlighted
some areas for continued focus, to ensure the culture
remains aligned with our purpose and values over time. One
key outcome was supporting the workforce through a period of
change which has been addressed through re-introducing an
employee well-being day, providing a ‘striking the balance’
toolkit and other well-being resources, as well as a focus on
corporate communications around change within the
business. Employees also participated in sessions on
managing change with a change management expert as part
of our annual employee strategy event. Focus areas for 2024
include greater emphasis on culture and values in the
employee induction process and continued Executive
Committee engagement with the workforce. More information
regarding outcomes from employee engagement activities is
included in the Stakeholder Engagement report on pages 50
to 51.
In future years, the Board will build on the findings of the
culture review and use its regular monitoring activities to
ensure that they understand the workforce experience of
culture and apply insights to their Board decision making and
discussions. Their monitoring will help ensure that Beazley’s
culture remains valued by our people and other stakeholders
and continues to be a key driver of what makes us different.
Shareholder and stakeholder engagement
The Board is committed to understanding the views of the
Company’s key stakeholders and has continued to ensure
effective engagement with its stakeholders to ensure that
their interests are taken into account in its decision making.
Further information on how the Board has discharged its
duties under section 172 of the Companies Act 2006, and
how it has engaged with stakeholders and the outcomes of
these activities is included in the Strategic Report from page
57.
During 2023, the Board reviewed and refreshed its key
stakeholder groups, and as a result of the review, community
and environment were recognised as an additional group. The
addition of this group further aligns the Group’s key
stakeholders with the key pillars of our strategy. More
information on the strategy can be found within the Strategic
Report on pages 3 to 7. More information on our
stakeholders, how we engage with them, and the outcomes of
that engagement can be found on pages 50 to 56.
Shareholder engagement
Communication with shareholders remains important and the
Board spends a significant amount of time during their
strategy planning sessions during the year considering
shareholder perspectives and considering how the business
can continue to create long-term sustainable growth.
We hold regular feedback sessions with shareholders around
important topics. In accordance with the Code, during 2023,
the Board actively pursued engagement with shareholders with
regard to the pre-emption rights resolutions which did not
pass at the 2023 AGM and the impact of our transition to
IFRS 17 on incentive arrangements including annual bonus
and LTIPs. Information was also provided to shareholders, via
presentations and on the website, to explain how the change
in accounting standards would impact our financial
statements.
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The Senior Independent Director has specific responsibility to
be available to investors who have any issues or concerns,
and in cases where contact with the Chair, Chief Executive
and Group Financial Director has either failed to resolve their
concerns, or where such contact is inappropriate. No such
concerns have been raised in the year under review.
2023 AGM resolutions
At the 2023 AGM, resolutions 22 (general disapplication of
pre-emption rights) and 23 (disapplication of pre-emption
rights in connection with an acquisition or specified capital
investment) which were special resolutions requiring a 75%
majority, did not receive sufficient support to be passed
(receiving votes in favour of 60.76% and 60.85% respectively).
In accordance with Provision 4 of the Code, the Company
wrote to a significant number of shareholders that voted
against the resolutions to understand their views. The Board
would like to thank those shareholders which engaged with
the Company. Whilst the feedback was limited, the utilisation
of a cashbox structure for the November 2022 capital raise,
and the resulting dilution of shareholder equity, appears to be
the main area of concern.
The resolutions followed the provisions of the Pre-Emption
Group's 2022 Statement of Principles for the dis-application
of pre-emption rights and the Board continues to consider the
flexibility afforded to be in the best interests of the Company
and its shareholders. However, as a result of the feedback
received, the Board has considered its capital position and at
the 2024 AGM will not seek the levels of authority at the
levels set out in the Pre-Emption Group's guidelines. The
Company intends to revert to previous levels of authority for
the general dis-application of pre-emption rights and to seek
no authority to dis-apply pre-emption rights in connection with
an acquisition or specified capital investment. The Company
will consider the levels of authority to be sought on an annual
basis. The Company remains committed to following the Pre-
Emption Group’s guidelines in respect of all future issuances.
IFRS 17 and incentive arrangements
Towards the end of 2023 and in early 2024, the
Remuneration Committee Chair, with the support of the
Company Secretary, led activities to engage with circa 40 of
our top shareholders on our proposed approach to ensuring
fair variable remuneration for all employees as a result of the
impacts of IFRS 17 on the incentive framework. Shareholders
were supportive of the approach proposed, and welcomed the
opportunity to engage. More information on our approach to
shareholder engagement, including on this topic, is included
in the Stakeholder Engagement report on page 54.
In addition to Board led engagement, the Investor Relations
team provide regular reports to the Board on their activities.
The report includes information regarding meetings with
investors and analysts, formal engagement activities, and
information about the shareholder register.
All shareholders are invited to attend the Company’s AGM in
person. The Chairs of the Audit, Remuneration, Nomination
and Governance, and Risk Committees attend the AGM along
with the other Directors and are available to answer
shareholders’ questions, along with the Chair, Chief Executive
and Group Finance Director. Shareholders are also invited to
ask questions during the meeting and have an opportunity to
meet with Directors after the formal business of the meeting
has been concluded. Details of proxy voting by shareholders,
including votes withheld, are made available on request and
are placed on the Company’s website following the meeting.
The Group maintains a corporate website (www.beazley.com)
containing a wide range of information of interest to
institutional and private investors.
Workforce engagement
The Board exercises a combination of formal and informal
engagement methods which are detailed in the Stakeholder
Engagement report on pages 50 to 51. In accordance with the
Code, the Board have appointed a dedicated Non-Executive
Director, Fiona Muldoon (prior to this Robert Stuchbery), who
is responsible for gathering the views of the workforce (the
Employee Voice) and reporting this information to the Board.
Fiona provides a twice yearly written report to the Board as
well as providing informal feedback during the Board’s
discussions and decision-making activities. In addition to the
methods set out in the Stakeholder Engagement report; the
Board and its Committees routinely invite members of the
management team to join meetings to present on the matters
and hold informal social gatherings with presenters and senior
management around its Board meetings. As a result of
feedback received through formal and informal employee
feedback channels a number of corporate decisions were
made during 2023, which are set out in the Stakeholder
Engagement report. The effectiveness of the methods of
engagement with the workforce are kept under review.
Investing in and rewarding the workforce
In addition to salary and discretionary bonus, we offer a
generous global package of benefits that provide choice and
flexibility as well as stability and security to help our people no
matter what stage of their life journey they are at. These
include flexible religious holidays, six full months of parental
leave no matter how you come to parenthood, sabbatical
leave, £100 (or equivalent) monthly lifestyle allowance, paid
for commuter benefits, free lunch, plus the standard offerings
such as medical insurance and retirement/pension
contributions. We know that the small things also matter. For
example, we have healthy snacks available in every office for
everyone to enjoy and match funding/volunteer leave for those
who want to make a difference.
Each year there is an all employee session where the Chief
Executive and the Chief People Officer explain how both
executive and employee remuneration is determined and the
policy relating to remuneration, including setting bonuses of
employees. Bonuses are set with regard to our policies and
are based on performance of the Company and individual
performance.
From a career development and learning perspective, we offer
a variety of tools and programmes that enable people to reach
their full potential and build their careers. From online self-
learning courses to coaching and mentoring, residential
leadership programmes, to professional qualifications. We
regularly deliver mandatory training, and have a suite of
training courses available. This includes specific training for
managers, to help support them in their role. Launching in
2024 is our new leadership profile which will form the
foundation for a review of our leadership and management
development over the next year. We also bring a focus on
feedback, whether that is via our annual engagement survey
or during the appraisal process, to ensure we continue to
invest in our people in the right way.
www.beazley.com
Beazley | Annual report 2023
93
Board leadership and
company purpose continued
Workforce policies and practices
The Board and its Executive Committee have ultimate
responsibility for overseeing the Company’s compliance with
the Beazley code of conduct and upkeep of whistleblowing
procedures and other employee policies and ensuring they are
in line with strategy and culture. The workforce is able to raise
concerns through the whistleblowing procedures, set out in
the Whistleblowing Policy. The Whistleblowing Policy is
approved annually by the Audit Committee and both the Audit
Committee and the Board receive regular whistleblowing
updates, in the form of reports on an annual basis. More
information on this policy and our policies in relation to our
workforce is included in the Non-Financial and Sustainability
Information Statement from page 45.
Division of responsibilities
Roles and responsibilities
The roles and responsibilities of the Chair and Chief Executive
are separate, with each having clearly defined responsibilities.
They maintain a close working relationship to ensure the
integrity of the Board’s decision-making process and the
successful delivery of the Group’s strategy. The Chair and
Non-Executive Directors regularly meet without the presence of
the Executive Directors and other senior leadership. The
Executive Committee meet informally weekly and meet
formally monthly to oversee the management of the Group and
implementation of strategy. Any significant issues or updates
are communicated to the Board in a timely manner outside of
Board meetings either via electronic communications or the
Board portal. The Board have access to the Group Company
Secretary for advice in relation to Board and corporate
governance matters.
Non-Executive Directors
Chair
Senior Independent Director
Non-Executive Directors
The Chair is responsible for:
• Effective and objective leadership and
governance of the Board, ensuring that the
Board discharges its duties effectively and the
Board remains effective with the right
composition and mix of skills.
• Overseeing the Group’s overall strategy, as
approved by the Board, in alignment with
purpose, values and culture and ensuring an
inclusive culture by establishing the right ‘tone
from the top’.
In addition to the responsibilities of the Non-
Executive Directors, the Senior Independent
Director:
• Supports the Chair and is ready to deputise for
the Chair.
• Acts as an alternative contact for shareholders
and other stakeholder groups.
• Leads the evaluation of the Chair’s performance
including seeking feedback from Executive and
Non-Executive Directors.
• Acts as a sounding board for the Non-Executive
• Works effectively with the Chief Executive and
Directors.
Company Secretary to ensure the right topics are
on the Board agenda, that information is
disseminated in a timely manner and supports
effective and constructive challenge and debate
during discussions and decision-making.
• Managing constructive dialogue between Non-
Executive Directors and the Executive Directors
and Executive leadership team and ensuring
effective relationships between them.
• Ensuring effective communication between
shareholders, Executive management, the Board
and other stakeholder groups and that
stakeholder views are considered appropriately
in Board discussions and decision-making.
Chief Executive
Non-Executive Directors must:
• Uphold high standards of integrity and corporate
governance and support an inclusive culture by
setting the right ‘tone from the top’.
• Allow sufficient time to meet their Board
responsibilities and provide constructive
challenge, strategic guidance, offer specialist
advice and hold management to account.
• Attest on appointment that they are able to
allocate sufficient time to discharge their duties
effectively and continue to keep this under
review if their responsibilities with Beazley or
externally change. The Nomination Committee is
also responsible for monitoring the commitments
of the Non-Executive Directors.
• Engage with internal and external stakeholders
as appropriate.
• Serve on Committees of the Board.
The Chief Executive is responsible for:
• Proposing and delivering the strategy agreed by the Board.
• Running the Company's business on a day-to-day basis, making and implementing operational decisions.
• Maintaining a strong direct link between the business and the Non-Executive Directors.
• Building an effective relationship with the Chair and maintaining an ongoing dialogue on key strategic issues.
• Together with the Group Finance Director, leading shareholder engagement activities, responding to feedback from investors, and reporting to the Board on
outcomes from this engagement.
• Representing Beazley externally to all external stakeholder groups.
• Setting the tone from the top to maintain an inclusive culture and ensuring the Group operates in line with its values.
Company Secretary
The Company Secretary is responsible for:
• Supporting the Chair, the Board and its Committees and advises them on all corporate governance matters.
• Ensuring accurate, timely, and clear information flows to the Boards and its Committees and between senior management and Non-Executive Directors in
support of effective decision making.
• Ensuring that the Board has the policies, processes, information, time and resources to function effectively and efficiently and support the Chair in
undertaking Board performance evaluations.
• Beazley's compliance with the Listing Rules, Disclosure and Transparency Rules, statutory compliance and the reporting under the UK Corporate Governance
Code.
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Composition, succession,
and evaluation
Board composition and succession planning
The Nomination Committee is responsible for recommending
appointments to the Board and its Committees and for
ensuring a formal, rigorous and transparent appointment
procedure, which also considers Board diversity. The
Nomination Committee is also responsible for ensuring an
effective succession plan for the Board and senior
management, in accordance with the Code. The Nomination
Committee report on pages 100 to 105 sets out the approach
to succession planning and the procedures and outcomes in
relation to the Board appointments during 2023 and early
2024.
Skills, experience, and knowledge
The Nomination Committee ensures that the Board and its
Committees have the range of skills, experience, and
knowledge necessary to discharge their roles and to support
the management team in the execution of the Company’s
strategy. Board knowledge is reviewed annually by the
Nomination Committee and training needs are identified with
plans to address these needs proposed. Further information
is included in the Nomination Committee report and the Board
Evaluation report on pages 97 to 98.
Induction, training and support
Induction process
Directors receive a comprehensive induction when they join
the Board covering the Company’s business and the industry.
Directors are asked to complete a skills and knowledge
assessment and a tailored initial training plan is developed to
ensure the Director is capable and comfortable in discharging
their duties. Directors meet a range of people across the
business and obtain an insight into our culture. Board
members are asked to provide feedback on the process so
that it can be continually refreshed. A check-in with each
Director takes place after they have been in role for around six
months, to follow up on any areas on which they may require
further information or support. Directors can also request
follow-up sessions at any point following the completion of the
formal induction.
Clive Bannister’s induction
Beazley welcomed Clive Bannister as the new Chair of Beazley
plc in early 2023. Clive received a comprehensive and tailored
induction plan covering our business and markets and
meeting our key internal and external stakeholders. Key
activities included in the induction plan were:
• One-to-one meetings with the Directors of the Beazley plc
Board and Directors of the principal subsidiary Boards;
• Attending Board meetings of our principal subsidiary
Boards, including visiting our Dublin office for a meeting of
the Beazley Insurance dac Board;
• One-to-one meetings with senior executives and the
Company Secretary;
• Participating in a Q&A with our Chief Executive at the
London office and live streamed virtually to all staff;
• Meeting our regulators with the Chief Risk Officer;
• Meeting our remuneration consultants; and
• Meetings with our shareholders (as described in the
Stakeholder Engagement report on page 53).
Induction topics were centred around core skills and areas of
knowledge required and a broad suite of topics covering our
global business were covered to provide the Chair with a
fulsome overview of the business. Induction sessions were
delivered by a range of senior leaders across the business,
giving the Chair the opportunity to learn about Beazley from its
people. Topics were grouped into six core areas of strategy,
how Beazley does business, market knowledge, risk
management and controls, governance, and global regulatory
requirements.
Director training and development
For our Board to remain effective, it is important that our
Directors are briefed on recent and upcoming developments
and keep their knowledge and skills up to date and enable
them to fulfil their responsibilities to the Company.
Annual training is provided for all Directors, based on the
annual Board skills and knowledge assessments and
feedback from Directors, the Company Secretary, the Chief
People Officer and other senior leadership. The annual
assessment is carried out in conjunction with the annual
Board evaluation process so that any outcomes from the
evaluation can be incorporated into the training plans. The
training sessions include business and industry specific
topics, a range of strategic matters, economic and political
updates, as well as changes to legal, accounting, information
security, tax and other regulations. Standard training modules
are regularly reviewed to ensure they meet best practice and
the changing business environment and may be delivered by
internal experts or external advisers. Bespoke training will
also be provided if requested by any Director.
The format of training sessions primarily includes videos sent
out in advance, followed by a live question and answer
session where the Directors can discuss specific aspects of
interest to them in detail. The aim of the training sessions is
to enhance the Board’s skills and update them on new and
evolving topics or regulations so that they can contribute to
Board discussions effectively. They also provide the Board
with access to senior leaders and other experts within
Beazley, below Board and Executive Committee level, who
often deliver the training. The format of the training allows the
Board to gain in-depth insight into the topics and hold detailed
discussions with our subject matter experts, providing insight
into management capability. In addition, the Directors of our
subsidiaries sometimes join training sessions, allowing
engagement between the Beazley plc and subsidiary Board
Directors.
During 2023, training sessions included Realistic Disaster
Scenarios, UK Consumer Duty (Risk Committee members),
Information Security, our ESG in underwriting strategy
including climate risk and climate adaptation. EY also
provided an update on the UK Audit and Corporate
Governance reforms to the Audit Committee. At the Board
strategy day in May, the Board received an update from
external experts on Artificial Intelligence and emerging risks
and opportunities for Beazley.
For topics of key significance, more frequent optional briefings
are held for Directors to ensure they have sufficient
information and understanding to discuss and challenge
management. For example, during 2023 briefings were held
on capital and IFRS 17 and its impacts on our reporting.
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Composition, succession, and evaluation continued
Timely information for decision making
To enable the Board to function effectively and Directors to discharge their responsibilities, timely access is given to all relevant
information. In the case of Board meetings, this consists of a comprehensive set of papers, including regular business progress
reports and discussion documents regarding specific matters. Directors have access to an electronic information repository to
support their activities. The terms and conditions of appointment for all the Non-Executive Directors set out the expected time
commitment and they agree that they have sufficient time to provide what is expected of them.
There is a continued focus on the quality of Board reporting to promote better discussions and further assist decision-making to
ensure that high standards are maintained. Ongoing training sessions on how to write effective Board reports have been carried
out by the external provider of the Board portal platform and the corporate governance team have also provided training to
relevant authors of Board and Committee reports. The Board and Committees consider the quality of reporting at each meeting
and feedback is provided to ensure continuous improvement.
There is an agreed principle that Directors may take independent professional advice if necessary, at the Company’s expense,
assuming that the expense is reasonable. This is in addition to the access which every Director has to the Company Secretary.
The Company Secretary supports the Chair to ensure that the Board has the necessary policies, processes, information, time
and the resources to function effectively and efficiently.
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Board evaluation
Board and Committee performance evaluation
The Board monitors and continually improves its effectiveness
through its annual evaluation of the performance of the Board
and its Committees. The evaluation is designed to assess
whether the Board and its Committees are operating
effectively and whether the Chair and Directors are making
effective contributions individually and collectively. Feedback
from the evaluation is also used to formulate action plans for
improvement areas and identify where the composition of the
Board and Committees could be enhanced.
Board evaluations are carried out on a three-year cycle, with
an externally facilitated performance evaluation carried out
every three years, and internally led evaluations taking place
in other years. The previous external evaluation was
conducted by Clare Chalmers Limited in 2021. The
Nomination Committee reflected upon the internal process
undertaken in 2022 and agreed that the 2023 performance
evaluation should be internally led following the same
process. An externally led comprehensive evaluation of the
Board and its Committees is planned for 2024, in accordance
with the Company’s approach and the Code. The external and
internal evaluation processes are undertaken for Beazley plc
and other principal Group subsidiaries.
Findings from the 2023 Board evaluation
The 2023 evaluation concluded that the Board and its
Committees were operating effectively. The overall findings
were positive, with good progress made on previous areas
recommended for enhancement from the prior year evaluation.
The Board has been working well collectively to oversee the
strategic direction of the Group. Areas contributing to
effectiveness included deep-dive sessions used to enhance
collective Board knowledge of key topics, appropriate use of
hybrid meetings, an inclusive culture in the boardroom, and
good progress made in refining the governance approach and
division of responsibilities between the Beazley plc Board and
its principal subsidiaries. The evaluation included a review of
the mix of skills, knowledge and expertise and diversity, both
collectively on the Board and in relation to the Board's
Committees.
While the findings were positive and found the Board to be
operating effectively, several opportunities for enhancement
were identified during the evaluation. Actions were agreed by
the Nomination Committee and the Board to address specific
observations and support the continued effectiveness of the
Board and its Committees.
Beazley’s overall approach to Board evaluation
External reviews (every three years)
Internal reviews (other years)
An independent external evaluation firm is appointed who works
with the Chair, the Nomination Committee and Company
Secretary to define the objectives and scope of the evaluation.
The external evaluation is the beginning of the three-year cycle
and ensures a rigorous approach. The scope may build on
Beazley’s experience from previous evaluations, whilst also
enabling the evaluator to use their own experience and
independence to provide insight. Processes (e.g., interviews,
meeting observations, desk-top reviews, questionnaires) and
key people included within the review are also agreed. The
findings and agreed actions from the evaluation are reviewed
and monitored by the Board and, as part of the ongoing cycle,
the themes and recommendations may be built upon in the
subsequent internally led board performance evaluations.
The internal reviews are facilitated internally by the Company Secretary with support from the
Chair and Nomination Committee. Internal reviews involve interviews with Directors individually to
obtain their views on the effectiveness of the Board and each Committee. Directors are
encouraged to share their views openly, and questions are asked of each Director to determine
overall Board and Committee effectiveness and obtain feedback on opportunities for continued
improvement.
The Chair also conducts separate meetings with each Director to solicit their feedback on board
dynamics, review their individual performance and determine any steps to be taken. The Senior
Independent Director conducts a review of the Chair. A Directors’ knowledge and skills self-
assessment exercise complements the evaluation process to identify any areas for individual or
collective board training for the following year.
The findings from this work are presented to the Nomination Committee and the Board and an
action plan is created to address specific findings. Progress against these actions is monitored
by the Board throughout the year.
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Board evaluation continued
Recommendations and actions from the 2023 Board performance evaluation
Recommendations and priorities
Actions agreed
Building and enhancing relationships
Due to expected changes to the Board and Executive leadership
during 2024, a priority would be to ensure that relationships
were built and enhanced to ensure ongoing effectiveness.
In addition, the board highlighted a need to enhance
engagement with other senior leaders and with those in all
regions in which Beazley operates.
Long-term planning and strategy
Notwithstanding enhancements made around business planning
during 2023, this remained a priority for 2024.
A further priority was to gain more insight into the competitive
landscape.
Supporting business change
There was a substantial amount of change both in terms of
critical milestones in Beazley’s three-platform strategy and with
changes to leadership for the Board to support during 2024.
Board reporting
Notwithstanding the high quality of reporting and enhancements
made in this area over the past two years, there was an
opportunity for further enhancement of specific reports.
Actions considered by the board for 2024 include:
• Ensuring effective induction processes for the new Board and Executive Committee members.
• Increased opportunities for Executive exposure to the Board on relevant topics.
• Increased social activities between the Board and Executives.
• Board meetings to be held at locations where Beazley operates outside of London at least
annually.
• Deep dives on regions in which Beazley operates to be facilitated.
The Board agreed to set specific objectives and to use strategy sessions and deep dives to
ensure understanding and oversight of the long-term plans and of the competitive landscape.
Actions considered by the Board for 2024 include:
• Ensuring the right topics are on the Board agenda and that deep dive and training plans
reflect the changing environment.
• Ensuring that the board composition remains appropriate to support the changing business.
Specific feedback and knowledge will be shared by the Board on suggested enhancements.
Regular training on board report writing to continue to be provided in 2024.
Progress made on action areas from the 2022 Board performance evaluation
Recommendations and priorities
Actions agreed
Seek to further improve the efficiency of corporate governance
across Boards and Committees without
impacting effectiveness.
Improve the processes around short- and longer-term business
planning.
Create an integrated scorecard as a more impactful means of
monitoring the performance of businesses and key
programmes.
Ensure meeting agendas are appropriately focused.
Ensure The Board has appropriate oversight and understanding
of IFRS 17 changes.
A governance effectiveness review was conducted in 2023 and actions are being implemented
during 2023 and 2024. The relationships and responsibilities between Beazley plc and
subsidiary Boards were a key component of the review. Changes have been proposed, including
the appointment of a new non-executive director of Beazley plc who will also Chair the principal
US subsidiary Board (see Nomination Committee report from page 100).
A roadmap was presented to the Board in 2023 for the implementation of an integrated planning
model, with an expected full implementation date of 2025. This remains a priority for 2024.
An integrated performance scorecard was developed during 2023 and will be subject to
continual enhancements.
Enhancements have been made to agendas during 2023 and this will continue to evolve under
Beazley’s new Chair as a priority.
Time was devoted by the Board and Audit Committee to understand the commercial and
technical implications of the move to IFRS 17 and determine the key judgements to be made. A
suite of training material was made available as well as specific training sessions with the
Board.
Performance of the Board’s Committees
The evaluation of the performance of the Board Committees
found that each Committee is effective in supporting the
Board. Specific actions for Committees included further
consideration of succession planning processes by the
Nomination Committee and continued embedding of the new
Risk Committee, following the separation of the Audit and Risk
Committee at the beginning of 2023.
Individual Director performance
Individual Director performance and contribution was
assessed through one-to-one discussions between the Chair
and each Director. The sessions included reflection on
contributions during the year, strengths, and personal
development areas. This was supported by the self-evaluation
of knowledge and skills completed by the Directors. The
evaluation concluded that each Director is operating
effectively and contributing positively to the effective operation
of the Board and Committees. A few areas to support the
Directors’ individual or collective performance were identified
and action plans have been formulated. This includes delivery
of the 2024 Board knowledge and training plan. Topics such
as Artificial Intelligence, Operational Resilience, Cyber Security
and Cloud, Data, Analytics and Digital were identified for the
2024 training plan. Director time commitments and
independence were also considered as part of the evaluation.
Chair performance
The Senior Independent Director carried out a review of the
performance of the Chair. The Senior Independent Director
sought feedback from all Directors. The review concluded that
the Chair was effective and had made a positive start in the
role, particularly given the level of activity during the six
months including successful execution of key projects such
as IFRS 17, strategic projects, as well as resignations of the
Group Finance Director and two other Executive Committee
members. The Nomination Committee discussed the
evaluation and the feedback including strengths in areas such
as support of the Executive Committee, engagement with
people across the business, strategy direction, growth,
expense management, investor relations and governance. The
Senior Independent Director provided all feedback directly to
the Chair, including areas for continued development as he
embeds into the role and business.
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Audit, Risk and Internal
Control
EY were first appointed as the external auditor for the 2019
accounting year. The respective responsibilities of the
Directors and the Auditors in connection with the accounts are
explained in the Statement of Directors’ Responsibilities on
page 146 and the Independent Auditor’s Report on page 152.
The Board is responsible for the Group’s system of risk
management and internal control and for reviewing its
effectiveness. However, such a system can only provide
reasonable, not absolute, assurance against material
misstatement or loss. The system is designed to manage,
rather than eliminate, the risk of failure to achieve business
objectives within the risk appetite set by the Board. The Board
confirms that it is comfortable with the effectiveness of the
Group’s risk management and internal controls (including
financial, operational and compliance controls), which have
been in place throughout 2023 and continue to operate up to
the date of approval of the annual report and accounts. The
Board delegates oversight of these controls and their
effectiveness to the Audit Committee and Risk Committee, as
set out in their terms of reference. The Audit Committee has
overseen work to enhance internal controls in relation to
financial and non-financial information and reporting during the
year. More information on work undertaken as well as the
process to review internal financial controls is included in the
Audit Committee report on page 106. More information on the
process to review compliance and operational controls is
included in the Risk Committee report from page 115.
The Board agrees the overall risk appetite for the Group.
Throughout the year, the Board has monitored performance
against risk appetite in accordance with the risk management
framework, which is itself reviewed and approved by the Board
annually. Key components of the risk management framework
include ongoing assessment and validation of controls, and
taking steps to ensure that controls remain effective. Ongoing
oversight of risk is undertaken via the Executive Risk and
Regulatory Committee, which meets each month and
considers key risk indicators and reviews of specific risk
areas. The Board delegates oversight of risk management and
compliance matters to the Risk Committee. There is ongoing
reporting of risk matters to Risk Committee and Board, as
appropriate, from the Chief Risk Officer and members of the
Risk function. The Board also receives specific assessments
of risk in the form of risk opinions to support key decision-
making. During the year, the Board received risk opinions in
relation to the execution of key strategic projects related to
the three platform strategy. This included reviewing all key
risks including capital, insurance, liquidity and operational
risks in relation to key steps in the projects. The Board also
received a risk opinion in relation to the transition to Solvency
Coverage Ratio for monitoring and reporting solvency.
Annually, the Board receives a risk opinion on the business
plan for the forthcoming year. This year's risk assessment
focused on whether the plan was logical, realistic and
achievable as well as any risks to the plan and how they
would be mitigated, which helped inform the Board's
assessment and approval of the 2024 business plan.
Further information is provided in the Risk management and
compliance report from page 69 and the Risk Committee
report from page 115.
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Nomination Committee
“2023 proved another busy year for the
Nomination Committee. There were changes
at both the Board and Executive level. We are
committed to engaging with the highest
levels of professional skills at the Board, to
lead the Group; whilst fulfilling all our
Inclusion and Diversity ambitions.”
Role of the Committee
The Nomination Committee provides dedicated focus on the
leadership needs of Beazley. This includes reviewing and
monitoring Board and Committee composition, their
effectiveness, succession planning for the Board and senior
executives, the senior management pipeline, and inclusion
and diversity. The Committee's role is to ensure the Board, its
Committees, and the executive leadership team, as well as
those in the talent pipeline, have the right skills, capabilities,
and diversity of thought, to effectively oversee and implement
the Company's strategy and ensure Beazley's long-term
success.
Responsibilities of the Committee
The full responsibilities of the Nomination Committee are set
out in its terms of reference. These are reviewed by the
Committee and submitted to the Board for approval on an
annual basis. The terms of reference are available on the
Company’s website.
The Committee’s main responsibilities are:
Board composition, succession, and evaluation
• Regularly review the structure, size, and composition
(including the skills, knowledge, experience, and diversity)
of the Board and its Committees in response to the
changing business needs and external environment.
• Consider succession planning for Executive and Non-
Executive Directors and ensure the Board will continue to
have the right balance of competences, skills, knowledge
and diversity, considering the challenges and opportunities
facing Beazley.
• Ensure Non-Executive Directors possess the skills and
knowledge required through training and development to
ensure effective Board performance; and to ensure that a
performance evaluation is conducted to highlight areas for
improvement and that appropriate action plans are in place
to meet development needs.
• Conduct search and selection processes for Board and
Executive Director roles, and review any other key
leadership roles, in line with governance and diversity
requirements.
• Recommend, if appropriate, all Directors for election or re-
election by shareholders under the annual re-election
provisions of the Code, having due regard to their
performance and their ability to continue to contribute to the
overall long-term success of the Board.
Leadership succession and talent pipeline
• Review succession planning for senior leadership, including
development plans for internal talent, to ensure Beazley’s
long-term success and ability to compete effectively in the
marketplace.
Inclusion and Diversity
• Review the Group’s and the Board’s diversity policy and link
to company strategy and ensure inclusion and diversity
perspectives are considered across all areas of Board and
Committee composition, succession planning and
development of the talent pipeline. Monitor progress
against Beazley’s inclusion and diversity objectives to drive
progress and meet ambitions to be an inclusive
organisation, where all our people can thrive.
Committee membership and meetings
Attendance at Nomination Committee meetings by Committee
members is shown in the table on page 87. In 2023, there
were four scheduled meetings and two additional ad hoc
meetings. The Nomination Committee is chaired by Clive
Bannister following his appointment at the AGM on 25 April
2023. The Committee also comprises Pierre-Olivier Desaulle,
Christine LaSala, John Reizenstein, and Cecilia Reyes
Leuzinger, who are independent Non-Executive Directors. Until
25 April 2023, the Committee was chaired by Christine
LaSala, who was also acting as Interim Chair. Cecilia Reyes
Leuzinger was appointed to the Committee on 29 September
2023 to ensure continuing diversity of the Committee’s
membership. The biographical details of the Committee
members can be found on pages 80 to 82. The gender and
ethnic diversity of the Committee is shown on page 76.
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The key activities of the Committee during 2023 are set out below. Only members of the Committee have the right to attend
meetings; however, other individuals, such as the Chief Executive, Chief People Officer and Head of ESG, representatives from
other Boards or Committees, and external advisers, may be invited to attend for all or part of any meeting where this is
beneficial to assist the Committee with fulfilling its responsibilities. The Company Secretary is secretary to the Committee.
Key Committee activities
Activities
Board composition,
succession, and evaluation
Leadership succession
and talent pipeline
• Commenced the search for a new Group Finance Director to succeed Sally Lake and
provided oversight of the recruitment process.
• Conducted an external search for the appointment of a new Non-Executive Director.
• Commenced an internal search for the appointment of a Senior Independent
Director to succeed Christine LaSala.
• After an external and internal search process, agreed the appointment of Bob
Stuchbery as the Chair of Beazley Furlonge Limited ('BFL'), one of Beazley's key
operating subsidiaries.
• Recommended changes to the composition of Board committees.
• Recommended the renewal of the appointments of Non-Executive Directors.
• Reviewed the onboarding and induction processes for Directors.
• Reviewed Beazley plc and subsidiary Board renewals and appointments, including
succession plans, and reflected on effectiveness of succession planning activities.
• Reviewed the knowledge, skills and training assessment for the Beazley plc and
regulated/principal subsidiary Boards and confirmed that the Boards continued to
have the right mix of skills and experience.
• Reviewed the plans for and outcomes of the 2023 performance evaluation for the
Beazley plc Board, Committees, and key regulated subsidiary Boards and
Committees.
• Reviewed Executive performance and succession planning, including a review of the
diversity of the senior leadership talent pipeline.
• Received updates regarding some key senior internal appointments including the
appointment of Head of Strategy, following the departure of Rachel Turk.
• Recruited a new Chief People Officer and Head of ESG, following the retirement of
the incumbent, Pippa Vowles.
Inclusion and Diversity
• Reviewed diversity commitments and targets set by Beazley.
• Reviewed policies including Inclusion and Diversity policies for the Board and the
Group.
• Reviewed sections of the Annual Report and Accounts including diversity disclosures
required by Listing Rules 9.8.6(9) and (10).
• Inclusion and diversity considerations also underpinned other activities including
Board recruitment and composition and succession planning discussions.
More information?
Board evaluation (pages 97 to 98).
More information on board and committee
changes is included in this report
More information on succession planning
and the process for appointing new
Directors is included in this report.
More information on Inclusion and
Diversity is included below and in the
Responsible Business report (pages 17 to
21).
For Listing Rule disclosures see
Governance at a Glance (page 76).
Board composition, succession, and evaluation
Board and committee composition and succession
during 2023
2023 proved to be another year of change impacting the
Committee’s key activities. Considerable time was spent
by the Committee on the composition of the Board and
its Committees, as well as changes in the Executive
leadership team.
The composition of the Board is informed by an assessment
of the skills required, diversity objectives, and orderly
succession plans in line with the overall goal of ensuring the
long-term success of Beazley and ability to develop and
implement its strategy. Following outcomes from the 2022
Board evaluation and an internal review, the Committee has
focused on ensuring that the composition of the Beazley plc
Board and the Boards of its principal subsidiaries is
appropriate, aligned to broader strategy and ensures effective
governance oversight of the Group. Therefore, succession
planning covers both Beazley plc and the Boards of its
principal subsidiaries, with the Chairs of those subsidiaries
usually being appointed to the Beazley plc Board.
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Nomination Committee
continued
Committee changes
Several changes were made or put into action during the year
to strengthen the Board and Committee composition, to
support succession planning, and to continue to support the
overall governance effectiveness of the Group. These
included:
• The permanent appointment of Nicola Hodson as Chair of
the Remuneration Committee with effect from 5 May 2023.
• The appointment of Fiona Muldoon as Chair of the Risk
Committee with effect from 29 September 2023 to succeed
Robert Stuchbery (who remains a member and has been
appointed as Chair of Beazley Furlonge Limited).
• The appointment of Cecilia Reyes Leuzinger as a member of
the Nomination Committee, with effect from 29 September
2023.
When appointing Nicola as the permanent Chair of the
Remuneration Committee, the Board considered Nicola's time
commitments and her other executive and non-executive roles.
Nicola is the Chief Executive of IBM UK and Europe, which is
an unlisted private limited subsidiary company and division of
IBM, and a non-executive director of Drax plc, where she also
chairs the remuneration committee and is a member of their
audit committee and risk committee. The Nomination
Committee and Board are satisfied that Nicola has sufficient
time to undertake her role and is able to balance her
responsibilities well. The Committee keeps the situation under
review to ensure that Nicola is able to to commit the time and
dedication required as a Non-Executive Director of Beazley plc;
as we do for all Directors.
Selection of a new Senior Independent Director
Christine LaSala, who has been on the Board for eight years
and is currently the Senior Independent Director, expressed
her intention to not seek re-election at the 2024 AGM.
Following this decision, the Committee discussed and
reviewed the process for the selection of the next Senior
Independent Director. The Committee approved the role
specification, which sets out the role's responsibilities and
required skills and attributes. The Committee were satisfied
that an internal candidate could be identified. During early
2024, the Chair and the incumbent Senior Independent
Director met with interested candidates. Their skills and
attributes will be assessed against the role specification as
well as considering their existing time commitments. It is
anticipated that the appointment will be confirmed prior to
the AGM.
Recruitment of a Chief Financial Officer
In August 2023, Sally Lake announced that she intended to
step down as Group Finance Director during 2024, after five
years in the role, and 18 years at Beazley. The Committee has
overseen the recruitment process for a Chief Financial Officer,
to replace Sally in 2024. The process has been led by the
Chief Executive, with the support and guidance of the
Committee and the involvement of independent Non-Executive
Directors in all stages. A candidate brief and role specification
was discussed and approved by the Committee and it was
confirmed that an external search was appropriate.
Succession plans for internal talent would continue to be
developed. The key search criteria including required skills,
attributes and cultural fit were agreed. A diverse and inclusive
candidate list was sought. This included, where possible,
seeking candidates from different geographical regions in
which Beazley operates. Spencer Stuart were appointed to
conduct the search, and they have no other connection with
the Company or its Directors.
Following a comprehensive process, Barbara Plucnar Jensen
was identified as the successor to Sally Lake as Chief
Financial Officer and recommended to the Board for approval.
Barbara will join Beazley in May 2024. Barbara’s depth and
breadth of experience across financial services, together with
her leadership style was considered to be a great asset and
cultural fit for Beazley. Barbara was most recently CFO at Tryg,
the largest non-life insurer in Scandinavia with a top 3 market
position across Denmark, Norway and Sweden.
Board recruitment process in focus: appointment of an
additional independent Non-Executive Director, Carolyn
Johnson
The Nomination Committee is responsible for oversight of
search and selection processes for Board and Executive
Director roles and as such a key activity during 2023 and early
2024 was the process to identify a Chair of Beazley's US
holding company, Beazley Holdings Inc, who would also be an
independent Non-Executive Director of Beazley plc.
We were pleased to announce on 22 February 2024, that
Carolyn Johnson will be taking up this role, on 1 March 2024.
Stage 1 – Commencement
• To align the Board and subsidiary governance framework to
the three-platform business model and broader strategic
ambitions, the Committee and the Board decided to
commence a search for a Chair of the principal US
subsidiary Board which will oversee the North American
platform, who will also be appointed as an independent
Non-Executive Director of Beazley plc.
• A sub-group of the Committee, led by Christine LaSala, was
established to lead the search and report to the Committee.
Stage 2 - Key search criteria
• In September, the Committee reviewed the role
specification including key experience, skills and attributes
required.
• An independent external search consultancy, Russell
Reynolds, was engaged to support the process. The
Company and its Directors have no other connection
with Russell Reynolds.
• Key search criteria included: US domiciled, successful track
record as a Non-Executive or Executive leader in the US
insurance sector, ability and capacity to build and develop
the US board, and cultural fit.
• The Committee requested that a diverse candidate long-list
be sought, following consideration of the current Board
diversity profile and the Board's inclusion and diversity
policy. The Committee selected broad search criteria to
allow consideration of candidates from different
backgrounds and foster diversity of candidate profiles.
• A pool of 40 candidates were reviewed in November 2023.
Stage 3 - Short list and initial interviews
• All candidates were assessed against the search criteria.
Six candidates from the long list were selected for interview,
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with five of the candidates being women. Initial interviews
were held with the Senior Independent Director and another
member of the Nomination Committee.
The significant benefits of having Non-Executives who are
serving Executives in other firms having balanced against their
availability.
Stage 4 – Second stage and final interviews
• In February, the sub-group selected three candidates to
progress to the second stage. The candidates were
assessed based on their strengths and capabilities
identified through the initial interviews, against the search
criteria. The second stage included interviews with two
independent Non-Executive Directors of Beazley plc, and
two Executive Committee members based in the US.
• Upon conclusion of these interviews, Carolyn Johnson was
identified by all those involved as the preferred candidate
based on her experience, strengths, cultural fit, and
appetite and ability to build and develop the US Board.
The sub-committee put forward Carolyn for a final interview
with the Chair and Chief Executive.
Stage 5 – Selection: supporting Board diversity and US
regional experience
• The Committee discussed the proposed candidate and
decided that Carolyn Johnson be recommended to the
Board for appointment.
• Carolyn Johnson was recommended because of her
extensive US financial services and insurance experience,
which would complement and strengthen the Board's US
insurance industry knowledge following Christine LaSala’s
departure at the conclusion of the AGM. Carolyn's executive
leadership and transformation leadership skills were also a
key strength, which would help with strategic ambitions for
the US platform. Carolyn also has relevant UK listed
insurance company experience and extensive experience
gained from her successful executive career which will
further enhance the Board. In addition, the Board were
pleased that the appointment would promote the continued
diversity of the Board and meant that one of the three
principal subsidiary Chair roles was held by a woman.
Board tenure, renewal of Non-Executive Director
appointments, and review of time commitments
The Committee reviewed the profile of Board tenure of the
Non-Executive Directors with a view to the future requirements
of Beazley, the length of service of the Board as a whole and
succession plans for key Board roles. As part of this it
considered the reappointments of Rajesh Agrawal, Robert
Stuchbery, and Pierre-Olivier Desaulle. The Committee
recommended:
• The reappointment of Rajesh Agrawal for a second three-
year term.
• That Robert Stuchbery be re-appointed to serve until August
2025. Robert Stuchbery has served on the Board since
August 2016 and his full nine-year term will expire in August
2025.
• That Pierre-Olivier Desaulle be reappointed until the 2025
AGM and his appointment be considered on a rolling 12-
month basis. Pierre-Olivier Desaulle's first three-year term
on the Board was due to expire in January 2024. However,
since 2017 he has served as an independent Non-Executive
Director of Beazley’s Irish regulated subsidiary, Beazley
Insurance dac, including as Chair since 2021.
The Nomination Committee continues to monitor the time
commitment of all Directors to ensure that Directors are able
to provide a sufficient level of time and dedication to the role.
In addition, in September 2023, Fiona Muldoon's appointment
to Admiral plc was considered. It was noted that given Fiona
would be stepping down from her Non-Executive Directorship
at the Bank of Ireland plc, Fiona would continue to have
sufficient time to dedicate to her role at Beazley.
The Committee also monitors and evaluates the
independence of all Non-Executive Directors and undertakes
an annual review of their other interests. The Board, on the
Committee's recommendation is satisfied that each Non-
Executive Director serving remains independent and has
sufficient time to discharge their responsibilities to the
Company.
Board and Committee performance evaluation
The Board carries out a formal and rigorous annual evaluation
of its performance and of the performance of its Committees,
the Chair and individual Directors. The Committee has a role
in overseeing the Board and Committee evaluation process for
Beazley, and in making recommendations to the Board to
improve performance.
To fulfil its responsibility to ensure the Board and its
Committees remain effective, the Committee spent time
reviewing the actions from the internal 2022 Board
effectiveness review. In addition, the Committee reviewed and
approved the plans for the 2023 internal Board effectiveness
review for the Board, its Committees and for two of the
principal regulated subsidiary Boards and their Committees
(Beazley Insurance dac and Beazley Furlonge Limited). The
Committee received a report on the outcomes of the internal
review for all Boards and Committees and discussed common
themes and key areas of focus in 2024. The Committee noted
that in 2024 an external Board performance evaluation will be
carried out.
More information on the Board evaluation process is provided
on page 97.
The Committee reviewed its effectiveness during the year, as
part of the annual Board evaluation process. The Board
confirmed that the Committee is effective in fulfilling its role.
Board knowledge and skills assessment
The Board and Committee recognise the importance of a
diverse composition with a broad mix of skills and experience.
As part of each annual Board evaluation, all Directors carry
out a self-assessment of their knowledge against a wide range
of skills and competencies. For each area, the Directors
assess whether they have considerable knowledge, a base
level of knowledge necessary to contribute to discussions, or
no knowledge. The Committee receives a report on the self-
assessments completed, including information for each
Director, to enable them to assess whether each Director and
the Board collectively have the right mix of skills and
experience. The Chair also considers this information in the
performance evaluations of the Directors, together with other
relevant information and feedback, to assess whether each
Director continues to contribute effectively
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Nomination Committee
continued
The self-assessment helps identify any areas where training
would be useful to develop knowledge and skills either for
Directors individually or for the Board as a whole, and a
training plan for each year is developed. For some skills,
which are dynamic and changing, the Directors’ knowledge
is augmented by external or internal experts who ensure
the Board has the right, up to date, expertise to challenge
effectively. The balance of skills and experience on the
Board is also a core part of Director succession planning.
A summary of the aggregate skills of the Directors from the
skills self-assessment is included on page 77.
Board training
Information on Directors skills and training plans carried out
in 2023 and proposed for 2024, which were reviewed and
agreed by the Committee, can be found on page 95.
Director induction process
In advance of the new Chair joining, the Committee took the
opportunity in early 2023 to review the Director induction
process, seeking feedback from the two recent appointees,
Fiona Muldoon and Cecilia Reyes Leuzinger. Beazley provides
a comprehensive formal and tailored induction for new
Directors including meetings with senior leadership and key
external stakeholders such as regulators, auditors and
shareholders. The plans ensure that Directors are appraised
of all areas of the business. This is supplemented with follow-
up sessions on areas of interest or where further development
is required. Core competencies covered include areas such as
business strategy and business model, responsible business
strategy, business planning, our 'target operating model',
reinsurance, Solvency II, our culture and approach to people,
market knowledge, risk management, and governance
oversight. A description of the Chair's induction process is
included on page 95
Leadership succession planning and talent pipeline
Throughout 2023, the Committee carried out its key
responsibilities of ensuring that plans are in place for the
succession of Executive Director roles and wider senior
management positions and ensuring the continued strong
Executive talent pipeline within the Group. This work aligns
with the people pillar of Beazley’s strategy to attract and
nurture talented colleagues.
The Committee reviews succession plans for the Executive
Committee members annually and their individual performance
against objectives. The succession plans for other senior
roles (such as Executive Committee direct reports) and
regulatory roles are also reviewed annually. The reporting
includes information about potential successors for each role
in the short, medium, longer term and emergency cover,
including whether roles could be filled internally or externally.
The reporting assists with proactively planning for future roles
to progress our internal talent. The 'talent pipeline review'
also covers cross team succession opportunities. The
succession plans are linked to the inclusion and diversity
strategy and policy. The progress towards meeting and/or
exceeding externally and internally set diversity targets is
reviewed.
For vacancies at both Board and Executive leadership level,
external search agencies are often utilised. Any internal
candidates are incorporated into the process run by the
appointed external agency. All external agencies are made
aware of our inclusion and diversity policy and long and short
lists are designed to ensure there is a diverse selection of
candidates put forward.
During 2023, the Committee also received updates on the
appointment of a new Chief People Officer and Head of ESG
and a new Head of Strategy. This was following changes to
the Executive leadership team as a result of the resignation
of Rachel Turk as Head of Strategy and the decision by Pippa
Vowles, Head of Culture and People, to retire. The search was
led by the Chief Executive. Both internal and external
candidates were considered, and comprehensive searches
were carried out. The Committee were pleased that the
successful candidate for the Head of Strategy role, Brenna
Westinghouse, was an internal candidate. Brenna had
previously been highlighted through succession planning and
talent mapping activities, including activities to highlight future
women leaders. Liz Ashford, an external candidate, was
appointed as Chief People Officer and Head of ESG.
In addition to the activities highlighting those who may be
successors for leadership roles in the short- to medium-term,
there are programmes and activities to highlight and develop
future talent throughout the organisation. The diversity of
cohorts for such programmes is taken into account, to ensure
that a diverse range of talented individuals are included and
provided with opportunities to develop. The 'NexCo', which is
described in the Stakeholder Engagement report on page 50,
is an example of one of these programmes.
The Committee will continue to review succession plans for
senior Executives, including programmes in place to identify
and develop internal capability, to facilitate internal
candidates available for future opportunities in line with
Beazley’s people strategy.
Inclusion and diversity
Inclusion and diversity policies
The Board firmly believes that having an inclusive and diverse
workplace will support us in our ambitions to outperform the
market. Our inclusion and diversity strategy enables us to
deliver our business strategy, as we need to attract, engage
and nurture a diverse, high-performing workforce in order to
drive, develop and implement the business strategy. A diverse
workforce with progressive mindsets helps champion diversity
of thought leading to better outcomes for both Beazley and its
stakeholders.
Beazley’s inclusion and diversity policy is reviewed annually.
In 2023 the policy was expanded to commit to improving
inclusion and diversity within the wider industry, with third
parties, suppliers, and partners and to add specific reference
to reporting of incidents. The Board has adopted its own
inclusion and diversity policy which is aligned to that of the
Group. Both policies are available on the Company’s website
(www.beazley.com/en-sg/who-we-are/inclusion-diversity).
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those leading strategic projects. This helps ensure a diverse
pipeline. During the year we have continued to embed the
strategy for gender equality and ethnic diversity to help us
reach our targets of 45% female representation in senior
leadership roles by the end of 2023 and to increase the
representation of People of Colour in leadership roles by 6% to
17% by the end of 2027. For the wider workforce, we have
also set targets for People of Colour representation of at least
25% by the end of 2023 (of this target 25% should be Black
people). In early 2024, these targets were reviewed against
updated government census data in the locations in which we
are based and were increased. Our new goal is to have People
of Colour make up at least 33% in our workforce by the end of
March 2028. Roles are not held specifically for people from
minority groups and our targets are not quotas. We aim for the
applicant talent pool to reflect the diversity of the talent
available in the locations in which we are based.
The Committee monitors the workforce's diversity through
reporting and succession planning activities for the Executive
Committee. The Committee tracks progress by ensuring that
senior leadership have relevant targets related to inclusion
and diversity in their own objectives. Progress against these
targets is reviewed as part of the Committee’s activities in
reviewing the performance of senior leadership. The Executive
Directors also have specific inclusion and diversity targets
linked to their discretionary remuneration. For further
information see the Directors' Remuneration Report from page
124.
The Committee will continue to review, assess, and challenge
succession planning to ensure there is a diverse pipeline of
senior women and People of Colour within Beazley, that senior
leadership truly reflects the diverse make-up of our workforce
and communities, and that people from a diverse range of
backgrounds are able to see career progression within
Beazley. Our Responsible Business report provides further
information on our inclusion and diversity activities, including
our strategy, objectives, and outcomes against our targets,
please see our Responsible Business report on pages 17 to
21. We also publish a more detailed Responsible Business
report, which is available on our website.
Diversity data
The diversity data for the Board and Executive management in
terms of gender and ethnic background, as required by the
Listing Rules is set out on page 20, following our Responsible
Business report. We also disclose diversity data for our senior
management and all employees, as required by and defined
by the Code and the Companies Act 2006. We disclose this
data both to meet the requirements and for comparison with
other organisations. However, we use internally set targets
based on a defined leadership population for our own
monitoring purposes and these are also disclosed. Page 76
provides an overview of diversity at Board level, including the
gender and ethnic diversity disclosures required by Listing
Rules 9.8.6R(9) and 9.8.6R(10).
The inclusion and diversity policy sets out our commitment to
recruit, retain and develop people with diverse backgrounds
and experiences to thrive at all levels of our business, in a
truly inclusive environment that has zero tolerance for
discrimination or harassment and fully supports and
celebrates differences. These differences could include but
are not limited to age, disability, gender, gender
reassignment, marital status, pregnancy and maternity, race,
nationality or ethnic origin, religion or religious beliefs,
sexuality, socio-economic group or working pattern.
We want our workforce and supply chain to reflect the diversity
of our customers and the communities where we work around
the world; however, we know that simply aspiring to have a
diverse workforce is not enough. As an organisation, we
continue to set measurable targets to become a truly diverse
and inclusive employer; where everyone can contribute their
best work and develop fully. We aim to set objectives where
possible and appropriate to embed inclusion and diversity
within our supply chain. Our colleagues and third parties,
where appropriate, are encouraged to report incidents through
relevant channels, including through the whistleblowing
procedures. The policy is supported by the inclusion and
diversity strategy and roadmap, and more information is
included in the Responsible Business report on pages 17 to
21.
The Board's inclusion and diversity policy sets out the
commitment of the Board to use its position and influence to
create a truly inclusive environment and confirms the Board's
view that diversity is central to our strategy by contributing to
enhanced risk management and improved business
performance, bringing about richness of challenge, debate,
and innovation. The Board commits to continue to meet or
exceed guidelines and regulations for gender or racial diversity
set out in the Parker Review and the FTSE Women Leaders
review. While accepting there will be natural fluctuations in
balance due to the size of the Board, the Board also aims to
reflect the Company’s public targets regarding gender and
race and ethnicity in its own composition.
The Board's inclusion and diversity policy also applies to the
Board's key Committees. The Committee considers diversity
when appointing Directors to Board Committees. The diversity
of each Committee is shown in 'governance at a glance' on
page 76.
Approach to diversity and setting targets
The Committee is satisfied that the focus on inclusion and
diversity by the Board and Executive leadership team and the
Company’s diversity strategy, underpinned by bold targets
mean that any risks around continuing to meet externally set
targets for Board diversity are mitigated. Beazley and the
Committee use governmental census data to set evidence-
based diversity targets. Through this data and understanding
our employee base, we are able to understand where there
may be gender or racial disparities in our recruitment or
promotion activities. However, decisions relating to
performance, hiring and promotion at Beazley are always
based on individual merit and performance.
The Committee has agreed targets for gender diversity and
ethnic diversity for the senior leadership, which have been
monitored by the Committee during the year. We determine
and monitor against our own leadership groups, which
represent those most likely to progress to senior positions in
the organisation, including the Executive Committee, and
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Audit Committee
Dear shareholder
I am pleased to present the Audit Committee (the Committee)
report, which provides shareholders with insight into the
activities of the Audit Committee during 2023. The Audit and
Risk Committee was separated on 1 January 2023, and this
has allowed us to focus on our key responsibilities of ensuring
the integrity of the annual report and financial statements,
assessing the independence and effectiveness of the External
Auditors, and overseeing the internal financial control
framework of the Company.
Throughout the year, I regularly engaged with the Group
Finance Director, other Executives, the Company Secretary,
External Auditor, Head of Internal Audit, and individuals
preparing and presenting reports to the Committee, to ensure
that the Committee members had the necessary information
to enable them to advise, challenge and make decisions. This
also ensured that the right topics were presented to the
Committee.
In March, the Committee oversaw the reissuing of the Group’s
2022 annual report following the identification of an error in
the net asset value per share (NAVps) calculation. Any
material error in the annual report is unacceptable, and the
Committee subsequently received and discussed a report
from the risk function on the root causes and lessons learned
from the error. Further detail is given in the Committee’s
report on page 108 and in the section 172 statement on page
58.
The Committee’s work during 2023 was carried out against a
backdrop of considerable regulatory change. The
implementation of IFRS 17 from 1 January 2023 represented
a major change to the way insurers account for their business
activities. I would like to extend my thanks to the IFRS 17
project team for the significant work undertaken across the
many functions in Beazley to prepare the business for the
changes under the IFRS 17 accounting standard.
The Audit Committee closely monitored the progress of the
implementation of the new standard. Throughout the year,
Committee members continued to receive training and
briefings to embed their understanding of the scope of the
standard as the practical application of IFRS 17 became more
evident and to support their discussions with management.
The Committee uses its collective expertise and experience to
challenge the approach and judgements made in the
treatment of financial matters and the resulting disclosures to
be made under IFRS 17. A higher level of scrutiny was
required as we reported under IFRS 17 for the first time in the
2023 half year results.
The 2023 half year results provided shareholders the
opportunity to see the full impact of IFRS 17 on our financials
with 2022 IFRS 17 comparatives being included. Additional
activities were carried out during the year to help shareholders
understand the impact of IFRS 17 and the way in which our
results are disclosed. Further information on the transition to
IFRS 17 is included in the financial review from page 60 and
in Note 1 to the financial statements on page 171. The
Committee was informed by the Financial Reporting Council
(FRC) that our half year results were reviewed as part of their
thematic review into the initial application of IFRS 17 and were
pleased to be informed that no information or clarifications
were required following the review.
The Committee has also overseen potential reporting changes
resulting from the audit and corporate governance reform in
the UK. We reviewed the ‘Audit Committees and the External
Audit: Minimum Standard’ published by the FRC in 2023 and
are pleased to report that we are operating in accordance with
the Standard.
In support of Beazley’s commitment to doing the right thing
and being a responsible business, the Committee oversaw
further enhancement of Beazley’s reporting of climate and
ESG matters in accordance with the ‘Taskforce on Climate-
Related Financial Disclosures’ (TCFD), and the reporting
requirements under the Companies (Strategic Report)
(Climate-related Financial Disclosure) Regulations 2022. The
Committee will also be kept updated on the Group’s reporting
obligations in relation to the EU Corporate Sustainability
Reporting Directive (CSRD).
In August, Sally Lake announced her decision to step down
from her role at Beazley. We will miss Sally, who has provided
a valuable contribution to Beazley and plays a substantial role
supporting the Committee and its work. We look forward to
welcoming her successor Barbara Plucnar Jensen later in
2024 and will be wholeheartedly involved in ensuring that
there is a smooth and orderly transition.
John Reizenstein
Audit Committee Chair
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Committee membership
The Audit Committee membership is compliant with the Code.
The Audit Committee was established as a separate
Committee on 1 January 2023 and currently comprises five
independent Non-Executive Directors: John Reizenstein
(Chair), Rajesh Agrawal, Fiona Muldoon, Cecilia Reyes
Leuzinger and Robert Stuchbery. There were no changes to
the Committee membership during the year. The Board is
satisfied that members of the Committee have ‘recent and
relevant financial experience’ and that the Committee as a
whole has competence relevant to the sector, as required by
the Code. All Committee members are independent Non-
Executive Directors of the Board and details of each member’s
relevant experience, including their financial and/or sector
experience, are given in their biographies on pages 80 to 82.
The gender and ethnic diversity of the Committee is shown in
'governance at a glance' on page 76.
Committee meetings
Attendance at Audit Committee meetings by Committee
members is shown in the table on page 87.
The Audit Committee was required to meet at least quarterly,
with meetings scheduled at appropriate intervals in the
reporting and audit cycles in accordance with the forward-
looking agenda planner. Additional meetings were held as
required. In 2023, there were a total of ten scheduled
meetings, which included a joint meeting of the Audit
Committees of Beazley plc and other regulated Group entities
to consider policies, the internal audit plans for the
forthcoming year and other matters relevant across entities.
There were five further meetings, which were fully attended
apart from one meeting which was attended by four members.
Additional meetings were used to provide updates on progress
with the half-year results which were the first results released
under IFRS 17, and were released in September 2023.
Meetings were also required to consider additional reporting
provided to the market such as the 2022 IFRS 17
comparatives which were released. Whilst every effort is made
to consider time zone differences when scheduling the
Committee meetings, it was not possible to do so on two
occasions in 2023. It is also not possible for overseas based
Directors to attend every meeting in person. For this reason,
Rajesh was unable to attend the 9 May and 29 November
2023 meetings. Rajesh had full access to the Committee
packs prior to the meetings and was able to raise any prior
observations for discussion at the meetings.
Only members of the Committee had the right to attend
meetings; however, invitations are routinely extended to the
Beazley plc Chair, the Senior Independent Director, the Chief
Executive, the Group Finance Director, the Chief Risk Officer,
the Chief Underwriting Officer, the Head of Internal Audit, and
participants from the External Audit firm. The Chairs of the
Audit Committees of the Group’s regulated subsidiaries also
attended Audit Committee meetings during the year as and
when appropriate. The Company Secretary acted as secretary
to the Committee.
The Head of Internal Audit and representatives from the
External Auditor periodically met in private with the Committee
to discuss matters relating to its remit and issues arising from
their work. The Committee also met in private with the Group
Actuary. In addition, the Chair of the Audit Committee had
regular contact with the External Auditor and internal auditors
throughout the year and members of the Committee met
individually with regulators when required. The Committee
Chair also meets regularly with the Group Finance Director,
other senior finance managers and the Company Secretary to
ensure the work of the Committee is focused on the right
topics and the Committee is receiving valuable information.
Committee performance evaluation
The Committee reviewed its effectiveness during the year, as
part of the Board evaluation process (see page 95). The Board
confirmed that the Committee was effective in its role and
that the Chair contributed positively to the effective running of
the Committee and oversight of the Committee’s
responsibilities. The Board agreed the closure of the actions
from the 2022 review. These included the recommendation
that consideration be given to the separation of the Audit and
Risk Committees to ensure strong governance and to allow
sufficient time for the separate oversight and reporting of the
audit and risk functions on behalf of the Board and the
implementation of training sessions for all Directors on the
commercial and technical implications of the transition to the
IFRS 17 accounting standard. No specific actions from the
review were noted for the Committee, however the change of
Group Finance Director expected in 2024 was highlighted as
of key importance to the Committee, who would need to be
ready to support a smooth and orderly transition.
Responsibilities of the Committee
Following the separation of the Audit and Risk Committee on 1
January 2023, oversight of risk management, internal controls
and compliance was transferred to the Risk Committee.
Oversight of internal financial controls remains under the Audit
Committee’s remit.
The Committee's key responsibilities are set out in full in the
terms of reference which are available on the Company’s
website. The terms of reference are reviewed annually. In
2023, updates were made to reflect the FRC’s ‘Audit
Committee and the External Audit: Minimum Standard.’
Financial and narrative reporting
• monitor the integrity of the Company’s financial and
narrative statements;
• review significant financial reporting judgements contained
in the financial statements;
• review and oversee accounting policies and practices;
• review the analysis supporting the going concern
assumption and long-term viability statement;
• review the Annual Report and advise the Board on whether
it is fair, balanced and understandable; and
• review of other reporting such as the Solvency and Financial
Condition Report and Task Force on Climate Related
Financial Disclosures.
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Audit Committee continued
External audit
• review and make recommendations to the Board regarding
the tendering of the External Audit contract, the
appointment, remuneration and terms of engagement of the
External Auditor;
• review and oversee the relationship with the External
Auditor, including their independence, objectivity, and the
policy on and level of non-audit services; and
• review and monitor the effectiveness of the External Auditor
and the audit process.
Internal audit
• monitor and review the effectiveness of the Group’s internal
audit function; and
• review and approve the internal audit plan and monitor its
implementation, including adequacy of resources.
Internal financial controls
• review and make recommendations to the Board on the
effectiveness of the internal financial controls;
• review statements in the Annual Report concerning internal
financial controls;
• review whistleblowing arrangements in place for the
workforce to raise concerns; and
• monitor the performance and independence of consulting
actuaries used for the review of insurance reserving.
Key focus areas and activities in 2023/24
The Committee supported the Board of Directors in overseeing
the accuracy of financial reporting and ensuring the system of
internal financial control, the audit process and the
Company’s processes for compliance with laws and
regulations and internal policies and procedures are robust,
effective, and responsive to ever-changing environments.
Financial and narrative reporting
Re-issue of Beazley’s 2022 Annual Report and Accounts
As described in the section 172 statement on page 58, a
version of Beazley's Annual Report and Accounts for the year
ended 31 December 2022 was originally approved by the
Board on 1 March 2023 and Beazley announced its results for
the year ended 31 December 2022 on 2 March 2023. The
results reported an Alternative Performance Measure (APM) of
NAVps that had been calculated using the weighted average of
shares for the year. It had been intended that the alternative
performance measure would be calculated using the number
of shares at 31 December 2022, rather than using the
weighted average of shares for the year.
The Committee took responsibility for investigating the root
causes of the error and ensuring the control environment was
effective. The Committee received a report from the Risk
function, with input from the Group’s financial control team. It
was found that the error occurred due to incorrect calculation
methodology being applied in some underlying spreadsheets,
which were calculating the NAVps using the weighted average
shares in issue as opposed to the number of shares in issue
at 31 December 2022. The large increase in the Group’s
number of shares in issue due to the 2022 equity raise
resulted in a material difference between these two values.
Several actions were agreed on following the review and
improvements to the control environment and review process
around spreadsheets used throughout the Group’s financial
close process have been made. The Committee also
discussed the root cause of the error with the External Auditor
and any resultant impact on their audit approach. The
Committee has subsequently received updates on the
progress of these actions. As noted elsewhere in this report
the Committee continues to monitor the progress of
management in enhancing the Group’s financial control
framework and ongoing work to automate and improve
processes within the Finance function. The Committee is
satisfied that the Group's financial controls are effective.
Annual Report and financial reporting 2023
The Annual Report and Accounts provide shareholders with
information necessary to enable an assessment of Beazley’s
position, performance, business model and strategy.
The Committee reviewed the Annual Report and Accounts for
the year ended 31 December 2023, to recommend to the
Board for approval. The Committee also considered the key
risks around the financial results underpinning the full year
reporting process. The 2023 full year results announcement
and Annual Report were ultimately recommended to the Board
for approval.
An important part of the review of financial reporting was to
consider and agree the significant financial estimates and
judgements in relation to the financial statements. The
Committee received reports on these judgements for the full
and half year reports and after seeking the views of the
External Auditors (Ernst & Young LLP (EY)), determined that
they were appropriate. The table on pages 110 to 111 sets
out the key accounting estimates and judgements for 2023
and how these were addressed. Management present views
on key accounting issues and judgments throughout the year,
as part of the regular external financial reporting including the
announcement of half year and quarterly results.
The Committee also assesses the appropriateness and
presentation of any APMs used in financial reporting, and
reviewed the change in reported APMs that occurred in the
year.
The Committee continued to focus on the Group’s close and
estimation processes generally, and the related controls
carried out by the business and specifically the finance team.
The Audit Committee remained committed to ensuring that
there were robust controls and oversight over the close
process. During the year and at year end, the Committee
received updates from management on the level of
estimations used in the close process and the controls
carried out to review these estimates retrospectively. The
Committee continued to receive periodic reporting from both
the finance and actuarial functions on our estimation process,
and the related controls, in respect of claims reserves, the
risk adjustment for non-financial risk and other key financial
statement captions. As mentioned above, the Committee
received additional reporting and a lessons learned around
financial controls during the year, following the error in the
NAVps in the 2022 Annual Report and Accounts. Based on
reports received and reviewed during the last 12 months, the
Audit Committee remains satisfied that the estimation and
control processes deployed by the Group are appropriate.
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The Committee also reviewed the half year results
announcements and quarterly trading statements which are
released. Particular attention was paid to the half-year results
which represented the Company’s first disclosure under IFRS
17. Further information is included below.
months to 30 June 2022 and the year to 31 December 2022,
restated for the adoption of IFRS 17. This information was
provided to allow shareholders to understand the impact of
implementing IFRS 17 on the Group’s results and financial
reporting.
Going concern and viability
The assessment of the viability and going concern statements
was a key activity of the Committee. During key reporting
periods, management outlined to the Committee evidence for
the basis of preparation adopted in the financial statements
and any statements around the future viability of the Group.
The Committee reviewed detailed projections of future cash
flows, profit forecasts and capital requirements under various
scenarios, including scenarios stressed in terms of claims
frequency and liquidity.
The Committee also considered the appropriateness of
management’s viability statement and the period over which
this analysis is performed. The Committee was satisfied by
the level of analysis presented during the year and the related
approach taken and statements made in the Group’s key
external reporting. The Viability Statement is on pages 73 to
74.
Fair, balanced, and understandable assessment
It is a key requirement that the Group’s financial statements
are fair, balanced, and understandable. The Audit Committee
applied the same due diligence approach adopted in previous
years to assess this requirement under the Code. The Annual
Report is prepared following a well-documented internal
process that is performed in parallel with the processes
undertaken by the External Auditor. The process includes
comprehensive review by senior management during the
drafting process. The Audit Committee has reviewed
management’s assessment as a part of the formal annual
report governance process. Following its review, the Audit
Committee is satisfied that the 2023 annual report is fair,
balanced and understandable, and provides the information
necessary for shareholders and other stakeholders to assess
the Company’s position and performance, business model
and strategy, and has advised the Board accordingly.
IFRS 17
A key activity in relation to the review of the half year results
and the Annual Report for 2023 was the implementation of
IFRS 17. Throughout the year, the Committee received
detailed progress reports on the implementation of the IFRS
17 accounting standard, including key implications and
judgments relating to assumptions impacting the Opening
Balance Sheet ("OBS") (including risk adjustment,
measurement model and discounting), and IFRS 17 and IFRS
9 disclosure requirements. Reports were received from EY in
addition to those received from the finance team. Information
shared included the updates in relation to EY’s review of
assumptions and data testing for the OBS, full year 2022
comparatives and transitional provisions for IFRS 9. Deep dive
Board training sessions continued throughout the year as the
practical application of the IFRS 17 standard became evident.
Committee members also attended a briefing session which
outlined the gross impact on equity on transition to the new
standard in compliance with IAS 8 disclosure requirements.
The Committee also oversaw the release to the market of
financial information and presentation slides which provided
indicative and unaudited comparative information for the six
Several ad hoc meetings were scheduled in relation to the
delivery of IFRS 17 reporting, where the Committee received
assurances from management as to the internal financial
controls implemented and delivery of IFRS 17 reporting
against stringent timelines.
The Group’s interim report was subject to a limited scope
review of the IFRS 17 disclosures as part of the FRC’s
thematic review “IFRS 17 ‘Insurance Contracts’ Interim
Disclosures in the First Year of Application”. The FRC raised
no questions or queries as a result of their review. The Group
remains committed to ensuring that its disclosures are of the
highest quality and comply with all relevant reporting
standards. The FRC’s review was based solely on the interim
report and should provide no assurance that the interim report
was correct in all material respects; the FRC's role is not to
verify the information provided to it but to consider compliance
with reporting requirements. The FRC’s letters are written on
the basis that the FRC (including its officers, employees and
agents) accept no liability for reliance on them by the
Company or any third party, including but not limited to
investors and shareholders.
Dividends
In March 2024, the Audit Committee considered the full year
result and the declaration of a dividend of 14.2p. In March
2023 the Audit Committee considered and recommended a
dividend of 13.5p.
Other reporting
The Committee is also responsible for oversight of other
external reporting such as the Company’s ESG and Solvency II
reporting.
During the year the Committee reviewed and approved the
Group’s 2022 solvency and financial condition report and
regular supervisory summary report as well as approving the
Solvency II policy documentation for the Group. The
Committee considered and approved the proposal for a
revised consolidation approach within the Group Solvency II
balance sheet.
The quality of ESG reporting as contained in the Responsible
Business and TCFD reports remained a key area of focus for
the Committee during the year. The Committee were kept
informed of key developments in reporting standards and
climate change metrics and as to progress made with the
embedding of Beazley’s Responsible Business Strategy within
the Group. The Committee received updates from EY on their
findings and future considerations following their review of
TCFD reporting, which is performed by their specialist
sustainability reporting team. A gap analysis and action plan
were implemented in response to the findings with the
Responsible Business team working with the External Auditors
throughout the year to enhance the ESG reporting process and
address the recommendations.
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Audit Committee continued
The Committee received updates on:
• the UK Government's proposed reforms to audit and
The Committee received updates in relation to the EU
Corporate Sustainability Reporting Directive which came into
force on 5 January 2023 and the Group’s preparedness for
reporting requirements under the new Directive, which applies
to its principal regulated subsidiary in Ireland.
External environment
The Committee kept under review impacts on the financial
performance of the business from the external environment
such as:
• Conflict in Ukraine: the Committee received regular updates
to ensure that the adequacy of loss estimates in connection
with the Ukraine war remained constant against the
continually changing landscape of the conflict;
• Inflation: the Committee continued to obtain assurance
from management on the effectiveness of the process for
monitoring reserve loadings for recession and excess
economic and social inflation in response to the changing
economic environment.
Monitoring forthcoming regulatory changes
In relation to its activities, the Committee kept under review
several areas of potential corporate reform in both the UK and
other jurisdictions where Beazley operates.
corporate governance, including proposed changes to the
Companies Act 2006 (which were later revoked) and the
FRC’s changes to the Code. The Committee received
updates regarding the proposed changes and Beazley
responded to the FRC consultation in September 2023,
which was sent on behalf of the Chair of the Committee.
Beazley also responded to other consultations such as the
Department for Business and Trade’s call for evidence on
non-financial reporting over the summer. The 2024 UK
Corporate Governance Code was published by the FRC in
January 2024, along with guidance. The Company is
reviewing the changes and guidance and does not
anticipate any problems with complying with the new or
amended principles and provisions. The Committee notes
that management will continue with ongoing projects to
enhance the Group’s control environment, in readiness to
be able to comply with the changes to the Code;
• the FRC publication of the 'Audit Committees and the
External Audit: Minimum Standard' (the Standard). The
Committee received a gap analysis which set out the new
requirements of the Standard, outlining areas where the
Group was currently compliant, together with actions to be
taken to comply with reporting requirements against the
Standard. Key areas of focus included the minimum
requirements around audit tendering and the monitoring of
ongoing contracts for non-audit services undertaken by
other audit firms. The Committee’s terms of reference were
updated in November 2023 to reflect the Committee’s remit
in respect of the new Standard. The Committee is satisfied
that Beazley already operates in accordance with the
Standard and additional reporting will be provided in 2024
to ensure full compliance with the Standard; and
• monitoring of key reporting and regulatory updates,
including updates on accounting standards, changes in
tax legislation and changes in regulatory requirements.
Key financial judgements and estimates for the year ended 31 December 2023
Area of focus
How addressed by the committee
Assessing indicators of impairment of Goodwill
As further explained in Note 16 to the financial statements, the
Group considers annually whether its Goodwill and other indefinite
useful life intangible assets require impairment. The recoverability
assessment of these assets involves consideration of a number of
judgmental assumptions such as future profitability and premium
rates.
Measurement of insurance contract liabilities – level of aggregation
The Group’s policy is to apply the IFRS 17 General Measurement
Model when measuring its insurance contract liabilities. Under this
model, contracts are aggregated into portfolios based on shared
risk and management characteristics, then into groups based on
the profitability of the underlying contracts both on initial
recognition and subsequently. Further details are included in Note
3 to the financial statements.
Measurement of insurance contract liabilities – future cash flows
Groups of insurance contracts are measured by estimating the
amount, timing and probability of future cash flows. Estimates are
formed by applying assumptions about past events, current
conditions and forecasts of future conditions. These have been
outlined in Note 3 to the financial statements.
The Committee reviewed management’s assumptions and inputs into the analysis of whether
there were any indicators of impairment of the Group's Goodwill balance. The Audit
Committee was satisfied with management’s approach in determining the carrying value of
the Group’s intangible assets, and its conclusion that there was no requirement to impair the
Group’s intangible assets as at 31 December 2023.
The Committee reviewed management’s basis for aggregating contracts into portfolios and
groups and was satisfied that this approach was reasonable and in compliance with the
requirements of the IFRS 17 General Measurement Model.
The assumptions applied by management in estimating future cash flows arising from groups
of insurance contracts were reviewed by the Audit Committee. Overall, members were
satisfied that the inputs applied were appropriate.
In addition, information was presented to the Audit Committee on emerging uncertainty and
risk in the reserve environment which might impact future cash flows. Discussions focused
on uncertainty around geopolitical developments, rising inflation, macroeconomic uncertainty,
and climate change. Accordingly, the potential that these factors might result in increased
volatility, as well as greater estimation challenges in respect of insurance claims, remained a
key consideration for 2023.
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Area of focus
How addressed by the committee
Measurement of insurance contract liabilities – discount rates
The Group applies discount rates to expected future cash flows in
measuring insurance contract liabilities. Management has applied
judgement in determining that the 'bottom-up' technique should be
used in calculating these rates. This method relies on various
estimates – it takes risk-free rates which are derived using
government yield curves and adjusts for an illiquidity premium
which reflects the characteristics of the Group’s asset portfolio.
Further details are included in Note 3 to the financial statements.
Measurement of insurance contract liabilities – risk adjustment
IFRS 17 requires that a risk adjustment for non-financial risk is
considered in the measurement of insurance contract liabilities.
The Group has applied judgement in determining that the Cost of
Capital ("CoC") approach should be applied in calculating this risk
adjustment.
Estimation of the risk adjustment for non-financial risk is based on
various inputs and assumptions, particularly relating to the
underwriting risk element of the Solvency II internal model which
captures all material exposure elements for the Group. Further
details are included in Note 3 to the financial statements.
Measurement of insurance contract liabilities – expense allocation
Under IFRS 17, the Group is required to include both acquisition
and administrative expenses where they are directly attributable to
the insurance contract. Judgement is required in determining the
appropriate proportion of expenses to be included within the
insurance result and reflected on the face of the statement of profit
or loss. Refer to Note 3 for further details.
Valuation of level 3 financial assets
The Board is responsible for setting the Group’s investment
strategy, defining the risk appetite and overseeing the internal and
outsourced providers via the Chief Investment Officer. The
Committee has oversight of the assumptions and techniques used
to value the Group’s investment portfolio. The valuation of our hard
to value ‘level 3’ investments requires significant judgement.
Further details are included in Note 18 to the financial statements.
Other financial reporting issues
The Committee considered a number of other areas of judgement
as part of their review of the Group’s financial statements, which
whilst less material still warranted review by the Committee:
The Audit Committee received information on management’s basis for applying the ‘bottom-
up’ estimation technique. In addition, management presented to the Committee an overview
of the calculation methodology and the final rates applied in determining the IFRS 17 result
for the year ended 31 December 2023. The Committee was satisfied that both the underlying
process and final output were reasonable.
The Committee has reviewed management’s rationale for selecting the CoC approach in
calculating the risk adjustment for non-financial risk and deemed this to be reasonable.
The Audit Committee received regular reports throughout the year from the Group Chief
Actuary and the External Audit team. Towards the end of the year, the Group Chief Actuary
reported on the results of the third-quarter reserving review exercise which provided an
indication of the reserve confidence level. The Committee also received a detailed paper in
support of the level of margin held within technical reserves in the Group’s statement of
financial position as at 31 December 2023. As in prior years, the committee considered the
report of the External Auditor following its re-projection of reserves using its own
methodologies. Overall, the Committee was satisfied that there were no errors or
inconsistencies that were material in the context of the financial statements.
Information was presented to the Audit Committee on the judgements applied in determining
which costs were ‘directly attributable’ and could therefore be included in the ‘insurance
service expense’ line. Overall, the Committee was comfortable that the judgements applied
were appropriate.
The Committee noted that the overall investment strategy was broadly unchanged from prior
periods. The Committee received updates from the Group Finance Director and reviewed
reports that confirm that the investment portfolio was in line with the 2023 Board-approved
risk appetite, that carrying values of the portfolio as at 31 December 2023 were appropriate
and that the valuation methodologies applied to each hierarchy level were consistent with the
accounting policies. Committee members were invited to and periodically attended the
Investment Committee.
No misstatements that were material in the context of the financial statements as a whole
were identified and the Audit Committee was satisfied with the approach employed by
management in valuing the financial assets at fair value on the balance sheet at 31
December 2023. Further details on the valuation of financial assets are given in Note 18.
Materiality – The Committee considered how management determine and apply materiality in
the context of preparing the financial statements.
Accounting for employee share schemes – The Committee reviewed an overview of the
assumptions and calculation methodology for determining the fair value of shares which are
included as part of employee remuneration.
Taxation – The Board and Committee receive regular updates from the Group Head of Tax
with regard to taxation matters.
Disclosures – The Committee reviewed the format and content of the Group’s financial
statements, including new IFRS 17/IFRS 9 disclosures and changes to the structure of the
report.
External audit
A key area of oversight for the Committee is the management
of the external audit process and relationship with the Group’s
External Auditor, Ernst & Young LLP (EY) and on behalf of the
Board. EY were re-appointed as the External Auditors at the
2023 AGM.
During the year and up to the date of this report, the
Committee considered reports from EY and management
related to the half-year results, the audit of the 2023 Annual
Report and Accounts and the 2023 Solvency II related
reporting. EY also shared insights and feedback with the
Committee and management in relation to the audit and UK
audit and corporate governance reforms.
Following the approval of the 2022 Annual Report and
Accounts in early 2023, the process for 2023 begins with
consideration of the observations from the 2022 audit and
management letter points, which set out suggested
improvements to controls and processes to further enhance
the integrity of the financial reporting process. The Committee
receives assurance from management regarding progress
made on these points and agrees timeframes for completion
of any required actions.
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Audit Committee continued
The Committee reviewed and discussed EY’s audit planning
report for 2023, including work in relation to the half-year
results and the year-end audit. A critical change this year was
the implementation of IFRS 17. The Committee noted that the
EY audit plan and scoping was consistent with previous audits
and continued to align with the Group’s increased size and
complexity. However, EY also set out in their plan the
establishment of an additional IFRS 17 team for the purposes
of the 2023 audit. The key areas of audit focus are set out in
the Auditor's Report on page 108.
The External Auditor provided a review of the Group’s half year
report in July 2023, as the Company prepared to release
results under IFRS 17 for the first time. The report included
information regarding EY’s audit procedures over the IFRS 17
opening balance sheet, the 2022 comparatives, and the
review procedures carried out over key disclosures. The
Committee also considered a report from EY on their actuarial
review of Beazley’s reserving position. The actuarial review
included EY’s findings on management’s treatment of
reserving for excess economic and social inflation and key
risks and uncertainties arising from market-wide issues,
including social and economic inflation and global political
uncertainty.
The Committee reviewed EY’s findings from their interim audit
work ahead of year-end, which was predominantly focused on
testing of controls over processes from which financial
information is derived.
• Considering an assessment and review of the audit team,
where feedback from various stakeholders is conducted
through survey and discussions.
• Reviewing the results of the annual survey on the
effectiveness of the external audit process conducted by
management. Feedback was requested in the form of a
questionnaire circulated to Non-Executive Directors and
management across the Group, including in the US, Ireland,
and Singapore. In line with the previous year, the survey
focused on five areas; Audit Quality, Forward Looking &
Insightful; Efficiency & Audit Delivery; ‘No surprises’; Service
Quality; and Audit Team Engagement. A comparison of prior
year scoring against for these areas had also been
provided. The survey also included responses from
management and Non-Executive Directors in relation to
EY’s professional scepticism and noted that Non-Executive
Directors believed that a robust level of challenge was
provided. The overall results of the survey were positive,
concluding the external audit process to be effective. The
survey also highlighted areas proposed by management
where EY and management could work together to improve
the audit process.
• Reviewing the summary of the FRC’s Audit Quality
Inspection and Supervision Report for EY published in July
2023. Overall, the FRC concluded that EY had made
progress on previous findings raised, including improvement
in the percentage of audits inspected graded ‘good’ or
‘limited improvements.’ EY also highlighted areas for
ongoing improvement to address their key themes of
“Rebalancing Work Intensity”, “More Effective Coaching and
Support” and “Greater Standardisation and Simplification”,
which included increased focus on project management,
including training, and the allocation of equitable workloads.
Moving into year-end and early 2024, the Audit Committee
was focused on the review of the 2023 Report and Accounts
and the reporting provided by EY in relation to their audit
findings.
After taking all the above into account, the Committee
concluded that the External Auditor and the external audit
process were effective.
The Committee regularly meets with EY without management
present to facilitate open and transparent discussion, and the
Audit Committee Chair and Committee members meet the
lead audit partner outside of Committee meetings on a regular
basis.
Assessing the effectiveness of the External Auditor
The Committee ensured that high standards of quality and
effectiveness in the external audit process were maintained
throughout the year.
Audit quality and effectiveness were assessed on an ongoing
basis, with a focus on strong audit governance and the
quality, experience, and appropriate skillsets of the team. This
included the provision of technical and industry knowledge and
the independence, objectivity and level of professional
scepticism exercised by the External Auditor.
The Committee’s activities in assessing the effectiveness of
the external audit included:
• Reviewing the quality and scope of the audit planning and
its responsiveness to changes in the business and
identified risk.
Non-audit services and independence of the External Auditor
The policy for the provision of non-audit services by the
External Auditor supports the Audit Committee’s responsibility
to monitor and review the objectivity and independence of the
External Auditor. The Committee regards the independence of
the External Auditor as of the utmost importance in
safeguarding the integrity of the external audit process.
The non-audit services policy is reviewed annually by the
Committee. The policy’s aim is to ensure that the provision of
such services does not impair the External Auditor’s
objectivity. Some activities are prohibited from being
performed by the External Auditor under the policy, such as
recording and reporting financial transactions, internal
estimation of risks and liabilities, and setting executive pay
levels. The policy requires consideration and pre-approval for
all other material services. Permissible non-audit services are
all closely related to the audit and/or required by law or
regulation.
The Committee reviewed the terms of any proposed
appointments to ensure they had been robustly justified. The
Committee received a report from the External Auditors setting
out all non-audit services undertaken, to enable them to
monitor the types of services being provided and fees incurred
for that work. Non-audit work approved by the Committee
during the year included the appointment of EY to assist with
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the ‘Lloyd’s Agency Circumstance Procedure’ in relation to the
Group’s proposal to set up a new US Excess and Surplus
Lines Carrier (Beazley Excess and Surplus Insurance Company
Inc) which included discussions with the Lloyd’s Names
(Names)/Members’ Agents and the collation and reporting of
votes from the ballot of Names. None of the non-audit
services provided are considered by the Audit Committee
to affect the Auditor’s independence or objectivity.
The Committee received an overview from EY of the policies
and procedures in place to safeguard auditor objectivity and
independence. These include annual confirmation by all EY
professionals of compliance with independence policies and
procedures and wider processes and systems to monitor
potential threats to auditor independence throughout the year.
The Committee received the yearly confirmation of EY's
independence, verifying that no partners or staff held any
financial interests in the Beazley Group and that their ethics
and independence policies are aligned with the requirements
of the FRC’s ethical standard.
Having considered the following factors, the Committee
concluded that EY was independent from the Group
throughout the year and to the date of their audit report:
• non-audit services provided by EY complied with the Group’s
non-audit policy and the requirements of the FRC’s ethical
standard;
• EY had complied with the FRC’s requirements around
rotation of the audit partner and senior members of the
audit team;
• the Group has not employed members of the EY audit team
or any EY partners during the year; and
• EY have confirmed compliance of their staff and partners
with EY’s internal policies and processes around
independence, and no partners or staff held financial
interests in the Group.
Auditor tenure and audit partner
EY were appointed as the Group’s auditor in 2019, following a
comprehensive tender process and the 2023 year-end audit
marks EY’s fifth consecutive year end as the Group’s auditor.
The Group is required to put the audit to a competitive tender
process at least every ten years. The recently published FRC
Minimum Standard places greater emphasis on best practice
for the audit tender process, including the management of
non-audit relationships with other audit firms. This is to
ensure there is a fair choice of suitable external auditors at
the time of the tender. Management have recommended that
a longer planning period should be adopted prior to the
commencement of the next tender process, which must
conclude before the commencement of the 2029 audit.
Enhanced processes to monitor relationships with other audit
firms are being developed, and further reporting will be
provided to the Committee in 2024.
The Committee considered the rotation of the lead-audit
partner in line with the requirements of the FRC Ethical
Standard (2019). Following the conclusion of the 2023 year-
end audit, Stuart Wilson, the current lead audit partner, will
rotate from the role following the sign-off of the audit opinion
and related work for the 2023 Annual Report and Accounts. To
select the new lead audit partner, the Committee requested
that EY provide a shortlist of candidates. Three candidates
were put forward to meet with the Group Finance Director and
senior management from the finance function. Management’s
recommended candidate subsequently met with the Chair of
the Committee. In discussing the appointment, the Committee
noted the depth of experience of the candidates presented
but also the lack of diversity. Robert Bruce, who has extensive
insurance and financial services audit experience, has been
appointed as the lead audit partner for Beazley plc Group’s
statutory audit effective from 1 January 2024.
Audit fees and reappointment
The Committee reviewed and agreed EY’s audit fee for the
2023 year-end, including TCFD reporting work and the initial
audit of IFRS 17 and IFRS 9. For 2023, fees for audit and
audit related services were $11.2m (2022: $6.2m). Fees for
non-audit and assurance services for the year were $0.9m
(2022: $0.7m) and included work related to the accounts and
regulatory reporting of the syndicates managed by Beazley,
which would commonly be carried out by the External Auditor.
Detailed papers were submitted by EY explaining their
proposed increase in fees. The first-year audit of IFRS 17
which involved EY auditing the opening balance sheet and
2022 comparative alongside the 2023 result caused a
significant increase in the audit fee of $5.0m, of which we
expect approximately $1.5m to be a recurring additional cost.
The Group has complied with the UK Competition & Markets
Authority’s Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of Competitive Tender
Processes and Audit Committee Responsibilities) Order 2014
throughout the year. The external audit contract will be put out
to tender at least every 10 years and will be conducted no
later than 2029. There are no contractual obligations which
restrict the Group’s choice of auditor.
Given the assessments described above regarding EY’s
continued effectiveness and independence, and that EY have
indicated their willingness to be reappointed as the Group’s
auditor, the Audit Committee has recommended to the Board
that EY be reappointed for the financial year ending 31
December 2024.
Internal audit
During 2023, the Group’s Internal Audit function reported
directly, and was accountable, to the Committee and the Head
of Internal Audit had direct access to the Committee Chair.
Internal Audit plays an important role in providing an
independent view to management, the Committee, and the
Board on Beazley’s risk management, internal controls, and
governance. The Internal Audit Charter sets out their purpose,
responsibility, and authority, and is reviewed by the
Committee on an annual basis. Internal Audit’s purpose is to
enhance and protect Beazley’s organisational value by
providing risk-based and objective assurance, advice and
insight.
The Committee reviews reports from Internal Audit, covering
an overview of the work undertaken and audits completed in
that period. The report describes actions arising from
completed audits and the tracking and completion of actions
from previous audits. The Head of Internal Audit highlights any
concerns or overdue audit actions to the Committee. During
2023, Internal Audit also presented the Internal Audit Change
Assurance Plan. The report set out how the Internal Audit
function would monitor and provide assurance over change
related to the mid-term strategy, portfolio change, and other
change projects across Beazley.
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Audit Committee continued
A key document reviewed by the Committee is the Internal
Audit plan and risk-based audit universe, which is discussed
with the Committee annually. A consolidated assurance plan
is also developed through co-ordination with other assurance
functions to ensure that all assurance related work is aligned
and focused on the key priorities. The Committee questions
any topics that it thinks are missing and makes sure that
there are enough resources to implement the plan. External
providers are sometimes used to enhance delivery, where
specific skills and expertise need to be co-sourced.
The Committee reviewed the areas to be included in the 2024
internal audit plan which included leadership change, including
impact on culture and control effectiveness in the IFRS 17
environment. The plan had been divided into two parts, the
primary plan showing key deliverables for 2024, and the
secondary plan which would be reassessed based on
resources available. During the review of the 2024 plan, the
Committee challenged the frequency of audits in certain areas
of the business as well as the balance between thematic
reviews and full end-to-end audits.
At the end of each year, the Committee considers an annual
report from Internal Audit which provides analysis of the
delivery of the audit plan; significant findings and overdue
actions; the control maturity framework (for control design,
control operation and risk management and compliance); risk
management framework; risk management culture; control
environment; and whistleblowing.
The Committee also reviewed the suggested changes to the
Institute of Internal Auditors (IIA) International Professional
Practices Framework and the refresh of the Global Internal
Audit Standards. An important aspect is the duties and
functions of the Audit Committee that allow the Internal Audit
function to fulfil its objective. Following the review, it was not
expected that there would be any significant impact to the
current approach, but the Committee agreed to carry out a full
gap analysis when the new standards were published.
Overall, the Internal Audit function was able to report that, in
the context of the agreed audit universe and plans, none of
the work indicated that the Group was operating outside of its
agreed risk appetite.
The Committee reviewed the effectiveness of the function
and remained satisfied that the Internal Audit function had
sufficient resources during the year to undertake its duties.
The effectiveness of Internal Audit was monitored by the
Audit Committee, through agreeing plans and performance
monitoring. External Quality Assessment reviews are also
undertaken every five years (unless it is agreed by the
Committee that a review is required earlier). The last external
review was completed in November 2019 and the process
for the 2024 external assessment has commenced. The
Committee was satisfied that the Internal Audit function
remained effective.
Internal financial controls
The Board is responsible for the Group’s risk management
and systems of internal control and is required by the 2018
version of the Corporate Governance Code to review their
effectiveness. As part of this process the Audit Committee
was responsible for reviewing the effectiveness of internal
financial controls. This included receiving information provided
by the Financial Controls function relating to the internal
control environment over financial reporting, including those
controls in place expected to support the reporting obligations
required under the newly implemented IFRS 17 accounting
standard. The Committee also oversaw the ongoing
enhancements to the Group’s Financial Control Framework,
receiving updates on the timeline for the implementation of
the enhanced framework and recommended the Financial
Control Framework policy for approval to the Board. The
purpose of the framework is to set out the principles and
processes required to provide management and Non-Executive
Directors with objective assurance that the internal controls
environment over financial reporting is effective. The
framework will also further enhance the Board’s ability to
assess the effectiveness of these controls on an annual basis
in line with the revisions to the Code in the UK and Model
Audit Rule reporting requirements in the US. In relation to the
half-year results, the Committee considered progress made on
the implementation of the Financial Control Framework and
additional information on control safeguard enhancements
implemented by the Group with the support of the Financial
Controls function.
The Committee also received detailed information and
analysis from EY on UK Corporate Reform implications for the
Group and providing industry benchmark analysis on internal
control best practice.
Each year an independent and objective opinion is provided by
the Internal Audit function regarding the design and operating
effectiveness of the system of internal controls covering the
integrity of the Group’s financial statements and reports,
compliance with laws and regulations, corporate policies and
the effective management of risks faced by the Group in
executing its strategic and tactical operating plans.
The review includes an assessment of the Control Maturity
Grading framework, which enables Internal Audit to formulate
a strategic view on the maturity of the Group’s control
environment. The review has concluded that the Group’s
overall systems of controls are designed appropriately and
are operating effectively.
The Committee reviewed the report from Internal Audit and
were satisfied that the Group’s system of internal control and
risk management framework remains effective.
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Risk Committee
Dear shareholder,
I am pleased to present the Risk Committee (the Committee)
report for the year ended 31 December 2023. In its first year
since the Risk Committee was separated from the Audit
Committee, we have supported the Board in overseeing the
Company’s internal control and risk management systems.
This includes the effectiveness of material operational and
compliance controls, and the Group’s risk management
framework and processes for monitoring compliance with laws
and regulations.
Economic uncertainty
Throughout the year, the Committee has kept under review
much uncertainty from developments in macro-economic and
geopolitical environments and their possible impacts on
Beazley’s risk profile. The extraordinary combination of
external headwinds in the insurance sector, softening market
conditions in certain Specialty risk classes, continuing but
stabilising economic inflation, and impacts from conflicts have
been monitored closely. Climate change also remains a global
concern requiring increasing focus both internally and
externally. The Committee expects continued uncertainty and
continues to monitor these risks given their evolving nature.
The Committee will continue to monitor and scan for other
emerging risks.
Simplification and de-risking
The multi-year programme to simplify and de-risk the business
is being overseen by the Committee. This programme poses
implementation risks albeit successful execution will provide
further digitalisation and scalability opportunities to the Group.
The Board has also charged the Committee with overseeing
the assurance activities for the programme. Also, the
Committee closely monitors the rate of change and totality of
activity to ensure core elements of the business plan and
control environment remain strong.
Continued enhancements to the risk management
framework
I am pleased to note further enhancements to the risk
management framework this year. The Committee oversaw a
refreshed suite of Key Risk Indicators being fully embedded
across the risks as part of the risk appetite framework. A
simplified format makes content in the risk management
framework more accessible to the business. The refreshed
risk taxonomy provides a common language of risk to be used
throughout the business. A more holistic view of key emerging
risks is in place encompassing both macro and micro views
across key risk categories with enhanced governance.
Internal Model
The Committee reviewed and recommended for Board
approval a major change to the Internal Model during the year,
including ensuring that the model remained appropriate given
the current risk profile. The Committee assessed the impact
of the changes on Solvency Capital Requirements of the
Group. These were determined to be reasonable.
2024 priorities
In 2024, the Committee will be focused on oversight of
successful execution of the previously mentioned programme
to simplify and de-risk; risk implications arising from the
Group’s three-platform strategy being further embedded; key
regulatory changes including Consumer Duty and UK corporate
governance reforms; trends and changes with geo-political
issues; market cycle risks with the hardening Property
Reinsurance market and headwinds in Cyber and certain
Specialty Risks; inflation and social inflation risk; Artificial
Intelligence including the risk and opportunities both to
Beazley’s operations and insurance business. There are
planned deep dives by the second line across key risks in
2024, which will be reported to the Committee. These are
important as Beazley grows its business across the three
underwriting platforms and keeps abreast of ever-evolving
regulatory and legislative changes.
I was delighted to become Chair of the Committee on 29
September 2023, taking over from Robert Stuchbery, and I
look forward to working diligently with the Committee,
management, and the entire Risk Management function to
place the Group in the optimal position to ensure success in
the challenging macro-economic environment.
Fiona Muldoon
Risk Committee Chair
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Responsibilities of the committee
The Committee’s principal role is to support the Board
of Directors in overseeing the Group’s risk management
framework and processes for monitoring compliance with
laws and regulations.
The responsibilities of the Risk Committee are set out in its
terms of reference, which are reviewed by the Committee and
submitted to the Board for approval on an annual basis. The
terms of reference are available on the Company’s website:
www.beazley.com
The Committee’s key responsibilities include:
Internal control and risk management systems
• Reviewing the Company’s internal control and risk
management systems and the effectiveness of controls;
• Advising the Board on the risk management framework;
• Reviewing reports on the key risks and controls;
• Monitoring risk appetite;
• Reviewing and managing emerging risks;
• Ensuring the Risk Management function has adequate
resources to perform effectively; and
• Reviewing statements to be included in the Annual Report
regarding risk management and controls and assessment
of principal and emerging risks.
Compliance and assurance
• Reviewing systems, procedures and controls for detecting
and preventing fraud and bribery;
• Reviewing reports from the Compliance Officer; and
• Providing assurance to the Board regarding risks around
group-wide transformational or strategic projects.
Committee membership and meetings
Since its establishment on 1 January 2023, the Committee
comprises six independent Non-Executive Directors. Robert
Stuchbery was Chair until 29 September, when Fiona Muldoon
assumed the role. Pierre-Olivier Desaulle, Nicola Hodson,
John Reizenstein, and Cecilia Reyes Leuzinger are the
other members. There were no changes to Committee
membership during 2023.
The gender and ethnic diversity of the Committee is shown
in 'governance at a glance' on page 76.
The Risk Committee is required to meet at least quarterly,
with meetings scheduled at appropriate intervals in the
reporting cycles. During 2023, the Committee met six times,
which included a sub-group of the Committee holding a
meeting to review and recommend the annual Own Risk and
Solvency Assessment (ORSA) and a joint meeting of the
Beazley plc Risk Committee and those of its regulated
subsidiaries to review the risk management framework and
the assurance function plans for 2024. The attendance of the
members at Risk Committee meetings is provided in the table
on page 87.
Only the members of the Committee have the right to attend
meetings; however, invitations are routinely extended to the
Beazley plc Chair, Chief Risk Officer, Chief Executive, Group
Finance Director, Head of Internal Audit and the External
Auditors. The Company Secretary acted as secretary to
the Committee. The Chair of the Committee meets with the
Chief Risk Officer, Senior Risk Managers and the Company
Secretary during the year to ensure the work of the Committee
is focused on the right topics and the Committee is receiving
valuable information.
The work of the Committee is also supported by the work
undertaken by the Risk Committees of the Group’s principal
subsidiaries and by the Executive Risk and Regulatory
Committee. The Chairs of the subsidiary Risk Committees
attend the Beazley plc Risk Committee at least annually
and the Chairs are in regular communication to ensure a
consistent approach to risk management oversight across the
Group. The joint meeting of the Risk Committees, where all
members are invited, also helps with cohesiveness of
approach to risk management across the Group.
Committee performance evaluation
The review of Committee effectiveness will take place annually
as part of the Board evaluation process. As the Committee
was newly formed in 2023, this was the first evaluation of the
Committee’s performance. The review determined that the
Committee is operating effectively, however, the Committee is
still in its formative stage, and the review acknowledged that
improvements could be made in line with the longer-term
strategic plan and governance changes. For more information
on the Board evaluation and its outcomes please refer to
pages 97 to 98.
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Risk Committee continued
Areas of focus during 2023
Area of focus
Risk management framework
How addressed by the Committee
Embedding and enhancing the risk
management framework including risk
registers, and the link between business
strategy, risk strategy and risk appetite. For
further information on the risk management
framework see the Risk management report
from page 69.
The Committee reviewed the ongoing maturity development of the risk management framework to ensure that the
framework is aligned with the Group’s risk profile, regulatory expectations, future growth plans, and strategic
objectives. The Committee approved changes to the suite of core documentation and risk incident processes in
June and November 2023, including a revised risk taxonomy, ORSA policy, refinements to risk appetite statements
including key risk indicators, risk and control assessment templates and the risk framework document including
risk opinions and emerging risks. The Committee will continue to oversee work into 2024 in embedding the risk
management framework.
Operational risk
The Board has delegated primary
responsibility for oversight and assurance
around the execution of strategic and
operational projects to the Risk Committee, in
addition to overseeing operational risk as part
of the risk management framework.
Cyber risk
Cyber risks continue to evolve and increase
due to the commercialisation of cyber-crime
leading to a potential increase in the
frequency and severity of incidents impacting
underwriting and operational risks.
Internal controls and systems
Reviewing the effectiveness of internal
controls as part of the risk management
framework, in accordance with the UK
Corporate Governance Code.
Internal Model
Beazley sought to apply to make a major
model change application to the Central Bank
of Ireland during the year. The Committee
reviewed the application and changes to the
Group model.
Principal and emerging risks assessment
The Committee is responsible for carrying out
an assessment of the Group’s principal and
emerging risks in accordance with the
Corporate Governance Code.
The Committee received quarterly updates regarding the key strategic and operational projects across the Group,
including internal and external assurance activities related to the projects. The Committee also received specific
reporting on the operational risks as part of the evolving risk profile and framework of the Group. The Committee
was satisfied that Beazley’s approach to managing operational risk is appropriate to meet current business
activities. The operational risk policy was reviewed and approved by the Committee in September 2023.
Given the importance of Cyber Risk business to the Group, this line of business contributes significantly to the
potential reputational risk of the Group. It is important therefore for the Group to be cyber-resilient. A combination
of a large cyber outage of critical infrastructure impacting both the Group and its clients at the same time presents
a remote but high-impact emerging risk.
The Committee reviewed detailed scenario analysis during 2023 around cyber risk. The assumptions and
methodology underlying the cyber realistic disaster scenarios were debated and challenged. The Committee
reviewed the detailed annual operational resilience self-assessment in March 2023 including Beazley’s incident
response plan and operational resilience testing.
The Board is responsible for the Group’s risk management and system of internal controls and reviewing their
effectiveness, however the Committee provides input into this assessment. The Committee assesses the internal
control environment throughout the year through review of the risk management framework and regular risk
management and second line assurance reporting. This includes regularly assessing key controls for operational
effectiveness. Reports include commentary on the status of the control environment and risk incidents, and any
issues arising out of risk reviews are reported to the Committee.
The Committee has determined that the Group’s systems of risk management and internal control continue to be
effective in line with the Code and the FRC’s Guidance on Risk Management, Internal Control and related Financial
and Business Reporting. The Group will continue to carry out its medium-term plans to de-risk and simplify the
business; including evolving current infrastructure, and automating processes to support a more robust internal
control framework.
The Internal Audit function separately reports independently to the Audit Committee on the design and operating
effectiveness of the system of internal controls covering the integrity of the Group’s financial statements and
reports, compliance with laws and regulations, corporate policies and the effective management of risks faced by
the Group in executing its strategic and tactical operating plans. For more information see the Audit Committee
report from page 106.
The Committee reviewed a major change to the Group Internal Model during the year, including ensuring that the
model remained appropriate given the current risk profile and assessing the impact on Solvency Capital
Requirements of the proposed changes on the Group. The Committee also received and reviewed an independent
external validation opinion in connection with the proposed changes, in line with the Internal Model Validation
policy. Based on all of the information received, the Committee was satisfied that the Internal Model was
appropriate and that the relevant policies had been correctly updated. The Committee recommended the changes
to the Internal Model to the Board for approval and that the application be submitted to the Central Bank of
Ireland. The changes were also approved by the Board of the Group’s principal Irish regulated entity, Beazley
Insurance dac, which was impacted by the proposed changes to the Internal Model.
The Committee specifically considered areas of key risks to the business and emerging risk via reporting and
through the ORSA. The process for identifying and managing emerging risks is set out in the risk management
framework and they are identified through internal and external lenses. The principal risks to the business were
identified as insurance risk, market risk, operational risk, liquidity risk, credit risk, group and strategic risks, and
regulatory and legal risk. Further information regarding these risks is included in the Risk management report from
page 69.
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Other Committee activities during 2023
Internal control and risk management systems
• Risk appetite: The Committee has monitored the Group's
actual risk profile against risk appetite throughout 2023
and can confirm that Beazley plc is operating within risk
appetite as at 31 December 2023.
• Risk assessment: The Committee has performed a review
of the Group’s risk profile to assess its coverage of the
universe of risk and ensure that major underlying risks are
visible to the Board and are being monitored.
• Reverse stress testing: The Committee received the results
of the reverse stress testing exercise, which explores the
conditions necessary to render the Group unviable. The
Committee has provided assurance to the Board that this
work has been performed with the appropriate level of depth
and expertise. The work covered four key scenarios
including large operational, cyber catastrophe, natural
catastrophe, and combined catastrophe events. The reverse
stress tests carried out in 2023 concluded that the Group
currently has significant capital surplus, especially following
the capital injection in 2022, and the control environment is
robust and unlikely to fail in such a way as to cause
unviability to the Group. Further information is included in
the viability statement on pages 73 to 74.
• Heightened risk: A risk is considered heightened if the
likelihood or the impact of occurrence is higher than usual.
The Committee considered the heightened risk report twice
during 2023. Based on the business plan, the Risk
Management function identified areas of heightened risk,
which were discussed by the Committee. Management
continues to be proactive in ensuring processes and
capabilities continue to be fit for purpose and are scalable
for the future.
• Oversight of the Internal Model: During 2023 the Committee
approved the Group solvency capital requirement (SCR) and
a major model change to the Group’s Internal Model. The
Committee and the Risk Committees of the subsidiary
Boards spent significant effort in the oversight of the
Group’s Internal Model. This work has included oversight of
a standing report on Internal Model output, and a validation
report of model changes featuring both internal and
independent validation and themed reviews – for example,
on the approach used to aggregate risk in individual entities
which consolidate up to the Group level. These
assessments have supported the Boards’ approval and use
of the Internal Model.
• ORSA: The Committee received ORSA reports and reviewed
them before recommending them to the Board. The Annual
ORSA was reviewed and recommended to the Board in April
2023. An ad hoc ORSA pertaining to the major model
change was presented and approved for recommendation to
the Board in September 2023. The Committee also
reviewed and approved enhancements to the ORSA process
through the scenario analysis work undertaken in 2023 in
line with the new stress and scenario testing framework;
• Capital: The Committee noted that scenarios across Cyber
underwriting and high inflation have the most significant
impact on solvency, however there are several capital
contingency options in place to mitigate this risk.
• Deep dives/assurance assessments/risk reviews: During
2023, the Committee received focused risk assessments
and assurance on key risks. These included IFRS 17, multi-
year Group-wide operational projects, strategic project risk
opinions, business plan risk opinions, reinsurance
concentration, and outsourcing over delegated claims
adjusting partners. The Committee also received risk
reviews on areas such as talent management, finance,
credit, legal and regulatory, reputation, conduct,
environmental, social and governance (ESG), reinsurance
operational, claims operational, third party intra-group
services and working environment.
• Risk function resources and plan: The Committee oversaw
and monitored the resourcing plan for the Risk function and
reviewed its effectiveness, as well as reviewing the
prioritisation of resource for key risk exposures, business
changes, strategic project work in the move towards a three-
platform model, strategic projects, and the 2024 business
plan.
• Culture: The Committee received observations on risk
culture as part of the various risk reports presented. An
independent review of overall culture was also carried out
and reported to the Committee. For more information, see
page 91.
• Third party and intra-group outsourcing: Given the Group’s
structure and transition to a three-platform model, it is
important that additional oversight is placed on all intra-
group services. This is a recent area of regulatory focus and
engagement, particularly seen in 2023. In addition,
continued regulatory oversight over third parties continues
to be a heightened risk. The Committee received a report in
June 2023 around the de-risking activity of Beazley’s
procurement processes to address Internal Audit findings
and third-party regulatory obligations as well as building an
enhanced Group procurement capability.
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Risk Committee continued
Compliance and Assurance
• Legal risk framework: Given Beazley's size, complexity and
growth aspirations, the Committee reviewed the Group's
legal framework to ensure Beazley has a consistent
approach to managing legal matters. The Committee
reviewed the recommendations around an enhanced legal
risk framework and will continue to monitor and oversee
legal risk and the implementation of an enhanced legal risk
framework during 2024.
• Annual compliance plans: The Committee monitored the
implementation of the 2023 compliance monitoring plan
and reviewed and approved the annual compliance plan for
2024.
• Compliance function resources and effectiveness: The
Committee received updates on the resourcing, structure
and effectiveness of the Compliance function and Risk
function. In reviewing the effectiveness of the Risk and
Compliance functions the Risk Committee remained
satisfied that the Risk and Compliance functions had
sufficient resources during the year and into 2024 to
undertake their duties.
• Laws and regulations: The Committee reviewed changes in
the regulatory environment applicable to Beazley and
received regular updates on relationships with key Group
regulators and oversight of regulatory requests as well as
providing oversight of responses to regulators in relation to
corporate developments.
• Money laundering officer reporting: The Committee reviewed
updates from the money laundering reporting officer on the
adequacy and effectiveness of the Company’s anti-money
laundering systems and controls.
• Financial Crime: The Committee reviewed and approved the
Group financial crime policies inclusive of anti-bribery and
corruption and anti-fraud to ensure the Group has
appropriate procedures in place to prevent bribery and
corruption. The Committee also received updates on the
new UK regulations that introduces the 'failure to prevent
fraud' corporate offence and Beazley's steps to prepare for
this legal and regulatory development. The Committee also
received and reviewed the annual financial crime risk
assessment report.
www.beazley.com
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Committee meetings and attendance
The Committee was chaired by Nicola Hodson on an interim
basis until 9 May 2023, when Nicola was appointed Chair on
a permanent basis. Committee membership also comprises
Raj Agrawal, Christine LaSala, Cecilia Reyes Leuzinger, and
Robert Stuchbery.
In 2023, there were four scheduled meetings and two
additional ad hoc meetings. The additional meetings were
pertaining to remuneration arrangements for senior individuals
within the firm and to discuss the impacts of the financial
accounting change to IFRS 17 on remuneration. The activities
of the committee during 2023 are set out below. Only
members of the committee have the right to attend meetings;
however, other individuals, such as the Chair, Chief People
Officer and Head of ESG, representatives from other Boards or
Committees, and external advisers, may be invited to attend
for all or part of any meeting where this is beneficial to assist
the Committee with fulfilling its responsibilities. The Company
Secretary is the secretary to the Committee.
The attendance at meetings by Committee members is shown
in the table on page 86.
The gender and ethnic diversity of the Committee is shown in
'governance at a glance' on page 76.
Board and Committee performance evaluation
The Committee reviewed its effectiveness during the year, as
part of the annual board evaluation process. The Board
confirmed that the Committee is effective in fulfilling its role.
Remuneration
Committee
Responsibilities of the Committee
The Board has delegated responsibility to the Remuneration
Committee (the Committee) for oversight of remuneration
polices to support our strategy and promote the long-term
success of Beazley for our stakeholders. The Committee’s
role is to ensure that the remuneration policy is designed to
retain and incentivise our talented people to deliver our
strategy. The Committee ensures that remuneration is fair,
culturally aligned with our values, promotes effective risk
management and, for senior leadership, is aligned to the long-
term success of Beazley and to shareholder interests.
The full responsibilities of the Committee are set out in its
terms of reference, which are available on the Company’s
website.
The Committee’s main responsibilities are to:
• Set the remuneration policy for the Group and present the
policy for approval by shareholders at the annual general
meeting every three years. The objective of the
remuneration policy is to ensure that members of the
executive management of the Company are provided with
appropriate incentives to encourage enhanced performance
whilst also promoting sound and effective risk management,
and are, in a fair and responsible manner, rewarded for
their individual contributions to the success of the
Company.
• Recommend and where appropriate approve targets for
performance related pay schemes and seek shareholder
approval for any changes to existing or new long-term
incentive arrangements.
• Recommend and approve the remuneration of the Chair of
the Company.
• Recommend the remuneration of the Chief Executive, the
other Executive Directors, the direct reports to the Chief
Executive, the Company Secretary, and such other members
of the Executive management as it is designated to
consider. Setting executive remuneration includes taking
into account workforce remuneration and related policies,
and the alignment of incentives and rewards with culture.
No Director or manager shall be involved in any decisions
as to his or her own remuneration.
• Recommending the remuneration policy for all employees
including for key functions and other staff whose
professional activities have a material impact on the Group.
• Review of the design of all share incentive plans for
approval by the Board, and where relevant, the
shareholders.
• Obtain reliable, up-to-date information about remuneration
in other companies.
• Appoint and review the performance of Remuneration
Committee consultants, currently Deloitte LLP.
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Key Committee activities during 2023 and early 2024
Remuneration
policy
Activities
• Completed the implementation of the new remuneration policy that was
approved by shareholders at the 2023 AGM, this included the inclusion of
ESG related performance metrics in the Long-term Incentive Plan (LTIP).
Shareholder engagement activities and outcomes in relation to the
remuneration policy were explained in the 2022 Annual Report.
More information
Directors' remuneration report (page
124)
Remuneration of Chair,
Executives and other
senior management
• Having assessed individual performance, approved the remuneration
arrangements and bonus awards of the Executive Directors and the
Executive leadership team.
Directors' remuneration report
(page 140)
Remuneration
of the workforce
• Ensured incentives continued to be appropriate to align the interests of
Executives and senior management of the Company and shareholders.
• Considered and approved the salary and bonus awards for 2023 for heads
of control functions, material risk takers, and the Company Secretary.
• Considered the potential for windfall gains in LTIP awards granted in 2021.
• Satisfied itself that the current remuneration structure is appropriate to
attract and retain talented people and took any appropriate actions that
were necessary throughout the year.
• Approved specific matters to support the retention of key employees.
• Considered the aggregate remuneration approach for the wider workforce
and ensured that the approach to Executive and workforce remuneration
and bonuses was explained to the workforce by the Chief Executive in an
all-employee session.
Share plans
• Approved the grant of share awards under the Group’s deferred, and LTIP
Governance
plans.
• Reviewed the methodology used to calculate NAVps growth for LTIP
vesting, and introduced further controls, in conjunction with the work
carried out by the Audit Committee.
• Reviewed and approved an updated LTIP shareholding requirement policy
for senior management of the Company.
• Considered the Chief Risk Officer’s report which confirmed that the design
of the remuneration policy promotes appropriate risk behaviour throughout
the organisation. In addition, the analysis considered the performance of
the control environment, profit related pay targets, calculation of the bonus
pool, share awards, and review of risk metrics for Solvency II purposes.
Approved the gender and race pay gap reports.
• Reviewed the remuneration landscape for FTSE 250 and FTSE 100
companies and guidance from proxy agencies and investors.
• Approved the Malus and Clawback policy.
• Reviewed and approved the Directors’ Remuneration report.
• Engaged with more than 40 of the largest shareholders regarding the
impact of the IFRS 17 financial report change on the incentive framework
and took their views into account in agreeing the framework.
Directors' remuneration report
(page 140)
Directors' remuneration report
(page 144)
Our gender pay gap report is
available on the Company’s website
www.beazley.com
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We are also proud of the social impact we achieved in
2023. We met our gender target, and now 45% of our senior
leadership team are women. We met our goal for racial
representation, and now 27% of the organisation are People
of Colour, with a quarter of that group specifically being Black
people. Beazley employees also volunteered a total of 2,697
hours for our communities (up 59% on 2022). There was also
an increase to the amount donated to charitable causes, with
Beazley donating over $600,000 (up 27% on 2022). We
continued to enhance our approach to climate-related matters,
through the targeting of a 50% reduction in in-scope
greenhouse gas emissions by the end of 2025 (relative to the
2019 baseline), further developing our tools to assess climate
risk, and the development of Beazley’s first plan for the
transition to net zero.
Incentive out-turns
2023 was an exceptional year in terms of both financial
and strategic performance. Taking into account our record
performance and the exemplary individual performance of the
executive directors, the committee determined that they would
receive maximum annual bonus in respect of 2023. This is
the first year that annual bonuses have paid out at maximum
and the committee considers it an appropriate reflection of an
outstanding year. The Committee has applied a risk
adjustment of 10% to the GFD's 2023 bonus. Further details
are provided on page 133.
In-line with Beazley’s long-term success the second tranche
of the 2019 LTIP vested at 100% of maximum following NAV
growth per annum of 18.3% and the first tranche of the 2021
LTIP also vested at 100% of maximum following NAV growth
per annum of 26.3%.
The committee considers the incentive outturns to be
appropriately aligned with Beazley’s pay for performance
culture and considers that the remuneration policy has
operated as intended during 2023.
Letter from the Chair
of our Remuneration
Committee
Dear shareholder
On behalf of The Board, it is my pleasure to present
Beazley’s directors’ remuneration report for the year
ended 31 December 2023.
Beazley's performance in 2023
I am pleased to report that our company has achieved
outstanding results in the past fiscal year. The Group returned
record profits of $1,254.4m and delivered record Return
on Equity (ROE) of 30%. Insurance written premiums increased
to $5,601.4m and we realised a combined ratio figure of 71%.
This exceptional performance was accomplished through the
disciplined management of our products and is a testament
to our collective efforts in seizing developing underwriting
opportunities and deploying capital strategically. Throughout
the year, Beazley has demonstrated resilience, foresight, and
agility in navigating the challenges posed by the ever-evolving
market landscape, particularly the rising geopolitical tension,
a maturing Cyber market and navigating the impact of AI on
our risk environment. We are strongly capitalised and very
well positioned to deploy it in the areas where we can make
the most of market opportunities and achieve continued
profitable growth.
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Remuneration Policy implementation for 2024
The committee considers that the current implementation
of the policy continues to be appropriately aligned with the
delivery of Beazley’s long-term strategic priorities and in
the best interest of shareholders. Therefore we are not
proposing any material changes to the remuneration
framework for 2024.
Chair and Non-Executive Director fees for 2024
During the year the Non-Executive Director Fee Committee
undertook a detailed review of fee levels. The review took
into account the increased expectations of the role given the
growth in Beazley’s scale and complexity over the last few
years. The committee identified that fee levels were no longer
reflective of the time commitment of Beazley’s Non-Executive
Directors. Therefore, it was agreed that fees would be
increased to a more appropriate level to enable Beazley to
continue to attract Non-Executives with the necessary skills
and experience to effectively oversee Beazley’s governance.
2024 AGM
At the forthcoming AGM there will be an advisory vote in
respect of the directors’ remuneration report. I look forward
to your continued support of remuneration at Beazley.
Nicola Hodson
Remuneration Committee Chair
Impact of IFRS 17 on incentives
As discussed on page 129 in this Annual Report, the adoption
of accounting standard IFRS 17, with effect from 1 January
2023, has had a significant impact on Beazley’s financial
reporting. One of the major impacts of the transition to IFRS
17 is a change in the timing of profit recognition relative to the
previous accounting standards, which has a material impact
on the performance assessment for both the bonus and LTIP.
During the year the Committee has given this issue careful
consideration and, guided by a principle of fairness, we have
identified that it is necessary to make adjustments to the
bonus and LTIP outcomes to ensure that participants do not
unduly benefit nor are unduly penalised by the adoption of
IFRS 17.
Recognising that adjustments to inflight incentives can be
a sensitive topic the Committee consulted with our major
shareholders to explain the rationale for the adjustments and
to allow shareholder views to be taken into account when
finalising our approach. The Committee greatly values the
views of our shareholders, and we were pleased to find that
all shareholders consulted were supportive of our approach. I
would like to take this opportunity to thank those
shareholders who took part in our consultation. Further
details can be found on page 130.
Director changes
As announced during the year, Sally Lake is due to step down
from the board and her role as Finance Director by August
2024. In recognition of her remarkable 18-year career with
Beazley, and her commitment to an orderly succession, Sally
will be treated as a ‘good leaver’ for the purposes of her
incentives. She will remain eligible for a pro-rated annual
bonus in respect of 2024 and her outstanding share awards
will subsist to their normal release/vesting date subject
to time and performance pro-rating where applicable.
In accordance with the Remuneration Policy Sally will
be subject to post-employment shareholding guidelines
following her departure.
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Directors’ remuneration report
Remuneration in brief
Remuneration policy
The main aim of Beazley’s remuneration policy is to ensure that management and staff are remunerated fairly and in such a
manner as to facilitate the recruitment, retention and motivation of suitably qualified personnel. The Committee considers that
the policy supports our strategy and promotes the long-term success of Beazley.
The following table summarises how the Committee addressed the factors set out in the UK Corporate Governance Code when
determining the remuneration policy:
Factor
Details
Clarity
Remuneration arrangements should be
transparent and promote effective
engagement with shareholders and the
workforce
Simplicity
Remuneration structures should avoid
complexity and their rationale and operation
should be easy to understand
Risk
Remuneration arrangements should ensure
reputational and other risks from excessive
rewards, and behavioural risks that can arise
from target-based incentive plans, are
identified and mitigated
Predictability
The range of possible values of rewards to
individual directors and any other limits or
discretions should be identified and
explained at the time of approving the policy
Proportionality
The link between individual awards, the
delivery of strategy and the long-term
performance of the company should be clear.
Outcomes should not reward poor
performance
Alignment to culture
Incentive schemes should drive behaviours
consistent with company purpose, values
and strategy
At Beazley performance-related remuneration is an essential motivation to management and
staff and is structured to ensure that Executives’ interests are aligned with those of our
shareholders.
We operate a bonus structure that is based on Group profitability and long term performance. A
key principle is that the committee exercises its judgement in determining individual bonus
awards. In recent years we have expanded our disclosure to provide shareholders with further
clarity on the way in which we determine awards.
In determining our remuneration framework the Committee was mindful of avoiding complexity
and making arrangements easy to understand for both participants and our shareholders.
As part of last year's Policy review we simplified our approach to bonus deferral so that one-
third of any bonus is deferred into shares for three years and we also simplified the LTIP
performance period.
We believe reward at Beazley is appropriately balanced in light of risk considerations. The
Committee receives an annual report from the Chief Risk Officer to ensure that our wider
remuneration policy is consistent with, and promotes, effective risk management.
Our framework has a number of features which align remuneration out-turns with risk, including
a five year time horizon on the LTIP, deferral of bonus into shares and personal shareholding
requirements which extend post departure. Further details of the link between risk and
remuneration are set out on page 137.
Stated in the 2022 Directors Remuneration Report are four illustrations of the application of
our remuneration policy including the key elements of remuneration: base salary, pension,
benefits and incentives. Payments at Beazley are directly aligned to the Group’s performance
and the graph and table set out on page 134 demonstrates how historic annual bonus out-
turns have reflected ROE performance.
Individual remuneration reflects Group objectives but is dependent on the profitability of the
Group and is appropriately balanced against risk considerations. Potential rewards are market-
competitive and the committee is comfortable that the range of potential out-turns are
appropriate and reasonable.
The Remuneration Committee considers that the structure of remuneration packages supports
meritocracy, which is an important part of Beazley’s culture. All employees at Beazley are
eligible to participate in a defined contribution pension plan and a bonus plan. Bonuses are
funded by a pool approach which reflects our commitment to encourage teamwork at every
level, which is one of our key cultural strengths.
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Directors’ remuneration report
Performance in 2023
2023 was an exceptional year for Beazley. The Group achieved profit before tax of $1,254.4m (prior to the IFRS 17 adjustment)
and an impressive 71% combined ratio and strong investment results. Insurance written premiums were up by 7% to
$5,601.4m (2022: $5,246.3m). The adjustment detailed on page 129 has no impact on bonus outcomes for 2023 as the
unadjusted ROE exceeded the maximum target.
1 The PBT figures stated above are on an IFRS 4 basis for 2021 to 2022
and on an IFRS 17 basis for 2023 (including a transitional adjustment as
explained on page 129).
1 The ROE figures stated above are on an IFRS 4 basis for 2021 to 2022
and on an IFRS 17 basis for 2023 (including a transitional adjustment as
explained on page 129).
1 The net assets per share figures stated above are on an IFRS 4 basis for
2019 to 2022 and on an IFRS 17 basis for 2023 (excluding the adjustment
as explained on page 129).
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125
Profit before tax ($) ¹3691911,254191Pre-tax profit/(loss)Transition adjustment20212022202301503004506007509001,0501,2001,3501,500Return on equity (%) ¹ ²167305Post-tax ROETransition adjustment2021202220230510152025303540Net assets per share (c) ¹286.3278.0331.2367.4560.923.320.920.419.324.9TangibleIntangible20192020202120222023050100150200250300350400450500550600Share Price (p)510.16367.00538.9Share price at grantVesting price 538.9p2019 award2021 award 050100150200250300350400450500550600
Outcomes for 2023 and
implementation for 2024
Overview of Policy and implementation for 2023
Overview of implementation for 2024
Base salary
Salaries are set at a level to appropriately recognise responsibilities and to
be broadly market competitive. Salary increases generally reflect our standard
approach to all-employee salary increases across the Group.
Salaries for 2023 were as follows:
• A P Cox
• S M Lake
£625,000
£434,700
Benefits
Salaries increased by 4%, below the average rate for the wider workforce.
Salaries for 2024 are as follows:
• A P Cox
• S M Lake
£650,000
£452,100
Benefits include private medical insurance, lifestyle allowance and company car
or monthly car allowance.
No change to approach.
Pension
Pension allowance of 12.5% of salary, in-line with the rate available to the wider
UK workforce.
Annual Bonus
No change to approach.
Discretionary annual bonus determined by reference to both financial and
individual performance.
No change to approach.
The maximum bonus opportunity for Executive Directors in 2023 was 300% of
salary.
Adjusted ROE for the year was 34.6% and profit before tax was $1,445.2m.
Both figures have been amended to take into account the transition to IFRS 17
as explained on page 129. Bonus outcomes for 2023 were:
• A P Cox: 100% of maximum
• S M Lake: 90% of maximum¹
33% of the award will be deferred into shares for three years. Further details are
set out on page 134.
1 The Committee has applied a risk adjustment of 10% to the GFD's 2023
bonus. Further details are provided on page 133.
Long-term Incentive Plan (LTIP)
For awards made prior to 2023 50% is subject to NAVps performance over three
years and 50% over five years. The first tranche is subject to a further two year
holding period taking the total time frame for the entire award to five years.
Awards vesting in respect of 2023
• The first tranche of the 2021 LTIP award vested at 100% of maximum
No change to approach.
In 2024, Executive Directors will receive the following grant levels subject to
NAVps and ESG performance conditions:
• A P Cox: 300% of salary
• Due to her forthcoming departure S M Lake is not eligible for a 2024 LTIP
following three year NAVps performance of 26.3% p.a.
award
• The second tranche of the 2019 LTIP award vested at 100% of maximum
following five year NAVps performance of 18.3% p.a.
For awards made from 2023 the performance period was simplified so that
performance for the entire award is measured over three years. A further two
year holding period remains taking the total time frame for the entire award to
five years.
A portion of the LTIP is subject to measures linked to our ESG priorities. Further
details of the LTIP structure and the performance targets are set out on pages
135 to 136.
Awards granted during the year
In 2023 Executive Directors received the following grant levels subject to NAVps
and ESG performance conditions:
• A P Cox: 300% of salary
• S M Lake: 250% of salary
Shareholding guidelines
Executive Directors are expected to build up and maintain a shareholding of
300% of salary for the CEO and 200% of salary for the GFD. As at 31 December
2023 A P Cox had exceeded the guideline and S M Lake fell short of the
guideline.
No change to approach.
Executives are expected to maintain 100% of their shareholding requirement
for two years post-departure.
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Beazley | Annual report 2023
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Directors’ remuneration report
Annual remuneration report
This part of the report, the annual remuneration report, sets out the remuneration out-turns for 2023 (and how these relate to
our performance in the year) and details of the operation of our policy for 2024.
The symbol ▪ by a heading indicates that the information in that section has been audited.
Single total figure of remuneration ▪
The tables below set out the single figure of total remuneration for Executive Directors and Non-Executive Directors for the
financial years ending 31 December 2023 and 31 December 2022.
Executive Directors
Fixed pay
Pay for performance
£
Adrian P Cox
Sally M Lake
Salary
2023 625,000
2022 525,250
2023 434,700
2022 414,000
Benefits
12,061
19,760
3,161
2,938
Pension
Total fixed
pay
Total annual
bonus1
78,125 715,186 1,875,000
65,656 610,666
787,875
48,779 486,640 1,173,690
621,000
45,960 462,898
Long term
incentives
(LTI)2
1,046,258
108,614
496,817
72,493
Total
variable pay
2,921,258
896,489
1,670,507
693,493
Total
remuneration
3,636,444
1,507,155
2,157,147
1,156,391
1 A portion of the 2022 and 2023 bonus awards shown in the table above is deferred into shares for three years. Details of the deferral in respect of 2023 awards
can be found on page 134.
2 The LTI figures for 2023 have been calculated using the average share price in the last three months of 2023 of 538.9p. The share prices at the time LTI awards
were granted were 510.16p for the 2019 award and 367.0p for the 2021 award. The 2023 LTI figures therefore include share appreciation of £253,762 for
Adrian P Cox and £131,817 for Sally M Lake. See page 124 for further details. For 2022, the LTI figures have been restated to reflect the share price at the date
of vesting of 642.27p. The Committee did not exercise any discretion in relation to share price changes.
Non-Executive Directors
Clive C R Bannister4
Rajesh K Agrawal5
Pierre-Olivier Desaulle
Nicola Hodson
Christine LaSala6
Robert A Stuchbery7
A John Reizenstein
Fiona M Muldoon8
Cecilia Reyes Leuzinger
2023
289,583
81,200
76,000
94,100
146,695
104,173
98,500
93,627
90,200
2023
Subsidiary
Board fees
0
2,888
14,496
0
28,539
19,600
19,600
0
0
2023 Total
fees1,2
289,583
84,088
90,496
94,100
175,234
123,773
118,100
93,627
90,200
2022 Total
Fees3
0
77,547
88,496
81,648
157,016
116,733
107,100
44,438
46,505
1 Other than for the Beazley plc Board Chair, total fees include Chairs and members of Beazley plc Committees, the role of Senior Independent Director and
Employee Voice, as well as fees, where relevant, for members of the subsidiary boards Beazley Furlonge Limited, Beazley Insurance dac, Beazley Insurance
Company, Inc. and the Chair of the Beazley Furlonge Limited Risk Committee.
2 The Beazley plc Audit and Risk Committee was bifurcated on 1 January 2023. Fees for the Chairs and members for both Committees have been amended
accordingly to reflect roles and responsibilities of both separate Committees.
3 For Christine LaSala and Pierre-Olivier Desaulle the total 2022 fees have not changed but the representation has been amended in order to be consistent with
2023. Fees are paid in multiple currencies – 2022 fees have been restated using 2023 FX rates of GBP 1 : USD 1.25 and GBP 1 : EUR 1.17.
4 Clive C R Bannister was appointed a member of the Beazley plc Board from 8 February 2023 and Chair of the Beazley plc Board and Nomination Committee upon
conclusion of the AGM 2023.
5 Rajesh K Agrawal joined as a Non-Executive Director of the Beazley Insurance Company, Inc Board with effect 5 September 2023.
6 Christine LaSala acted as interim Chair of the Beazley plc Board and Chair of the Nomination Committee until 30 April 2023, returning to Senior Independent
Director and as a member of the Remuneration Committee from 1 May 2023. Christine LaSala also stepped down from the Beazley Furlonge Limited Board on 18
December 2023. Fees have been amended accordingly to reflect roles and responsibilities.
7 Robert A Stuchbery acted as interim Senior Independent Director until 30 April 2023, and stepped down as the Beazley plc Risk Committee Chair on 28
September 2023. Robert A Stuchbery was appointed Chair of the Beazley Furlonge Limited Board on 18 December 2023. Fees have been amended accordingly
to reflect roles and responsibilities.
8 Fiona M Muldoon became Chair of the Beazley plc Risk Committee on 29 September 2023.
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Salary ▪
The Committee reviews salaries annually taking into consideration any changes in role and responsibilities, development of the
individual in the role and levels in comparable positions in similar financial service companies. It also considers the
performance of the Group and the individual as well as the average salary increase for employees across the whole Group.
Salary reviews take place annually, with new salaries effective from 1 January.
For 2024, the Executive Directors received a salary increase of 4% which is below the average salary increase across the
Group.
The base salaries for the Executive Directors in 2023 and 2024 are as set out below:
Adrian P Cox
Sally M Lake
2023
base salary
£
625,000
434,700
2024
base salary
£
650,000
452,100
Increase
%
4.0
4.0
Benefits ▪
Benefits include private medical insurance for the Director and their immediate family, income protection insurance, death in
service benefit at four times annual salary, lifestyle allowance, season ticket and the provision of either a company car or a
monthly car allowance.
Pension ▪
Executive Directors receive a pension allowance of 12.5% of salary, in-line with the rate available to the majority of the UK
workforce.
Prior to 31 March 2006 the Company provided pension entitlements to Directors that are defined benefit in nature, based on its
legacy policy under the Beazley Furlonge Limited Final Salary Pension Scheme. Future service accruals ceased on 31 March
2006. Only base salary is pensionable, subject to an earnings cap. The normal retirement age for pension calculation purposes
is 60 years. A spouse’s pension is the equivalent of two-thirds of the member’s pension (before any commutation) payable on
the member’s death after retirement.
Details of the defined benefit entitlements of those who served as Directors during the year are as follows:
Accrued benefit
at 31
December
2023
£
16,431
Increase in
accrued
benefit
excluding
inflation (A)
£
(292)
Increase in
accrued
benefit
including
inflation
£
(292)
Transfer value of
(A) less directors
contribution
£
(5,435)
Transfer value
of accrued
benefits at 31
December
2023
£
305,848
Increase in
transfer value
less directors'
contribution
£
12,785
Normal retirement
date
12 Mar 2031
Adrian P Cox
Under the Beazley Furlonge Limited Final Salary Pension Scheme, on early retirement the Director receives a pension which is
reduced to reflect early payment in accordance with the rules of the scheme.
No other pension provisions are made.
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Details of the 2023 annual bonus awards are set out on page
134.
Note that due to Beazley's exceptional performance in 2023,
the unadjusted ROE performance exceeded the maximum
target and therefore the IFRS 17 adjustment had no impact on
bonus outcomes.
LTIP
The primary measure for LTIP awards is growth in net asset
value per share (NAVps). As a result of the transition to IFRS
17, there was an increase to equity as at 31 December 2022
of c.$381.5m and a corresponding increase to NAVps of
c.57.4c. This increase to NAVps inflates NAVps growth which
would unduly benefit inflight LTIP awards and lead to a higher
vesting outcome. The Committee has agreed to strip out the
increased NAVps of 57.4c and spread it over the period that it
would have been broadly recognised, mirroring the approach
for the bonus as follows:
• 2023: 50% of the NAVps (c. 28.7c)
• 2024: 25% of the NAVps (c. 14.4c)
• 2025: 25% of the NAVps (c. 14.4c)
This adjustment results in a reduction to performance for
awards with performance periods ending in 2023, 2024 and
2025. The Committee is comfortable that the adjustments are
reasonable to ensure that participants are only rewarded for
NAVps growth at the time it would have arisen under the
accounting standards in place when the targets were set.
Details of the vesting of the second tranche of the 2019 LTIP
and the first tranche of the 2021 LTIP can be found on page
135.
Impact of IFRS 17 on incentives
IFRS 17 is a global accounting standard that governs the
accounting treatment of insurance contracts. Its
implementation has brought significant changes in the
financial reporting landscape for insurance companies,
including Beazley. One of the major impacts of the transition
to IFRS 17 is a change in the timing of profit recognition.
Beazley’s incentive plans, the annual bonus and Long Term
Incentive Plan (LTIP), both use performance measures linked
to the Company’s profit performance and therefore are
materially impacted by the change in profit recognition.
The Remuneration Committee has given this issue careful
consideration and in identifying a solution we have been
guided by the principle of fairness and ensuring that
participants are not unduly benefited nor penalised by the
change. The underlying premise of the Committee’s approach
is to recognise profits broadly when they would have originally
been recognised under the accounting standards that were in
effect when the targets were set. The Committee considers
this approach to be measured and appropriate, and was
pleased to find that all shareholders consulted with during the
year were supportive.
Annual bonus
As discussed on page 173, IFRS 17 brings in the concept of
discounting insurance liabilities. As a result, profits of c.
$381.5m that would otherwise have been recognised in future
years under the prior IFRS 4 accounting rules have been
accelerated to 2022 under IFRS 17. As annual bonuses for
2022 were calculated on an IFRS 4 basis they did not take
into account these accelerated profits. However, under IFRS
17, there will be a reduction to profit over the following years
as a result of the unwinding of this position. If no action is
taken, then participants could be unfairly impacted given that
they have not benefited from the accelerated profits in 2022
but could be adversely impacted by the unwind in future years.
The Committee considered at length how best to address this.
One alternative discussed was to allocate this profit to the
bonus pool for 2022, given that this would be consistent with
the treatment under IFRS 17. However, the Committee did not
consider it appropriate to re-open the bonus pool for a prior
year because bonus payments were aligned with the
accounting standards in place at the time. Instead, the
Committee has agreed that the profit which has been
accelerated to 2022 will be apportioned over the respective
three years (2023, 2024 and 2025) to align with how it would
have been broadly recognised under IFRS 4 as follows:
• 2023: 50% of the profit (c. $191m)
• 2024: 25% of the profit (c. $95m)
• 2025: 25% of the profit (c. $95m)
The bonus framework will otherwise continue to operate in
broadly the normal way for 2023, 2024 and 2025 with the
adjustment above used to determine the size of the bonus
pool and individual awards. In-line with Beazley’s collegiate
approach to reward this change will apply to all relevant
employees including Executive Directors. Awards for Executive
Directors will continue to be subject to the limits of the
shareholder-approved remuneration policy including the
maximum cap of 300% of salary.
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Annual bonus structure
The annual bonus plan is a discretionary plan in which all employees are eligible to participate. The annual bonus is funded by a
bonus pool. The pool is calculated as a percentage of profit subject to a minimum group ROE. The size of the pool as a
percentage of profit increases for higher levels of ROE. This ensures that outcomes are strongly aligned with shareholders’
interests.
The operation of an annual bonus pool approach reflects Beazley’s commitment to encourage teamwork at every level, which,
culturally, is one of its key strengths. A broad senior management team, beyond Executive Directors, participate in the bonus
pool, reinforcing the Company’s collegiate culture.
Once the annual bonus pool has been calculated the Committee determines individual allocations taking into consideration
corporate/strategic achievements and individual achievements. The bonus is discretionary and, rather than adopting a
prescriptive formulaic framework, the Committee considers wider factors in its deliberations at the end of the year: for example
quality of profit and risk considerations.
In determining awards, the Committee will not necessarily award the bonus pool in aggregate (i.e. the sum of the bonus awards
may be less than the bonus pool).
The approach to the calculation of bonuses is aligned to shareholders’ interests and ensures that bonuses are affordable, while
the ROE targets increase the performance gearing. The Committee reviews the bonus pool framework each year to ensure it
remains appropriate, taking into account the prevailing environment, interest rates and expected investment returns, headcount
and any other relevant factors.
Annual bonus out-turn for 2023
The process for determining 2023 bonuses is described below, including full details of the ROE targets underpinning our bonus
approach along with the guideline levels which are used by the Committee in its determination for each Executive Director.
Annual bonus pool calculation for 2023
At the beginning of the financial year, the risk-free return (RFR) was set at 3.5% taking into account the yield on US treasuries of
two to five year maturities. This resulted in the following ROE hurdles and guideline bonus awards:
ROE performance hurdles
ROE performance
Guideline/illustrative bonus award as % of maximum
Threshold
3.5 %
0%
Maximum
6.5 % 13.5 % 21.0 % 28.5 %
100%
12.5%
37.5%
75%
When considering the annual bonus pool outcome, the
Committee takes into account the outcome of the Group’s
ROE/profit. The framework is used by the Committee as a
broad guideline rather than being formulaic and applies to a
broader group of Executives than Board Directors. A key
principle of the process is that the Committee exercises its
judgement in determining individual awards taking into
account the corporate/strategic objectives, individual’s
contribution and performance. In particular, there may be a
diverse spread of returns earned across the various divisions
within the business which will be reflected in bonus out-turns
achieved. The table therefore provides full retrospective
disclosure of all the Group financial targets and corporate/
strategic performance which the Committee considers when
determining the annual bonuses.
When determining annual bonuses an assessment against the
expectation for each element is made with reference to the
following grading system:
Expectation achieved or exceeded
Reasonable outcome against expectation
Expectation not met
These percentages are indicative only and based on broad
corporate results. Within the pool framework bonus out-turns
may be higher or lower taking into account corporate
achievements and individual performance (see next page).
ROE for 2023, adjusted to include the transitional impact of
IFRS 17 as explained on page 129 was 34.6%. This
adjustment had no impact on bonus outcomes for 2023 as
the unadjusted ROE exceeded the maximum target.
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2023 ROE hurdles and guideline bonus awardsGuideline/illustrative bonus award as % of maximum3.5%6.5%13.5%21.0%28.5%0%20%40%60%80%100%
Directors’ remuneration report
Annual remuneration report
continued
Assessment of achievements for 2023
In determining annual bonuses for 2023, the Committee took into account a range of (i) financial, (ii) strategic and (iii) individual
elements as set out below.
(i) Financial performance
Element
Combined ratio
Achievement
71%
Insurance written premiums growth
Increased by 7%
Expense management
Excluding remuneration, actual expenses were materially maintained at
that budgeted for the year
Profit before tax
$1,254.4m profit before tax (excluding IFRS 17 adjustment)
Net assets per share growth
NAVps growth of 31.9%
Investment performance (portfolio return)
4.9% portfolio return
(ii) Strategic performance
Element
Expectation
Achievement
Responsible business Create and publish our net zero transition plan,
ensuring our approach is in line with the
Science Based Target initiative (SBTi) and NZIA
Protocol.
Incubate at least two new ESG related products
or services.
Embed data collection methods for sexuality,
religion, and disability in possible locations.
Enhance at least two existing products or
services to better meet the ESG needs of our
clients.
Deliver medium term business plan.
Medium term plan
Net zero strategy is complete and in line with the SBTi,
awaiting Board sign off in March 2024. Due to legal
reasons we pulled out of NZIA Protocol.
Created two new environmental products; Arbol and Sola.
A data capture process has been embedded into our
employee engagement survey successfully, with a
completion rate of 80%.
We piloted the Beazley better hub an ESG information
website helping clients untangle the complex web that is
ESG.
Deliverables for 2023 achieved and on track.
Wholesale platforms
Increase profitable growth across Wholesale
platforms in London, Asia Pac and Miami.
Our Wholesale platform grew 2%.
North American
growth
Achieve profitable growth in the US and Canada. Our North American platform grew 10%.
European growth
Achieve profitable growth in Europe.
Our European platform grew 20%.
Culture and people
Sustain high levels of employee engagement
and inclusivity within the business.
Employee engagement score increased to 86% in 2023.
Turnover has decreased to 9.5% compared to 10.3% at
the end of 2021. Inclusivity targets met for 2023.
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(iii) Individual performance
While a number of the specific individual objectives of the Executive Directors are considered commercially sensitive, the
following provides details of Executive Director achievements which the Committee took into account.
Executive
Objectives
Achievement
Adrian Cox
(Chief Executive)
Deliver 2023 underwriting business
plan, GAAP budget and provide
leadership for the modernisation
programme.
Execute on medium term plan and
developing into general business
strategy.
Develop/scope out a new cyber
systemic scenario and compare/
contrast at least one of our current
ones to the other peer insurers &
models in the market.
Define a plan for the continued
development of climate scenario
analysis in order to ensure climate
risks form part of business.
Execute new governance across
boards, executive and sub-
committees.
Deliver inclusion and diversity targets,
focusing on rolling recruitment and
promotion ratios.
• Premium growth of 7% and achieved rate change of 4%.
• Combined ratio for 2023 of 71%.
• Modernisation programme delivering improvements to the business
and on track for further improvements.
• Managed budgets and risk appetites proactively through the year to
optimise short and long-term positions.
• The 2023 element of the medium term plan achieved and well
embedded into general business strategy.
• Delivered new cyber systemic scenario and modelling in the market.
• Built a functioning model producing outputs which are being evaluated
by the technical experts.
• Built a synthetic industry exposure database (“IED”) which allows us
to run a sample portfolio through the model. We are reflecting on how
best to present an industry loss.
• Constructed three new malware scenarios.
• A program of works to further Beazley’s approach to climate-related
matters was delivered in 2023 by the Climate Risk Working Group.
• New governance structure for boards, executive and sub-committees
agreed and being implemented.
• Our core public targets were achieved by the end of 2023; 45%
women in senior leadership and at least 25% people of colour at a
group level.
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Directors’ remuneration report
Annual remuneration report
continued
Executive
Objectives
Achievement
Sally Lake
(Group Finance
Director)
Execute IFRS 17 implementation.
• IFRS 17 successfully implemented.
Manage the financial projections of
the long-term plan.
Deliver capital management and tax
implications for the organisational
model/large projects.
Chair the investment committee and
build a strong committee that delivers
above target investment return for
2023.
• All aspects of the long term plan financial projections completed and
included within the plan.
• Considerable work completed successfully on capital management
and tax implications for large projects and organisational model.
• Investment committee chaired well and delivered above target
investment return of 4.9% for 2023.
Work to align the investment portfolio
with a 1.5-degree pathway by 2028.
• On track.
Co-sponsor the multi-year
modernisation programme with Chief
Operating Officer to deliver greater
efficiencies including the
implementation of the disclosure
management tool.
Execute target for development of
women and people of colour into more
senior positions.
• Steady progress made in 2023 but further efficiencies to be achieved
in 2024.
• Achieved the target of 45% for women in senior roles and the target of
26% for managers who are people of colour.
Annual bonus awards outcomes for 2023
Taking into account the financial, strategic and individual performance set out above, the Committee determined that Executive
Directors would receive the following bonuses for 2023.
In its assessment of individual bonus out-turns the Remuneration Committee took into account an error in the 2022 annual
report and accounts. As announced in March 2023 the Group’s initial results announcement for 2022 contained an error
relating to the number of shares used to calculate two of our alternative performance metrics used in the calculation of
remuneration. The error was quickly rectified, however the Remuneration Committee determined this event warranted a risk
adjustment. After careful consideration the Committee determined that the GFD’s bonus would be reduced by 10% as a result.
Adrian P Cox
Sally M Lake
% of maximum
100%
90%
% of salary
300%
270%
Bonus value
£1,875,000
£1,173,690
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The following graph and table illustrates the way in which bonuses over time reflect profit and ROE performance.
1 The maximum bonus opportunity for Executive Directors was reduced from 400% to 300% of salary from 2023.
Pre-tax profit/ (loss)
Post-tax ROE
Average Executive
Director bonus as a
percentage of salary
2015
2014
20231
2018
$262m $284m $293m $168m $76m $268m ($50m) $369m $191m $1,445m
35%
16%
15%
19%
18%
17%
(3%)
7%
5%
9%
2022
2020
2017
2021
2019
2016
c.294%
c.291%
c.272%
c.150%
c.73% c.212%
c.0% c.300% c.150% c.288%
1 The 2023 profit and ROE figures have been calculated on an IFRS 17 basis including the transitional adjustment as explained on page 129.
Bonus deferral
A portion of the bonus will generally be deferred into shares for three years. From 2023 the deferral rate has been set at 33% of
the bonus. Deferred shares are generally subject to continued employment.
A portion of bonus may also be deferred under the investment in underwriting plan, and this capital can be lost if underwriting
performance is poor (see investment in underwriting section on page 137 for further details).
The following table sets out the deferred bonus awards made during 2023 in respect of the bonus for 2022:
Individual
Adrian P Cox
Sally M Lake
Type of interest
Basis on which
award is made
Deferred shares Deferred bonus
Deferred shares Deferred bonus
Number of shares
awarded
32,307
25,464
Face value of
shares (£)1
£196,968
£155,250
% vesting at
threshold
n/a
n/a
1 The face value of shares awarded was calculated using the three day average share price prior to grant, which was 609.67p.
Annual bonus approach for 2024
The annual bonus for 2024 will continue to operate within a broadly similar framework as in previous years, with awards
dependent on a profit pool and minimum level of ROE performance and taking into account individual performance and
achievements. During the year the Committee intends to undertake a fundamental review of the ROE framework to ensure that
it continues to appropriately incentivise the delivery of our strategy in the context of the transition to IFRS 17 and the Group’s
increased scale and complexity. The details of any refinements will be presented and fully explained in next year’s Directors’
Remuneration Report.
As explained on page 129, the Committee’s intention is that ROE for 2024 will be adjusted to include the transitional impact of
IFRS 17. The overall bonus pool (in which Executive Directors as well as other senior employees participate) will be calculated
based on this adjusted figure.
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Post-tax ROEAverage Executive Director bonus as a percentage of maximum¹Average Executive Director bonus vs ROE performance-5%0%5%10%15%20%25%30%35%0%25%50%75%100%
Directors’ remuneration report
Annual remuneration report
continued
Long term incentive plan (LTIP)
Under the LTIP Executive Directors, senior management and selected underwriters receive awards of shares subject to the
achievement of stretching performance conditions.
LTIP structure for awards granted prior to 2023
For awards granted prior to 2023 vesting is based on growth in net asset value per share (NAVps), one of Beazley’s key
performance indicators. NAVps performance is assessed equally over a three year and five year period. In accordance with the
UK Corporate Governance Code the first tranche of LTIP awards is subject to a further two year holding period, taking the total
time frame for the entire award to five years.
The NAVps performance conditions for all outstanding awards are as follows:
NAVps performance
NAVps growth < risk-free rate +7.5% p.a.
NAVps growth = risk-free rate +7.5% p.a.
NAVps growth = risk-free rate +10% p.a.
NAVps growth = risk-free rate +15% p.a.
% of award
vesting
0 %
10 %
25 %
100 %
Growth in NAVps is calculated taking into account any payment of dividends by the Company. In line with our reporting to
shareholders, NAVps is denominated in US dollars.
LTIP outturns in respect of 2023
The LTIP awards shown in the single total figure of remuneration for 2023 include:
• the second tranche of awards granted on 12 February 2019. These will vest at 100%, based on the achievement of the
NAVps growth performance condition over the five years ended 31 December 2023; and
• the first tranche of awards granted on 10 February 2021. These will vest at 100%, based on the achievement of the NAVps
growth performance condition over the three years ended 31 December 2023.
The following table summarises the actual NAVps growth (including the transitional impact of IFRS 17 as explained on page
129) achieved over the two performance periods and the resultant vesting levels:
LTIP award
Second tranche of the 2019 awards
First tranche of the 2021 awards
Performance period
Five years ended 31
December 2023
Three years ended 31
December 2023
NAVps growth
18.3% p.a.
26.3% p.a.
% of award vesting
100%
100%
The results were independently calculated by Deloitte LLP. The Committee is comfortable that Executives have not unduly
benefited from windfall gains in respect of their LTIP awards. In particular the Committee noted that the 2019 awards were
granted prior to the fall in share price resulting from the outbreak of COVID-19 and the 2021 awards were granted a year after
the outbreak of COVID-19 once the share price had stabilised.
LTIP structure for awards granted from 2023 ▪
The LTIP is an important tool in the remuneration framework for incentivising participants and aligning their interests with those
of our shareholders. As explained last year, as part of the 2023 Remuneration Policy renewal the Committee made a number of
refinements to improve the effectiveness of the LTIP structure and to reflect evolving market practice.
The key features of the plan for awards granted from 2023 are as follows:
• Performance is measured after three years.
• Awards are subject to a further two year holding period taking the total time frame to five years.
• Vesting is based on growth in net asset value per share (NAVps) and the delivery of our ESG priorities.
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LTIP awards granted in 2023 ▪
During 2023, LTIP awards with a face value equal to 300% of salary for the CEO and 250% of salary for the GFD were granted.
These awards are subject to NAVps (250% of salary and 200% of salary respectively) and ESG performance (50% of salary) as
set out below:
Individual
Adrian P Cox
Sally M Lake
1 The face value of shares awarded was calculated using the three day average share price prior to grant, which was 609.67p.
Type of interest
Nil cost option (LTIP)
Nil cost option (LTIP)
Face value of
shares (£)1
307,543 1,875,000
178,252 1,086,750
Basis on which award
is made
300% of salary
250% of salary
% vesting at
threshold
10%
10%
Number of
shares
awarded
NAVps performance
NAVps growth < risk-free rate +7.5%
NAVps growth = risk-free rate +7.5%
NAVps growth = risk-free rate +10%
NAVps growth = risk-free rate +15%
Performance period
end
31/12/2025
31/12/2025
% of award vesting
0 %
10 %
25 %
100 %
ESG target
Reduce carbon emissions (Scope 1, 2 & 3) relative to 2019 baseline
Increase female representation at Board and Senior Manager level
Increase People of Colour representation at Board and Senior Manager level
Weighting
(of ESG element)
One third
One third
One third
Threshold
(10% of max)
45 %
44 %
13 %
Max
50 %
45 %
15 %
LTIP awards to be granted in 2024 ▪
LTIP awards for 2024 will be operated on a similar basis as the 2023 awards. The CEO will be granted an LTIP award with a
face value equal to 300% of salary. Due to her forthcoming departure S M Lake is not eligible for a 2024 LTIP award. 2024 LTIP
awards will be subject to the NAVps and ESG performance conditions set out below.
NAVps performance
NAVps growth < risk-free rate +7.5%
NAVps growth = risk-free rate +7.5%
NAVps growth = risk-free rate +10%
NAVps growth = risk-free rate +15%
% of award vesting
0 %
10 %
25 %
100 %
ESG target
Reduce carbon emissions (Scope 1 & 2) relative to 2022 baseline
Maintain gender balance representation at Board and Senior Manager level
Increase People of Colour representation at a group level
Weighting
(of ESG element)
One third
One third
One third
Threshold
(10% of max)
20 %
45 %
30 %
Max
30 %
45 %
32 %
We understand that we and the business world are on a complex journey. Whilst we believe that the above metrics are the most
appropriate metrics for the LTIP at this time, we acknowledge that our ESG strategy will evolve over time, and we intend to
employ alternative metrics in the future where appropriate and relevant given our priorities.
Dilution
The share plans permit 10% of the Company’s issued share capital to be issued pursuant to awards under the LTIP, SAYE and
option plan in a 10-year period. The Company adheres to a dilution limit of 5% in a 10 year period for executive schemes.
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Directors’ remuneration report
Annual remuneration report
continued
Beazley staff underwriting plan for this purpose since 2004
and Executive Directors and other selected staff are invited to
participate through bonus deferral with an element of their
cash incentives ‘at risk’ as capital commitments. These
capital commitments can be lost in full if underwriting
performance is poor.
Investment in underwriting
Traditionally, Lloyd’s underwriters contributed their personal
capital to syndicates in which they worked. With the move to
corporate provision of capital, individual membership of
Lloyd’s has declined significantly. The Committee feels that
having personal capital at risk in the syndicate is an important
part of the remuneration policy and provides a healthy
counterbalance to incentivisation through bonuses and long
term incentive awards. The Company has operated the
The Group funds the capital for the plan. The individual capital
commitment is then funded through individual’s bonus
deferral. The aim is for individuals to fund their capital within
three years.
To date over 340 employees of the Group have committed to
put at risk £15.8m of bonuses to the underwriting results of
syndicate 623. Of the total at risk, £13.4m has already been
deferred from the bonuses awarded.
The following Executive Directors participated in syndicate 623 through Beazley Staff Underwriting Limited:
Adrian P Cox
Sally M Lake
Total bonuses deferred
£
188,400
105,000
2022 year of accounting
underwriting capacity
400,000
100,000
2023 year of accounting
underwriting capacity
400,000
250,000
2024 year of accounting
underwriting capacity
400,000
0
Adrian P Cox and Sally M Lake have both fully funded the capital requirement.
Malus and clawback
Recovery provisions (malus and clawback) have applied to incentives for a number of years. Further detail on the recovery
provisions, including the circumstances and timeframe for which they can be applied are set out in the remuneration policy.
Risk and reward at Beazley
The Committee regularly reviews developing remuneration governance in the context of Solvency II remuneration guidance, other
corporate governance developments and institutional shareholders’ guidance. The Chief Risk Officer reports annually to the
Remuneration Committee on risk and remuneration as part of the regular agenda. The Committee believes the Group is
adopting an approach which is consistent with, and takes account of, the risk profile of the Group.
We believe reward at Beazley is appropriately balanced in light of risk considerations, particularly taking into account the
following features:
Features aligned with risk considerations
Share deferral
LTIP holding period
Shareholding requirements
Investment in underwriting
Underwriters remuneration
aligned with profit received
33% of the bonus is normally deferred into shares for three years. These deferred shares, together with
shares awarded under the LTIP, mean that a significant portion of total remuneration is delivered in the
form of shares deferred for a period of years.
Outstanding LTIP awards vest over a five year period. From 2023 LTIP awards vest over a three-year period.
Any awards which have a performance period of less than five years are subject to an additional holding
period, following the date on which the award vests, up to the fifth year of the award.
Executive Directors are expected to build up and maintain a shareholding of 300% of salary for the CEO and
200% of salary for the GFD. Executive Directors are also expected to maintain a shareholding post-
departure.
Management and underwriters may defer part of their bonuses into the Beazley staff underwriting plan,
providing alignment with capital providers. Capital commitments can be lost if underwriting performance is
poor.
Under the profit related bonus plan payments are aligned with the timing of profits achieved on the account.
For long tail accounts this may be in excess of six years. If the account deteriorates then payouts are
‘clawed back’ through adjustments to future payments. Since 2012 profit related pay plans may be at risk
of forfeiture or reduction if, in the opinion of the Remuneration Committee, there has been a serious
regulatory breach by the underwriter concerned, including in relation to the Group’s policy on conduct risk.
Malus and clawback provisions Malus and clawback provisions apply to all incentives that Executive Directors participate in.
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137
Leaving arrangements for Sally Lake
Sally M Lake is due to step down from the Board and her role as GFD by August 2024. In recognition of her remarkable 18 year
career with Beazley and her commitment to an orderly succession the Remuneration Committee has determined that Sally will
be treated as a ‘good leaver’ for the purposes of her incentives. She will remain eligible for a pro-rated annual bonus in respect
of 2024 and her outstanding LTIP and deferred bonus awards will subsist to their normal release/vesting date subject to time
and performance pro-rating where applicable. Following her departure, Sally M Lake will be subject to our post-employment
shareholding guidelines for a period of two years.
Service contracts and payments for loss of office
No loss of office payments have been made in the year.
There is no unexpired term as each of the Executive Directors’ contracts is on a rolling basis.
Non-Executive Directors’ fees
Clive C R Bannister took up the role of Chair of the Board following the AGM on 25 April 2023. Clive C R Bannister's fee as
Chair of the Board has been set at £325,000 and his fee will not be eligible for an increase until 2026.
The fees of Non-Executive Directors are determined by the Board and are reviewed annually. When setting fee levels,
consideration is given to levels in comparable companies for comparable services and also to the time commitment and
responsibilities of the individual Non-Executive Director. No Non-Executive Director is involved in the determination of their fees.
As part of the annual review of Non-Executive Director fees, consideration was given to the increased expectations of the role
given the growth in Beazley's scale and complexity over the last few years. The NED Fee Committee identified that the fees had
fallen out of step with the time commitment of Beazley's Non-Executive Directors and determined that it would be in
shareholders' interest to increase them to a more appropriate level.
Details of the Non-Executive Directors’ fees payable for the plc Board responsibilities are set out below (the fee for the Chair of
the Board is inclusive of subsidiary fees):
Chair of Board fee
Basic fee
Senior Independent Director fee
Chair of Audit Committee
Chair of Risk Committee
Chair of Remuneration Committee fee
Membership fee for Non-Executive Directors on the Audit Committee
Membership fee for Non-Executive Directors on the Risk Committee
Membership fee for Non-Executive Directors on the Remuneration Committee
Fee for designated Non-Executive Director representing employee voice
2023 fee
£325,000
£67,000
£11,700
£22,500
£22,500
£18,100
£9,000
£9,000
£5,200
£5,200
2024 fee
£325,000
£76,000
£17,000
£30,000
£30,000
£30,000
£15,000
£15,000
£14,000
£15,000
Beazley operates across Lloyd’s, Europe and the US markets through a variety of legal entities and structures. Non-Executive
Directors, in addition to the plc Board, typically sit on either one of our key subsidiary Boards, namely Beazley Furlonge Ltd, our
managing agency at Lloyd’s, or Beazley Insurance dac, our Irish insurance company. Non-Executive Directors may receive
additional fees for sitting on subsidiary Boards. As a result of developments in regulation, the degree of autonomy in the
operation of each Board has increased in recent years, with a consequent increase in time commitment and scope of the role.
No Non-Executive Director participates in the Group’s incentive arrangements or pension plan.
Non-Executive Directors are appointed for fixed terms, normally for three years, and may be reappointed for future terms.
Non-Executive Directors are typically appointed through a selection process that assesses whether the candidate brings the
desired competencies and skills to the Group. The Board has identified several key competencies for Non-Executive
Directors to complement the existing skill-set of the Executive Directors. These competencies may include:
• insurance sector expertise;
• asset management skills;
• public company and corporate governance experience;
• risk management skills;
• finance skills; and
• IT and operations skills.
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Directors’ remuneration report
Annual remuneration report
continued
Non-Executive Directors’ service contracts
Details of the Non-Executive Directors’ terms of appointment are set out below:
Clive C R Bannister
Christine LaSala
Robert A Stuchbery
A John Reizenstein
Nicola Hodson
Rajesh K Agrawal
Pierre-Olivier Desaulle
Fiona M Muldoon
Cecilia Reyes Leuzinger
Commencement of employment
8 Feb 2023
1 Jul 2016
11 Aug 2016
10 Apr 2019
10 Apr 2019
1 Aug 2021
1 Jan 2021
31 May 2022
31 May 2022
AGM expiry year
2026
2024
20241
2025
2025
20242
20243
2025
2025
1 At the 2024 AGM it will be proposed to shareholders to extend to 2025 AGM.
2 At the 2024 AGM it will be proposed to shareholders to extend to 2027 AGM.
3 At the 2024 AGM it will be proposed to shareholders to extend to 2025 AGM.
The standard approach for Non-Executive Director appointments is that the appointment expires at the AGM following the end of
a three year term, notwithstanding the fact that each Non-Executive Director is subject to annual re-election at each AGM.
Approach to remuneration for employees other than directors
The Committee also has oversight of remuneration arrangements elsewhere in the Group. The following tables set out the
additional incentive arrangements for other staff within the organisation.
Other incentive arrangements at Beazley (not applicable to Executive Directors):
Element
Profit related pay plan
Support bonus plan
Objective
To align underwriters’ reward with the
profitability of their account.
To align staff bonuses with individual
performance and achievement of objectives.
Retention shares
To retain key staff
Summary
Profit on the relevant underwriting account as
measured at three years and later.
Participation is limited to staff members not on the
executive or in receipt of profit related pay bonus.
The support bonus pool may be enhanced by a
contribution from the enterprise bonus pool.
Used in certain circumstances. Full vesting
dependent on continued employment over six years.
Underwriter bonus plan – profit related pay plan
Underwriters participate in a profit related pay plan based upon the profitability of their underwriting account. Executive Directors
do not participate in this plan.
The objective of the plan is to align the interests of the Group and the individual through aligning an underwriter’s reward to the
long term profitability of their portfolio. Underwriters who have significant influence over a portfolio may be offered awards under
the plan. There is no automatic eligibility. Profit related pay is awarded irrespective of the results of the Group. Awards are
capped.
This bonus is awarded as cash and is based upon a fixed proportion of profit achieved on the relevant underwriting account as
measured at three years and later. Any movements in prior years are reflected in future year payments as the account develops
after three years. For long-tail accounts the class is still relatively immature at the three-year stage and therefore payments will
be modest. Underwriters may receive further payouts in years four, five and six (and even later) as the account matures.
Therefore each year they could be receiving payouts in relation to multiple underwriting years.
If the account deteriorates as it develops any payouts are ‘clawed back’ through reductions in future profit related pay bonuses.
From 2012 onwards any new profit related pay plans may be at risk of forfeiture or reduction if, in the opinion of the
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139
Remuneration Committee, there has been a serious regulatory breach by the underwriter concerned, including in relation to the
Group’s policy on conduct risk. The Remuneration Committee also have oversight for all material risk takers who participate in
the profit related pay plan.
The fixed proportion is calculated based upon profit targets which are set through the business planning process and reviewed
by a Committee formed of Executive Committee members and functional specialists including the Group actuary. Underwriting
risk is taken into account when setting profit targets.
In addition to profit related pay, underwriters are also eligible to receive a discretionary bonus, based upon performance, from
the enterprise bonus pool. A proportion of this bonus may be paid in deferred shares, which vest after three years subject to
continued employment.
Support bonus plan
Employees who are not members of the Executive and who do not participate in the underwriters’ profit related pay plan
participate in a discretionary bonus pool. This pool provides employees with a discretionary award of an annual performance
bonus that reflects overall individual performance including meeting annual objectives.
A proportion of this award may also be dependent on the Group’s ROE and therefore allocated from the enterprise bonus pool.
A proportion of this bonus may be paid in deferred shares, which vest after three years subject to continued employment.
UK SAYE
The Company operates an HMRC-approved SAYE scheme for the benefit of UK-based employees. The scheme offers a three-
year savings contract period with options being offered at a 20% discount to the share price on grant. Monthly contributions are
made through a payroll deduction on behalf of participating employees. The UK SAYE scheme has been extended to eligible
employees in Singapore, Ireland, Canada, France, Germany and Spain. The Irish SAYE scheme has been approved by the Irish
Revenue. However due to changes in Irish regulations in 2021 it was no longer possible to offer an Irish tax approved SAYE
plan. Instead, eligible Irish employees were invited to participate in the international SAYE plan offering on a non-tax approved
basis. The updated SAYE plan rules were approved at the 2022 AGM.
US SAYE
The Beazley plc savings-related share option plan for US employees permits all eligible US-based employees to purchase shares
of Beazley plc at a discount of up to 15% to the shares’ fair market value. Participants may exercise options after a two-year
period. The plan is compliant with the terms of section 423 of the US Internal Revenue Code and is similar to the SAYE scheme
operated for UK-based Beazley employees.
Retention shares
The retention plan may be used for recruitment or retention purposes. Any awards vest at 25% per annum over years three to
six. In line with policy, existing Executive Directors do not participate in this plan and no Executive Directors have subsisting
legacy awards outstanding.
Annual percentage change in remuneration of Directors and employees
2022 -2023
2021 -2022
2020 -2021
2019 -2020
Salary
Benefits
Bonus
Salary
Benefits
Bonus
Salary
Benefits
Bonus
Salary
Benefits
Bonus
Executive Directors
All employees
7.6
16.4
167.1
4.5
11.3
-3.5
3.2
11.1
119.3
3.5
-12.8
-30.5
Adrian P Cox1
19.0
5.6
138.0
3.5
8.8
-45.4
23.2
22.1
n/a
2.6
-7.2
-100
Sally M Lake
5.0
6.2
89.0
3.5
5.8
-46.9
11.4
9.5
n/a
2.9
15.4
-100
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Directors’ remuneration report
Annual remuneration report
continued
Non-Executive Directors
2022
-2023
2021
-2022
2020
-2021
2019
-2020
Salary
Benefits
Bonus
Salary
Benefits
Bonus
Salary
Benefits
Bonus
Salary
Benefits
Bonus
Clive C R
Bannister²
-
n/a
n/a
–
n/a
n/a
–
n/a
n/a
–
n/a
n/a
Christine
LaSala3
-62.5
n/a
n/a
31.7
n/a
n/a
8.7
n/a
n/a
40.0
n/a
n/a
Robert A
Stuchbery4,8
5.7
n/a
n/a
8.0
n/a
n/a
3.5
n/a
n/a
16.6
n/a
n/a
A John
Reizenstein
10.3
n/a
n/a
5.9
n/a
n/a
–
n/a
n/a
2.5
n/a
n/a
Nicola
Hodson
2.2
n/a
n/a
8.0
n/a
n/a
–
n/a
n/a
2.5
n/a
n/a
Pierre-Olivier
Desaulle
2.0
n/a
n/a
14.1
n/a
n/a
–
n/a
n/a
–
n/a
n/a
Rajesh K
Agrawal5
13.8
n/a
n/a
12.2
n/a
n/a
–
n/a
n/a
–
n/a
n/a
Cecilia
Reyes
Leuzinger6
13.9
n/a
n/a
–
n/a
n/a
–
n/a
n/a
–
n/a
n/a
Fiona M
Muldoon7,8
30.9
n/a
n/a
–
n/a
n/a
–
n/a
n/a
–
n/a
n/a
Note: Salary and bonus are compared against all employees of the Group. Benefits and pension are compared against all UK employees, reflecting the Group’s
policy that benefits are provided by reference to local market levels.
During 2022 and 2023 a number of the Non-Executive Directors joined additional Board Committees and took on interim responsibilities and therefore received
additional fees. Therefore, for these Non-Executive Directors, the year-on-year comparisons reflect their additional responsibilities and corresponding fees.
1 Adrian received a salary increase above the wider workforce with effect from 1 January 2023 to bring in line with comparator groups.
2 Clive C R Bannister was appointed a member of the Beazley plc Board from 8 February 2023 and Chair of the Beazley plc Board and Nomination Committee upon
conclusion of the AGM 2023.
3 Christine LaSala acted as interim Chair of the Beazley plc Board and Chair of the Nomination Committee from 24 October 2022 until 30 April 2023, returning to
Senior Independent Director and member of the Remuneration Committee from 1 May 2023. Christine LaSala also stepped down from the Beazley Furlonge
Limited Board on 18 December 2023.
4 Robert A Stuchbery acted as interim Senior Independent Director from 24 October 2022 until 30 April 2023, and stepped down as the Beazley plc Risk Chair on
28 September 2023. Robert A Stuchbery was appointed Chair of the Beazley Furlonge Limited Board on 18 December 2023.
5 Rajesh K Agrawal joined as a Non-Executive Director of the Remuneration Committee with effect from 26 April 2022 and a Non-Executive Director of the Beazley
Insurance Company, Inc Board with effect 5 September 2023.
6 Cecilia Reyes Leuzinger joined as a Non-Executive Director of the Beazley plc Board, Audit & Risk Committee and Remuneration Committee with effect from 31
May 2022.
7 Fiona M Muldoon joined as a Non-Executive Director of the Beazley plc Board and Audit & Risk Committee with effect from 31 May 2022, and became Chair of
the Risk Committee on 29 September 2023.
8 With effect from 24 October 2022 Robert A Stuchbery stepped down as employee voice of the Beazley plc Board and Fiona M Muldoon took on the role.
Statement of Directors’ shareholdings and share interests
For the year ending 31 December 2023 the CEO had a shareholding requirement of 300% of salary and the GFD had a
shareholding requirement of 200% of salary. The CEO has exceeded the shareholding guideline, the GFD has fallen short of the
shareholding guideline (see chart below).
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Beazley | Annual report 2023
141
Shareholding versus holding requirement995%177%Actual holdingHolding requirementA CoxS Lake 0%200%400%600%800%1000%
The table below shows the total number of Directors’ interests in shares as at 31 December 2023 or date of cessation as a
director. As at 4 March 2024, there have been no changes.
Conditional
shares not
subject to
performance
conditions
(deferred shares
and retention
shares)
Nil cost options
subject to
performance
conditions (LTIP
awards)
Options over
shares subject
to savings
contracts (SAYE)
Unexercised nil
cost options
Options
exercised in the
year
121,439
97,790
915,379
524,871
0
6,250
9,823
8,816
52,428
23,881
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Number of
shares owned
(including by
connected
persons)
1,154,248
142,818
138,000
23,000
27,464
1,824
53,085
16,251
97,578
0
26,086
Name
Adrian P Cox
Sally M Lake
Clive C R Bannister1
Rajesh K Agrawal
Pierre-Olivier Desaulle
Nicola Hodson
Christine LaSala
A John Reizenstein
Robert A Stuchbery
Fiona M Muldoon
Cecilia Reyes Leuzinger
1 Clive C R Bannister was appointed a member of the Beazley plc Board from 8 February 2023 and Chair of the Beazley plc Board and Nomination Committee upon
conclusion of the AGM 2023.
CEO Pay versus performance
The following graph sets out Beazley’s 10 year total shareholder return performance to 31 December 2023, compared with the
FTSE All Share and FTSE 350 Non-Life Insurance indices. These indices were chosen as comparators as they comprise
companies listed on the same exchange and, in the case of the Non-Life Insurance index, the same sector as Beazley.
142
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www.beazley.com
Value of £100 invested on 31 December 2013Total shareholder return performanceBeazleyFTSE All ShareFTSE 350 Non-Life Insurance1314151617181920212223050100150200250300350400
Directors’ remuneration report
Annual remuneration report
continued
Year
2014
2015
2016
2017
2018
2019
2020
2021 (D A Horton)1
2021 (A P Cox as CEO)
2022
2023
CEO single figure of
total remuneration
£3,745,989
£3,711,647
£3,715,146
£3,140,145
£1,524,600
£2,157,018
£631,890
£145,896
£2,100,534
£1,507,155
£3,636,444
Annual variable award
(% of maximum
opportunity)
74%
73%
70%
38%
19%
57%
–
–
75%
38%
100%
Long term incentives
vesting (% of maximum
opportunity)
100%
100%
100%
98%
41%
37%
6.6%
–
17.8%
17.5%
100%
1 D A Horton stepped down as CEO on 31 March 2021 and was succeeded by A P Cox. The figures for A P Cox relate to the whole of 2021, including the portion of
the year when he was Chief Underwriting Officer.
Pay ratio data
The following table provides pay ratio data in respect of the CEO’s total remuneration compared to the 25th, median and 75th
percentile UK employees.
Financial year
2023
2022
2021
2020
2019
Method
Option A
Option A
Option A
Option A
Option A
25th percentile pay ratio
48:1
28:1
39:1
13:1
42:1
Median pay ratio
29:1
16:1
21:1
7:1
25:1
75th percentile pay ratio
19:1
11:1
14:1
5:1
15:1
The employees used for the purposes of the table above were identified on a full-time equivalent basis as at 31 December
2023. Option A was chosen as it is considered to be the most accurate way of identifying the relevant employees. This captures
all relevant pay and benefits and aligns to how the single figure table is calculated.
The following table provides salary and total remuneration information in respect of the employees at each quartile for 2023.
Element of pay
Salary
Total remuneration
25th percentile employee
£47,726
£75,585
Median employee
£75,206
£125,067
75th percentile employee
£110,000
£191,227
Note: Salary and bonus are compared against all employees of the UK Group.
The pay ratios for 2023 have increased in-line with the Group's exceptional performance and are comparable with 2019. This is
driven by strong underwriting, record incentive out-turns, significant share price growth and an upturn in investment
performance.
In-line with our pay-for-performance culture a significant portion of the CEO’s remuneration is variable and dependent on
performance. Therefore there is a direct correlation between Company performance, the CEO’s single figure and the pay ratios.
The Committee is comfortable that the pay ratios for 2023 align to the pay and progression policies for employees and, that the
link between individual awards, the delivery of strategy and the long-term performance of the Company through our incentive
schemes drive behaviours consistent with company purpose, values and strategy and appropriately motivate and reward.
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Beazley | Annual report 2023
143
Relative importance of spend on pay
The following table shows the relative spend on pay compared to distributions to shareholders:
2023
2022
Overall expenditure on pay
$449.3m
$302.5m
Shareholder distributions
(dividends in respect of the
year)
$118m
$110m
Directors’ share plan interests ▪
Details of share plan interests of those Directors who served during the period are as follows:
Adrian P Cox
Deferred bonus:
LTIP (see notes):
SAYE:
Sally M Lake
Deferred bonus:
LTIP (see notes):
SAYE:
Outstanding
options at 1 Jan
2023
Options
granted Options exercised
Lapsed
unvested
134,472
694,707
0
93,736
398,473
6,250
32,307
307,543
0
25,464
178,252
0
45,340
7,088
0
21,410
2,471
0
0
79,783
0
0
49,383
0
Outstanding
options at 31
Dec 2023
121,439
915,379
0
97,790
524,871
6,250
Notes to share plan interests table
Deferred bonus
Deferred bonus awards are made in the form of conditional shares that normally vest three years after the date of
award.
Performance conditions: all awards are subject to NAVps performance, with 50% measured over a three year period
and 50% measured over a five year period. NAVps < RFR+7.5% p.a. equates to 0% vesting, NAVps = RFR+7.5% p.a.
equates to 10% vesting, NAVps = RFR+10% p.a. equates to 25% vesting, NAVps = or > RFR+15% p.a. equates to
100% vesting, with straight-line pro-rated vesting between these points.
LTIP awards
LTIP 2017 – 3/5 year
LTIP 2018 – 3/5 year
LTIP 2019 – 3/5 year
LTIP 2020 – 3/5 year
LTIP 2021 – 3/5 year
LTIP 2022 – 3/5 year
LTIP 2023 – 3 year
Awards were made on 8 February 2017 at a mid-market share price of 434.33p.
Awards expire in February 2027.
Awards were made on 13 February 2018 at a mid-market share price of 553.33p.
Awards expire in February 2028.
Awards were made on 12 February 2019 at a mid-market share price of 510.16p.
Awards expire in February 2029.
Awards were made on 11 February 2020 at a mid-market share price of 595.5p.
Awards expire in February 2030.
Awards were made on 10 February 2021 at a mid-market share price of 367.0p.
Awards expire in February 2031.
Awards were made on 15 February 2022 at a mid-market share price of 485.3p.
Awards expire in February 2032.
Awards were made on 19 May 2023 at a mid-market share price of 609.67p.
Awards expire in May 2033.
Share prices
The market price of Beazley ordinary shares at 29 December 2023 (the last trading day of the year) was 522.0p and the range
during the year was 503.0p to 687.5p.
Remuneration Committee
The Committee consists of only Non-Executive Directors and during the year the members were; Christine LaSala, Nicola
Hodson, Cecilia Reyes Leuzinger, Rajesh K Agrawal and Robert A Stuchbery. The Board views each of the Committee members
as independent.
The Committee considers the individual remuneration packages of the CEO, Executive Directors and Executive Committee
members. It also has oversight of the salary and bonus awards of individuals outside the Executive Committee who either
directly report to Executive Committee members or who have basic salaries over £200,000, as well as the overall bonus pool
and total incentives paid by the Group. The terms of reference of the Committee are available on the Company’s website. The
Committee met six times during the year. Further information on the key activities of the Committee for 2023 can be found
within the Board Governance section on page 121.
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Directors’ remuneration report
Annual remuneration report
continued
During the year the Committee was advised by remuneration consultants from Deloitte LLP. Total fees in relation to Executive
remuneration consulting were £104,000. Deloitte LLP also provided advice in relation to share schemes, tax, internal audit and
compliance support.
Deloitte LLP was appointed by the Committee. Deloitte LLP is a member of the remuneration consultants’ Group and as such
voluntarily operates under a code of conduct in relation to Executive remuneration consulting in the UK. The Committee agrees
each year the protocols under which Deloitte LLP provides advice, to support independence. The Committee is satisfied that the
advice received from Deloitte LLP has been objective and independent.
Input was also received by the Committee during the year from the CEO, Head of Culture & People, Company Secretary and
Chief Risk Officer. However, no individual plays a part in the determination of their own remuneration.
Engagement with the workforce
As part of the regular cycle, the Committee is informed of pay and employment conditions of wider employees in the Group and
takes these into account when determining the remuneration for Executive Directors.
Statement of shareholder voting
The voting outcomes for the 2022 remuneration policy and annual remuneration report were as follows:
2022 remuneration policy
2022 annual remuneration report
Votes for
% for
475,662,878 95.26%
449,211,909 91.16%
Votes against
23,682,695
43,542,160
% against
4.74%
8.84%
Total votes cast
Votes withheld
(abstentions)
499,345,573 10,187,696
492,754,069 16,779,200
Annual general meeting
At the forthcoming AGM to be held on 25 April 2024, a binding resolution will be proposed to approve the Directors’
remuneration policy and an advisory resolution will be proposed to approve this annual remuneration report.
I am keen to encourage an ongoing dialogue with shareholders. Accordingly, if you would like to discuss any matter arising from
this report or remuneration issues generally, please email Christine Oldridge at christine.oldridge@beazley.com.
By order of the Board
Nicola Hodson
Remuneration Committee Chair
6 March 2024
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Beazley | Annual report 2023
145
Statement of Directors’ responsibilities
in respect of the annual report and financial statements
The Directors are responsible for preparing the annual
report and the Group financial statements in accordance
with applicable United Kingdom law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have elected to prepare the Group and parent
company financial statements in accordance with UK adopted
International Financial Reporting Standards (IFRSs) in
conformity with the Companies Act 2006.
Under the Financial Conduct Authority’s Disclosure Guidance
and Transparency Rules, Group financial statements are
required to be prepared in accordance with UK adopted IFRSs
and the requirements of the Companies Act 2006.
Under company law the Directors must not approve the Group
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and the
Company and of the profit or loss of the Group and the
Company for that period.
In preparing these financial statements the Directors are
required to:
• select suitable accounting policies in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and
Errors and then apply them consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the Group’s financial
position and financial performance;
• in respect of the Group financial statements, state whether
UK adopted IFRSs and the requirements of the Companies
Act 2006 have been followed, subject to any material
departures disclosed and explained in the financial
statements;
• in respect of the parent company financial statements,
state whether IFRSs in conformity with the Companies Act
have been followed, subject to any material departures
disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern
basis unless it is appropriate to presume that the Company
and the Group will not continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain the
Company’s and Group’s transactions and disclose with
reasonable accuracy at any time the financial position of the
Company and the Group and enable them to ensure that the
Company and the Group financial statements comply with
Section 403 of the Companies Act 2006. They are
responsible for such internal control as they determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a strategic report, Directors’ report,
Directors’ remuneration report and corporate governance
statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included on
the Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Disclosure of information to auditor
Each of the Directors in office at the date of approval of this
Directors’ report confirms that, so far as they are aware, there
is no relevant audit information of which the Company’s
Auditors are unaware; and each Director has taken all the
steps that he or she ought to have taken as a Director to
make himself or herself aware of any relevant audit
information and to establish that the Company’s Auditors are
aware of that information.
Responsibility statement of the directors in respect of the
annual financial report
Each of the Directors, whose details can be found on pages
80 to 82, to the best of their knowledge confirm:
• that the consolidated financial statements, prepared in
accordance with UK adopted IFRSs and the requirements of
the Companies Act 2006 give a true and fair view of the
assets, liabilities, financial position and profit of the parent
company and undertakings included in the consolidation
taken as a whole;
• that the annual report, including the strategic report and the
Directors' report, together includes a fair review of the
development and performance of the business and the
position of the Company and undertakings included in the
consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face; and
• that they consider the annual report and accounts, taken as
a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Group’s position and performance, business model and
strategy.
C Bannister
Chair
S M Lake
Group Finance Director
6 March 2024
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Directors’ report
Principal activity
Beazley plc (registered number 09763575) is the ultimate
holding company for the Beazley Group, a global specialist
risk insurance and reinsurance business operating through:
its managed syndicates at Lloyd’s in the UK; Beazley
Insurance Company, Inc., Beazley Excess and Surplus
Insurance, Inc., and Beazley America Insurance Company,
Inc., which are admitted insurance carriers in the US; and
Beazley Insurance dac, a European insurance company in
Ireland.
Management report
The Directors’ report, together with the strategic report on
pages 1 to 74, and the governance report on pages 76 to
151, serves as the management report for the purpose of
Disclosure, Guidance and Transparency Rule 4.1.8R.
Directors’ responsibilities
The statement of Directors’ responsibilities in respect of the
annual report and financial statements is set out on page
146.
Review of business
A more detailed review of the business for the year and a
summary of future developments are included in the
statement of the Chair, the Chief Executive’s statement and
the financial review.
Future business developments
Information relating to future business developments can be
found in the strategic report.
Going concern and viability statement
The financial review from page 60 contains details of the
financial position of the Group, its cash flows and its
borrowing facilities.
After reviewing the Group’s current and forecast solvency and
liquidity positions, 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. For this reason, the Board
considers it appropriate for the Group to continue to adopt
the going concern basis in preparing its accounts.
Further information on the Board's assessment of the Group
as a going concern is contained in Note 1e to the financial
statements on page 172.
In accordance with the UK Corporate Governance Code (the
Code), the Directors have assessed the viability of the Group.
The viability statement, which supports the going concern
basis mentioned above, is included in the Risk management
report on pages 73 to 74.
Information to be disclosed under LR9.84R
Results and dividends
The consolidated profit before taxation for the year ended 31
December 2023 amounted to $1,254.4m (2022: $584.0m).
The Directors have approved an interim dividend of 14.2p
(2023: 13.5p) payable in April 2024.
Information on interest
capitalised
Details of long-term incentive
schemes
Location
Note 26 (page 214)
Directors' Remuneration
Report
(page 126)
The trustees of the Employee Benefit Trust (EBT) waived its
rights to receive dividends on shares it holds for Beazley's
employees.
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Beazley | Annual report 2023
147
Research and development
In the ordinary course of business, the Group develops new
products and services in each of its business divisions and
develops IT solutions to support business requirements.
Auditor
Ernst & Young LLP (EY) has indicated its willingness to
continue in office. Resolutions to reappoint EY as auditor of
the Company and authorise the Audit Committee to determine
their remuneration will be proposed at the 2024 AGM.
Directors
The Directors of the Company who served during 2023 and/or
to the date of this report were as follows:
Adrian Cox
Anthony (John) Reizenstein
Cecilia Reyes Leuzinger
Christine LaSala
Clive Bannister
Fiona Muldoon
Nicola Hodson
Pierre-Oliver Desaulle
Rajesh Agrawal
Robert Stuchbery
Sally Lake
Chief Executive
Non-Executive Director
Non-Executive Director
Non-Executive Director
(interim Non-Executive
Chair until 25/04/2023)
Non-Executive Director
(appointed
08/02/2023)/Chair
(appointed 25/04/2023)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Group Finance Director
The Board is complying with the provision on annual re-
election of all Directors in accordance with the Code. The
appointment and replacement of Directors is governed by the
Company’s Articles of Association (the Articles), the Code,
Companies Act 2006 and related legislation. Directors may
be appointed by ordinary resolution of the Company or by the
Directors. Each Director shall retire and be eligible for election
or re-election at each annual general meeting. Directors
appointed may be appointed to hold any employment or
executive office with the Company. Directors may be removed
from office by special resolution of the Company. The Articles
may be amended by a special resolution of the shareholders.
Subject to the Articles, Companies Act 2006 and any
directions given by special resolution, the business of the
Company will be managed by the Board which may exercise
all the powers of the Company.
Directors’ interests
The Directors’ interests in shares of the Company, for those
Directors in office at the end of the year, including any
interests of a connected person (as defined in the Disclosure,
Guidance and Transparency Rules of the UK’s Financial
Conduct Authority), can be found in the Directors’
remuneration report on page 124. Details of Directors’
service contracts are given in the Directors’ remuneration
report. The Directors’ biographies are set out in the 'Board of
Directors' section of the annual report on pages 80 to 82.
Directors’ indemnities
The Company maintains Directors’ and Officers’ Liability
insurance which gives cover for legal action taken against its
Directors, subject to its terms. The Company has also granted
indemnities to each of its Directors to the extent permitted by
law in respect of costs of defending claims against them and
third-party liabilities. A copy of the indemnity is available for
inspection at the Company’s registered office during normal
business hours. These provisions, deemed to be ‘qualifying
third-party indemnity provisions’ pursuant to section 234 of
the Companies Act 2006, were in force during the year ended
31 December 2023 for the benefit of the then Directors of
the Company and remain in force as at the date of this report
for the current Directors of the Company. Indemnities have
also been granted to directors of three of the Company’s
wholly owned subsidiaries. There is also Directors' and
Officers’ Liability insurance in place which covers directors on
all direct and indirect subsidiaries of the Beazley Group.
Conflicts of interest
The Board has established procedures for the management of
potential and actual conflicts of interest of the Directors in
accordance with the Companies Act 2006 and the Articles of
Association. All Directors are responsible for notifying the
Company Secretary and declaring at each Board meeting any
new actual or potential conflicts of interest. The Directors are
also responsible for declaring any existing conflicts of interest
which are relevant to transactions to be discussed at the
Board meeting. None of the Directors had any significant
contract with the Company or with any Group undertaking
during the year.
Substantial shareholdings
As at 31 December 2023, the Board had been notified of the
following shareholdings of 3% or more of the Company’s
issued ordinary share capital, in accordance with Disclosure
and Transparency Rule (DTR) 5. The information provided
below was correct at the date of notification. The Company
has only disclosed those interests of which it has been
notified. It should be noted that these holdings are likely to
have changed since being notified to the Company. However,
notification of any change is not required until the next
applicable threshold is crossed.
Fidelity Management & Research
Wellington Management
BlackRock
MFS Investment Management
Invesco
Number of
ordinary shares
44,225,198
34,357,006
33,587,793
26,529,103
16,181,198
%
6.6
5.1
5.0
5.0
3.0
The Company has not been notified of any changes to these
shareholdings between 1 January 2024 and 5 March 2024.
Note: All percentages are calculated at the date of
notification. All interests disclosed to the Company in
accordance with DTR 5 can be found in the news and alerts
section of our corporate website: www.beazley.com
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www.beazley.com
Directors’ report continued
Share capital
As at 31 December 2023, the Company’s issued share
capital comprised 672,542,440 representing 100% of the
total issued share capital. Details of the movement in
ordinary share capital during the year can be found in Note 22
on page 209. The Company also has two deferred shares of
£1 in issue. The rights attached to the shares are set out on
the Company's Articles. There are no restrictions on the
transfer of shares in the Company other than as set out in the
Articles and certain restrictions which may from time to time
be imposed by law and regulations.
Authority to purchase own shares
On 25 April 2023 shareholders approved an authority, which
will expire on 25 July 2024 or, if earlier, at the conclusion of
the 2024 Annual General Meeting (AGM), for the Company to
repurchase up to a maximum of 67,120,402 ordinary shares
(representing approximately 10% of the Company’s issued
ordinary share capital at that time).
The Board continues to regard the ability to repurchase
issued shares in suitable circumstances as an important part
of the financial management of the Company. As noted in the
Chair's Statement on page 8, the Company intends to use
the authority this year to commence a share buyback
programme. More detail about this proposal will be given in
an announcement to the market and in the notice of the AGM.
A resolution will also be proposed at the 2024 AGM to renew
the authority for the Company to purchase its own share
capital up to the specified limits for a further year.
Employee Benefit Trust
The Company has an EBT. Details of the shares held by the
EBT as at 31 December 2023 are set out in Note 23. During
the year shares have been released from the EBT in respect
of shares schemes for employees. The trustee of the EBT
does not vote the shares it holds on behalf of employees at
the AGM and waives its right to dividends on the shares.
Significant agreements – change of control
Details of an agreement to which the Company is party that
alters on change of control of the Company following a
takeover bid are as follows.
In 2023, we renewed the $450m multi-currency standby letter
of credit and revolving credit facility. Key terms remain
unchanged. The agreement, which is between the Company,
other members of the Group and various banks, provides that
if any person or groups of persons acting in concert gains
control of the Company or another Group obligor, then: (a) the
banks are thereafter not obliged to participate in any new
revolving advances or issue any letter of credit; and (b) the
facility agent may:
(i)
require the Group obligors to repay outstanding revolving
advances made to them together with accrued interest;
and
(ii) ensure that the liabilities under letters of credit are
reduced to zero or otherwise secured by providing cash
collateral in an amount equal to the maximum actual and
contingent liabilities under such letters of credit.
Furthermore, the facility agreement includes a covenant that
no Group obligor (other than a wholly owned subsidiary) will,
without prior consent of the banks, amalgamate, merge
(within the meaning of generally accepted accounting
principles in the UK), consolidate or combine by scheme of
arrangement or otherwise with any other corporation or
person. If this covenant should be breached without prior
consent, then the facility agent may: (a) require the Group
obligors to repay outstanding revolving advances made to
them together with accrued interest; (b) ensure that the
liabilities under letters of credit are reduced to zero or
otherwise secured by providing cash collateral in an amount
equal to the maximum actual and contingent liabilities under
such letters of credit; (c) declare that any unutilised portion of
the facility is cancelled; and (d) give a notice of non-extension
to Lloyd’s in respect of any letter of credit.
Annual general meeting
The AGM of the Company will be held on 25 April 2024 at
14:30. The notice of the AGM details the business to be put
to shareholders.
Corporate, social and environmental responsibility and
charitable donations
The Company’s corporate, social and environmental activities
are set out in the statement of the Chair on page 8, the
Responsible Business report on pages 17 to 21, and in the
TCFD statement from pages 22 to 44. During 2023, Beazley
and employees donated $602,932 to charities.
Employee engagement
We are committed to employee involvement across the
business. We place great emphasis on open and regular
communication, to ensure employees are well informed of
Beazley’s performance and strategy. Active employee
engagement has always been a priority and has become
increasingly important due to our activity-based working
policies which allow colleagues to work flexibly and as many
of our teams are based across different locations.
During 2023, all employees were invited to participate in
surveys on the business and its culture, and on Beazley’s
leadership. An independent culture review was also carried
out. The key findings from these surveys and actions to
address these findings were discussed by the Board. Insight
gained through various employee networks and via the day-to-
day engagement of senior management with the workforce
was also shared with the Board. In addition, employee views
have been obtained by the Non-Executive Director nominated
by the Board, Fiona Muldoon. Throughout the year, Fiona has
attended a variety of forums with employees to get direct
feedback.
Information on our employee engagement activities and how
feedback has informed decisions can be found in the
Stakeholder Engagement report on pages 50 to 51.
Employees are able to share financially in Beazley’s success.
Annual bonus payments may be awarded and relate to the
performance of the Company, as well as an individual’s own
performance. Some of the bonus payment may be deferred
into shares. The Company operates a Save As You Earn
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scheme to support share ownership amongst employees, and
a long-term incentive plan is offered to senior employees. A
share incentive plan is also set to be launched in 2024, to
provide an additional mechanism for employees to share in
Beazley’s success.
Inclusion & diversity and equal opportunity
Information concerning inclusion and diversity, including
statistics on the number of women in senior leadership roles,
can be found in the Responsible Business section on pages
17 to 21 and in the Nomination Committee report on pages
100 to 105.
A key part of Beazley’s strategy is to attract and nurture
talented colleagues who champion diversity of thought. We
are committed to providing equal opportunities irrespective of
age, disability, gender reassignment, marital status,
pregnancy and maternity, race, nationality or ethnic origin,
religion or religious beliefs, sexuality, socio-economic group or
working pattern. We hire people with wide perspectives
leading to a more dynamic, innovative, and responsive
organisation in touch with the changing world and
marketplace. All applications for employment are objectively
assessed on the basis of the skills and aptitudes of the
applicant in light of the requirements of the role.
It is the policy of the Group that full and fair consideration is
given to all job applications from disabled people. The policy
also requires that the training, career development and
promotion of disabled persons should, so far as possible, be
identical to that of other employees. In the event an employee
becomes disabled, every effort is made to ensure that their
employment with the Group continues, and that appropriate
support is arranged.
Political donations policy
It is the policy of the Beazley Group that no political
donations are made by and on behalf of the Company
and its subsidiaries.
Financial instruments
Derivatives are used to manage the Group’s capital position,
details of these derivatives are contained in Note 19 to the
financial statements. Disclosure with respect to financial risk
is included in the Risk management and compliance report
from page 69 and in Note 30 to the financial statements.
Carbon emissions
The following data is set out to demonstrate compliance
with the Streamlined Energy and Carbon Reporting (SECR)
requirements set out by HM UK Government in the
Companies Act 2006 (strategic report and Directors’ report)
Regulations 2013 and the Companies (Directors’ report) and
Limited Liability Partnerships (energy and carbon report)
Regulations 2018.
Methodology
The scope of this reporting differs from the carbon emissions
reported in the metrics section of the TCFD report, in that it
only covers UK-based operations. Global comparisons for
overall energy consumption are also provided for reference.
Data has been collated from a number of sources. For all
travel including car hire, hotels, rail, air and taxi use data has
been provided from our booking agent partners, or through
invoices on our accountancy system. Energy data and
company car details have been sourced from utility bills
and lease agreements, respectively.
Company cars
There were eight company cars used across 2023 of which
five are current at the end of 2023. All five cars are either
hybrids or electric.
Electricity for utilities
The scope of reporting for SECR covers Beazley’s UK
operations in London and Birmingham. Global reporting
covers: Dublin (Ireland), Munich (Germany), Paris (France),
Barcelona (Spain), Singapore (Asia), Atlanta (US), Boston
(US), Chicago (US), Dallas (US), Farmington (US), New York
(US), San Francisco (US), Philadelphia (US), Denver (US),
Houston (US), Los Angeles (US), Miami (US), Vancouver
(Canada), Toronto (Canada), and Montreal (Canada).
Beazley’s Hamburg office, as well as US subsidiaries,
Lodestone (Lewisville) & BHI Digital (Miami), are excluded.
Exclusions
Energy consumption from business travel, with the exception
of company cars and hire cars, has not been included as
Beazley does not operate the transport in question.
Energy report
Beazley has a total of 2457.58 FTE staff (including
contractors) as at 1 January 2024, of which are considered
in scope for the global energy consumption reported in the
tables below. Within the UK, Beazley has 1269.78 FTE
(including contractors). This is equivalent of 51.66% of
our global workforce.
Company cars
The total estimated kWh equivalent for fuel consumption
in 2023 is 31,071.12 kWh.
Energy for heating, cooling and small power
There was no direct gas use within Beazley operations in
2023, with landlords providing heating to our offices.
Electricity
UK
Europe
USA
Rest of World
Total
Energy consumption kWh
2022
758,294
223,294
1,607,857
222,642
2,812,088
2023
771,063
176,516
1,480,816
128,016
2,556,411
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Directors’ report continued
We were able to procure energy from certified renewable sources for the following locations in 2023:
Office location
London
Dublin
San Francisco
Energy consumption (kWh)
628,432
61,258
53,732
Car hire
The energy use from UK car hire was estimated to be 110.61kWh. Globally energy use from car hire was estimated to be
42,030.55kWh.
Overall energy consumption
Within the scope of the SECR, total energy consumption within the UK was 802,244.41kWh. This equates to 631.80kWh/ FTE
in 2023, down from 759.82 kWh/ FTE in 2022. This reduction is primarily due to reduction in office space Beazley held in
2023, when compared to 2022.
For carbon emissions associated with Beazley's operations in the UK, please see page 42 of this report for Scope 1 and Scope
2 emissions.
Target for 2024
Beazley is currently in the process of setting new targets for the reduction of GHG emissions. These will be published in
Beazley's new ESG strategy, later in 2024.
Matters disclosed in the strategic report
The Directors consider the following matters of strategic importance and have chosen to disclose these in the strategic report
to the accounts as permitted by section 414C (11) of the Companies Act 2006:
Future business developments
Employee engagement
How the Directors have had regard to the need to foster business
relationships with suppliers, customers and others, and the impact
of this regard on decision making
Corporate governance report
Directors' service contracts
Chief Executive's statement (pages 10 to 11)
Chief Underwriting Officer's report (page 12 to
14)
Stakeholder engagement report (pages 50 to
51)
Stakeholder engagement report (pages 50 to
56)
Section 172 statement (page 57)
Pages 83 to 99
Directors' Remuneration Report (pages 138 to
139)
Matters disclosed elsewhere within the annual report
The following matters are disclosed in the notes to the financial statements:
Financial risk management objectives and policies including credit risk, liquidity risk
Details of hedge accounting and derivative financial instruments
Details of any overseas branches
Recent developments and post balance sheet events
Note 30 (pages 228 to 241)
Note 3 (page 183)
Note 31 (page 242)
Note 34 (page 245)
C P Oldridge
Company Secretary
22 Bishopsgate
London
EC2N 4BQ
6 March 2024
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151
Independent auditor’s report
to the members of Beazley plc
Opinion
In our opinion:
• Beazley plc’s Group financial statements and parent company financial statements (the “financial statements”) give a true
and fair view of the state of the Group’s and of the parent company’s affairs as at 31 December 2023 and of the Group’s
profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting
standards;
• the parent company financial statements have been properly prepared in accordance with UK adopted international
accounting standards as applied in accordance with section 408 of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Beazley plc (the ‘parent company’) and its subsidiaries (the ‘Group’) for the year
ended 31 December 2023 which comprise:
Group
Consolidated statement of profit or loss for the year
ended 31 December 2023
Consolidated statement of comprehensive income for the
year ended 31 December 2023
Consolidated statement of changes in equity for the year
ended 31 December 2023
Consolidated statement of financial position as at 31
December 2023
Consolidated statement of cash flows for the year ended
31 December 2023
Related notes 1 to 34 to the financial statements,
including material accounting policy information
Parent company
Company statement of financial position as at 31 December 2023
Company statement of changes in equity for the year ended 31
December 2023
Company statement of cash flows for the year ended 31 December
2023
Related notes 1 to 9 to the financial statements, including material
accounting policy information
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international
accounting standards and as regards the parent company financial statements, as applied in accordance with section 408 of
the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We are independent of the Group and parent in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent company and we
remain independent of the Group and the parent company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and parent
company’s ability to continue to adopt the going concern basis of accounting involved evaluating the reasonableness of the
Group’s going concern assessment. Beazley’s going concern assessment period used was 12 months from the date the
financial statements were authorised for issue. We verified that the Board approved the forecasts used in management’s
analysis and determined whether management’s going concern period was appropriate. We challenged and independently
stressed the assumptions used by Beazley to develop their forecast, which included liquidity projections and reviewed the
clerical accuracy of Beazley’s base case, as well as assessed the accuracy of management’s historic forecasts to actual
performance. Furthermore, management assessed the Group’s solvency and liquidity position if a natural catastrophe or cyber
catastrophe occurred, including potential mitigation actions that management could take to maintain viability. We evaluated the
reasonableness and timeliness of these mitigating actions that management could put in place.
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Auditors’ report continued
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and parent company’s ability to continue as a going concern
for a period of twelve months from the date the financial statements are authorised for issue.
In relation to the Group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to
the Group’s ability to continue as a going concern.
Overview of our audit approach
Audit scope
• We performed an audit of the complete financial information of two components (UK fully-aligned
Syndicates and Beazley Insurance Company Inc (‘BICI’)) and audit procedures on specific balances for a
further five components (Beazley Insurance Designated Activity Company (‘BIDAC’), Beazley Furlonge
Limited (‘BFL’), Beazley Management Limited (‘BML’), Beazley plc and Beazley Services USA Inc.
(‘BUSA’)).
• The components where we performed full or specific audit procedures accounted for 92% of Profit before
tax, 100% of Insurance Revenue and 95% of Total assets.
• Revenue recognition (CSM release and experience adjustments)
• Valuation of (re)insurance contract assets/liabilities
• Valuation of level 3 financial investments
• Overall Group materiality of $27m (2022: $11.3m) which represents 5% of pre-tax profits on a 5-year
average adjusted for Covid-19 losses in 2020 and the gain on sale of the Beazley Benefit business in
2021. (2022: 5% of pre-tax profits on a 5-year average adjusted for Covid-19 losses in 2020 and the gain
on sale of the Beazley Benefit business in 2021).
Key Audit
Matters
Materiality
An overview of the scope of the parent company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial
statements. We take into account size, risk profile, the organisation of the Group and effectiveness of group-wide controls,
changes in the business environment, the potential impact of climate change and other factors when assessing the level of
work to be performed at each company.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the financial statements, of the 34 legal entities within the Group, we selected seven
components covering entities within UK, Ireland and US, which represent the principal business units within the Group.
Of the seven components selected, we performed an audit of the complete financial information of two components (“full scope
components”) which were selected based on their size or risk characteristics. For the remaining five components (“specific
scope components”), we performed audit procedures on specific accounts within that component that we considered had the
potential for the greatest impact on the significant accounts in the financial statements either because of the size of these
accounts or their risk profile. For group-wide processes we performed audit procedures over the specific accounts which consist
of all IFRS 17 related adjustments, Taxation, Cash and cash equivalents, Share based payments, Right of use assets, Lease
liabilities, Financial assets and Intangible assets.
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Scope
Full
Details of the seven reporting components are set out below:
Component
UK fully-aligned Syndicates (Syndicates
2623, 3623 & 3622)
Beazley Insurance Company Inc. (‘BICI’)
Beazley Services USA Inc. (BUSA)
Beazley Insurance Designated Activity
Company (‘BIDAC’)
Beazley Furlonge Limited (BFL)
Beazley Management Limited (BML)
Full
Specific
Specific
Specific
Specific
Beazley Plc
Specific
Auditor
EY Component Team (UK)
EY Component Team (New York)
EY Component Team (New York)
EY Primary Team
EY Primary Team
EY Primary Team & EY Component Team
(New York)
EY Primary Team
The reporting components where we performed audit procedures accounted for 92% (2022: 95%) of the Group’s Profit before
tax, 100% of the Group’s Insurance Revenue (2022: 96% of the Group’s Revenue) and 95% (2022: 98%) of the Group’s Total
assets. For the current year, the full scope components contributed 79% (2022: 87%) of the Group’s Profit before tax, 93% of
the Group’s Insurance Revenue (2022: 89% of the Group’s Revenue) and 18% (2022: 7%) of the Group’s Total assets. The
specific scope component contributed 13% (2022: 8%) of the Group’s Profit before tax, 7% of the Group’s Insurance Revenue
(2022: 7% of the Group’s Revenue) and 77% (2022: 91%) of the Group’s Total assets. The audit scope of these components
may not have included testing of all significant accounts of the component but will have contributed to the coverage of
significant accounts tested for the Group.
Of the remaining 27 legal entities that together represent 8% (2022: 5%) of the Group’s Profit before tax, none are individually
greater than 3% of the Group’s Profit before tax. For these components, we performed other procedures, including analytical
review, testing of significant balances, review of consolidation journals and intercompany eliminations to respond to any
potential risks of material misstatement to the Group financial statements.
Changes from the prior year
In the prior year we determined scoping based on individual Syndicates, which meant that Syndicate 2623 was designated a full
scope component and Syndicate 3623 was specific scope. For the 2023 audit, in light of how the Syndicates report on IFRS
17 internally, we have reassessed this approach and have concluded that the fully-aligned Syndicates are treated as one
component due to these being managed together with the same support function and finance team.
Furthermore, the EY Primary Team have audited all the IFRS 17 adjustments for the Group as these are booked centrally.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each
of the components by us, as the primary audit engagement team, or by component auditors from EY UK and other global
network firms operating under our instruction.
The primary audit team provided detailed audit instructions to the component teams which included guidance on areas of focus,
including the relevant risks of material misstatement detailed above, and set out the information required to be reported to the
primary audit team.
For three specific scope components (BIDAC, BFL and Beazley plc) and all group-wide processes, all audit procedures were
performed directly by the primary audit team whilst for BML (specific scope), the audit procedures were performed by the
primary audit team and the component audit team in the United States of America. UK fully-aligned Syndicates (full scope
component) was audited by a component audit team in the United Kingdom, and the full scope component BICI and the specific
scope component BUSA were audited by a component audit team in the United States of America. For the companies where the
work was performed by component auditors, we determined the appropriate level of involvement to enable us to determine that
sufficient audit evidence had been obtained as a basis for our opinion on the Group as a whole.
The Senior Statutory Auditor, Stuart Wilson, maintained oversight of the UK and US component teams through a programme of
meetings (both in person and virtual) with management of each significant component and held regular team interactions with
the component teams during various stages of the audit.
The work performed on the components, together with the additional procedures performed at Group level, gave us appropriate
evidence for our opinion on the Group financial statements.
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Auditors’ report continued
Climate change
Stakeholders are increasingly interested in how climate change will impact Beazley. The Group has determined that the most
significant future impacts from climate change on their operations will be from underwriting portfolio management, exposure
risk appetite management and investment portfolio management. These are explained on pages 22 to 44 in the required Task
Force for Climate related Financial Disclosures. These disclosures form part of the “Other information,” rather than the audited
financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear
to be materially misstated, in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any
consequential material impact on its financial statements.
The Group has explained in the Statement of accounting policies how they have reflected the impact of climate change in their
financial statements. Significant judgements and estimates relating to climate change are included in note 3a. In note 30 to the
financial statements supplementary sensitivity disclosures of the impact of the frequency and severity of natural catastrophes
has been provided.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating
management’s assessment of the impact of climate risk, physical and transition, and the significant judgements and estimates
disclosed in note 3a and whether these have been appropriately reflected in asset values and associated disclosures where
values are determined through modelling future cash flows. As part of this evaluation, we performed our own risk assessment,
supported by our climate change internal specialists, to determine the risks of material misstatement in the financial
statements from climate change which needed to be considered in our audit.
We also challenged the directors’ considerations of climate change risks in their assessment of going concern and viability and
associated disclosures. Where considerations of climate change were relevant to our assessment of going concern, these are
described above.
Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or
to impact a key audit matter.
Whilst the Group have stated their commitment to the aspirations of the Paris Agreement to achieve net zero emissions by
2050, the Group is currently unable to determine the full future economic impact on its business model, operational plans and
customers to achieve this. Therefore as set out above the potential impacts are not fully incorporated in these financial
statements.
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Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the
context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters.
Key observations
communicated to the Audit
Committee
Based on our
procedures performed
we are satisfied that
revenue has been
recognised in-line with
the requirements of
IFRS 17.
Our response to the risk
We engaged our actuaries as part of our audit team and
performed the following procedures:
• Performed walkthroughs of the IFRS 17 model including the
determination of the CSM release and experience adjustment.
We tested the design effectiveness of key controls.
• We compared the appropriateness of Beazley's methodology
for the release of the CSM to profit or loss to the
requirements of IFRS 17. We identified unusual release
patterns and challenged management on these to understand
the appropriateness of the release patterns selected.
• We recalculated the experience adjustment and compared
this to the amount recognised in the consolidated statement
of profit or loss.
• We tested all out of model adjustments posted by
management and compared to supporting documentation.
• The measurement of the experience adjustment depends on
complete and accurate data to be used in the IFRS 17
Calculation Engine, the most significant data source being
ultimate premium. With support from our EY actuarial team,
we performed independent re-projections of ultimate premium
per underwriting year for the 2022 and prior underwriting
years, applying our own assumptions and comparing these to
the Group’s booked ultimate premium on a class of business
including distribution channel basis. Where there were
significant variances, we challenged management’s
assumptions used for bias and consistency in approach from
prior year.
• For a sample of policy estimates in respect of the 2023
underwriting year, we corroborated the estimated premium for
polices such as binders and inward reinsurance to supporting
evidence such as signed slips. Additionally, to corroborate
estimates, including for coverholder business, where similar
policies and binders have been written previously, we
performed back testing of historical estimated premium
income compared to actual premium signed.
Risk
Revenue recognition (Contractual
Service Margin (‘CSM’) release
($691.4m, PY comparative
$565.2m) and experience
adjustments ($503.7m, PY
comparative ($434.6m))
Refer to Accounting policies (page
182) and Note 5 of the
Consolidated Financial Statements
(page 189).
At initial recognition, the CSM
relates to the unearned profit
under (re)insurance contracts
issued. As services are provided
under the terms of these
(re)insurance contracts, the CSM is
released to the Consolidated
statement of profit or loss,
reflecting the profit relating to
services performed in the period.
There is a high degree of
complexity and estimation involved
in deriving the release patterns.
Experience adjustments within
revenue represent the difference
between the estimate of future
cashflows and the actual
cashflows received. As such,
experience adjustments reflect a
write-up or down of estimates to
known quantities once cash has
been received.
Although the adjustment is to a
known quantity, this balance is
susceptible to a higher degree of
judgement and uncertainty as a
result of having to allocate the
experience adjustments to revenue
or to the CSM. Given this potential
to manipulate the timing of the
recognition of revenue, for similar
reasons to the CSM release above
this represents a higher risk of
material misstatement.
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Auditors’ report continued
Risk
Valuation of (re)insurance contract assets and liabilities (Insurance Contract Assets: $101.5m, PY comparative ($84.1)m;
Insurance Contract Liabilities: $7,992.2m, PY comparative ($7,349.8m; Reinsurance Contract Assets: $2,426.7m, PY
comparative ($2,175.3)m; Reinsurance Contract Liabilities: $333.5m, PY comparative ($161.2m)
Our response to the risk
Key observations
communicated to the Audit
Committee
Refer to the Audit Committee Report (pages 110 to 111); Accounting policies (pages 178 to 183) and Note 28 of the
Consolidated Financial Statements (pages 216 to 226)
One of the most significant financial statement risk areas from both a business and an audit perspective is the valuation of
the insurance and reinsurance contract assets and liabilities held by the Group. These accounts contain the present value for
future cash flows and risk adjustment for non-financial risk which builds up the Contractual Service Margin ('CSM'). This
involves highly complex calculations and data inputs that are susceptible to a higher degree of estimation i.e., estimated
premium income. These balances are inherently uncertain and subjective by nature and therefore are more susceptible to
fraud or error than other financial statement balances.
We have split the risk relating to the valuation of insurance liabilities into the following component parts:
• Actuarial Assumptions used and the method of calculation of the (re)insurance contract assets/liabilities.
• Data used in the calculation of the (re)insurance contract assets/liabilities.
Actuarial Assumptions used and
the method of the calculation of
the (re)insurance contract assets
and liabilities
To obtain sufficient audit evidence to conclude on the
appropriateness of the actuarial assumptions used in the
calculation of the (re)insurance contract assets and liabilities,
with support from our actuaries as part of the audit team, we
performed the following procedures:
• Obtained an understanding of the calculation performed by
Based on our
procedures performed
we are satisfied that
the assumptions used
in the valuations of the
insurance and
reinsurance contract
assets and liabilities
are reasonable.
The actuarial assumptions used to
develop the (re)insurance contract
assets / liabilities involve a
significant degree of judgement
and estimation uncertainty. The
most significant assumptions
being:
• Discount Rates;
• Risk Adjustment; and
• Gross and Reinsurance Initial
Expected Loss Ratios (‘IELRs’)
and Ultimate Loss Ratios
(‘ULRs’).
the IFRS 17 model, using data from underlying source
systems e.g., policy administration and claims systems and
tested the design effectiveness of key controls.
Discount rates:
• Compared the approach to calculating the illiquidity premium
for consistency across periods; whilst comparing against
industry benchmarks.
• Compared the changes in yield curves against our
expectations which consists of comparison to the movement
in the Bank of England risk free rates.
Risk Adjustment:
• Read the latest internal model validation reports and
considered the effects of model changes.
• To validate key components of the Group’s Solvency II internal
capital model, which are key input into the risk adjustment
calculation, we compared the model outputs against industry
benchmarks.
• Tested the application of the methodology used to calculate
the risk adjustment and compared the consistency of the
methodology across periods.
Gross and Reinsurance Initial Expected Loss Ratios (‘IELRs’) and
Ultimate Loss Ratios (‘ULRs’):
• Assessed the reserving methodology on a gross and net of
reinsurance basis. This also involved comparing the group’s
reserving methodology with industry practice.
• Performed independent re-projections of ULRs and IELRs by
applying our own assumptions, across all attritional classes of
business and comparing these to management’s results.
Assessed whether the assumptions, such as inflation, applied
to key areas of uncertainty were appropriate based on our
knowledge of the Group, industry practice and regulatory and
financial reporting requirements. As part of our re-projections
we have formed an independent view of the additional claims
cost arising from the current economic inflationary
environment; and
• Benchmarked catastrophe and large losses and assumptions
used in inherently uncertain classes and new growing classes
against other comparable industry participants.
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157
Key observations
communicated to the Audit
Committee
Based on our
procedures performed
we are satisfied that
the data used in the
valuations of the
insurance and
reinsurance contract
assets and liabilities
are reasonable.
Risk
Data used in the calculation of
the (re)insurance contract assets
and liabilities
The valuation of (re)insurance
contract assets and liabilities
depends on complete and accurate
data to be used in the IFRS 17
Calculation Engine. This data is
often highly subjective and subject
to a higher degree of estimation
uncertainty and includes:
• Estimated Premium Income
(‘EPI’) source data
• Claims paid and outstanding
source data; and
• Reinsurance data.
Our response to the risk
To obtain sufficient audit evidence to conclude on the
appropriateness of data used in the calculation of the
(re)insurance contract assets and liabilities, we performed the
following procedures:
• Obtained an understanding of the process and tested the
design and operating effectiveness of key controls over
management’s source data collection, extraction, and
validation process.
• For a sample of policy estimates in respect of the youngest
underwriting year, we corroborated the estimated premium to
supporting evidence such as signed slips. Additionally, to
corroborate estimates, we performed back testing of historical
estimated premium income compared to actual premium
signed.
• We compared a sample of paid and outstanding claims, used
in determining management’s loss ratios, to underlying
supporting evidence. For paid claims this included
authorisation requests and bank statements.
• Compared material cashflows which are input into the model
to source information.
• For a sample of outstanding claims, we held discussions with
claims handlers to further understand the background of the
claims and assess the reasonableness of the assumptions
made in setting the reserve. We also obtained supporting
evidence, where relevant, including third-party reports to
corroborate the year end balances.
• Tested the completeness and accuracy of the claims,
reinsurance data and premium data used within the reserving
process by reconciling the data used in the actuarial
projections to the underlying policy administration,
reinsurance, and finance systems.
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Auditors’ report continued
Our response to the risk
To obtain sufficient audit evidence to conclude on the
appropriateness of the initial application of the new IFRS 17
accounting standard, we have performed the following
procedures:
• Obtained and challenged management’s methodology papers
for compliance with the IFRS 17 accounting standard and
subsequently assessed management’s implementation of
their methodology.
• Tested management’s IFRS 17 disclosures in the
consolidated financial statements in relation to transition and
restated comparative periods.
• Tested the IFRS 4 to IFRS 17 bridging of equity and profit
before tax.
Key observations
communicated to the Audit
Committee
Through the procedures
performed, we have
determined that
management have
appropriately
implemented the IFRS
17 insurance
accounting standard
within their financial
reporting and this is
reflected within the
consolidated financial
statements in all
material respects.
Risk
Transition to IFRS 17
Refer to the IFRS 17 transition
disclosures included in Note 2a of
the Consolidated Financial
Statements (pages 173 to 175)
The transition to IFRS 17, the new
insurance accounting standard,
effective for annual reporting
periods beginning on or after 1
January 2023, has resulted in
significant change to the reporting
processes and to the consolidated
financial statements. This
transition, which includes a
number of key judgements, has
required substantial focus during
our audit, however these areas are
not considered to be significant
risks.
We have focused on a number of
transition areas, with the following
being key areas of focus:
i) Methodology - The risk of
ii)
management’s
methodology being out of
line with the standard.
Financial statement
disclosures – The risk of
disclosures in relation to
the application of IFRS 17
being insufficient or
inappropriate.
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159
Key observations
communicated to the Audit
Committee
Based on our
procedures performed
we were satisfied that
the valuations of illiquid
credit asset funds were
reasonable.
In respect of the
syndicate loans, we
were satisfied the
carrying value was not
materially different to
our own valuation.
Risk
Valuation of level 3 investments
($254.2m, PY comparative
($255.4m)
Our response to the risk
To obtain sufficient audit evidence to conclude on the
appropriateness of valuation of level 3 investments, we
performed the following procedures for a sample of investments:
• Obtained an understanding of the valuation process and
tested the design effectiveness of key controls.
• Obtained net assets valuation (‘NAV’) statements provided by
third party administrators in respect of all investments and
compared these to management’s valuations.
• Assessed management’s valuations by performing
independent back testing of recent realisations, to confirm
that NAV is an appropriate proxy for fair value.
• Obtained the most recent audited financial statements for
each fund and inspected liquidity and going concern
disclosures for indication of impairment. Furthermore, we
inspected the relevant accounting policies to confirm that the
underlying investments are being held at fair value to support
the NAV being a suitable proxy for fair value.
• Performed retrospective testing to establish the accuracy of
management’s estimation process by comparing the booked
and final audited valuation positions in the underlying funds
from the previous year.
• Assessed investment carrying values for possible material
movements since the latest asset valuation by obtaining
confirmation of the investment managers latest percentage
change NAV estimates, where available, and performed
procedures to establish if there were any indicators of
impairment since the latest valuation date.
• With support from our EY valuation specialists, we performed
an independent valuation of the syndicate loans.
Refer to the Audit Committee
Report (page 111); Accounting
policies (page 183) and Note 18 of
the Consolidated Financial
Statements (pages 201 to 207).
Investments in level 3 assets
predominately comprise illiquid
credit asset funds managed by
third party managers (generally
closed end limited partnerships or
open-ended funds). The
investments themselves are in
many cases private and unquoted.
These assets are inherently harder
to value due to the inability to
obtain a market price of these
assets as at the balance sheet
date. Therefore, there is judgement
in both deriving the price and the
timeliness of receiving the
information from the third-party
managers, either of which could
result in misstatements of the
value recognised in the financial
statements. Additionally, Beazley
holds syndicate loans which are
funds provided by Beazley’s
Syndicates to the Central Funds at
Lloyd’s in respect of the 2019 and
2020 underwriting years.
Observable inputs are not readily
available for the valuation of
Syndicate loans and so
management use models with
other inputs to estimate their
value.
In the prior year, our auditor’s report included a key audit matter in relation to valuation of gross insurance claims liabilities and
reinsurers’ share of Incurred but not reported (‘IBNR’) and measurement of estimated premium income. In the current year, the
key audit matters have been revised in order to align to our assessment of risks of material misstatement under IFRS 17.
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Auditors’ report continued
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on
the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent
of our audit procedures.
We determined materiality for the Group to be $27 million (2022: $11 million), which is 5% of pre-tax profits on a 5-year
average adjusted for Covid-19 losses ($340.0m) and the gain on sale of the Beazley Benefit business ($54.4m) (2022: 5% of
pre-tax profits on a 5-year average adjusted for Covid-19 losses and the gain on sale of the Beazley Benefit business). This
materiality basis is in line with our approach taken in the prior year, albeit using 2023 and 2022 pre-tax profits on an IFRS 17
basis. We considered that adjusted pre-tax profits is the most relevant performance measure used by investors, regulators and
other stakeholders when assessing the Group. Given the nature of risks underwritten by Beazley, we believe the use of a five-
year average profit is appropriate, as the profitability of the Group is expected to fluctuate from period to period. Despite this we
believe that an additional adjustment for COVID losses is also appropriate given its unprecedented nature, which would not
normally be expected in such a five-year time horizon.
We determined materiality for the Parent Company to be $15 million (2022: $16 million), which is 1% (2022: 1%) of equity. The
Parent company primarily holds the investment in Group entities and, therefore, net assets is considered to be the key focus for
users of the financial statements.
During the course of our audit, we reassessed initial materiality and updated for the actual pre-tax profit for 2023 in our
calculation of the 5-year average.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement
was that performance materiality was 50% (2022: 50%) of our planning materiality, namely $13.5m (2022: $5.6m).
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is
undertaken based on a percentage of total performance materiality. The performance materiality set for each component is
based on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement
at that component. In the current year, the range of performance materiality allocated to components was $4.2m to $12.2m
(2022: $1.2m to $5.6m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $1.25m (2022:
$0.6m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 1 to 255, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within
the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we
have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
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161
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group and company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 147;
• Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the
period is appropriate set out on page 73 to 74;
• Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and
meets its liabilities set out on pages 73 to 74;
• Directors’ statement on fair, balanced and understandable set out on page 109;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 117;
• The section of the annual report that describes the review of effectiveness of risk management and internal control systems
set out on page 114; and;
• The section describing the work of the audit committee set out on pages 106 to 114.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement set out on page 146, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and parent company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
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Auditors’ report continued
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of
the company and management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that
the most significant are permissions and supervisory requirements of the Central Bank of Ireland (‘CBI’), the Corporation of
Lloyd’s, the Prudential Regulation Authority (‘PRA’), the Financial Conduct Authority (‘FCA’), the State of Connecticut Insurance
Department and the UK Listing Authority (‘UKLA’).
• We understood how Beazley plc is complying with those frameworks by making enquiries of management, internal audit and
those responsible for legal and compliance matters. We also reviewed correspondence between the Group and regulatory
bodies, reviewed minutes of the Executive Committee, Risk Committee and attended the Audit Committees and gained an
understanding of the Group’s approach to governance demonstrated by The Board’s approval of the Group’s governance
framework.
• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might
occur by considering the controls that the Group has established to address risks identified by the entity, or that otherwise
seek to prevent, deter or detect fraud. We also considered areas of significant judgement, including complex transactions,
performance targets, external pressures and the impact these have on the control environment and their potential to
influence management to manage earnings or influence the perceptions of investors and stakeholders. Where this risk was
considered to be higher, within Revenue recognition (CSM release and experience adjustments), valuation of (re)insurance
contract assets/liabilities and valuation of level 3 financial investments we performed audit procedures to address the
identified fraud risk as detailed in the respective key audit matters above. We made enquiries with management in person
and via the use of video conferencing and performed analytical review procedures to assess for unusual movements
throughout the year. Our procedures to address the risk identified also incorporated unpredictability into the nature, timing
and/or extent of our testing; challenging assumptions, significant judgements and estimates made by management.
Additionally, we tested year-end manual journals to provide reasonable assurance that the financial statements were free
from fraud or error.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations.
Our procedures involved making enquiry of those charged with governance and senior management for their awareness of any
non-compliance of laws or regulations; inquiring about the policies that have been established to prevent non-compliance with
laws and regulations by officers and employees both at a Group and component level; inquiring about the Group’s methods of
enforcing and monitoring compliance with such policies; and inspecting significant correspondence with the CBI, the
Corporation of Lloyd’s, the FCA, the PRA, the State of Connecticut Insurance Department and the UKLA.
• The Group operates in the insurance industry which is a highly regulated environment. As such the Senior Statutory Auditor
considered the experience and expertise of the engagement team to ensure that the team had the appropriate competence
and capabilities, which included the use of specialists where appropriate.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the audit committee, we were appointed by the company on 23 May 2019 to audit the
financial statements for the year ending 31 December 2019 and subsequent financial periods.
• The period of total uninterrupted engagement including previous renewals and reappointments is five years, covering the
years ending 31 December 2019 to 31 December 2023.
• The audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Stuart Wilson (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
6 March 2024
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Beazley | Annual report 2023
163
Financial
statements
165
166
167
168
169
170
246
253
Consolidated statement of profit or loss
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of financial position
Consolidated statement of cash flows
Notes to the financial statements
Company financial statements
Alternative performance measures
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Consolidated statement of profit or loss
for the year ended 31 December 2023
Insurance revenue
Insurance service expenses
Allocation of reinsurance premium
Amounts recoverable from reinsurers for incurred claims
Insurance service result
Net investment income/(loss)
Net finance (expense)/income from insurance contracts issued
Net finance income/(expense) from reinsurance contracts held
Net insurance and financial result
Other income
Operating expenses²
Foreign exchange gains/(losses)
Results from operating activities
Finance costs
Profit before tax
Tax expense
Profit after tax for the year
Earnings per share (cents per share):
Basic
Diluted
Earnings per share (pence per share):
Basic
Diluted
2023
20221
$m
$m
5,442.4 4,848.4
(3,592.6) (4,014.0)
(965.4)
(1,127.3)
953.9
528.5
822.9
1,251.0
480.2
(169.3)
15.9
1,577.8
(179.7)
279.5
(96.5)
826.2
78.5
(365.8)
4.5
1,295.0
32.1
(217.6)
(17.3)
623.4
(40.6)
1,254.4
(39.4)
584.0
(227.6)
1,026.8
(100.7)
483.3
154.7
151.4
79.0
78.0
124.8
122.1
63.4
62.6
Note
5
6
7
7
8
8
8
9
10
12
13
14
14
14
14
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 14 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.
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165
Consolidated statement of comprehensive income
for the year ended 31 December 2023
Profit after tax for the year
Items that will never be reclassified to profit or loss:
Loss on remeasurement of retirement benefit obligations
Tax credit on defined benefit obligation
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation gains/(losses)
Total other comprehensive income/(expense)
Note
17
2023
$m
20221
$m
1,026.8
483.3
(0.1)
0.7
(12.5)
2.7
5.7
(12.6)
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.
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Consolidated statement of changes in equity
for the year ended 31 December 2023
Share
capital
$m
Share
premium
$m
Note
Foreign
currency
translation
reserve
$m
Other
reserves
$m
Retained
earnings
$m
Total
$m
Balance as at 31 December 2021
(previously reported)
IFRS 17 adjustment¹
Restated balance as at 01 January 2022
Total comprehensive (expense) /income
Dividend paid
Acquisition of own shares held in trust
Issue of shares
Equity raise
Transfer of merger reserve to retained earnings
Equity settled share based payments
Tax on share option vestings
Transfer of shares to employees
Balance at 31 December 2022
IFRS 9 adjustment¹
Balance at 01 January 2023
Total comprehensive income
Dividend paid
Issue of shares
Equity settled share based payments
Acquisition of own shares held in trust
Tax on share option vestings
Transfer of shares to employees
Balance at 31 December 2023
42.9
–
42.9
–
–
–
0.1
3.6
–
–
–
–
46.6
–
46.6
—
—
0.1
—
—
—
—
46.7
5.3
–
5.3
–
–
–
0.8
3.6
–
–
–
–
9.7
–
9.7
—
—
0.9
—
—
—
—
10.6
15
23
22
22
23
23
23
15
22
23
23
23
23
–
(97.2)
(4.0) 2,183.8 2,130.8
–
59.4
59.4
(97.2)
(4.0) 2,243.2 2,190.2
(12.6)
460.9
473.5
–
–
(103.0)
(103.0)
–
–
(17.8)
–
(17.8)
–
0.9
–
–
–
404.4
–
397.2
–
–
397.2
(397.2)
–
15.7
–
15.7
–
3.7
0.6
3.1
–
(4.6)
–
4.6
(109.8)
(7.6) 3,016.1 2,955.0
–
(1.0)
(1.0)
(109.8)
(7.6) 3,015.1 2,954.0
5.7
— 1,027.4 1,033.1
—
(107.7)
— (107.7)
—
—
1.0
—
36.2
—
36.2
—
— (33.6)
— (33.6)
(0.9)
0.7
—
—
(8.5)
—
(12.8) 3,941.7 3,882.1
(104.1)
(1.6)
8.5
–
1 Refer to Note 2 which shows the opening balance sheet ("OBS") positions and equity adjustments on adoption of both IFRS 17 and IFRS 9.
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Beazley | Annual report 2023
167
Consolidated statement of financial position
as at 31 December 2023
Intangible assets
Plant and equipment
Right-of-use assets
Deferred tax asset²
Retirement benefit asset
Insurance contract assets
Reinsurance contract assets
Financial assets at fair value
Other assets²
Current tax asset
Cash and cash equivalents
Total assets
Share capital
Share premium
Foreign currency translation reserve
Other reserves
Retained earnings
Total equity
Deferred tax liability
Financial liabilities
Lease liabilities
Insurance contract liabilities
Reinsurance contract liabilities
Current tax liability
Other liabilities
Total liabilities
Total equity and liabilities
Note
16
27
25
17
28
28
18
20
21
22
23
25
18
27
28
28
29
31 December
2023
31 December
20221
$m
165.3
15.9
59.4
46.9
4.5
101.5
2,426.7
9,665.5
354.2
13.2
812.3
13,665.4
46.7
10.6
(104.1)
(12.8)
3,941.7
3,882.1
202.2
554.6
76.6
7,992.2
333.5
13.7
610.5
9,783.3
$m
128.8
14.9
60.5
30.8
4.6
84.1
2,175.3
8,345.6
204.2
11.7
652.5
11,713.0
46.6
9.7
(109.8)
(7.6)
3,016.1
2,955.0
79.2
562.5
72.7
7,349.8
161.2
8.6
524.0
8,758.0
1 January
20221
$m
123.5
19.2
75.5
18.0
18.1
—
1,674.3
7,283.5
238.1
11.9
591.8
10,053.9
42.9
5.3
(97.2)
(4.0)
2,243.2
2,190.2
15.0
554.7
84.3
6,559.5
139.7
24.5
486.0
7,863.7
13,665.4
11,713.0
10,053.9
1
2
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.
Refer to Note 2 which sets out the full impact by balance sheet line item.
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. Refer to Note 2 for further details.
The financial statements were authorised for issue by the Board of Directors on 6 March 2024 and were signed on its behalf
by:
C Bannister
Chair
S M Lake
Group Finance Director
6 March 2024
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Consolidated statement of cash flows
for the year ended 31 December 2023
Cash flows from operating activities:
Profit before tax
Adjustments for non-cash items:
Interest and dividends receivable on financial assets
Finance costs payable
Net fair value (gains)/losses on financial assets
Other non-cash items²
Changes in operational assets and liabilities:
Increase in net insurance and reinsurance contract liabilities
Increase in other liabilities
(Increase)/decrease in other assets
Purchases of investments
Proceeds from sale of investments
Interest and dividends received on financial assets
Tax paid
Net cash in/(out)flows from operating activities
Cash flows from investing activities:
Purchase of plant and equipment
Expenditure on software development and other intangible assets
Net cash outflows from investing activities
Cash flows from financing activities:
Acquisition of own shares in trust
Payment of lease liabilities
Equity raise
Finance costs paid
Dividend paid
Net cash (out)/inflows from financing activities
Net increase in cash and cash equivalents
Opening cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Closing cash and cash equivalents
Note
2023
$m
20221
$m
1,254.4
584.0
8
12
8
28
29
20
8
16
27
12
15
21
(215.3)
40.6
(325.2)
45.7
(101.1)
39.4
274.4
62.6
545.9
86.5
(150.0)
(7,115.9)
226.7
38.0
33.9
(6,645.4)
6,129.8 5,325.3
94.2
207.4
(110.7)
393.2
(61.1)
(129.1)
(4.3)
(50.9)
(55.2)
(1.0)
(22.7)
(23.7)
(33.6)
(12.0)
—
(37.5)
(107.7)
(190.8)
147.2
652.5
12.6
812.3
(17.8)
(11.6)
404.4
(36.3)
(103.0)
235.7
82.9
591.8
(22.2)
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.
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169
Notes to the financial
statements
171 1 General information
173 2 Impact of new accounting standards
178 3 Statement of accounting policies
185 4 Segmental reporting
189 5 Insurance revenue
189 6 Insurance service expenses
189 7 Net income/expenses from reinsurance contracts held
190 8 Net financial result
191 9 Other income
192 10 Operating expenses
193 11 Auditor's remuneration
193 12 Finance costs
194 13 Tax expense
195 14 Earnings per share
195 15 Dividends per share
196 16 Intangible assets
199 17 Retirement benefit asset
201 18 Financial assets and liabilities
208 19 Derivative financial instruments
208 20 Other assets
209 21 Cash and cash equivalents
209 22 Share capital
210 23 Other reserves
211 24 Equity compensation plans
213 25 Deferred tax
214 26 Subordinated liabilities
215 27 Leases
216 28 Insurance and reinsurance contracts
227 29 Other liabilities
228 30 Risk and sensitivity analysis
242 31 Subsidiary undertakings
244 32 Related party transactions
245 33 Contingencies
245 34 Subsequent events
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Notes to the financial statements
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. For the separate parent company
financial statements, refer to page 246.
1b Basis of preparation
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 13 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).
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171
Notes to the financial statements
continued
1 General information continued
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.
For further details, refer to the Viability Statement on Page 73 of this Annual Report & Accounts.
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.
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2 Impact of new accounting standards
2a IFRS 17
i. Transition
IFRS 17 Insurance Contracts is a new accounting standard applicable for reporting periods beginning on or after 01 January
2023. The accounting policies applied by the Group on adoption of IFRS 17 have been disclosed in Note 3b.
The Group has applied the transitional provisions under IFRS 17, meaning changes in accounting policies resulting from the
adoption of IFRS 17 have been applied on a fully retrospective basis. This required assumptions to be made (for example, in
relation to discount rates and the risk adjustment for non-financial risk) based on what management’s intentions would have
been in previous periods.
Under the fully retrospective approach, the Group has made the following changes to classification and measurement as at 01
January 2022.
• The Group has elected to apply the General Measurement Model (“GMM”) to the insurance and reinsurance contracts that it
issues, and applies the GMM with certain prescribed modifications to the reinsurance contracts that it holds. This is the
default measurement model under IFRS 17.
• Insurance contracts issued are identified and recognised by management as those contracts under which significant
insurance risk is accepted from another party (either the policyholder or the cedant) by agreeing to compensate the third party
if a specified uncertain future event ("the insured event") adversely affects the policyholder or cedant. This category also
includes some reinsurance contracts which are issued by the Group.
• Reinsurance contracts held are those under which the Group acts as cedant as opposed to reinsurer. These are measured
separately from the underlying contracts to which the arrangement relates.
• The Group allocates insurance contracts to portfolios based on whether they share similar risk characteristics and are
managed together. Generally, all insurance contracts within a product line (being similar types of underlying coverage and
geography) represent a portfolio of contracts.
• For each portfolio, contracts issued within a calendar year (i.e. annual cohorts) are further disaggregated into groups based
on those which are/are not onerous at initial recognition. The non-onerous contracts are further broken down into those which
do and do not have a significant possibility of becoming onerous subsequently. Note that onerous here means that the
expected costs of meeting contractual obligations will exceed the expected economic benefits.
• These groups represent the level of aggregation at which insurance contracts are initially recognised and measured, and such
groupings are not subsequently reconsidered.
• The Group measures its insurance contracts issued and reinsurance contracts held as the sum of the following:
– the estimated present value of future cash flows ("PVFCF"), discounted in order to account for the time value of money;
– a risk adjustment for non-financial risks that are expected to arise as the Group fulfils its contractual obligations; and
– a contractual service margin (“CSM”), which represents unearned profit.
• The Group recognises profit through release of the CSM for a group of insurance contracts over each period as insurance
contract services are provided. The amount of CSM released is based on assumptions around coverage units, which typically
correspond to the length of cover on a policy. Assumptions include the number of coverage units included in a group of
insurance contracts, the allocation of CSM to each coverage unit, and the number of coverage units provided in the period. If
a group of contracts is expected to be onerous on day one or subsequently becomes so, a loss is recognised immediately in
the profit or loss account.
• Insurance contracts issued can also be represented as the sum of the liability for remaining coverage and the liability for
incurred claims. For portfolios of issued insurance contracts that are onerous, a loss component is included within the liability
for remaining coverage and recognised in profit or loss upon initial recognition. Reinsurance contracts held are comprised of
the asset for remaining coverage (which contains a loss recovery component) in addition to the asset for incurred claims.
The following changes have been made to the presentation of the Group's financial statement on adoption of IFRS 17:
• Balances that existed under IFRS 4 and continue to exist under the new standard, such as reinsurance premiums payable,
have been reclassified.
• Balances that would not have existed if IFRS 17 had always been applied, primarily being deferred acquisition costs ("DAC")
and the unearned premium reserve (“UPR”), have been derecognised.
• Groups of insurance and reinsurance contracts have been identified, recognised and measured as if IFRS 17 had always
been applied. This has resulted in insurance and reinsurance contract assets and liabilities being recognised on the balance
sheet.
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173
Notes to the financial statements
continued
2 Impact of new accounting standards continued
• Insurance revenue, insurance finance income/expenses, and net income/expenses from reinsurance contracts held
(comprised of the allocation of reinsurance premium and amounts recoverable from reinsurers for incurred claims) have been
recognised in the statement of profit or loss.
• The net effect of adopting IFRS 17 as at 01 January 2022 has been recognised through the statement of changes in equity.
Refer to Section ii below for further details.
ii. Opening equity adjustment
The following table sets out the impact of the adoption of IFRS 17 on the Group’s consolidated statement of financial position
as at 01 January 2022, with the net position posted as an adjustment to retained earnings.
The overall increase in equity is largely due to the following reclassification and measurement differences between IFRS 4 and
IFRS 17.
• There is a requirement under IFRS 17 to discount technical provisions to reflect the time value of money, whereas under IFRS
4 no such discounting was applied. This change therefore causes a timing difference in the way that profit is recognised as
the discount unwinds throughout the claims settlement period. There will initially be a favourable impact on profit as the
discount is established, followed by an unfavourable impact as the initial credit from discounting unwinds (assuming a
positive interest rate environment).
• In order to cover claims expected to be paid, the Group has historically held reserves within a range of 5-10% over an
actuarial estimate. This actuarial estimate itself had an embedded level of prudence. Under IFRS 17, reserves are held
at a best estimate with an additional risk adjustment calculated to a specified confidence level. This percentile indicates
where reserves sit compared to the best estimate and the capital requirement. Under IFRS 4 at the date of transition,
the level of prudence within reserves equated to a confidence level at the upper end of an 80th to 90th percentile range.
Under IFRS 17, the confidence level on transition is in the middle of this range. Accordingly, the provision for claims
recognised on adoption of IFRS 17 is lower than under IFRS 4.
• Under IFRS 4, the unearned premium reserve and deferred acquisition costs were treated as non-monetary items and were
translated to the Group’s functional currency using historic exchange rates. Under IFRS 17, all insurance contract balances
are considered to be monetary items and are revalued using spot rates at each reporting date.
• Balances which existed under IFRS 4 have been reclassified. This includes reinsurance premiums payable and insurance
receivables and payables (all of which are now measured under IFRS 17).
• Other amounts that would not have existed if IFRS 17 had always been applied (namely DAC and UPR) have been
derecognised.
• In addition, the adoption of IFRS 17 has caused a number of temporary differences for tax purposes, resulting in the
recognition of an additional deferred tax asset of $1.7m and deferred tax liability of $15.0m as at 01 January 2022. Refer to
Note 25 for further details.
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2 Impact of new accounting standards continued
Consolidated statement of financial position
31 December 2021
(previously reported)
IFRS 17 reclassification
IFRS 17 measurement
01 January 2022
(restated under IFRS 17)
$m
$m
$m
$m
Assets
Intangible assets
Plant and equipment
Right-of-use assets
Deferred tax asset
Deferred acquisition costs
Retirement benefit asset
Reinsurance assets
Insurance receivables
Reinsurance contract assets
Financial assets at fair value
Other assets
Current tax asset
Cash and cash equivalents
Total assets
Liabilities
Insurance liabilities
Insurance contract liabilities
Reinsurance contract liabilities
Financial liabilities
Lease liabilities
Deferred tax liabilities
Current tax liability
Other liabilities
Total liabilities
Equity
Share capital
Share premium
Foreign currency translation
Other reserves
Retained earnings
Total equity
123.5
19.2
75.5
16.3
477.8
18.1
2,386.4
1,696.1
—
7,283.5
107.3
11.9
591.8
12,807.4
8,871.8
—
—
554.7
84.3
—
24.5
1,141.3
10,676.6
42.9
5.3
(97.2)
(4.0)
2,183.8
2,130.8
—
—
—
—
(477.8)
—
(2,386.4)
(1,696.1)
2,386.4
—
130.8
—
—
(2,043.1)
(8,871.8)
6,828.7
655.3
—
—
—
—
(655.3)
(2,043.1)
—
—
—
—
—
—
—
—
—
1.7
—
—
—
—
(712.1)
—
—
—
—
(710.4)
—
(269.2)
(515.6)
—
—
15.0
—
—
(769.8)
—
—
—
—
59.4
59.4
123.5
19.2
75.5
18.0
—
18.1
—
—
1,674.3
7,283.5
238.1
11.9
591.8
10,053.9
—
6,559.5
139.7
554.7
84.3
15.0
24.5
486.0
7,863.7
42.9
5.3
(97.2)
(4.0)
2,243.2
2,190.2
Total liabilities and equity
12,807.4
(2,043.1)
(710.4)
10,053.9
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175
Notes to the financial statements
continued
2 Impact of new accounting standards continued
2b IFRS 9
i. Transition
IFRS 9 Financial Instruments is a new accounting standard applied prospectively by the Group from 01 January 2023. The
classification and measurement of financial instruments under IFRS 9 has been determined based on facts and circumstances
that existed at this date. For example, if a financial asset had low credit risk as at 01 January 2023, then the credit risk of that
asset is considered not to have increased significantly since initial recognition.
ii. Changes to the classification and measurement of financial assets
IFRS 9 requires all financial assets to be classified either at fair value through profit or loss ("FVTPL"), fair value through other
comprehensive income ("FVOCI"), or amortised cost. This has resulted in some reclassifications when compared to the
measurement categories under IAS 39. Namely, cash and cash equivalents has been reclassified from FVTPL (designated) to
amortised cost, other receivables has been reclassified from loans and receivables to amortised cost, and all other financial
assets have been reclassified from FVTPL (designated) to FVTPL (mandatory). Included below is a reconciliation between the
carrying amounts under IAS 39 as at 31 December 2022 and the balances reported under IFRS 9 as at 01 January 2023. The
equity adjustment on adoption of IFRS 9 has been included at Section iv.
Total financial assets at fair value through profit or loss
Fixed and floating rate debt securities:
– Government issued
– Corporate bonds
– Investment grade
– High yield
Syndicate loans
Equity funds
Hedge funds
Illiquid assets
Derivative financial assets
Cash and cash equivalents
Total financial assets at fair value through profit or loss
Under
IAS 39 Reclassification
$m
$m
ECL
$m
Under
IFRS 9
$m
5,006.3
—
—
5,006.3
2,050.5
308.7
32.5
159.4
530.6
222.9
34.7
652.5
8,998.1
—
—
—
—
—
—
—
(652.5)
(652.5)
—
—
—
—
—
—
—
—
—
2,050.5
308.7
32.5
159.4
530.6
222.9
34.7
—
8,345.6
Financial assets at amortised cost
Cash and cash equivalents
Amounts due from managed syndicates and other receivables
Total financial assets at amortised cost
—
181.8
181.8
652.5
—
652.5
—
(1.3)
(1.3)
652.5
180.5
833.0
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Total financial liabilities at fair value through profit or loss
Financial liabilities at amortised cost
Tier 2 subordinated debt (2026)
Tier 2 subordinated debt (2029)
Other liabilities
Total financial liabilities at amortised cost
14.5
14.5
249.4
298.6
524.0
1,072.0
—
—
—
—
—
—
—
—
—
—
—
—
14.5
14.5
249.4
298.6
524.0
1,072.0
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2 Impact of new accounting standards continued
iii. Expected credit losses ("ECLs")
The table below shows the receivables for which loss allowances have been measured using a lifetime ECL (as permitted by the
simplified approach) on the adoption of IFRS 9 as at 01 January 2023. These loss allowances have been estimated by applying
inputs and assumptions in relation to the following:
• the period of assessment for the receivables;
• the creditworthiness of counterparties;
• the probability of default by these counterparties over the lifetime of the assets; and
• the loss given default based on historical rates.
We have determined that a reasonable change in any of these assumptions would not have a material impact on the ECLs
recognised in the financial statements.
as at 01 January 2023
Investment receivables
Accrued investment income
Other receivables
Total amounts due from managed syndicates and other receivables
Before ECL
$m
53.9
35.7
92.2
181.8
ECL
$m
(0.3)
(0.3)
(0.7)
(1.3)
Net
$m
53.6
35.4
91.5
180.5
iv. Opening equity adjustment
The difference between the carrying amounts of the Group's financial assets before and after the adoption of IFRS 9 has been
posted as an opening adjustment to retained earnings. The adjustment is comprised of $1.3m in ECLs offset by $0.3m in
deferred tax assets – refer to Section b(iii) above for further details.
Assets
Deferred tax asset
Other assets
Total impact on assets
Equity
Retained earnings
Total impact on equity
31 December 2022
IFRS 9 adjustment
01 January 2023
$m
30.8
204.2
235.0
3,016.1
3,016.1
$m
0.3
(1.3)
(1.0)
(1.0)
(1.0)
$m
31.1
202.9
234.0
3,015.1
3,015.1
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177
Notes to the financial statements
continued
3 Statement of accounting policies
3a Use of key judgements and estimates
The preparation of financial statements requires the use of judgements and estimates that affect the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from those on which management’s estimates are based.
Inputs and assumptions are evaluated on an ongoing basis by considering historical experience, expectations of reasonably
possible future events, and other factors. For example, estimates which are sensitive to economic, regulatory and geopolitical
conditions could be impacted by significant changes in the external environment such as rising inflation, rising interest rates,
climate change, international conflicts, and significant changes in legislation. Any revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
Specific to climate change, the estimate for which there is the highest potential exposure to climate risk is the estimation of
future cash flows within insurance contract assets and liabilities. Management currently include allowances in the determination
of best estimate cash flows for the potential impact of changes arising from climate risks (which could include but is not limited
to an increased frequency of natural catastrophes, liability claims for green-washing and changes in legislation related to
climate). Management are of the view that for all other estimates, climate risk would not have a material impact on the
valuation of the assets and liabilities held by the Group at the year end date.
Information about the Group's key judgements and estimates has been disclosed below. Note that key judgements made by
management in applying its accounting policies are those that have the most significant effect on the amounts recognised in
the financial statements. Key estimates are those that have a significant risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next 12 months. The Group's key judgements and estimates are
reassessed at each reporting period and updated within the financial statements. These have changed in the current year due
to the adoption of IFRS 17.
i. Key judgements
Impairment assessment of goodwill
As part of the goodwill impairment assessment, management determines whether the recoverable amount of the cash
generating unit exceeds the carrying amount. The recoverable amount is deemed to be the value-in-use, which is estimated as
the present value of projected future cash flows. A number of judgemental inputs and assumptions are used in making this
assessment, including premium growth rates, claims experience, discount rates, retention rates and expected future market
conditions. Further detail is provided in Note 16, including a sensitivity analysis showing that a reasonably possible change in
the key inputs and assumptions would not have a material impact on the outcome of impairment testing. As a result, this is
considered to be an area of key judgement rather than a significant source of estimation uncertainty.
Measurement of insurance contract liabilities
Judgement has been applied in determining the Group's results on an IFRS 17 basis.
• Management has exercised judgement in determining an appropriate level of aggregation in the measurement of insurance
contracts. Contracts are aggregated into portfolios based on shared risk and management characteristics (i.e. by type of
cover, classes covered, and the reinsurer). These are then split into two groups representing contracts which are onerous and
those which are non-onerous on initial recognition. The latter category is broken down further based on whether there is a
significant possibility of contracts becoming onerous in the future.
• Under IFRS 17, discount rates are applied to expected future cash flows in measuring insurance contract liabilities.
Management has applied judgement in determining that the 'bottom-up' estimation technique should be used in calculating
these rates.
• Management has also applied judgement in determining an appropriate calculation basis for the risk adjustment. The Cost of
Capital ("CoC") approach has been applied as this is consistent with the basis on which the risk margin is calculated under
Solvency II, meaning work in this area could be leveraged. The main difference between the two methods is that the CoC is
prescribed by EIOPA under Solvency II, whereas under IFRS 17 this is calculated in line with the Group’s view of the required
return.
• Judgement has been applied by management in determining the amount of contractual service margin ("CSM") that should be
released into the profit or loss in each period. This process is carried out by identifying the coverage units in the group of
contracts based on straight-line earnings patterns, allocating the CSM to coverage units, and then assessing at each
reporting date the amount of CSM to be amortised and recognised as profit.
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3 Statement of accounting policies continued
• Finally, the Group has applied the IFRS 17 expense principles by allocating costs to the 'insurance service expense' line
based on those which are deemed to be 'directly attributable'. The amount recognised as insurance service expenses is
determined by excluding certain costs as prescribed by IFRS 17, breaking down the balance by classes of expense
(administrative, other acquisition, claims handling and brokerage), and then applying percentages representing amounts that
are directly attributable. These proportions are calculated with references to both forecast and historical figures.
For further details on the accounting for insurance and reinsurance contracts under IFRS 17, refer to the policies set out at
section (b)(iii) below. For details of the estimates applied in the calculation of discount rates and the risk adjustment, refer to
section (ii) below.
ii. Key estimates
Measurement of insurance contract liabilities - Future cash flows
The Group has estimated the amount, timing and probability of future cash flows. Estimates are formed by applying
assumptions about past events, current conditions and forecasts of future conditions. These have been outlined below:
• Future expected premium cash flows are based on data entered into underwriting systems. These have a level of estimate
embedded for certain contracts, with payment/settlement patterns used to determine timing.
• Gross and reinsured claims payments are determined using an approach whereby cash flows are set at a Year of Account and
reserving class level based on the latest quarterly reserving exercise.
• Expenses are deemed to be within the contract boundary, and therefore included in the cash flows, when these are directly
attributable to fulfilling insurance contracts.
• Lapses/cancellations are projected by applying assumptions determined through statistical measures based on the Group’s
experience. These vary by product type, policy duration and sales trends.
For carrying values of insurance contracts by measurement component (including future cash flows), refer to Note 28(a).
Measurement of insurance contract liabilities - Discount rates
The discount rates applied to expected future cash flows in measuring insurance contract liabilities have been determined using
the bottom-up approach. This method takes the risk-free rates and adjusts for an illiquidity premium.
• Risk-free rates are derived using government yield curves denominated in the same currency as the product being measured,
which are sourced from Moody's. These are based on quarter-start and quarter-end rates.
• The Group's illiquidity premium is also sourced from Moody’s and adjusted to reflect the Group’s own asset portfolio. This
represents the differences in the liquidity characteristics between the financial assets used to derive the risk-free yield and
the insurance contract liability characteristics. The illiquidity premium applied by management is a flat percentage which
varies by currency. For the USD discount rate, which is the dominant currency of the Group, as at 31 December 2023 this
was 0.4% (2022: 0.5%).
The discount rates applied in determining the Group’s IFRS 17 results are as follows.
31 December 2023
USD
CAD
GBP
EUR
31 December 2022
USD
CAD
GBP
EUR
1 Year
5.1 %
5.3 %
4.9 %
3.5 %
1 Year
5.2 %
5.3 %
4.4 %
2.9 %
3 Year
4.5 %
4.4 %
4.0 %
2.7 %
3 Year
4.8 %
4.6 %
4.4 %
3.1 %
5 Year
4.3 %
4.1 %
3.8 %
2.6 %
5 Year
4.5 %
4.3 %
4.5 %
3.1 %
For carrying values of insurance contract liabilities, refer to Note 28. Sensitivities to a change in interest rate against the
carrying value of insurance contract liabilities are included in Note 30(b)(iii).
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179
Notes to the financial statements
continued
3 Statement of accounting policies continued
Measurement of insurance contract liabilities - Risk adjustment
Estimation of the risk adjustment for non-financial risk is based on various inputs and assumptions, particularly relating to non-
financial risk components of the SCR from the Solvency II internal model which captures all material exposure elements for the
Group. IFRS 17 does not prescribe a specific methodology for the calculation of the risk adjustment for non-financial risk and
the Group has elected to use a CoC approach. This is determined at a segment level comparing the required return by segment.
Our overall cross cycle return on capital target is 15%. Projected capital amounts are derived from the annual business plan,
with adjustments made to factor in emerging risks and uncertainties. The risk adjustment therefore differs between portfolios
depending on the inherent risk associated with each. Diversification is considered between segments (to allow for negative/
positive correlation between risks) and between years (to allow for the different kind of risk written across years).
The risk adjustment calculations as defined above are performed on a net basis, and the resulting risk adjustment percentage
is then applied separately to insurance contracts issued and reinsurance contracts held.
The reserve confidence level determined by the actuarial department is considered as part of a quarterly reserve review
exercise. These meetings are attended by senior management, senior underwriters, and representatives from actuarial, claims
and finance. The reserve confidence level was deemed to be at the 85th percentile for the 2023 year end as per output from
the latest governed reserve review (2022: 85th percentile) at the balance sheet date. This is in line with the preference that the
Group maintains a reserve confidence level in the 80th to 90th percentile range. The carrying values of insurance contracts by
measurement component (including risk adjustment) are disclosed in Note 28(a). For sensitivities to a change in risk
adjustment, refer to Note 30(a)(iv).
Valuation of level 3 financial assets
The Group holds its syndicate loans and illiquid assets at level 3 within the fair value hierarchy. This means that fair values are
estimated using model valuations which incorporate both observable and unobservable market inputs and assumptions. For
further details on the methodologies, inputs and assumptions used by the Group, in addition to carrying values of level 3
financial assets, refer to Note 18. For the sensitivity of level 3 financial assets to price risk, refer to Note 30(b)(iv).
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3 Statement of accounting policies continued
3b Material accounting policies
i. Subsidiary undertakings
Subsidiary undertakings are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiary companies where the Group has control are consolidated within these financial statements.
Certain Group subsidiaries underwrite as corporate members of Lloyd’s on syndicates managed by Beazley Furlonge Limited. In
view of the several and direct liability of underwriting members at Lloyd’s for the transactions of syndicates in which they
participate, only attributable shares of transactions, assets and liabilities of those syndicates are included in the Group
financial statements. The Group continues to conclude that it remains appropriate to consolidate its share of the result of these
syndicates and accordingly, as the Group is the sole provider of capacity on syndicates 2623, 3622 and 3623, these financial
statements include 100% of the economic interest in these syndicates.
The Group provides 10% of the capacity on Syndicate 4321 for the 2022 and 2023 years of account and approximately 18% of
the capacity on Syndicate 5623 for the 2023 year of account. These syndicates are both managed by Beazley Furlonge Limited.
These financial statements include the corresponding economic interest in these syndicates for the relevant years of account
and show the Group's share of the transactions, assets and liabilities of these syndicates. For the remaining capacity of these
syndicates (including for 5623 the 2021 and 2022 years of account where capital was solely provided by third parties), the
Group's economic interest in the form of agency fees and profit commission attributable to non group capital providers is
included within these financial statements.
Beazley Furlonge Limited is also the managing agent of syndicates 623 and 6107. Capacity for these syndicates is provided
entirely by third parties to the Group, and these financial statements reflect Beazley’s economic interest in the form of agency
fees and profit commission to which it is entitled.
ii. Foreign currency translation
The Group financial statements are presented in US dollars, being the functional and presentational currency of the parent and
its main trading subsidiaries, as the majority of trading assets and insurance premiums are denominated in US dollars.
The Group has subsidiaries with different functional currencies, the results and financial position of which are translated into
the USD presentational currency as follows:
• assets and liabilities are translated at the closing rate as at the statement of financial position date;
• income and expenses are translated at average exchange rates for the reporting period where this is determined to be a
reasonable approximation of the actual transaction rates; and
• all resulting exchange differences are recognised in other comprehensive income and as a separate component of equity (the
foreign currency translation reserve).
iii. Insurance and reinsurance contracts
Recognition and measurement
The Group applies IFRS 17 to all insurance contracts issued and reinsurance contracts held. These are defined respectively as
contracts under which the Group accepts significant insurance risk by agreeing to compensate a policyholder/cedant if they are
adversely affected by an insured event, and contracts which are issued by a reinsurer to compensate the Group as cedant for
claims arising from underlying contracts. Insurance risk is considered in further detail in Note 30. The Group has elected to
apply the General Measurement Model (“GMM”) to all insurance and reinsurance contracts that it issues, and applies the GMM
with certain modifications to all reinsurance contracts that it holds. This is the default approach under IFRS 17 - the optional
simplified Premium Allocation Approach has not been applied. Under the GMM, insurance contracts issued are aggregated into
groups. Contracts are then recognised at the earliest of (i) the beginning of the coverage period of the group; (ii) the date when
first payment from a policyholder/cedant in the group is due; or (iii) where applicable, when the group becomes onerous. The
Group measures its reinsurance contracts held separately from the underlying contracts to which the arrangement relates. For
proportional reinsurance contracts, these are recognised at the later of the date on which the first underlying contract is initially
recognised, or the date into which the reinsurance is entered. Non-proportional reinsurance contracts are typically recognised at
the beginning of the coverage period of the group of reinsurance contracts. However if the underlying group is determined to be
onerous, then the reinsurance contract is recognised on the date at which this assessment took place.
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181
Notes to the financial statements
continued
3 Statement of accounting policies continued
Level of aggregation
The Group is required under IFRS 17 to allocate its insurance contracts into groups. These are first aggregated into portfolios at
a granular level based on whether they share similar risk characteristics and are managed together. Generally, all insurance
contracts within a product line are considered by management to represent a portfolio of contracts. These are then aggregated
further into groups based on profitability characteristics. The three categories are as follows:
• Contracts that are onerous on initial recognition, meaning the expected costs of meeting contractual obligations will exceed
the expected economic benefits;
• Contracts that are not onerous on initial recognition but have a significant possibility of becoming onerous subsequently; and
• Contracts that are not onerous on initial recognition and have no significant possibility of becoming onerous subsequently.
The majority of the Group's insurance contracts are deemed not to be onerous on initial recognition with a possibility of
becoming onerous subsequently.
Finally, these are aggregated into annual cohorts with contracts issued more than one year apart separated out. These groups
represent the level of aggregation at which insurance contracts are initially recognised and measured. Such groupings are not
subsequently reconsidered.
Components of insurance and reinsurance contracts
Insurance and reinsurance contracts included within the Group's statement of financial position are comprised of the following
components.
• The present value of future cash flows. Cash flows are comprised of future expected premium which is based on data entered
into underwriting systems, gross and reinsured claims payments derived from the latest quarterly reserving exercise,
expenses deemed to be within the contract boundary, and lapses/cancellations which are projected by applying assumptions
determined through statistical measures based on the Group’s experience. Cash flows also include amounts due to and from
insureds, brokers and reinsurers. An allowance is made for default by these parties. The future cash flows are discounted
using a rate derived by applying the 'bottom-up' estimation technique. As referenced in Section 3a, the future cash flows and
their discounting are both sensitive to changes in accounting estimates.
• A risk adjustment for non-financial risk. This represents the compensation that the Group requires for bearing uncertainty
around the amount and timing of the cash flows that arise from non-financial risk. IFRS 17 does not prescribe a specific
approach, therefore the Group has opted to apply the CoC approach. Under this method, the risk adjustment is calculated by
applying a cost of capital rate to the present value of the projected capital for non-financial risk. The risk adjustment changes
as cash flows crystallise on existing business, new business is recognised, and any changes to the cost of capital are
applied.
• The contractual service margin. This represents the unearned profit that the Group will recognise as it provides services in
the future. If the contract is not deemed to be onerous on initial recognition, the CSM is measured as the equal and opposite
of the sum of its related cash flows and risk adjustment. If deemed to be onerous, then the full CSM is immediately
recognised as a loss in the statement of profit or loss, and included within the loss component on subsequent measurement.
The Group has elected not to calculate its CSM on a year-to-date basis. Instead, the CSM is taken as the weighted average of
the year-to-date quarters, meaning this is updated periodically and then "locked in" at the year end position. Groups of
insurance contracts, including the CSM, that generate cash flows in a foreign currency are treated as monetary items. As the
Group measures fulfilment cash flows based on the four major transactional currencies (USD, GBP, EUR and Canadian
dollars), the Group maintains the CSM based on these respective currencies.
Coverage units
Management is required to identify coverage units in order to determine the amount of CSM that should be released into the
profit or loss in each period. Coverage units are determined at a policy level by considering the quantity of the benefits provided
and the expected coverage duration. For insurance contracts issued and proportional reinsurance contracts held, the number of
coverage units in a group reflects the expected pattern of underwriting of the contracts, as the level of service provided depends
on the number of contracts in force. Once management has determined the number of coverage units included in a group of
insurance contracts, CSM is allocated to each coverage unit. An assessment is then made at each reporting period as to how
much of the CSM should be released and recognised as profit. For non-proportional reinsurance contracts held, the CSM is
amortised on a straight-line basis over the life of the policy, as benefits are received evenly over the coverage period.
Liability for remaining coverage ("LRC") and liability for incurred claims ("LIC")
The LRC represents the Group's obligation for insurance contracts written where insured events have not yet occurred. The LIC
represents the Group's obligation to pay claims for insured events that have already occurred, including events that have
occurred but for which claims have not been reported. Insurance contracts issued are comprised of the LRC, which includes a
loss component, and the LIC. Reinsurance contracts held are comprised of the asset for remaining coverage ("ARC"),
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3 Statement of accounting policies continued
containing a loss recovery component, and an asset for incurred claims ("AIC"). Note that the LRC and ARC include an element
of the PVFCF, a risk adjustment for non-financial risk, and the CSM. The LIC and AIC include the remainder of the PVFCF and a
risk adjustment for non-financial risk.
Amounts recognised in profit or loss
• Insurance revenue in each reporting period represents the changes in the LRC that relate to services for which the Group
expects to receive consideration, in addition to an allocation of premiums that relate to the recovery of insurance acquisition
cash flows. Changes in the LRC include claims and expenses incurred in the period measured at the amounts expected at
the beginning of the period, changes in the risk adjustment for non-financial risk, amounts recognised as profit through
release of the CSM for insurance contract services provided, and other amounts including experience adjustments (which
represent the difference between the expected present value of future cash flows versus the actual cash flows generated,
and any resultant second order impacts).
• Insurance service expenses are comprised of incurred claims and other directly attributable expenses, changes that relate to
past service, changes that relate to future service, and the amortisation of insurance acquisition cash flows.
• Income/expenses from reinsurance contracts are presented separately from income/expenses from underlying insurance
contracts. The Group has elected to present its net expenses from reinsurance contracts in the statement of profit or loss as
the allocation of reinsurance premium and amounts recoverable from reinsurers for incurred claims.
• Finance income/expense from insurance contracts issued and reinsurance contracts held shows the interest accreted and
the effect of changes in discount rates and other financial assumptions.
• Changes in the risk adjustment for non-financial risk are disaggregated between insurance service expenses and insurance
finance income/expenses.
• Insurance and reinsurance contract amounts denominated in foreign currencies are translated to the Group's reporting
currency at the balance sheet date, with any translation differences recognised in the statement of profit or loss.
iv. Financial instruments
Financial instruments are recognised in the statement of financial position at such time as the Group becomes a party to the
contractual provisions of the financial instrument. Purchases and sales of financial assets are recognised on the trade date,
which is the date the Group commits to purchase or sell the asset. A financial asset is derecognised when the contractual
rights to receive cash flows from the financial assets expire, or where the financial assets have been transferred, together with
substantially all the risks and rewards of ownership. Financial liabilities are derecognised if the Group’s obligations specified in
the contract expire, are discharged or are cancelled.
Classification
The Group is required to classify its financial instruments into one of the following categories on subsequent measurement: fair
value through profit or loss, fair value through other comprehensive income, or amortised cost. Classification is based on the
business model in which these are managed and the characteristics of the associated contractual cash flows. Almost all of the
Group’s financial assets are measured at FVTPL under IFRS 9. This is with the exception of cash and cash equivalents,
amounts due from managed syndicates, and other receivables, all of which are measured at amortised cost.
The Group’s financial liabilities are held at amortised cost, with the exception of its derivative financial liabilities and a potential
profit uplift commission payment, both of which are held at FVTPL (mandatory) under IFRS 9.
Other receivables
Other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market, and are carried at amortised cost less any impairment losses. These are included within ‘Other assets’ on the face of
the consolidated statement of financial position.
Hedge funds, equity funds and illiquid assets
The Group invests in a number of hedge funds, equity funds and illiquid assets for which there are no available quoted market
prices. The valuation of these assets is based on fair value techniques as described in Note 18. The fair value of our hedge
fund and illiquid asset portfolio is calculated by reference to the underlying net asset values ("NAV") of each of the individual
funds. Consideration is also given to adjusting such NAV valuations for any restriction applied to distributions, the existence of
side pocket provisions and the timing of the latest available valuations. At certain times, the Group will have uncalled unfunded
commitments in relation to its illiquid assets and these are are actively monitored by the Group. These amounts are not shown
on the consolidated statement of financial position, and any additional investment into the illiquid asset portfolio is recognised
on the date that this funding is provided by the Group. Further information is included in Note 18 to the financial statements.
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183
Notes to the financial statements
continued
3 Statement of accounting policies continued
Other payables
Other payables are stated at amortised cost determined according to the effective interest rate method. Other payables are
included within ‘Other liabilities’ on the face of the consolidated statement of financial position.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at their fair value. The best evidence of fair value of a derivative at initial recognition is the transaction price. The
method of recognising the resulting fair value gains or losses depends on whether the derivative is designated as a hedging
instrument and, if so, the nature of the item being hedged. The Group does not hold any derivatives designated as fair value
hedges, cash flow hedges or net investment hedges and therefore all fair value movements are recorded through profit or loss.
Fair values are obtained from quoted market prices in active markets, recent market transactions, and valuation techniques
which include discounted cash flow models. All derivatives are carried as assets when fair value is positive and as liabilities
when fair value is negative.
Derivative assets and liabilities are offset and the net amount reported in the statement of financial position when there is a
legally enforceable right to set off the recognised amounts and the parties intend to settle on a net basis, or realise the assets
and settle the liability simultaneously.
Impairment of financial assets
The ‘expected credit losses’ (“ECLs”) model is applied to the Group’s financial assets measured at amortised cost. This
requires an entity to calculate an allowance for credit losses by taking the sum of various probability weighted outcomes. The
general approach is the default method which management applies in determining the ECLs against its cash and cash
equivalents. A simplified approach is permitted for trade receivables, contract assets and lease receivables where there is no
significant financing component. This results in an entity recognising an ECL that is always equal to a lifetime ECL, rather than
assessing periodically whether there has been an increase in credit risk. The main impact of this new IFRS 9 impairment model
is that credit losses are based on the risk of default, as opposed to whether a loss has been incurred, and consequently credit
losses are recognised earlier than under the previous accounting standard. Note that the Group has been able to determine the
credit risk of financial assets on transition using reasonable and supportable information, rather than placing reliance on
transitional provisions.
Cash and cash equivalents
Cash and cash equivalents consist of cash held at bank, cash in hand, deposits held at call with banks, cash held in Lloyd’s
trust accounts and other short term highly liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value. These investments have less than three months maturity from the date
of acquisition. Cash and cash equivalents are measured at amortised cost under IFRS 9.
v. Share based compensation
The grant date fair value of share based payment awards granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The
amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market
performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the
number of awards that meet the related service and non-market performance conditions at the vesting date. For share based
payment awards with non-vesting conditions, the grant date fair value of the share based payment is measured to reflect such
conditions and there is no true-up for differences between expected and actual outcomes.
When options are exercised and new shares are issued, the proceeds received, net of any transaction costs, are credited to
share capital (nominal value) with the excess amount going to share premium. For other plans, when no proceeds are received,
the nominal value of shares issued is to share capital and debited to retained earnings. When the options are exercised and
the shares are granted from the employee share trust, the proceeds received, net of any transaction costs, and the value of
shares held within the trust, are credited to retained earnings.
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4 Segmental reporting
4a 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.
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Beazley | Annual report 2023
185
Notes to the financial statements
continued
4 Segmental reporting continued
4b Segmental information
Year ended 31 December 2023
2023
Insurance revenue
Insurance service expenses
Current year claims
Adjustments to prior year claims
(Loss on)/reversal of onerous contracts
Insurance acquisition cash flows amortisation and other directly
attributable expenses
Allocation of reinsurance premium
Amounts recoverable from reinsurers for incurred claims
Current year claims
Adjustments to prior year claims
Share of expenses and other amounts
Insurance service result
Net investment income
Net finance expense from insurance contracts issued
Net finance (expense)/income from reinsurance contracts
held
Net insurance and financial result
Other income
Other operating expenses
Foreign exchange gains
Segment result
Finance costs
Profit before tax
Tax expense
Profit after tax
Claims ratio
Expense ratio
Combined ratio
Insurance assets
Reinsurance assets
Other
Total assets
Insurance liabilities
Reinsurance liabilities
Other
Total liabilities
Cyber Risks
Digital MAP Risks
$m
1,174.9
(802.1)
(565.2)
(8.9)
(2.6)
(225.4)
(308.5)
210.1
211.8
(1.0)
(0.7)
274.4
86.6
(17.5)
(1.3)
342.2
16.9
(52.7)
1.0
307.4
$m
224.7
(144.0)
(90.5)
33.7
2.6
(89.8)
(24.3)
7.1
13.0
(5.7)
(0.2)
63.5
14.8
(2.9)
0.5
75.9
3.2
(19.9)
0.2
59.4
$m
1,015.4
(635.5)
(430.8)
88.6
1.4
(294.7)
(236.1)
23.9
107.6
(83.0)
(0.7)
167.7
53.5
(12.6)
2.1
210.7
14.8
(68.1)
0.8
158.2
Property
Risks
Specialty
Risks
$m
1,145.2
(643.9)
(470.1)
108.1
(0.1)
$m
1,882.2
(1,367.1)
(940.1)
39.8
0.5
(281.8)
(198.5)
26.4
57.0
(30.1)
(0.5)
329.2
(467.3)
(359.9)
261.0
294.2
(31.7)
(1.5)
416.2
Total
$m
5,442.4
(3,592.6)
(2,496.7)
261.3
1.8
(1,359.0)
(1,127.3)
528.5
683.6
(151.5)
(3.6)
1,251.0
75.2
(10.9)
250.1
(125.4)
480.2
(169.3)
(13.7)
379.8
16.5
(42.5)
0.9
354.7
28.3
569.2
15.9
1,577.8
27.1
(182.6)
1.6
415.3
78.5
(365.8)
4.5
1,295.0
(40.6)
1,254.4
(227.6)
1,026.8
42 %
26 %
68 %
23 %
45 %
68 %
41 %
38 %
79 %
35 %
30 %
65 %
42 %
31 %
73 %
39 %
32 %
71 %
50.5
469.0
2,411.3
2,930.8
1,634.8
73.2
333.8
2,041.8
14.1
27.5
368.1
409.7
208.8
8.7
52.5
270.0
0.5
322.6
1,511.2
1,834.3
13.7
287.2
1,961.7
2,262.6
22.7
1,320.4
4,884.9
6,228.0
101.5
2,426.7
11,137.2
13,665.4
1,006.6
160.2
182.2
1,349.0
1,173.3
—
297.3
1,470.6
3,968.7
91.4
591.8
4,651.9
7,992.2
333.5
1,457.6
9,783.3
The calculation bases for the claims, expense and combined ratios are disclosed within the APMs section on page 254.
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4 Segmental reporting continued
2022
Insurance revenue
Insurance service expenses
Current year claims
Adjustments to prior year claims
(Loss on)/reversal of onerous contracts
Insurance acquisition cash flows amortisation and other directly
attributable expenses
Allocation of reinsurance premium
Amounts recoverable from reinsurers for incurred claims
Current year claims
Adjustments to prior year claims
Share of expenses and other amounts
Insurance service result
Net investment loss
Net finance income from insurance contracts issued
Net finance expense from reinsurance contracts held
Net insurance and financial result
Other income
Other operating expenses
Foreign exchange (losses)
Segment result
Finance costs
Profit before tax
Tax expense
Profit after tax
Claims ratio
Expense ratio
Combined ratio
Insurance assets
Reinsurance assets
Other
Total assets
Insurance liabilities
Reinsurance liabilities
Other
Total liabilities
Year ended 31 December 2022 (restated)
Cyber Risks
Digital MAP Risks
$m
1,013.5
(750.9)
(506.3)
(81.4)
23.2
(186.4)
(198.3)
208.4
128.2
80.5
(0.3)
272.7
(34.5)
30.2
(9.0)
259.4
7.9
(33.7)
(3.6)
230.0
$m
211.3
(161.3)
(104.3)
9.1
(0.2)
(65.9)
(27.2)
21.5
26.2
(4.6)
(0.1)
44.3
(8.7)
4.8
(0.9)
39.5
2.3
(9.9)
(0.8)
31.1
$m
970.3
(859.5)
(436.2)
(139.4)
(0.5)
(283.4)
(250.1)
296.3
172.9
123.7
(0.3)
157.0
(20.5)
45.3
(19.6)
162.2
1.0
(34.8)
(3.5)
124.9
Property
Risks
Specialty
Risks
$m
807.2
(699.5)
(524.0)
37.0
1.2
$m
1,846.1
(1,542.8)
(974.5)
(102.2)
0.4
(213.7)
(175.7)
108.5
123.4
(14.6)
(0.3)
40.5
(27.1)
24.5
(5.2)
32.7
7.4
(35.5)
(2.9)
1.7
(466.5)
(314.1)
319.2
282.9
37.0
(0.7)
308.4
(88.9)
174.7
(61.8)
332.4
13.5
(103.7)
(6.5)
235.7
Total
$m
4,848.4
(4,014.0)
(2,545.3)
(276.9)
24.1
(1,215.9)
(965.4)
953.9
733.6
222.0
(1.7)
822.9
(179.7)
279.5
(96.5)
826.2
32.1
(217.6)
(17.3)
623.4
(39.4)
584.0
(100.7)
483.3
44 %
23 %
67 %
40 %
36 %
76 %
39 %
39 %
78 %
60 %
34 %
94 %
49 %
31 %
80 %
47 %
32 %
79 %
0.4
308.6
2,169.6
2,478.6
1,285.8
17.9
348.6
1,652.3
—
26.5
340.6
367.1
198.2
2.1
49.5
249.8
44.1
327.0
1,307.0
1,678.1
14.0
430.8
1,436.5
1,881.3
25.6
1,082.4
4,199.9
5,307.9
84.1
2,175.3
9,453.6
11,713.0
1,141.9
82.6
134.6
1,359.1
1,141.9
3.9
218.3
1,364.1
3,582.0
54.7
496.0
4,132.7
7,349.8
161.2
1,247.0
8,758.0
www.beazley.com
Beazley | Annual report 2023
187
Notes to the financial statements
continued
4 Segmental reporting continued
4c Information about geographical areas
The Group generates revenue in multiple geographies, an overview of which is set out below. The basis for attributing insurance
revenues is as follows:
• UK insurance revenue represents all risks placed at Lloyd’s;
• US insurance revenue represents all risks placed at the Group’s US insurance companies (Beazley Insurance Company, Inc.
and Beazley America Insurance Company, Inc); and
• European insurance revenue represents all risks placed at the Group’s European insurance company (Beazley Insurance dac).
Insurance revenue
UK (Lloyd's)
US (Non-Lloyd's)
Europe (Non-Lloyd's)
2023
$m
4,539.0
603.5
299.9
5,442.4
2022¹
$m
3,990.6
625.7
232.1
4,848.4
1 Restated for the year ended 31 December 2022 following the adoption of IFRS 17.
Provided below is a geographical split of a portion of the Group's non-current assets, namely intangible assets, plant and
equipment, right of use assets, and investments in associates. This excludes financial instruments, deferred tax assets,
pension assets and insurance / reinsurance contract assets.
Non-current assets
UK
US
Europe
2023
$m
186.7
51.4
2.8
240.9
2022
$m
151.0
51.4
2.2
204.6
4d Total revenue
The table below sets out the Group's total revenue, being insurance revenue, interest on cash and cash equivalents and other
income within the scope of IFRS 15.
Insurance revenue
Interest on cash and cash equivalents
Other income
2023
$m
5,442.4
16.8
78.5
5,537.7
2022
$m
4,848.4
0.5
32.1
4,881.0
188
Beazley | Annual report 2023
www.beazley.com
5 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 6), after the loss component allocation.
Amounts relating to changes in the liability for remaining coverage:
Expected incurred claims and other expenses after loss component allocation
Change in risk adjustment for non-financial risk for the risk expired after loss component allocation
CSM recognised in profit or loss for services provided
Other amounts including experience adjustments
Insurance acquisition cash flows recovery
Total insurance revenue
2023
$m
2022
$m
3,015.7 2,723.8
274.7
565.2
434.6
850.1
5,442.4 4,848.4
316.8
691.4
503.7
914.8
6 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
Incurred claims and other directly attributable expenses
Changes that relate to past service - adjustments to the LIC
Losses on onerous contracts and reversal of those losses
Insurance acquisition cash flows amortisation
Total insurance service expense
$m
$m
2,911.6 2,908.6
279.4
(24.1)
850.1
3,592.6 4,014.0
(232.0)
(1.8)
914.8
7 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.
Amounts relating to changes in the remaining coverage:
– Expected claims and other expenses recovery
– Changes in the risk adjustment recognised for the risk expired
– CSM recognised for the services received
– Other amounts including experience adjustments
Allocation of reinsurance premium
Effect of changes in the risk of reinsurers non-performance
Claims recovered
Other incurred directly attributable expenses
Changes that relate to past service - adjustments to incurred claims recovery
Amounts recoverable from reinsurers for incurred claims
Total net expenses from reinsurance contracts held
2023
$m
2022
$m
(740.5)
(105.2)
(290.8)
9.2
(1,127.3)
4.2
680.1
(3.6)
(152.2)
528.5
(598.8)
(731.8)
(74.3)
(195.3)
36.0
(965.4)
(32.6)
733.4
(1.7)
254.8
953.9
(11.5)
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Beazley | Annual report 2023
189
Notes to the financial statements
continued
8 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).
Interest and dividends on financial assets at fair value
Interest on cash and cash equivalents
Net realised fair value losses on financial assets at FVTPL
Net unrealised fair value gains/(losses) on financial assets at FVTPL
Investment income/(expense) from financial assets
Investment management expenses
Net investment income/(loss)
Interest accreted
Effect of changes in financial assumptions
Net finance (expense)/income from insurance contracts issued
Interest accreted
Effect of changes in financial assumptions
Net finance income/(expense) from reinsurance contracts held
Net insurance finance (expense)/income
Net financial result
2023
2022
$m
215.3
16.8
(69.2)
325.2
488.1
(7.9)
480.2
(379.1)
209.8
(169.3)
84.4
(68.5)
15.9
(153.4)
326.8
$m
101.1
0.5
(7.6)
(266.8)
(172.8)
(6.9)
(179.7)
(153.7)
433.2
279.5
28.5
(125.0)
(96.5)
183.0
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.
2023
Interest and dividends received
Net realised (losses)/gains
Net unrealised fair value gains
Total investment income from financial assets
2022
Interest and dividends received
Net realised (losses)/gains
Net unrealised fair value losses
Total investment expense from financial assets
Debt securities and
syndicate loans
Capital
growth assets
Other
financial assets
$m
208.4
(117.8)
291.2
381.8
$m
3.7
52.6
34.0
90.3
$m
20.0
(4.0)
–
16.0
Debt securities and
syndicate loans
Capital
growth assets
Other
financial assets
$m
96.6
(93.3)
(235.6)
(232.3)
$m
3.6
31.9
(30.9)
4.6
$m
1.4
53.8
(0.3)
54.9
Total
$m
232.1
(69.2)
325.2
488.1
Total
$m
101.6
(7.6)
(266.8)
(172.8)
190
Beazley | Annual report 2023
www.beazley.com
9 Other income
Commissions received by Beazley service companies
Profit commissions from syndicates
Managing agent fees from third party syndicates
Other income
Total other income
2023
$m
42.8
29.9
3.6
2.2
78.5
2022
$m
20.0
7.2
4.0
0.9
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.
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Beazley | Annual report 2023
191
Notes to the financial statements
continued
10 Operating expenses
Staff costs
Other administrative expenses
Total administrative expenses
Recharged to third party syndicates
Expenses reclassified within the insurance service result
Total operating expenses
2023
$m
527.6
401.2
928.8
(115.5)
(447.5)
365.8
2022
$m
355.6
325.0
680.6
(75.8)
(387.2)
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
Wages and salaries
Short term incentive payments
Social security
Share based remuneration
Pension costs¹
Staff costs
Recharged to third party syndicates
Net staff costs
2023
$m
259.8
167.5
45.3
33.8
21.2
527.6
(78.2)
449.4
2022
$m
215.8
78.1
30.0
14.7
17.0
355.6
(53.1)
302.5
1 Pension costs primarily include contributions made under the defined contribution scheme. Further information on the defined benefit pension scheme can be
found in Note 17.
Average number of employees
A breakdown by category of employee is disclosed below.
Directors
Senior managers
Other employees
Total average number of employees
2023
11
145
1,988
2,144
2022
10
107
1,691
1,808
192
Beazley | Annual report 2023
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11 Auditor's remuneration
Operating expenses include amounts receivable by the Group’s auditors in respect of:
– audit of the Group’s annual report & accounts
– audit of subsidiaries pursuant to legislation
– audit-related assurance services
– other non-audit services
Total auditor's remuneration
2023
$m
6.5
3.6
1.1
0.9
12.1
2022
$m
1.7
3.1
1.4
0.7
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.
12 Finance costs
Interest expense on financial liabilities
Interest expense on lease liabilities
Interest and charges related to letters of credit
Equity raise costs not charged to share premium
Total finance costs
2023
$m
31.6
3.1
5.9
—
40.6
2022
$m
31.5
3.1
4.1
0.7
39.4
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Beazley | Annual report 2023
193
Notes to the financial statements
continued
13 Tax expense
Current tax expense
Current tax expense
Prior year adjustment
Deferred tax expense
Origination and reversal of temporary differences
Difference between current and deferred tax rates
Prior year adjustments
Tax expense
1 Restated for the year ended 31 December 2022 following the adoption of IFRS 17.
2023
$m
121.8
1.5
123.3
97.3
6.8
0.2
104.3
227.6
2022¹
$m
53.2
(9.9)
43.3
58.5
(1.0)
(0.1)
57.4
100.7
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:
Profit before tax
Tax calculated at the weighted average of statutory tax rate
Effects of:
– non-deductible/(non-taxable) expenses
– losses not previously recognised
– tax charge/(relief) on remuneration
– under/(over) provided in prior years
– Difference between current and deferred tax rates2
Tax expense for the year
2023
$m
1,254.4
221.4
(2.0)
(1.2)
0.9
1.7
6.8
227.6
2023
%
17.6
(0.2)
(0.1)
0.1
0.1
0.6
18.1
20221
$m
584.0
111.0
1.9
—
(1.2)
(10.0)
(1.0)
100.7
2022
%
19.0
0.3
—
(0.2)
(1.7)
(0.2)
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 $18m of corporate income tax payable in Ireland. The impact on the Beazley Group will depend on the actual
profits in each period.
194
Beazley | Annual report 2023
www.beazley.com
14 Earnings per share
Profit after tax¹ ($m)
Weighted average number of shares in issue (m)
Adjusted weighted average number of shares in issue (m)
Basic (cents)
Diluted (cents)
Basic (pence)
Diluted (pence)
2023
1,026.8
663.8
678.3
154.7c
151.4c
124.8p
122.1p
2022
483.3
611.7
619.7
79.0c
78.0c
63.4p
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.
Further details of equity compensation plans can be found in Note 24 as well as in the Directors’ remuneration report on pages
124 to 145.
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.
15 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.
www.beazley.com
Beazley | Annual report 2023
195
Notes to the financial statements
continued
16 Intangible assets
Opening cost at 01 January 2023
Derecognition
Additions
Foreign exchange gain
Closing cost at 31 December 2023
Opening amortisation and impairment at 01 January 2023
Amortisation
Derecognition
Foreign exchange loss
Closing amortisation and impairment at 31 December 2023
Goodwill
Syndicate
capacity
Licences
IT
development
costs
Renewal
rights
Total
$m
72.0
—
—
—
72.0
(10.0)
—
—
—
(10.0)
$m
13.7
—
17.6
—
31.3
—
—
—
—
—
$m
9.3
—
—
—
9.3
—
—
—
—
—
$m
125.3
(13.2)
33.3
3.3
148.7
(81.5)
(16.2)
13.2
(1.5)
(86.0)
$m
58.9
$m
279.2
— (13.2)
50.9
—
3.3
—
320.2
58.9
(58.9)
(150.4)
— (16.2)
13.2
—
(1.5)
—
(154.9)
(58.9)
Carrying amount at 31 December 2023
62.0
31.3
9.3
62.7
— 165.3
Goodwill
Syndicate
capacity
Licences
IT
development
costs
Renewal
rights
Opening cost at 01 January 2022
Additions
Foreign exchange loss
Closing cost at 31 December 2022
Opening amortisation and impairment at 01 January 2022
Amortisation
Foreign exchange gain
Closing amortisation and impairment at 31 December 2022
$m
72.0
—
—
72.0
(10.0)
—
—
(10.0)
$m
10.7
3.0
—
13.7
—
—
—
—
$m
9.3
—
—
9.3
—
—
—
—
$m
115.4
19.7
(9.8)
125.3
(74.3)
(13.6)
6.4
(81.5)
$m
61.4
—
(2.5)
58.9
Total
$m
268.8
22.7
(12.3)
279.2
(61.0)
(0.7)
2.8
(58.9)
(145.3)
(14.3)
9.2
(150.4)
Carrying amount at 31 December 2022
62.0
13.7
9.3
43.8
— 128.8
196
Beazley | Annual report 2023
www.beazley.com
16 Intangible assets continued
Impairment tests
Goodwill, syndicate capacity and US insurance authorisation licences are deemed to have indefinite useful lives as they are
expected to have a recoverable amount that does not erode or become obsolete over the course of time. Consequently, these
intangible assets are not amortised but are instead annually tested for impairment. For the purpose of impairment testing, they
are allocated to the following cash-generating units (“CGUs”):
2023
Goodwill
Syndicate capacity
Licences
Total
2022
Goodwill
Syndicate capacity
Licences
Total
Cyber Risks
Digital
MAP Risks
Property
Risks
Specialty
Risks
$m
1.7
5.7
2.8
10.2
$m
0.3
0.7
0.6
1.6
$m
31.9
6.7
—
38.6
$m
25.7
9.2
1.9
36.8
$m
2.4
9.0
4.0
15.4
Cyber Risks
Digital
MAP Risks
Property
Risks
Specialty
Risks
$m
1.7
3.1
2.8
7.6
$m
0.3
0.6
0.6
1.5
$m
31.9
3.0
—
34.9
$m
25.7
3.7
1.9
31.3
$m
2.4
3.3
4.0
9.7
Total
$m
62.0
31.3
9.3
102.6
Total
$m
62.0
13.7
9.3
85.0
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the fair value of the
identifiable assets, liabilities and contingent liabilities of the acquired subsidiary at the date of acquisition. Goodwill is carried
at cost less accumulated impairment losses.
The Group determines the recoverable amount of its indefinite useful life intangible assets using the value-in-use (“VIU”). This is
estimated by discounting the CGU's expected future cash flows sourced from financial budgets approved by management which
cover a five-year period. These cash flows give consideration to the Group's capital requirements, ensuring that a suitable
solvency range is maintained. A discount rate based on weighted average cost of capital of 16.6% (2022: 10.9%) has been
applied to determine the present value of projected future cash flows. This has been calculated using independent measures of
the risk-free rate of return and is indicative of the Group’s risk profile relative to the market.
The Group has performed the following sensitivity analysis to ensure that the key assumptions used in deriving the VIU for each
CGU considers the potential adverse effects of any changes in economic or regulatory environments. As a result, management
has determined that a reasonably possible change in any of the key assumptions outlined above would not have a material
impact on the outcome of impairment testing.
• Projected cash flows – The Group has used projected cash flows generated from operating profit consistent with five-year
financial forecasts. Sensitivity testing has been performed to model the impact of reasonably possible changes in these
profits (5% and 10% fall) when compared to the base impairment analysis and headroom. Within these ranges, the
recoverable amounts remain supportable.
• Future market conditions – To test each CGU's sensitivity to variances in forecast profits, the discount rate has been flexed
to 5% above and 5% below the central assumption. Within this range, the recovery of goodwill was stress tested and remains
supportable across all CGUs. Headroom was calculated in respect of the VIU of all of the Group’s other intangible assets.
• Premium growth rates/Retention rates – The Group has used a terminal growth rate of 0% (2022: 0%) to extrapolate
projections beyond the covered five-year period.
The impairment test for goodwill is carried out annually and confirms that the recoverable amount exceeds the carrying amount,
therefore no impairment or reversal of impairment is required.
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Beazley | Annual report 2023
197
Notes to the financial statements
continued
16 Intangible assets continued
Syndicate capacity
The syndicate capacity represents the cost of purchasing the Group’s participation in the combined syndicates. The capacity is
capitalised at cost in the statement of financial position. It has an indefinite useful life and is carried at cost less accumulated
impairment. It is annually tested for impairment by reference to the latest auction prices provided by Lloyd’s. The Group’s
intangible assets relating to syndicate capacity is allocated across all CGUs.
During the year the Group purchased £35.5m of capacity on syndicate 623/2623 (2022: £9.2m) at a cost of $17.6m (2022:
$3.0m).
Based upon the latest market prices, management has concluded that the fair value exceeds the carrying amount and as such
no impairment or reversal of impairment is necessary.
Licenses
US insurance authorisation licences represent the privilege to write insurance business in particular states in the US. Licences
are allocated to the relevant CGU. There is no active market for licences, therefore the recoverable amount is estimated as the
present value of projected future cash flows which are sourced from management approved budgets. Key assumptions are
consistent with those outlined in the Goodwill section above. Licences are annually tested for impairment and based upon all
available evidence, the results of the testing indicate that no impairment or reversal of impairment is required.
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17 Retirement benefit asset
Present value of funded obligations
Fair value of plan assets
Retirement benefit asset in the statement of financial position
Amounts recognised in the statement of profit or loss:
Interest cost
Expected return on plan assets
Retirement benefit return recognised in the statement of profit or loss
2023
$m
(34.9)
39.4
4.5
(1.5)
1.7
0.2
2022
$m
(31.1)
35.7
4.6
(1.1)
1.4
0.3
Beazley Furlonge Limited operates a defined benefit pension scheme (‘the Beazley Furlonge Limited Pension Scheme’), which
closed to new entrants in 2002 and to future accrual in 2006.
The scheme is administered by a trust that is legally separated from the Group.
The pension scheme trustees completed a transaction that insures all of the scheme’s liabilities to a third party via a bulk
annuity buy-in with an external insurance company in 2022. The annuity contracts meet the criteria to be classified as qualifying
insurance policies as defined in IAS 19 as the cash flows match the timing and value of the benefits payable to members that
they cover. These annuities are thus valued at the present value of the obligations insured.
At the reporting date, the trustees and the Company retain all obligations to ensure benefits due to scheme members are paid.
Following the buy-in transaction the Group expects to make no further contributions to the scheme.
Historically the scheme exposed the Group to additional actuarial, interest rate and market risk. However as a result of the buy-
in transaction in 2022 these risks are now born by the insurance company to which liabilities have been insured. The buy-in
transaction does expose the Group to additional credit risk with regard to the insurance company from whom the annuities were
purchased. This counterparty has an investment grade credit rating and therefore the Group considers the credit risk to be
minimal.
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199
Notes to the financial statements
continued
17 Retirement benefit asset continued
Included below is a reconciliation from opening to closing of the present value of funded obligations and the fair value of plan
assets. The amount recognised in the statement of comprehensive income is the net position of the actuarial gains/losses due
to changes in financial assumptions and the loss/gain on asset return.
Movement in present value of funded obligations recognised in the statement of financial position
Balance at 1 January
Interest cost
Actuarial loss/(gain) due to changes in financial assumptions
Benefits paid
Foreign exchange loss/(gain)
Balance at 31 December
Movement in fair value of plan assets recognised in the statement of financial position
Balance at 1 January
Expected return on plan assets
Gain/(loss) on asset return
Administrative expenses
Benefits paid
Foreign exchange gain/(loss)
Balance at 31 December
Plan assets are comprised as follows:
Purchased annuities
Cash
Total
2023
$m
31.1
1.5
2.0
(0.5)
0.8
34.9
2023
$m
35.7
1.7
1.9
(0.3)
(0.5)
0.9
39.4
2023
$m
34.9
4.5
39.4
2022
$m
56.9
1.0
(22.1)
(0.5)
(4.2)
31.1
2022
$m
75.0
1.3
(34.6)
—
(0.5)
(5.5)
35.7
2022
$m
31.1
4.6
35.7
200
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18 Financial assets and liabilities
18a 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 21); and
• Amounts due from managed syndicates, other receivables, lease liabilities, and other payables, all of which are carried at
amortised cost (per Section d).
Debt securities:
– Government issued
– Corporate bonds
– Investment grade
– High yield
Syndicate loans
Total debt securities and syndicate loans
Equity funds
Hedge funds
Illiquid assets
Total capital growth assets
Total financial investments at fair value through statement of profit or loss
Derivative financial assets
Total financial assets at fair value
2023
$m
2022
$m
4,469.1 5,006.3
489.0
34.1
3,578.3 2,050.5
308.7
32.5
8,570.5 7,398.0
159.4
282.7
530.6
582.2
222.9
220.1
1,085.0
912.9
9,655.5 8,310.9
34.7
9,665.5 8,345.6
10.0
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).
Tier 2 subordinated debt (2026)
Tier 2 subordinated debt (2029)
Derivative financial liabilities
Total financial liabilities
2023
$m
249.5
298.8
6.3
554.6
2022
$m
249.4
298.6
14.5
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. Further details are provided in Note 33.
For a maturity analysis showing the financial assets and liabilities due within and after one year of the reporting date, refer to
Note 30d.
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201
Notes to the financial statements
continued
18 Financial assets and liabilities continued
18b 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.
202
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18 Financial assets and liabilities continued
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.
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203
Notes to the financial statements
continued
18 Financial assets and liabilities continued
18c 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.
2023
Financial assets carried at fair value
Fixed and floating rate debt securities
– Government issued
– Corporate bonds
– Investment grade
– High yield
Syndicate loans
Equity funds
Hedge funds
Illiquid assets
Derivative financial assets
Total financial assets carried at fair value
Financial liabilities carried at fair value
Derivative financial liabilities
Total financial liabilities carried at fair value
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026)
Tier 2 subordinated debt (2029)
Total fair value of financial liabilities carried at amortised cost
2022
Financial assets carried at fair value
Fixed and floating rate debt securities
– Government issued
– Corporate bonds
– Investment grade
– High yield
Syndicate loans
Equity funds
Hedge funds
Illiquid assets
Derivative financial assets
Total financial assets carried at fair value
Financial liabilities carried at fair value
Derivative financial liabilities
Total financial liabilities carried at fair value
Fair value of financial liabilities carried at amortised cost
Tier 2 subordinated debt (2026)
Tier 2 subordinated debt (2029)
Total fair value of financial liabilities carried at amortised cost
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
3,291.9
1,177.2
— 4,469.1
1,596.7
488.1
—
282.7
—
—
10.0
5,669.4
6.3
6.3
—
—
—
1,981.6
0.9
—
—
582.2
—
—
3,741.9
—
—
241.7
271.9
513.6
— 3,578.3
489.0
—
34.1
34.1
282.7
—
582.2
—
220.1
220.1
10.0
—
9,665.5
254.2
—
—
—
—
—
6.3
6.3
241.7
271.9
513.6
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
4,022.5
983.8
— 5,006.3
893.8
34.2
—
159.4
—
—
34.7
5,144.6
14.5
14.5
—
—
—
1,156.7
274.5
—
—
530.6
—
—
2,945.6
—
—
240.3
265.9
506.2
— 2,050.5
308.7
—
32.5
32.5
159.4
—
530.6
—
222.9
222.9
34.7
—
8,345.6
255.4
—
—
—
—
—
14.5
14.5
240.3
265.9
506.2
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18 Financial assets and liabilities continued
18d 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.
Cash and cash equivalents
Amounts due from managed syndicates
Other receivables
Total financial assets at amortised cost 1
Lease liabilities
Amounts due to managed syndicates
Other payables
Total financial liabilities at amortised cost
2023
$m
812.3
25.4
272.1
1,109.8
76.6
304.3
207.3
588.2
2022
$m
652.5
1.9
179.9
834.3
72.7
308.0
184.5
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. Refer to Note
2 for the ECLs recognised on adoption of IFRS 9 as at 01 January 2023.
18e 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).
31 December 2023 vs 31 December 2022 transfer from level 2 to level 1
– Corporate Bonds – Investment grade
31 December 2023 vs 31 December 2022 transfer from level 1 to level 2
– Corporate Bonds – Investment grade
Level 1
$m
446.0
Level 2
$m
(446.0)
Level 1
$m
(525.3)
Level 2
$m
525.3
The values shown in the transfer tables above are translated using spot foreign exchange rates as at 31 December 2023.
18f 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 8).
Opening position as at 01 January
Purchases
Sales
Realised gain
Unrealised loss
Foreign exchange gain/(loss)
Closing position as at 31 December
2023
$m
255.4
21.8
(37.4)
20.2
(6.6)
0.8
254.2
2022
$m
315.8
13.0
(81.4)
13.2
(2.7)
(2.5)
255.4
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Beazley | Annual report 2023
205
Notes to the financial statements
continued
18 Financial assets and liabilities continued
18g 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:
High yield bond funds
Equity funds
Hedge funds
Illiquid assets
Investments through unconsolidated structured entities
2023
2022
$m
489.0
282.7
582.2
220.1
1,574.0
$m
308.7
159.4
530.6
222.9
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.
206
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18 Financial assets and liabilities continued
18h Currency exposures
The currency exposures of our financial assets held are detailed below:
2023
Financial assets at FVTPL:
- Fixed and floating rate debt securities
- Syndicate loans
- Equity Linked Funds
- Hedge funds
- Illiquid assets
- Derivative financial assets
Cash and cash equivalents
Amounts due from managed syndicates and other
receivables
Total
UK £
$m
789.6
34.1
—
—
6.4
—
125.8
27.6
CAD $
$m
432.5
—
—
—
—
—
51.5
EUR €
$m
Sub Total
$m
US $
$m
Total
$m
— 1,222.1
34.1
—
—
—
—
—
52.3
45.9
—
—
270.8
93.5
7,314.3
—
282.7
582.2
167.8
10.0
541.5
8,536.4
34.1
282.7
582.2
220.1
10.0
812.3
9.4
51.4
88.4
209.1
297.5
983.5
493.4
190.8
1,667.7
9,107.6
10,775.3
2022
Financial assets at FVTPL:
- Fixed and floating rate debt securities
- Syndicate loans
- Equity Linked Funds
- Hedge funds
- Illiquid assets
- Derivative financial assets
Cash and cash equivalents
Amounts due from managed syndicates and
other receivables
Total
UK £
$m
636.1
32.5
—
—
0.1
—
93.1
9.5
CAD $
$m
365.9
—
—
—
—
—
53.8
3.4
EUR €
$m
—
—
—
—
46.2
—
83.4
32.8
Sub Total
$m
1,002.0
32.5
—
—
46.3
—
230.3
US $
$m
Total
$m
6,363.5
—
159.4
530.6
176.6
34.7
422.2
7,365.5
32.5
159.4
530.6
222.9
34.7
652.5
45.7
136.1
181.8
771.3
423.1
162.4
1,356.8
7,823.1
9,179.9
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207
Notes to the financial statements
continued
19 Derivative financial instruments
Derivative financial instruments are utilised by the Group to manage its exposure to market risks on existing assets and
liabilities. For currency risk, over-the-counter foreign exchange forward agreements are used to economically hedge the balance
sheet's net assets by currency exposure.
The assets and liabilities of these contracts are detailed below. The Group has the right and intention to settle each contract on
a net basis.
2023
2022
Notional contract
amount
Market value
of derivative
position
Notional contract
amount
Market value
of derivative
position
Contract assets
Contract liabilities
Total derivative financial instruments
20 Other assets
Investment in associates
Prepayments and accrued income
Due from syndicate 623
Due from syndicate 4321
Other receivables
Total other assets
$m
648.8
436.4
$m
10.0
(6.3)
3.7
$m
560.1
549.7
2023
$m
0.3
56.4
19.1
6.3
272.1
354.2
$m
34.7
(14.5)
20.2
2022
$m
0.4
22.0
—
1.9
179.9
204.2
Other assets are due within one year of the reporting date, with the exception of the Group's investment in associates and
$13.7m (2022: $6.1m) of accrued income which is due after one year of the reporting date.
Investment in associates
The Group’s investment in associates consists of the following:
2023
Falcon Money Management Holdings Limited (and subsidiaries)
Pegasus Underwriting Limited
CyberAcu View LLC
1 259 St Paul Street, Valletta, Malta
2 Suite 126, 12/F Somptuex Central, 52-54 Wellington Street, Hong Kong
3 8130 Lakewood Main Street, Suite 103 #329. Lakewood Ranch, FL 34202
Country/region
of incorporation
Malta¹
Hong Kong²
USA³
% interest
held
25 %
33 %
14 %
The Group has the ability to appoint a member to the board of CyberAcuView LLC to represent its interest, therefore the Group
is deemed to have significant influence and this investment is recognised as an associate.
A share of loss on associates of $0.1m (2022: $0.2m) has been recognised in profit or loss for the year.
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21 Cash and cash equivalents
Cash at bank and in hand
Total cash and cash equivalents
2023
$m
812.3
812.3
2022
$m
652.5
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.
22 Share capital
Ordinary shares of 5p each
Issued and fully paid
Balance at 01 January
Issue of shares to satisfy employee share schemes
Equity raise
Balance at 31 December
No. of
shares (m)
672.5
671.2
1.3
—
672.5
2023
$m
46.7
46.6
0.1
—
46.7
No. of
shares (m)
671.2
609.2
1.0
61.0
671.2
2022
$m
46.6
42.9
0.1
3.6
46.6
There are no limits to the authorised share capital of the Company.
On 16 November 2022, the Group completed an equity raise with the issue of 60,959,017 new ordinary shares of 5 pence
each in the share capital of the Company. This equity raise was primarily comprised of 60,403,895 Placing shares, in addition
to Retail Offer shares and Subscription shares.
The shares were issued at a price of 575 pence per share, representing a discount of 8.0% to the closing share price of 625
pence on 15 November 2022. This represented approximately 9.99% of the Company's issued ordinary share capital on the day
prior to the equity raise. In aggregate, the equity raise represented net proceeds of £340.8m ($404.4m).
No share premium was recorded in relation to the Placing shares as merger relief under the Companies Act was available. The
premium over the nominal value of these shares was credited to a merger reserve and subsequently recognised in retained
earnings as it was deemed to be distributable.
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Beazley | Annual report 2023
209
Notes to the financial statements
continued
23 Other reserves
Balance at 01 January 2022
Share based payments
Tax on share option vestings
Acquisition of own shares held in trust
Transfer of shares to employees
Balance at 31 December 2022
Share based payments
Tax on share option vestings
Acquisition of own shares held in trust
Transfer of shares to employees
Balance at 31 December 2023
Employee
share options
reserve
Employee
share trust
reserve
$m
$m
(21.0)
17.0
—
15.7
3.1
—
— (17.8)
2.6
(7.2)
(36.2)
28.6
—
36.2
0.7
—
— (33.6)
6.3
(63.5)
(14.8)
50.7
Total
$m
(4.0)
15.7
3.1
(17.8)
(4.6)
(7.6)
36.2
0.7
(33.6)
(8.5)
(12.8)
The employee share options reserve is held in accordance with IFRS 2 Share-based payments. For awards satisfied by the
employee share trust ("EBT"), shares are purchased on the market and carried at cost. For further information refer to Note 24.
A reconciliation of the amounts included within the EBT reserve is provided below.
Balance at 01 January
Additions
Transfer of shares to employees
Balance at 31 December
2023
Number (m)
5.7
5.1
(1.0)
9.8
2022
Number (m)
3.1
3.0
(0.4)
5.7
210
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24 Equity compensation plans
The Group offers the following equity compensation plans: long term incentive plan (“LTIP”), save-as-you-earn ("SAYE") plan,
deferred share plan, and retention share plan. Provided vesting conditions are met, the methods of settlement for each plan are
as follows:
• LTIPs – share options which entitle executives and senior management to acquire shares in the Company, satisfied either
through new issue or the EBT;
• SAYE – share options which entitle the Group’s employees to buy shares at a set option price. These are satisfied through
new issue;
• Deferred awards – conditional awards granted to employees in the form of shares, satisfied through the EBT; and
• Retention shares – conditional awards granted to senior management in the form of shares, satisfied through the EBT.
The terms and conditions of the grants are as follows:
Equity compensation plans
LTIP (5 year)
LTIP (3 year)
SAYE (UK)
SAYE (US)
SAYE (Others)
Total options outstanding
Deferred share plan
Retention plan
Total outstanding
No. outstanding (m)
Vesting conditions
6.1
Five years' service + NAVps + minimum shareholding
8.9 Three years' service + NAVps + minimum shareholding + ESG
Three years' service
2.6
Two years’ service
0.2
0.2
Two years’ service
18.0
3.6
0.1
21.7
Three years’ service
Three to six years’ service (25% per year)
Contractual life
10 years
10 years
6 months
3 months
Various
N/A
N/A
In summary the vesting conditions are defined as:
• two, three, five or six years’ service – an employee has to remain in employment until the second, third, fifth or sixth
anniversary respectively from the grant date;
• NAVps – the net asset value per share ("NAVps") growth, after adjusting for the effect of dividends, is greater than the risk-
free rate of return plus a premium per year;
• the CEO and Group Finance Director ("Executive Directors") must hold and maintain a shareholding of 300% and 200%
respectively of base salary. The Executive Directors must maintain 100% of their shareholding requirement for two years post-
departure. Other executive management and senior management of the business are expected to hold and maintain a
shareholding of 150% and 100% respectively of base salary; and
• ESG requirements – newly introduced in 2023, the Group must reduce its carbon emissions and increase its female and
people of colour representation at the Board and Senior Manager level.
Further details can be found in the Directors’ remuneration report on pages 124 to 145. The total gain on Directors’ exercises
of share option plans during the year was £0.5m (2022: £0.2m).
Number of options and exercise prices
The following table summarises the number of options outstanding at the balance sheet date, the weighted average remaining
contractual life of these options, and the weighted average share price at exercise of options exercised during the year.
Outstanding at 01 January
Forfeited during the year
Exercised during the year¹
Granted during the year
Outstanding at 31 December²
Exercisable at 31 December
2023
2022
Weighted average
exercise price
(pence per share)
56.5
40.9
76.6
57.8
58.0
—
No. of
options
(m)
15.9
(2.2)
(1.4)
5.7
18.0
—
Weighted average
exercise price
(pence per share)
80.7
74.5
124.3
54.5
56.5
—
No. of
options
(m)
14.9
(3.2)
(1.1)
5.3
15.9
—
1 The weighted average share price at the point of exercise of these options was 610.2p (2022: 498.7p).
2 The weighted average remaining contractual life for the outstanding options at end of the year was 1.33 years (2022: 1.89 years).
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Beazley | Annual report 2023
211
Notes to the financial statements
continued
24 Equity compensation plans continued
The range of exercise prices for options outstanding at the end of the year were as follows:
Exercise prices (pence per option)
0 – 100
201 – 300
301 – 400
401 – 500
501 – 518
Total options outstanding
2023
2022
No. outstanding (m)
15.0
1.6
0.6
0.7
0.1
18.0
No. outstanding (m)
13.0
1.8
0.7
0.4
—
15.9
Fair values
The fair values of the LTIP and SAYE plans are measured using the Black Scholes model, taking into account the terms and
conditions upon which the options were granted.
For these plans, amounts are recognised in the profit or loss as an employee expense over the period in which the employees
become unconditionally entitled to the options, with a corresponding increase in the employee share options reserve. The
amount recognised as an expense is adjusted to reflect the actual number once vested. The below table is a summary of the
assumptions used to calculate the fair value of share options awarded during the year ended 31 December 2023.
Share options charge to employee share options reserve
LTIP
Weighted average share price (pence per option)
Weighted average fair value (pence per option)
Weighted average exercise price (pence per option)
Average expected life of options (years)
Expected volatility
Expected dividend yield
Average risk-free interest rate
SAYE
Weighted average share price (pence per option)
Weighted average fair value (pence per option)
Weighted average exercise price (pence per option)
Average expected life of options (years)
Expected volatility
Expected dividend yield
Average risk-free interest rate
2023
33.8
614.0
613.9
–
2.9yrs
35.0 %
— %
3.9 %
582.5
184.2
480.1
3.3yrs
34.8 %
2.5 %
3.8 %
2022
14.7
509.9
509.8
–
4.3yrs
38.9 %
— %
3.0 %
435.7
143.4
350.6
3.3yrs
39.3 %
2.6 %
2.6 %
The expected volatility is based on historic volatility over a period of at least two years.
For the deferred share plan and retention share plan, fair values are determined based on the share price at date of grant.
Amounts are recognised in the statement of profit or loss on a straight-line basis over a period of three years and six years
respectively.
212
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25 Deferred tax
Deferred tax asset
Deferred tax liability
Net deferred tax liability
1 Deferred tax amounts as at 31 December 2022 have been restated on adoption of IFRS 17. Refer below for further details.
2023
$m
46.9
(202.2)
(155.3)
20221
$m
30.8
(79.2)
(48.4)
Plant and equipment
Intangible assets
Underwriting profits
Deferred acquisition costs
Tax losses carried forward
Share based payments
Unrealised gains/(losses) on investments
IFRS 17 adjustments
Other
Net deferred tax asset/(liability)
Plant and equipment
Intangible assets
Underwriting profits
Deferred acquisition costs
Tax losses carried forward
Share based payments
Unrealised gains/(losses) on investments
IFRS 17 adjustments
Other
Net deferred tax asset/(liability)
Balance
01 Jan 23
Recognised in total
comprehensive income
Recognised in
equity
FX translation
differences
Balance
31 Dec 23
$m
(0.8)
(1.8)
7.4
1.7
4.0
8.4
9.9
(83.7)
6.5
(48.4)
$m
(0.3)
0.5
(101.6)
(1.7)
5.7
1.5
(11.1)
(3.4)
6.8
(103.6)
$m
—
—
—
—
—
(0.9)
—
—
—
(0.9)
$m
—
—
—
—
—
—
—
—
(2.4)
(2.4)
$m
(1.1)
(1.3)
(94.2)
—
9.7
9.0
(1.2)
(87.1)
10.9
(155.3)
Balance
01 Jan 22¹
Recognised in total
comprehensive income
Recognised in
equity
FX translation
differences
Balance
31 Dec 22
$m
(1.2)
(0.5)
14.2
(7.8)
9.6
2.6
(1.7)
(13.4)
1.2
3.0
$m
0.4
(1.3)
(6.8)
9.5
(5.6)
3.1
11.6
(70.3)
4.7
(54.7)
$m
—
—
—
—
—
3.1
—
—
0.6
3.7
$m
—
—
—
—
—
(0.4)
—
—
—
(0.4)
$m
(0.8)
(1.8)
7.4
1.7
4.0
8.4
9.9
(83.7)
6.5
(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.
UK
US
Ireland
Other¹
Net deferred tax liability
1 Includes Canada, France, Germany, Spain and Switzerland.
2023
$m
(152.8)
46.7
(38.7)
(10.5)
(155.3)
2022
$m
(35.3)
29.8
(39.0)
(3.9)
(48.4)
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Beazley | Annual report 2023
213
Notes to the financial statements
continued
25 Deferred tax continued
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 13 for further details.
26 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).
Opening balance at 01 January 2022
Amortisation of capitalised borrowing costs
Closing balance at 31 December 2022
Amortisation of capitalised borrowing costs
Closing balance at 31 December 2023
Tier 2
subordinated
debt (2029)
Tier 2
subordinated
debt (2026)
$m
298.4
0.2
298.6
0.2
298.8
$m
249.2
0.2
249.4
0.1
249.5
Total
$m
547.6
0.4
548.0
0.3
548.3
The annual interest expense on the Group's subordinated liabilities is included in Note 8. Accrued interest of $7.4m (2022:
$7.4m) is included within Other liabilities in Note 29.
214
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27 Leases
The Group leases offices, IT equipment and motor vehicles. The leased offices are in several locations and the leases of large
offices such as London and New York typically run for a period of 10 years with an option to renew the lease after that date or
continue on a rolling month-by-month basis. Lease payments are renegotiated as agreed in the lease contracts. Information
about leases for which the Group is a lessee are presented below. Note that the right-of-use assets do not meet the definition
of investment property as per IAS 40.
Right-of-use assets
Balance at 01 January 2022
Depreciation
Additions
Foreign exchange translation differences
Balance at 31 December 2022
Depreciation
Additions
Foreign exchange translation differences
Balance at 31 December 2023
Lease liabilities
Balance at 01 January 2022
Lease payments
Interest on lease liabilities and dilapidation provision
Additions to lease portfolio
Foreign exchange translation differences
Balance at 31 December 2022
Lease payments
Interest on lease liabilities and dilapidation provision
Additions to lease portfolio
Foreign exchange translation differences
Balance at 31 December 2023
Offices
IT equipment Motor vehicle
$m
63.4
(8.0)
0.9
(3.0)
53.3
(9.6)
10.9
0.8
55.4
$m
12.0
(4.2)
—
(0.6)
7.2
(3.3)
—
0.1
4.0
$m
0.1
(0.1)
—
—
—
—
—
—
—
Offices
IT equipment Motor vehicle
$m
72.1
(6.9)
2.8
0.9
(3.5)
65.4
(8.5)
3.1
10.9
1.5
72.4
$m
12.1
(4.5)
0.4
—
(0.7)
7.3
(3.5)
0.2
—
0.2
4.2
$m
0.1
(0.2)
—
—
0.1
—
—
—
—
—
—
Total
$m
75.5
(12.3)
0.9
(3.6)
60.5
(12.9)
10.9
0.9
59.4
Total
$m
84.3
(11.6)
3.2
0.9
(4.1)
72.7
(12.0)
3.3
10.9
1.7
76.6
The amount falling due within 12 months is $13.5m (2022: $9.6m). For a detailed maturity analysis, refer to Note 30d.
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Beazley | Annual report 2023
215
Notes to the financial statements
continued
28 Insurance and reinsurance contracts
28a 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. An explanation of
how amounts have moved in the year is set out in Note 2.
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.
31 December 2023
Opening insurance contract assets
Opening insurance contract liabilities
Net insurance contract liabilities at 01 January 2023
CSM recognised in profit or loss for services provided
Changes in the risk adjustment for non-financial risk for risk expired
Experience adjustments
Total changes relating to current service
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
$m
123.5
(6,324.0)
(6,200.5)
—
—
893.3
893.3
$m
(12.9)
(711.3)
(724.2)
—
316.8
(285.5)
31.3
CSM
Total
$m
(26.5)
(314.5)
(341.0)
$m
84.1
(7,349.8)
(7,265.7)
691.4
—
—
691.4
691.4
316.8
607.8
1,616.0
Changes in estimates that adjust the CSM
Changes in estimates that result in onerous contract losses or
reversal of such losses
Contracts initially recognised in the period
Total changes relating to future service
135.0
(19.1)
(115.9)
—
6.0
(1.1)
7.5
12.4
870.2
1,011.2
(264.2)
(284.4)
(616.6)
(725.0)
(10.6)
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
Foreign exchange gains/(losses)
Other amounts recognised in total comprehensive income
(190.2)
1.9
(188.3)
(13.9)
(0.6)
(14.5)
34.8
(4.2)
30.6
(169.3)
(2.9)
(172.2)
Premiums received net of insurance acquisition cash flows
Claims and other directly attributable expenses paid
Total cash flows
(4,526.4)
2,223.8
(2,302.6)
—
—
—
—
—
—
(4,526.4)
2,223.8
(2,302.6)
Closing insurance contract assets
Closing insurance contract liabilities
Net insurance contract liabilities at 31 December 2023
103.8
(6,874.5)
(6,770.7)
(1.2)
(774.8)
(776.0)
(1.1)
(342.9)
(344.0)
101.5
(7,992.2)
(7,890.7)
216
Beazley | Annual report 2023
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28 Insurance and reinsurance contracts continued
31 December 2022
Opening insurance contract assets
Opening insurance contract liabilities
Net insurance contract liabilities at 01 January 2022
CSM recognised in profit or loss for services provided
Changes in the risk adjustment for non-financial risk for risk expired
Experience adjustments
Total changes relating to current service
Changes in estimates that adjust the CSM
Changes in estimates that result in onerous contract losses or
reversal of such losses
Contracts initially recognised in the period
Total changes relating to future service
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
$m
—
(5,628.3)
(5,628.3)
—
—
518.4
518.4
57.2
42.7
$m
—
(740.3)
(740.3)
—
274.7
(268.6)
6.1
CSM
Total
$m
—
(190.9)
(190.9)
$m
—
(6,559.5)
(6,559.5)
565.2
—
—
565.2
565.2
274.7
249.8
1,089.7
61.5
(118.7)
—
(3.0)
18.5
58.2
898.3
998.2
(324.8)
(266.3)
(607.6)
(707.8)
(34.1)
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
Foreign exchange gains
Other amounts recognised in total comprehensive income
Premiums received net of insurance acquisition cash flows
Claims and other directly attributable expenses paid
Total cash flows
261.8
45.9
307.7
(4,141.0)
2,261.8
(1,879.2)
29.5
8.9
38.4
—
—
—
(11.8)
4.3
(7.5)
279.5
59.1
338.6
—
—
—
(4,141.0)
2,261.8
(1,879.2)
Closing insurance contract assets
Closing insurance contract liabilities
Net insurance contract liabilities at 31 December 2022
123.5
(6,324.0)
(6,200.5)
(12.9)
(711.3)
(724.2)
(26.5)
(314.5)
(341.0)
84.1
(7,349.8)
(7,265.7)
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Beazley | Annual report 2023
217
Notes to the financial statements
continued
28 Insurance and reinsurance contracts continued
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.
31 December 2023
Opening reinsurance contract assets
Opening reinsurance contract liabilities
Net reinsurance contract assets at 01 January 2023
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
$m
1,853.3
(193.8)
1,659.5
$m
184.6
12.7
197.3
CSM
$m
137.4
19.9
157.3
Total
$m
2,175.3
(161.2)
2,014.1
CSM recognised in profit or loss for the services provided
Changes in the risk adjustment for non-financial risk for the risk
expired
Experience adjustments
Total changes relating to current service
—
—
—
(290.8)
(290.8)
(105.2)
—
(105.2)
(139.0)
(139.0)
84.2
(21.0)
—
(290.8)
(54.8)
(450.8)
Changes in estimates that adjust the CSM
Contracts initially recognised in the period
Total changes relating to future service
Adjustments to incurred claims recovery
Effect of changes in the risk of reinsurers non-performance
Total changes relating to past service
91.6
(436.3)
(344.7)
(110.9)
4.2
(106.7)
(16.1)
84.2
68.1
(41.3)
—
(41.3)
(75.5)
352.1
276.6
—
—
—
—
—
—
(152.2)
4.2
(148.0)
Recognised in insurance service result
(590.4)
5.8
(14.2)
(598.8)
Finance income/(expenses) from reinsurance contracts held
Foreign exchange (losses)/gains
Other amounts recognised in total comprehensive income
24.0
(20.6)
3.4
5.7
15.8
21.5
(13.8)
0.3
(13.5)
15.9
(4.5)
11.4
Premiums paid net of ceding commissions and other directly
attributable expenses paid
Recoveries from reinsurance
Total cash flows
1,080.4
(413.9)
666.5
—
—
—
—
1,080.4
—
—
(413.9)
666.5
Closing reinsurance contract assets
Closing reinsurance contract liabilities
Net reinsurance contract assets at 31 December 2023
2,143.4
(404.4)
1,739.0
166.2
58.4
224.6
117.1
12.5
129.6
2,426.7
(333.5)
2,093.2
218
Beazley | Annual report 2023
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28 Insurance and reinsurance contracts continued
31 December 2022
Opening reinsurance contract assets
Opening reinsurance contract liabilities
Net reinsurance contract assets at 01 January 2022
CSM recognised in profit or loss for the services provided
Changes in the risk adjustment for non-financial risk for the risk
expired
Experience adjustments
Total changes relating to current service
Changes in estimates that adjust the CSM
Contracts initially recognised in the period
Total changes relating to future service
Adjustments to incurred claims recovery
Effect of changes in the risk of reinsurers non-performance
Total changes relating to past service
Present value of
future cash
flows
Risk adjustment
for non-financial
risk
$m
1,453.7
(156.6)
1,297.1
$m
177.0
13.8
190.8
CSM
$m
43.6
3.1
46.7
Total
$m
1,674.3
(139.7)
1,534.6
—
—
(29.8)
(29.8)
264.4
(646.2)
(381.8)
307.8
(32.6)
275.2
—
(195.3)
(195.3)
(74.3)
65.7
(8.6)
7.1
74.1
81.2
(53.0)
—
(53.0)
—
(74.3)
—
(195.3)
35.9
(233.7)
(271.5)
572.1
300.6
—
—
—
—
—
—
254.8
(32.6)
222.2
Recognised in insurance service result
(136.4)
19.6
105.3
(11.5)
Finance expenses from reinsurance contracts held
Foreign exchange (losses)/gains
Other amounts recognised in total comprehensive income
(82.6)
(6.9)
(89.5)
(10.7)
(2.4)
(13.1)
(3.2)
8.5
5.3
(96.5)
(0.8)
(97.3)
Premiums paid net of ceding commissions and other directly
attributable expenses paid
Recoveries from reinsurance
Total cash flows
961.7
(373.4)
588.3
—
—
—
—
—
—
961.7
(373.4)
588.3
Closing reinsurance contract assets
Closing reinsurance contract liabilities
Net reinsurance contract assets at 31 December 2022
1,853.3
(193.8)
1,659.5
184.6
12.7
197.3
137.4
19.9
157.3
2,175.3
(161.2)
2,014.1
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Beazley | Annual report 2023
219
Notes to the financial statements
continued
28 Insurance and reinsurance contracts continued
28b 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.
31 December 2023
Opening insurance contract assets
Opening insurance contract liabilities
Net insurance contract liabilities at 01 January 2023
Insurance revenue
Insurance service expenses:
- Incurred claims and other directly attributable expenses
- Changes that relate to past service - adjustments to the LIC
- Losses on onerous contracts and reversal of those losses
- Insurance acquisition cash flows amortisation
Recognised in insurance service result
LRC
Excluding
Loss
Component
$m
87.2
(824.7)
(737.5)
Loss
Component
LIC
Total
$m
$m
84.1
—
(10.1)
(7,349.8)
(10.1) (6,518.1) (7,265.7)
$m
(3.1)
(6,515.0)
5,442.4
—
— 5,442.4
(86.3)
—
—
(914.8)
4,441.3
(2,825.3)
232.0
—
—
(2,911.6)
—
232.0
—
1.8
1.8
—
(914.8)
1.8 (2,593.3) 1,849.8
Finance income/(expenses) from insurance contracts issued
Foreign exchange gains/(losses)
Other amounts recognised in total comprehensive income
70.8
4.7
75.5
—
—
—
(240.1)
(7.6)
(247.7)
(169.3)
(2.9)
(172.2)
Premiums received net of insurance acquisition cash flows
Claims and other directly attributable expenses paid
Total cash flows
(4,526.4)
—
(4,526.4)
—
(4,526.4)
—
— 2,223.8 2,223.8
— 2,223.8 (2,302.6)
Closing insurance contract assets
Closing insurance contract liabilities
Net insurance contract liabilities at 31 December 2023
101.7
(848.8)
(747.1)
(0.2)
(7,135.1)
101.5
—
(8.3)
(7,992.2)
(8.3) (7,135.3) (7,890.7)
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28 Insurance and reinsurance contracts continued
31 December 2022
Opening insurance contract assets
Opening insurance contract liabilities
Net insurance contract liabilities at 01 January 2022
Insurance revenue
Insurance service expenses:
- Incurred claims and other directly attributable expenses
- Changes that relate to past service - adjustments to the LIC
- Losses on onerous contracts and reversal of those losses
- Insurance acquisition cash flows amortisation
Recognised in insurance service result
LRC
Excluding
Loss
Component
$m
—
(688.1)
(688.1)
Loss
Component
LIC
Total
$m
$m
—
—
(34.3)
(6,559.5)
(34.3) (5,837.1) (6,559.5)
$m
—
(5,837.1)
4,848.4
—
— 4,848.4
(41.0)
—
—
(850.1)
3,957.3
—
—
24.1
—
(2,867.6)
(279.4)
—
—
24.1 (3,147.0)
(2,908.6)
(279.4)
24.1
(850.1)
834.4
Finance income from insurance contracts issued
Foreign exchange gains
Other amounts recognised in total comprehensive income
129.5
4.8
134.3
—
0.1
0.1
150.0
54.2
204.2
279.5
59.1
338.6
Premiums received net of insurance acquisition cash flows
Claims and other directly attributable expenses paid
Total cash flows
(4,141.0)
—
(4,141.0)
—
(4,141.0)
—
— 2,261.8 2,261.8
— 2,261.8 (1,879.2)
Closing insurance contract assets
Closing insurance contract liabilities
Net insurance contract liabilities at 31 December 2022
87.2
(824.7)
(737.5)
(3.1)
(6,515.0)
84.1
—
(10.1)
(7,349.8)
(10.1) (6,518.1) (7,265.7)
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Beazley | Annual report 2023
221
Notes to the financial statements
continued
28 Insurance and reinsurance contracts continued
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
Opening reinsurance contract assets
Opening reinsurance contract liabilities
Net reinsurance contract assets at 01 January 2023
$m
$m
$m
24.9 2,150.4 2,175.3
(254.7)
(161.2)
93.5
(229.8) 2,243.9 2,014.1
Expected claims and other expenses recovery
Changes in the risk adjustment recognised for the risk expired
CSM recognised for the services received
Other amounts including experience adjustments
Allocation of reinsurance premium
Effect of changes in the risk of reinsurers’ non-performance
Claims recovered
Other incurred directly attributable expenses
Changes that relate to past service – adjustments to incurred claims recovery
Amounts recoverable from reinsurers for incurred claims
Net expenses from reinsurance contracts held
Finance (expenses)/income from reinsurance contracts held
Foreign exchange (losses)/gains
Other amounts recognised in total comprehensive income
(1,419.8)
(189.4)
(290.8)
9.2
(1,890.8)
(1.3)
767.1
(0.5)
—
765.3
(1,125.5)
679.3
84.2
—
—
763.5
5.5
(87.0)
(3.1)
(152.2)
(236.8)
526.7
(740.5)
(105.2)
(290.8)
9.2
(1,127.3)
4.2
680.1
(3.6)
(152.2)
528.5
(598.8)
(40.9)
(6.1)
(47.0)
56.8
1.6
58.4
15.9
(4.5)
11.4
Premiums paid net of ceding commissions and other directly attributable expenses paid 1,080.4
—
Recoveries from reinsurance
1,080.4
Total cash flows
— 1,080.4
(413.9)
666.5
(413.9)
(413.9)
Closing reinsurance contract assets
Closing reinsurance contract liabilities
Net reinsurance contract assets at 31 December 2023
(1,080.3)
758.4 1,668.3 2,426.7
(333.5)
746.8
(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.
222
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28 Insurance and reinsurance contracts continued
31 December 2022
Opening reinsurance contract assets
Opening reinsurance contract liabilities
Net reinsurance contract assets/(liabilities) at 01 January 2022
Expected claims and other expenses recovery
Changes in the risk adjustment recognised for the risk expired
CSM recognised for the services received
Other amounts including experience adjustments
Allocation of reinsurance premium
Effect of changes in the risk of reinsurers’ non-performance
Claims recovered
Other incurred directly attributable expenses
Changes that relate to past service – adjustments to incurred claims recovery
Amounts recoverable from reinsurers for incurred claims
Net expenses from reinsurance contracts held
ARC¹
AIC
Total
$m
$m
$m
(29.0) 1,703.3 1,674.3
(139.7)
(252.4) 1,787.0 1,534.6
(223.4)
83.7
(140.0)
(195.3)
36.0
(1,002.1) 270.3
65.7
—
—
(1,301.4) 336.0
(31.2)
(731.8)
(74.3)
(195.3)
36.0
(965.4)
(32.6)
368.3 365.1 733.4
5.1
(1.7)
(6.8)
— 254.8 254.8
372.0 581.9 953.9
(11.5)
(929.4) 917.9
(1.4)
Finance expenses from reinsurance contracts held
Foreign exchange gains/(losses)
Other amounts recognised in total comprehensive income
(22.5)
12.8
(9.7)
(74.0)
(13.6)
(87.6)
(96.5)
(0.8)
(97.3)
Premiums paid net of ceding commissions and other directly attributable expenses paid
Recoveries from reinsurance
Total cash flows
961.7
—
— 961.7
(373.4)
961.7 (373.4) 588.3
(373.4)
Closing reinsurance contract assets
Closing reinsurance contract liabilities
Net reinsurance contract assets/(liabilities) at 31 December 2022
1 Includes loss recovery component of $3.4m at 01 January 2022 and $3.8m at 31 December 2022.
24.9 2,150.4 2,175.3
(161.2)
93.5
(229.8) 2,243.9 2,014.1
(254.7)
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Beazley | Annual report 2023
223
Notes to the financial statements
continued
28 Insurance and reinsurance contracts continued
28c 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.
Year ended 31 December 2023
Estimated present value of future cash outflows:
- Insurance acquisition cash flows
- Claims and other directly attributable expenses
Estimated present value of future cash inflows
Risk adjustment for non-financial risk
Contractual service margin
Net increase in insurance contract liabilities
Year ended 31 December 2022
Estimated present value of future cash outflows:
- Insurance acquisition cash flows
- Claims and other directly attributable expenses
Estimated present value of future cash inflows
Risk adjustment for non-financial risk
Contractual service margin
Net increase in insurance contract liabilities
Non-onerous
contracts
originated
Onerous
contracts
originated
$m
$m
Total
$m
(759.3)
(2,489.8)
4,115.0
(249.3)
(616.6)
—
(827.4)
(68.1)
(176.7)
(2,666.5)
249.1 4,364.1
(264.2)
(14.9)
(616.6)
—
(10.6)
(10.6)
Non-onerous
contracts
originated
Onerous
contracts
originated
$m
$m
Total
$m
(531.9)
(1,720.7)
3,077.9
(217.7)
(607.6)
—
(644.0)
(112.1)
(391.2)
(2,111.9)
576.3 3,654.2
(324.8)
(107.1)
(607.6)
—
(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).
Estimated present value of future cash outflows
Estimated present value of future cash inflows
Risk adjustment for non-financial risk
Contractual service margin
Net increase in reinsurance contract assets
2023
$m
(1,253.5)
817.2
84.2
352.1
—
2022
$m
(1,671.6)
1,025.4
74.1
572.1
—
224
Beazley | Annual report 2023
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28 Insurance and reinsurance contracts continued
28d 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.
Insurance contracts issued
Number of years until expected to be recognised
1
2
3
4
5
6-10
>10
Total
Reinsurance contracts held
Number of years until expected to be recognised
1
2
3
4
5
6-10
>10
Total
2023
$m
299.0
14.7
10.5
7.6
5.1
7.1
—
344.0
2023
$m
118.7
3.7
2.6
1.8
1.2
1.6
—
129.6
2022
$m
301.7
12.5
8.9
6.6
4.8
6.5
—
341.0
2022
$m
143.0
4.4
3.0
2.2
1.7
3.0
—
157.3
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Beazley | Annual report 2023
225
Notes to the financial statements
continued
28 Insurance and reinsurance contracts continued
28e 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.
Insurance contracts issued
2019
2020
2021
2022
2023
Total
Underwriting year
2023
At end of underwriting year
1 year later
2 years later
3 years later
4 years later
Cumulative gross estimate of claims
Cumulative payments to date
Carrying amount relating to 2018 and prior
underwriting years
Less liability for remaining coverage claims only
Impact of discounting (LIC)
LIC risk adjustment for non-financial risk
Gross discounted LIC
Reinsurance contracts held
2023
At end of underwriting year
1 year later
2 years later
3 years later
4 years later
Cumulative gross estimate of claims recoveries
Cumulative payments to date
Carrying amount relating to 2018 and prior
underwriting years
Less asset for remaining coverage claims only
Impact of discounting (AIC)
AIC risk adjustment for non-financial risk
Reinsurance discounted AIC
$m
$m
$m
$m
$m
1,712.5 2,309.3 2,699.4 3,123.8 3,112.0
2,205.2 2,696.3 2,966.1 3,030.4
2,236.2 2,802.2 2,782.1
2,231.5 2,649.2
2,221.9
2,221.9 2,649.2 2,782.1 3,030.4 3,112.0 13,795.6
(287.3) (6,010.9)
(1,696.9) (1,765.3) (1,319.5)
(941.9)
$m
1,102.7
(1,835.6)
(555.5)
639.0
7,135.3
2019
$m
(290.9)
(412.1)
(376.4)
(394.9)
(423.5)
(423.5)
263.5
Underwriting year
2020
$m
(455.4)
(635.1)
(700.0)
(577.1)
2021
$m
(700.1)
(708.9)
(708.1)
2022
$m
(934.1)
(884.2)
2023
$m
(520.9)
Total
$m
(577.1)
347.1
(708.1)
119.0
(884.2)
69.5
(520.9) (3,113.8)
812.9
13.8
(451.9)
338.7
190.4
(191.4)
(2,415.1)
226
Beazley | Annual report 2023
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29 Other liabilities
Accrued expenses including staff bonuses
Due to syndicate 623
Due to syndicate 5623
Due to syndicate 6107
Other payables
Total other liabilities
2023
2022
$m
98.9
—
217.7
86.6
207.3
$m
31.5
21.8
208.4
77.8
184.5
610.5 524.0
All other liabilities are payable within one year of the reporting date.
Profit uplift payment
The Group has agreed a potential profit uplift commission payment to the Members of Syndicate 623 on the 2023 year of
account contingent upon the underwriting profit recognised in certain entities in the 2025 to 2028 financial years, which would
become payable in 2029.
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Beazley | Annual report 2023
227
Notes to the financial statements
continued
30 Risk and sensitivity analysis
The symbol † by a table or numerical information means it has not been audited.
30a Insurance risk
The Group issues insurance contracts under which it accepts significant insurance risk from persons or organisations that are
directly exposed to an underlying loss from an insured event. Insurance risk arises from this risk transfer due to inherent
uncertainties about the occurrence, amount and timing of cash flows associated with the insured event. The four key
components of insurance risk are underwriting, reinsurance, claims management and reserving. Each element is considered
below.
i. Underwriting risk
Underwriting risk comprises four elements that apply to all insurance products offered by the Group:
• cycle risk – the risk that business is written without full knowledge as to the (in)adequacy of rates, terms and conditions;
• event risk – the risk that individual risk losses or catastrophes lead to claims that are higher than anticipated in plans and
pricing;
• pricing risk – the risk that the level of expected loss is understated in the pricing process; and
• expense risk – the risk that the allowance for expenses and inflation in pricing is inadequate.
The Group’s underwriting strategy is to seek a diverse and balanced portfolio of risks in order to limit the variability of
outcomes. This is achieved by accepting a spread of business over time, segmented between different products, geographies
and sizes. The annual business plans for each underwriting team reflect the Group’s underwriting strategy, and set out the
classes of business, the territories and the industry sectors in which business is to be written which are approved by the
appropriate Boards.
Our underwriters determine premiums for risks written based on a range of criteria tailored specifically to each individual risk.
These factors include but are not limited to financial exposure, loss history, risk characteristics, limits, deductibles, terms and
conditions, and acquisition expenses depending on the type of risk. A proportion of the Group’s insurance risks are transacted
by third parties under delegated underwriting and claims authorities. Each third party is thoroughly vetted by our coverholder
approval group before it can bind risks, and is subject to monitoring to maintain underwriting quality and confirm ongoing
compliance with contractual guidelines. All underwriters also have a right to refuse renewal or change the terms and conditions
of insurance contracts upon renewal. Rate monitoring details, including limits, deductibles, exposures, terms and conditions
and risk characteristics, are also captured and the results are combined to monitor the rating environment for each class of
business.
The Group also recognises that insurance events are, by their nature, random, and the actual number and size of events during
any one year may vary from those estimated using established statistical techniques. To address this, the Group sets out the
exposure that it is prepared to accept in certain territories to a range of events such as natural catastrophes and specific
scenarios which may result in large industry losses. This is monitored through regular calculation of realistic disaster scenarios
("RDS"). The aggregate position is monitored at the time of underwriting a risk, and reports are regularly produced to highlight
the key aggregations to which the Group is exposed.
The Group uses a number of modelling tools to monitor its exposures against the agreed risk appetite set and to simulate
catastrophe losses in order to measure the effectiveness of its reinsurance programmes. Stress and scenario tests are also
run using these models. The range of scenarios considered includes natural catastrophe, cyber, marine, liability, political,
terrorism and war events.
228
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30 Risk and sensitivity analysis continued
One of the largest types of event exposure relates to natural catastrophe events such as windstorms or earthquakes, with the
increasing risk from climate change impacting the frequency and severity of natural catastrophes. The Group continues to
monitor its exposure in this area. Where possible, the Group measures geographic accumulations and uses its knowledge of
the business, historical loss behaviour and commercial catastrophe modelling software to assess the expected range of losses
at different return periods. Upon application of the reinsurance coverage purchased, the key gross and net exposures are
calculated on the basis of extreme events at a range of return periods. The Group’s catastrophe risk appetite is set by the risk
management function and approved by the Board and the business plans of each team are determined within these
parameters. The Board may adjust these limits over time as conditions change. In 2023, the Group operated to a catastrophe
risk appetite for a probabilistic 1-in-250 years US event of † $534.0m (2022: $438.0m) net of reinsurance. This represents an
increase of 22% in 2023.
Lloyd’s has also defined its own specific set of RDS events for which all syndicates with relevant exposures must report. Of
these, the three largest (net of reinsurance) events which could have impacted Beazley in 2022 and 2023 were as follows.
†
2023
Lloyd’s prescribed natural catastrophe event (total incurred losses)
Los Angeles earthquake (2023: $78bn)
San Francisco earthquake (2023: $80bn)
Gulf of Mexico windstorm (2023: $118bn)
†
2022
Lloyd’s prescribed natural catastrophe event (total incurred losses)
Los Angeles earthquake (2022: $78bn)
US Northeast windstorm (2022: $81bn)
Gulf of Mexico windstorm (2022: $118bn)
1 Probable market loss.
Modelled
PML¹(before
reinsurance)
Modelled
PML¹(after
reinsurance)
$m
$m
827.2
854.1
927.5
325.1
315.0
291.3
Modelled
PML¹(before
reinsurance)
Modelled
PML¹(after
reinsurance)
$m
$m
692.4
579.6
725.0
266.8
257.2
253.2
The tables above show each event independent of each other and considered on their own.
• Net of reinsurance exposures for the Los Angeles quake scenario have increased by $58.3m or 22% in 2023, with gross
exposures increasing by $134.8m or 19%. The increase in gross exposures is being driven by growth in the Property Risks
division and specifically direct Property, which is also leading to the increase in the San Francisco quake and Gulf of Mexico
windstorm events. The increase in net exposure is less than the increase in gross as additional Reinsurance was bought
during 2023 for the Property Risks division.
• For 2023, the second largest scenario is now the San Francisco earthquake scenario which has replaced the US Northeast
windstorm scenario. The San Francisco earthquake scenario has increased by $139.3m or 19% gross and $66.3m or 27%
net (2022: $714.8m gross and $248.7m net). Similar to the Los Angeles quake scenario, the increase in net exposure is
less than gross as additional Reinsurance was bought during 2023.
• Windstorm exposures have increased in the Gulf of Mexico during 2023, which has resulted in the Gulf of Mexico scenario
increasing by $38.1m or 15% net, with the gross exposure increasing by $202.5m or 28%. Similar to the two earthquake
scenarios, the net exposure has increased less than gross due to additional Reinsurance being bought for the Property Risks
division.
• The net natural catastrophe risk appetite increased by 22% in 2023 to $534.0m from $438.0m in 2022, with the increase in
appetite being driven by the Property Risks division.
The net exposure of the Group to each of these modelled events at a given point in time is a function of assumptions made
about how and where the event occurs, its magnitude, the amount of business written that is exposed to each event and the
reinsurance arrangements in place.
www.beazley.com
Beazley | Annual report 2023
229
Notes to the financial statements
continued
30 Risk and sensitivity analysis continued
The Group also has exposure to man-made claim aggregations, such as those arising from terrorism, liability, and cyber events.
Beazley chooses to underwrite cyber insurance within the Cyber Risks and Specialty Risks divisions using our team of specialist
underwriters, claims managers and data breach services managers. Other than for affirmative cyber coverage, Beazley’s
preference is to exclude cyber exposure where possible.
To manage the potential exposure, the Board has approved a risk appetite for the aggregation of cyber related claims which is
monitored by reference to the largest of seventeen realistic disaster scenarios that have been developed internally. These
scenarios include the failure of a data aggregator, the failure of a shared hardware or software platform, the failure of a cloud
provider, and physical damage scenarios. Whilst it is not possible to be precise, as there is sparse data on actual aggregated
events, these severe scenarios are expected to be very infrequent. To manage underwriting exposures, the Group has
developed limits of authority and business plans which are binding upon all staff authorised to underwrite and are specific to
underwriters, classes of business and industry. In 2023, the maximum line that any one underwriter could commit the managed
syndicates to was $150m. In most cases, maximum lines for classes of business were much lower than this.
The Board also manages cyber to a 1-250 net probabilistic budget of $651.0m net of reinsurance for the Group. The
reinsurance programmes that protect the Cyber and Specialty Risks divisions would partially mitigate the cost of most, but not
all, Cyber catastrophes. The largest Cyber net realistic disaster scenario for the Group as at 31 December 2023 was just under
$205m. Beazley also reports on Cyber exposure to Lloyd’s using the three largest internal realistic disaster scenarios and three
new prescribed scenarios which include a cloud provider scenario and a ransomware scenario.
Exposure by operating division
In 2023, the Group’s business consisted of five operating divisions. The following table sets out the Group’s insurance revenue
by operating division.
Cyber Risks
Digital
MAP Risks
Property Risks
Specialty Risks
Total
Concentration by geography
Included below is a geographical analysis of the Group's insurance revenue based on placement of risk.
UK (Lloyd’s)
US (Non-Lloyd’s)
Europe (Non-Lloyd’s)
Total
2023
%
22%
4%
19%
20%
35%
100%
2023
%
83%
11%
6%
100%
2022
%
21%
4%
20%
17%
38%
100%
2022
%
82%
13%
5%
100%
Sensitivity analysis
The table below analyses the impact on the Group’s profit after tax and equity of changes in underwriting risk variables that
were reasonably possible at the reporting date. This analysis has been performed assuming a uniform percentage change in
loss ratios used to determine best estimate cash flows within the liability for remaining coverage, and a uniform percentage
change in the best estimate liability within the liability for incurred claims, including any consequential impact on the risk
adjustment or CSM. It should be noted that movements in these variables are non–linear.
Reserves (5% increase)
Reserves (5% decrease)
1 Impact of changes in risk variables is consistent across profit after tax and equity
Profit after tax / Equity¹
Profit after tax / Equity¹
Gross
2023
$m
(289.4)
287.7
Net
2023
$m
(179.6)
178.0
Gross
2022
$m
(266.5)
263.9
Net
2022
$m
(172.6)
171.1
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30 Risk and sensitivity analysis continued
ii. Reinsurance risk
Reinsurance risk arises for the Group where reinsurance contracts put in place to reduce gross insurance risk do not perform as
anticipated, resulting in coverage disputes or proving inadequate in terms of the vertical or horizontal limits purchased. Failure
of a reinsurer to pay a valid claim is considered a credit risk, which is detailed in the credit risk section on page 236. In some
cases, the Group deems it more economic to hold capital than to purchase reinsurance. These decisions are regularly reviewed.
The reinsurance security committee examines and approves all reinsurers to ensure that they possess suitable security. The
Group’s ceded reinsurance team ensures that these guidelines are followed, undertakes the administration of reinsurance
contracts, and monitors and instigates our responses to any erosion of the reinsurance programmes.
iii. Claims management risk
Claims management risk may arise within the Group in the event of inaccurate or incomplete case reserves and claims
settlements, poor service quality or excessive claims handling costs. These risks may damage the Group brand and undermine
its ability to win and retain business, or incur punitive damages. These risks can occur at any stage of the claims life cycle. The
Group’s claims teams are focused on delivering quality, reliability and speed of service to both internal and external clients.
Their aim is to adjust and process claims in a fair, efficient and timely manner, in accordance with the policy’s terms and
conditions, the regulatory environment, and the business’s broader interests. Case reserves are set for all known claims
liabilities, including provisions for expenses, as soon as a reliable estimate can be made of the claims liability.
iv. Reserving and ultimate reserves risk
Reserving and ultimate reserves risk occurs within the Group where established insurance liabilities are insufficient due to
inaccurate forecasting, or where there is inadequate allowance for expenses and reinsurance bad debts in provisions. To
manage reserving and ultimate reserve risk, a risk adjustment for non-financial risk is included within the valuation of insurance
contract liabilities.
The following sensitivity analysis shows how a change in risk adjustment impacts profit after tax and equity. The sensitivity was
calculated by selecting the risk adjustment 2.5 points above/below the current confidence level on the distribution by which it is
calibrated and flowing the consequential impact through the CSM and liability for incurred claims. This was performed both
before and after risk mitigation by reinsurance. It should be noted that movements in these variables are non–linear.
Change in risk adjustment (2.5% increase)
Change in risk adjustment (2.5% decrease)
1 Impact of changes in risk variables is consistent across profit after tax and equity
Profit after tax / Equity¹
Profit after tax / Equity¹
Gross
2023
$m
(80.0)
78.5
Net
2023
$m
(57.9)
56.7
Gross
2022
$m
(67.8)
60.5
Net
2022
$m
(49.4)
44.1
www.beazley.com
Beazley | Annual report 2023
231
Notes to the financial statements
continued
30 Risk and sensitivity analysis continued
30b Market risk
Market risk is referred to as ‘asset risk’ in the Group’s risk management framework. This risk arises from adverse financial
market movements in addition to other external market forces. The four key components of asset risk are investments, foreign
exchange, interest rate, and prices of assets and derivatives. Each element is considered in further detail below.
i. Investments
Efficient management of market risk is key to the investment of Group assets for matching to future liabilities. Beazley uses an
Economic Scenario Generator to create multiple simulations of financial conditions in order to support stochastic analysis of
asset risk. Beazley uses these outputs to assess the value at risk of its investments, at different confidence levels, including ‘1
in 200’, which reflects Solvency II modelling requirements, and ‘1 in 10’, reflecting scenarios which are more likely to occur in
practice. It is assessed for investments in isolation and also in conjunction with the present value of our liabilities, to assist in
the monitoring and management of asset risk for solvency and capital purposes. By its nature, stochastic modelling does not
provide a precise measure of risk, and Economic Scenario Generator outputs are regularly validated against actual market
conditions. Beazley also uses a number of other qualitative measures to support the monitoring and management of investment
risk, including stress testing and scenario analysis.
The Group’s investment strategy is developed with reference to an investment risk appetite, approved annually by the Board.
The asset risk element of our Solvency II internal model is used to monitor actual investment risk against this appetite, which
specifies how far investment return may deviate from target, at 90% confidence. The investment risk appetite was set at
$260m for 2023. From 2024, the investment risk appetite additionally incorporates interest rate risks to the present value of
our underwriting liabilities.
ii. Foreign exchange risk
The functional currency and presentational currency of Beazley plc and its main trading entities is US dollars. As a result, the
Group is mainly exposed to fluctuations in exchange rates for non-dollar denominated transactions and to net asset translation
risk on non-dollar functional currency entities.
The Group operates in four main currencies: US dollars, sterling, Canadian dollars and euros. Transactions in all currencies are
converted to US dollars on initial recognition, with any resulting monetary items being translated to the US dollar spot rate at
the reporting date. If any foreign exchange risk arises it is actively managed as described below.
In 2023, the Group managed its foreign exchange risk by periodically assessing its non-dollar exposures and hedging these to a
tolerable level while targeting to have net assets that are predominantly denominated in US dollars. As part of this hedging
strategy, exchange rate derivatives were used to rebalance currency exposure across the Group. Details of foreign currency
derivative contracts entered into with external parties are disclosed in Note 19. On a forward looking basis, an assessment is
made of expected future exposure development and appropriate currency trades are put in place to reduce risk. The Group’s
underwriting capital is matched by currency to the principal underlying currencies of its insurance transactions. This helps to
mitigate the risk that the Group’s capital required to underwrite business is materially affected by any future movements in
exchange rates.
The Group also has foreign operations with functional currencies that are different from the Group’s presentational currency.
The effect of this on foreign exchange risk is that the Group is exposed to fluctuations in exchange rates for US dollar
denominated transactions and net assets arising in those foreign currency operations. It also gives rise to a currency
translation exposure for the Group to sterling, euro, Canadian dollars, Singapore dollars and Australian dollars on translation to
the Group’s presentational currency. These exposures are minimal and are not hedged.
232
Beazley | Annual report 2023
www.beazley.com
30 Risk and sensitivity analysis continued
Exposure and risk concentrations by currency
The following tables summarise the carrying values of the insurance/reinsurance contract assets and liabilities and overall net
assets held by the Group, categorised by its main currencies. For a breakdown of financial assets by currency, refer to Note
18(h).
2023
Insurance contract assets
Reinsurance contract assets
Other
Total assets
Insurance contract liabilities
Reinsurance contract liabilities
Other
Total liabilities
Net assets
2022
Insurance contract assets
Reinsurance contract assets
Other
Total assets
Insurance contract liabilities
Reinsurance contract liabilities
Other
Total liabilities
Net assets
UK £
$m
2.4
243.1
574.8
820.3
(804.4)
(31.2)
(69.1)
(904.7)
(84.4)
UK £
$m
6.6
236.7
267.9
511.2
(470.5)
(60.2)
5.7
(525.0)
(13.8)
CAD $
$m
13.6
37.0
257.8
308.4
(229.0)
(0.6)
20.7
(208.9)
99.5
CAD $
$m
2.0
78.3
278.8
359.1
(363.7)
(15.8)
40.5
(339.0)
20.1
EUR €
Subtotal
US $
Total $
$m
(3.6)
166.4
69.2
232.0
(782.3)
(7.7)
441.0
(349.0)
(117.0)
EUR €
$m
(18.2)
35.0
(352.4)
(335.6)
(42.4)
(35.1)
397.4
319.9
(15.7)
$m
12.4
446.5
901.8
1,360.7
(1,815.7)
(39.5)
392.6
(1,462.6)
(101.9)
$m
89.1
1,980.2
10,235.4
12,304.7
(6,176.5)
(294.0)
(1,850.2)
(8,320.7)
3,984.0
$m
101.5
2,426.7
11,137.2
13,665.4
(7,992.2)
(333.5)
(1,457.6)
(9,783.3)
3,882.1
Subtotal
$m
(9.6)
350.0
194.3
534.7
(876.6)
(111.1)
443.6
(544.1)
(9.4)
US $
Total $
$m
93.7
1,825.3
9,259.3
11,178.3
(6,473.2)
(50.1)
(1,690.6)
(8,213.9)
2,964.4
$m
84.1
2,175.3
9,453.6
11,713.0
(7,349.8)
(161.2)
(1,247.0)
(8,758.0)
2,955.0
Sensitivity analysis
Fluctuations in the Group’s trading currencies against the US dollar would result in a change in profit after tax and equity. The
table below gives an indication of this impact for reasonably possible percentage changes in the relative strength of the US
dollar against the value of sterling, the Canadian dollar and the euro, simultaneously. The analysis is prepared based on the net
assets held by the Group at the balance sheet date.
Change in exchange rate of sterling, Canadian dollar and euro relative to
US dollar
Dollar weakens (30%)
Dollar weakens (20%)
Dollar weakens (10%)
Dollar strengthens (10%)
Dollar strengthens (20%)
Dollar strengthens (30%)
Profit after tax
2023
$m
(25.0)
(16.7)
(8.3)
8.3
16.7
25.0
2022
$m
(2.4)
(1.6)
(0.8)
0.8
1.6
2.4
Equity
2023
$m
45.2
30.1
15.1
(15.1)
(30.1)
(45.2)
2022
$m
39.9
26.6
13.3
(13.3)
(26.6)
(39.9)
www.beazley.com
Beazley | Annual report 2023
233
Notes to the financial statements
continued
30 Risk and sensitivity analysis continued
iii. Interest rate risk
The Group’s financial instruments (e.g. cash and cash equivalents, certain financial assets at fair value, and subordinated
debt), in addition to its insurance and reinsurance contracts, are exposed to movements in market interest rates. The Group
manages interest rate risk by primarily investing in short duration financial assets along with cash and cash equivalents. The
investment committee monitors the duration of these assets on a regular basis. The Group also entered into bond futures
contracts to manage the interest rate risk on bond portfolios.
Exposure and risk concentrations by duration
The following table shows the modified duration at the reporting date of the financial instruments that are exposed to
movements in market interest rates. Modified duration is a commonly used measure of volatility which represents the
percentage change of the price of a security to yield. The Group believes this gives a better indication than maturity of the likely
sensitivity of the portfolio to changes in interest rates.
2023
Financial assets at FVTPL:
- Fixed and floating rate debt securities
- Syndicate loans
Cash and cash equivalents
Subordinated debt
Total financial instruments
2022
Financial assets at FVTPL:
- Fixed and floating rate debt securities
- Syndicate loans
Cash and cash equivalents
Subordinated debt
Total financial instruments
<1 yr
$m
1-2 yrs
2-3 yrs
3-4 yrs
4-5 yrs
5-10 yrs
$m
$m
$m
$m
$m
Total
$m
2,499.9 3,123.8 1,214.6 1,419.5
—
—
—
965.1 1,419.5
—
26.5
—
—
— (249.5)
7.6
812.3
—
3,319.8 3,150.3
229.1
—
—
— (298.8)
49.5 8,536.4
34.1
—
— 812.3
(548.3)
(249.3) 8,834.5
229.1
<1 yr
$m
1-2 yrs
2-3 yrs
3-4 yrs
4-5 yrs
5-10 yrs
$m
$m
$m
$m
$m
Total
$m
441.2
1,962.9 3,094.1 1,430.9
—
25.6
—
—
— (249.4)
191.8
2,615.4 3,101.0 1,456.5
—
652.5
—
6.9
—
—
434.9
—
—
— (298.6)
1.5 7,365.5
—
32.5
— 652.5
(548.0)
(297.1) 7,502.5
434.9
234
Beazley | Annual report 2023
www.beazley.com
30 Risk and sensitivity analysis continued
Sensitivity analysis
All elements of the carrying values of the Group's insurance and reinsurance contracts are exposed to interest rate risk. The
following analysis is performed for reasonably possible movements in key variables with all other variables held constant,
showing the impact on profit after tax and equity. The correlation of variables will have a significant effect in determining the
ultimate impact of interest rate risk, but to demonstrate the impact due to changes in variables, variables had to be changed on
an individual basis. It should be noted that movements in these variables are non–linear.
Insurance and reinsurance contracts
Interest rate increases (150 bps)
Interest rate increases (100 bps)
Interest rate increases (50 bps)
Interest rate decreases (50 bps)
Interest rate decreases (100 bps)
Interest rate decreases (150 bps)
1 Impact of changes in risk variables is consistent across profit after tax and equity.
Financial assets
Interest rate increases (150 bps)
Interest rate increases (100 bps)
Interest rate increases (50 bps)
Interest rate decreases (50 bps)
Interest rate decreases (100 bps)
Interest rate decreases (150 bps)
Profit after tax / Equity¹
2023
$m
114.3
77.1
39.1
(40.0)
(81.0)
(123.0)
2022
$m
95.8
64.5
32.6
(33.5)
(67.8)
(102.8)
Profit after tax / Equity¹
2023
$m
(190.6)
(127.1)
(63.5)
63.5
127.1
190.6
2022
$m
(179.0)
(119.3)
(59.7)
59.7
119.3
179.0
1 Impact of changes in risk variables is consistent across profit after tax and equity.
iv. Price risk
Listed investments that are quoted in an active market are recognised in the statement of financial position at quoted bid price,
which is deemed to be approximate exit price. If the market for the investment is not considered to be active, then the Group
establishes fair value using valuation techniques (refer to Note 18). This includes comparison of orderly transactions between
market participants, reference to the current fair value of other investments that are substantially the same, discounted cash
flow models and other valuation techniques that are commonly used by market participants.
Price risk applies to financial assets that are susceptible to losses due to adverse changes in prices. At the reporting date, the
Group’s exposure to price risk was $1,085.0m (2022: $912.9m). This is comprised of hedge funds, equity investments and
illiquid assets, with no significant concentrations in one area. Note that the price of debt securities is affected by interest rate
risk and credit risk, both of which have been described above. In addition, the Group does not have any insurance or
reinsurance contracts which are exposed to price risk.
www.beazley.com
Beazley | Annual report 2023
235
Notes to the financial statements
continued
30 Risk and sensitivity analysis continued
Sensitivity analysis
Included below is a sensitivity analysis of the Group's financial assets against price risk. With all other variables remaining
constant, changes in fair values of the Group's hedge funds, equity investments and illiquid assets would affect reported profit
after tax and equity as indicated in the following table.
Fair value increases (30%)
Fair value increases (20%)
Fair value increases (10%)
Fair value decreases (10%)
Fair value decreases (20%)
Fair value decreases (30%)
Profit after tax / Equity¹
2023
$m
266.6
177.7
88.9
(88.9)
(177.7)
(266.6)
2022
$m
230.6
153.7
76.9
(76.9)
(153.7)
(230.6)
1 Impact of changes in risk variables is consistent across profit after tax and equity.
A 10% decrease in the fair value of the Group's level 3 financial assets would have an impact of ($20.8m) on profit after tax/
equity (2022: ($21.5m)).
30c Credit risk
This risk arises due to the failure of another party to perform its financial or contractual obligations to the Group in a timely
manner. The Group accepts credit risk overall and recognises credit risk is aligned to its appetite for insurance risk. The primary
sources of credit risk for the Group are:
• reinsurers – reinsurers may fail to pay valid claims against a reinsurance contract held by the Group;
• brokers and coverholders – counterparties may fail to pass on premiums or claims collected/paid on behalf of the Group; and
• investments – issuer may default, resulting in the Group losing all or part of the value of a financial instrument or a derivative
financial instrument.
An approval system exists for brokers with their credit and performance monitored. The investment committee has established
parameters for investment managers regarding the type, duration and quality of investments including credit ratings acceptable
to the Group. The performance of investment managers is regularly reviewed to confirm adherence to these guidelines. The
Group has developed processes to examine all reinsurers before entering into new business arrangements, and ongoing
relationships with Beazley are continually assessed. In addition, reinsurance recoverables are reviewed regularly to assess their
collectability.
2023
Tier 1
Tier 2
Tier 3
Tier 4
S&P
A.M. Best
Moody’s
Aaa to A3
A++ to A-
AAA to A-
B++ to B- Baa1 to Ba3 BBB+ to BB-
B+ to CCC
B1 to Caa
C++ to C-
R, (U,S) 3
Ca to C
D, E, F, S
236
Beazley | Annual report 2023
www.beazley.com
30 Risk and sensitivity analysis continued
Maximum exposure
The following tables summarise the Group’s maximum exposure to credit risk by reinsurance contract assets and financial
assets.
2023
Reinsurance contracts assets
Financial assets at FVTPL:
- Fixed and floating rate debt securities
- Syndicate loans
- Equity funds
- Hedge funds
- Illiquid assets
- Derivative financial assets
Cash and cash equivalents
Amounts due from managed syndicates and other
receivables
Total
2022
Reinsurance contracts assets
Financial assets at FVTPL:
- Fixed and floating rate debt securities
- Syndicate loans
- Equity funds
- Hedge funds
- Illiquid assets
- Derivative financial assets
Cash and cash equivalents
Amounts due from managed syndicates and other
receivables
Total
Tier 1
$m
2,387.5
7,101.7
34.1
—
—
—
—
812.3
—
Tier 2
$m
—
1,434.7
—
—
—
—
—
—
—
10,335.6
1,434.7
Tier 1
$m
2,139.4
6,767.1
32.5
—
—
—
—
652.5
—
Tier 2
$m
—
598.4
—
—
—
—
—
—
—
9,591.5
598.4
Tier 3
$m
—
Tier 4
$m
—
Unrated
$m
39.2
Total
$m
2,426.7
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 8,536.4
34.1
—
282.7
282.7
582.2
582.2
220.1
220.1
10.0
10.0
812.3
—
297.5
297.5
— 1,431.7
13,202.0
Tier 3
$m
—
Tier 4
$m
—
Unrated
$m
35.9
Total
$m
2,175.3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 7,365.5
32.5
—
159.4
159.4
530.6
530.6
222.9
222.9
34.7
34.7
652.5
—
181.8
181.8
— 1,165.3
11,355.2
The Group's maximum exposure to credit risk from insurance contract assets is $101.5m (2022: $84.1m). Overall exposure to
credit risk is concentrated within Tier 1, with the largest counterparty being $3,258.7m of US treasuries (2022: $3,715.8m).
Financial investments falling within the unrated category are those for which there is no readily available market data to allow
classification within the respective tiers.
www.beazley.com
Beazley | Annual report 2023
237
Notes to the financial statements
continued
30 Risk and sensitivity analysis continued
Credit quality of reinsurance contract assets
Reinsurance recoveries are specifically referenced in IFRS 17 and explicitly de-scoped from IFRS 9 (refer to Note 2). IFRS 17
requires the effect of any risk of non-performance by the reinsurer, including the effects of collateral and losses from disputes,
to be considered when determining the estimates of the present value of future cash flows for the group of reinsurance
contracts held. The Group has developed an internal policy, which involves calculating and re-evaluating expected credit losses
for reinsurance assets and actively following up on disputes with reinsurers for recoveries. Reinsurance recoveries are
assessed for Non-Performance Risk Provision using a % of the reinsurance programme/year of account level under IFRS 17.
The Group has reinsurance recoveries that are past due at the reporting date. An aged analysis of these (on an undiscounted
basis) is presented below.
2023
Reinsurance recoveries
2022
Reinsurance recoveries
Up to 30 days
past due
30-60 days
past due
60-90 days
past due
Greater than 90
days past due
$m
61.3
$m
57.5
$m
4.1
$m
54.9
Up to 30 days
past due
30-60 days
past due
60-90 days
past due
Greater than 90
days past due
$m
24.7
$m
29.2
$m
8.9
$m
82.6
Total
$m
177.8
Total
$m
145.4
30d Liquidity risk
Liquidity risk arises where cash may not be available to pay obligations. The Group is exposed to daily calls on its available
cash resources, principally from claims arising from its insurance business which is an industry norm. In the majority of the
cases, these claims are settled from the premiums received held as assets. Beazley avoids the risk of having insufficient liquid
assets to meet expected cash flow requirements.
The Group’s approach is to manage its liquidity position so that it can reasonably survive a significant individual or market loss
event (details of the Group’s exposure to RDS are provided on pages 228 to 230). This means that the Group maintains
sufficient liquid assets, or assets that can be converted into liquid assets at short notice and without any significant capital
loss, to meet expected cash flow requirements. These liquid funds are regularly monitored using cash flow forecasting to
ensure that surplus funds are invested to achieve a higher rate of return. The Group also makes use of loan facilities and
subordinated liabilities, details of which can be found in Note 26. Further information on the Group’s capital resources is
contained on pages 67 to 68.
Maturity analysis – Insurance and reinsurance contracts
Included below is a maturity analysis of the present value of future cash flows of the Group's net insurance contract liabilities
(per Note 28a). The tables also include the weighted average term to settlement, calculated based on undiscounted future cash
flows for total ultimate claims, excluding the risk adjustment and premium-related claims cash flows.
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2023
Cyber Risks
Digital
MAP Risks
Property Risks
Specialty Risks
Net insurance contract liabilities
$m
503.0
65.6
344.5
510.3
796.9
2,220.3
$m
372.8
44.5
232.3
247.5
884.1
1,781.2
$m
214.5
21.7
130.4
93.9
677.1
1,137.6
$m
116.0
10.8
71.0
39.6
453.2
690.6
$m
56.7
5.2
37.9
18.8
280.1
398.7
$m
64.8
6.6
50.0
21.0
399.9
542.3
$m
1,327.8
154.4
866.1
931.1
3,491.3
6,770.7
Weighted
average
term to
claims
settlement
Years
1.9
1.5
1.7
1.2
2.6
2.1
238
Beazley | Annual report 2023
www.beazley.com
30 Risk and sensitivity analysis continued
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2022
Cyber Risks
Digital
MAP Risks
Property Risks
Specialty Risks
Net insurance contract liabilities
$m
348.9
72.9
399.0
550.2
734.5
2,105.5
$m
300.9
44.9
266.5
236.8
776.2
1,625.3
$m
188.2
21.0
141.5
88.4
605.7
1,044.8
$m
90.4
9.2
79.0
35.4
412.0
626.0
$m
33.9
4.4
42.0
15.7
250.1
346.1
$m
25.4
3.5
54.8
14.9
354.2
452.8
$m
987.7
155.9
982.8
941.4
3,132.7
6,200.5
Weighted
average
term to
claims
settlement
Years
1.7
1.4
1.7
1.2
2.6
2.1
No insurance contract liabilities held by the Group as at 31 December are payable on demand.
Included below is a maturity analysis of the present value of future cash flows of the Group's net reinsurance contract assets
(per Note 28a). The tables also include the weighted average term to settlement for claims recoveries, calculated based on
undiscounted future cash flows for total ultimate claims, excluding the risk adjustment and premium-related cash flows.
2023
Cyber Risks
Digital
MAP Risks
Property Risks
Specialty Risks
Net reinsurance contract assets
<1 year
$m
(51.4)
(11.4)
(70.4)
104.4
75.8
47.0
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
$m
169.3
9.3
61.7
59.2
336.5
636.0
$m
94.6
4.5
52.3
27.0
249.7
428.1
$m
51.4
1.9
30.7
15.6
167.7
267.3
$m
24.3
0.9
18.2
3.4
105.9
152.7
$m
26.5
0.9
25.6
5.3
149.6
207.9
$m
314.7
6.1
118.1
214.9
1,085.2
1,739.0
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
2022
Cyber Risks
Digital
MAP Risks
Property Risks
Specialty Risks
Net reinsurance contract assets
$m
(149.1)
(14.3)
(168.7)
219.0
(108.7)
(221.8)
$m
153.3
13.6
154.9
92.3
278.4
692.5
$m
105.8
6.4
88.5
32.1
260.5
493.3
$m
51.2
2.5
57.3
10.5
182.6
304.1
$m
17.8
1.2
32.9
4.3
115.5
171.7
$m
12.6
0.8
41.2
6.6
158.5
219.7
$m
191.6
10.2
206.1
364.8
886.8
1,659.5
Weighted
average
term to
settlement
of claims
recoveries
Years
1.7
1.5
1.5
1.1
2.8
2.0
Weighted
average
term to
settlement
of claims
recoveries
Years
1.7
1.4
1.7
1.0
2.9
2.0
www.beazley.com
Beazley | Annual report 2023
239
Notes to the financial statements
continued
30 Risk and sensitivity analysis continued
Maturity analysis – Total liabilities
The following is a maturity analysis of the net contractual cash flows of the Group’s liabilities as at 31 December. This excludes
current tax and deferred tax liabilities, and reinsurance contracts which are in a net asset position at 31 December.
2023
Net insurance contract liabilities
Financial liabilities:
- Derivative financial liabilities
- Subordinated debt
Lease liabilities
Other liabilities
Total liabilities
2022
Net insurance contract liabilities
Financial liabilities:
- Derivative financial liabilities
- Subordinated debt
Lease liabilities
Other liabilities
Total liabilities
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
$m
2,220.3
—
6.3
31.2
13.5
610.5
2,881.8
$m
1,781.2
—
—
31.2
10.3
—
1,822.7
$m
1,137.6
—
—
278.9
9.2
—
1,425.7
$m
690.6
—
—
16.5
8.2
—
715.3
$m
398.7
—
—
16.5
7.7
—
422.9
$m
542.3
—
—
311.4
32.6
—
886.3
$m
6,770.7
—
6.3
685.7
81.5
610.5
8,154.7
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
Total
$m
2,105.5
—
14.5
31.2
9.6
524.0
2,684.8
$m
1,625.3
—
—
31.2
11.8
—
1,668.3
$m
1,044.8
—
—
31.2
8.9
—
1,084.9
$m
626.0
—
—
278.9
7.7
—
912.6
$m
346.1
—
—
16.5
—
—
362.6
$m
452.8
—
—
327.9
37.3
—
818.0
$m
6,200.5
—
14.5
716.9
75.3
524.0
7,531.2
Maturity analysis – Financial assets
Included below is a maturity analysis of the Group’s financial assets as at 31 December, based on their carrying values per the
balance sheet.
2023
Financial assets at FVTPL:
- Fixed and floating rate debt securities
- Syndicate loans
- Derivative financial assets
Cash and cash equivalents
Amounts due from managed syndicates
and other receivables
Total financial assets
2022
Financial assets at FVTPL:
- Fixed and floating rate debt securities
- Syndicate loans
- Derivative financial assets
Cash and cash equivalents
Amounts due from managed syndicates
and other receivables
Total financial assets
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
$m
$m
$m
$m
$m
$m
2,014.6
7.6
10.0
812.3
297.5
3,061.5
26.5
—
—
—
1,336.2
—
—
—
—
929.6
—
—
—
—
1,045.3
—
—
—
—
149.2
—
—
—
—
Total
$m
8,536.4
34.1
10.0
812.3
297.5
3,142.0
3,088.0
1,336.2
929.6
1,045.3
149.2
9,690.3
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
$m
$m
$m
$m
$m
$m
1,854.9
—
34.7
652.5
181.8
2,651.4
6.9
—
—
—
1,676.5
25.6
—
—
—
431.0
—
—
—
—
652.8
—
—
—
—
98.9
—
—
—
—
Total
$m
7,365.5
32.5
34.7
652.5
181.8
2,723.9
2,658.3
1,702.1
431.0
652.8
98.9
8,267.0
240
Beazley | Annual report 2023
www.beazley.com
30 Risk and sensitivity analysis continued
Our capital growth assets have no defined maturity dates and have thus been excluded from the above maturity table. However,
all $282.7m (2022: $159.4m) of equity funds could be liquidated within two weeks, $440.2m (2022: $416.8m) of hedge fund
assets within six months and the remaining $142.0m (2022: $113.8m) of hedge fund assets within 18 months, in normal
market conditions. Illiquid assets are not readily realisable and principal will be returned over the life of these assets, which
may be up to 12 years. The Group makes regular interest payments for its subordinated debt. Further details are provided in
Notes 12 and 26.
30e Capital management
The Group follows a risk-based approach to determine the amount of capital required to support its activities. Recognised
stochastic modelling techniques are used to measure risk exposures, and capital to support business activities is allocated
according to risk profile. Stress and scenario analysis is regularly performed and the results are documented and reconciled to
the Board’s risk appetite where necessary.
The Group has several requirements for capital, including:
• to support underwriting at Lloyd’s through the syndicates in which it participates, being 2623, 3622, 3623, 5623 and 4321.
This is based on the Group’s own individual capital assessment. It may be provided in the form of either the Group’s cash,
investments, debt facilities, or letter of credit;
• to support underwriting in Beazley Insurance Company, Inc., Beazley America Insurance Company, Inc., and Beazley NewCo
Captive Company, Inc. in the US;
• to support underwriting in Beazley Insurance dac in Europe; and
• to support strategic acquisitions and investments.
All entities within the Group have been in compliance with externally imposed capital requirements during the year. The Group
uses letters of credit ("LOC") available under a syndicated short term banking facility led by Lloyds Banking Group plc to support
Funds at Lloyd’s ("FAL") requirements. Lloyd’s of London apply certain criteria to banks issuing LOCs as FAL, including minimum
credit rating requirements and counterparty limits. Should any of the banks on the existing LOC facility breach Lloyd’s of London
requirements, the Group might be asked to replace the LOC provided with alternative eligible issuer(s) and/or assets meeting
Lloyd’s requirements. The creditworthiness of the counterparties on the facility is monitored by the Group on an ongoing basis.
The Group considers Shareholders' Funds, Tier 2 subordinated debt and letters of credit to be the primary sources of capital for
the Group. For more detail on the value of capital managed and how its value has changed in the year, please see pages 67 to
68.
The Internal Model Solvency Capital Requirement is a dedicated quantitative review of syndicate models and it sets outs to be a
key input to the Lloyd’s Internal Model.
The Board operates a progressive dividend strategy, intending to grow the dividend each year but recognising that some
earnings fluctuations are to be expected. When determining the level of the dividend, the Board considers the Group's capital
position, future investment and growth opportunities and its ability to generate cash flows. Dividends are typically paid on an
annual basis to align with the Group's capital planning cycle. The Group's capital management strategy is to carry some surplus
capital which makes it possible to take advantage of growth opportunities which may arise. Where surplus capital cannot be
profitably deployed it will be returned to shareholders.
www.beazley.com
Beazley | Annual report 2023
241
Notes to the financial statements
continued
31 Subsidiary undertakings
Beazley plc, a company incorporated in England and Wales and resident for tax purposes in the United Kingdom, is the ultimate
parent and the ultimate controlling party within the Group.
The following is a list of all the subsidiaries in the Group as at 31 December 2023, all of which are wholly owned.
Beazley Underwriting Pty Limited
Beazley Canada Limited
Beazley Corporate Member (No.2) Limited
Beazley Corporate Member (No.3) Limited
Beazley Corporate Member (No.6) Limited
Beazley Furlonge Holdings Limited
Beazley Furlonge Limited
Beazley Group Limited
Beazley Investments Limited
Beazley Management Limited
Beazley Staff Underwriting Limited
Beazley Solutions Limited
Beazley Underwriting Limited
Beazley Underwriting Services Limited
Lodestone Security Limited
Beazley Corporate Governance Services Limited
BHI Digital UK Limited
Beazley Insurance dac
Beazley Solutions International Limited
Beazley Ireland Holdings plc
Beazley Labuan Limited
Beazley America Insurance Company, Inc.***
Beazley Group (USA) General Partnership**
Beazley Holdings, Inc.*
Beazley Insurance Company, Inc.***
Beazley Newco Captive Company, Inc.***
Beazley USA Services, Inc.*
Beazley Excess and Surplus Insurance, Inc.***
BHI Digital, LLC.*****
Beazley RI Manager, Inc.*
Lodestone Securities LLC****
Beazley Pte. Limited
Please see page 243 for registered addresses.
Country/region
of incorporation
Australia
Canada
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
Ireland
Ireland
Jersey
Malaysia
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
Singapore
242
Beazley | Annual report 2023
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31 Subsidiary undertakings continued
The following is a list of the Group's registered office locations:
Address
City
Postcode
Country/region
United Kingdom and Continental Europe
22 Bishopsgate
2 Northwood Avenue
22 Grenville Street
North America
1209 Orange Street*
2711 Centerville Road Suite 400**
30 Batterson Park Road***
160 Greentree Drive, Suite 101****
55 University Avenue, Suite 550
251 Little Falls Drive*****
Asia
138 Market Street, 03-04 Capita Green
Kensington Gardens, No. I1317, Lot 7616, Jalan
Jumidar Buyong
Australia
Level 15, 1 O’Connell Street
London
Dublin
Saint Helier
EC2N 4AJ
D09 X5N9
JE4 8PX
19801
Wilmington, Delaware
Wilmington, Delaware
19808
Farmington, Connecticut 06032
19904
Dover, Delaware
M5J 2HJ
Toronto, Ontario
19808
Wilmington, Delaware
Singapore
Labuan
Sydney
048946
87000
England
Ireland
Jersey
USA
USA
USA
USA
Canada
USA
Singapore
Malaysia
NSW 2000
Australia
www.beazley.com
Beazley | Annual report 2023
243
Notes to the financial statements
continued
32 Related party transactions
The Group has related party relationships with syndicates 623, 4321, 5623, 6107, in addition to its subsidiaries, associates
and Directors.
32a Syndicates 623, 4321, 5623 and 6107
The Group received management fees and profit commissions for providing a range of management services to syndicates 623,
4321, 5623 and 6107 which are all managed by the Group. In addition, the Group ceded portions of a group of insurance
policies to syndicates 6107 and historically ceded certain business to 5623. The participants on syndicates 623 and 6107 are
solely third party capital while the Group provides 10% of the capital for syndicate 4321 and approximately 18% of capital to
5623 for the 2023 year of account.
Details of transactions entered into and the balances with these syndicates are as follows:
Written premium ceded to syndicates
Other income received from syndicates
Services provided
Balances due:
- Due from / (to) syndicate 623
- Due from syndicate 4321
- Due to syndicate 5623
- Due to syndicate 6107
32b Key management compensation
Salaries and other short term benefits
Pension costs
Share based remuneration
2023
$m
425.8
74.1
83.2
2022
$m
318.7
20.7
58.9
19.1
6.3
(217.7)
(86.6)
(7.2)
1.9
(208.4)
(77.8)
2023
$m
38.4
0.6
11.9
50.9
2022
$m
18.9
0.5
8.0
27.4
Key management include Executive and Non-Executive Directors and other senior management.
The total number of Beazley plc ordinary shares held by key management is 2.5m. Apart from the transactions listed in the
table above, there were no further related party transactions involving key management or a close member of their family.
Further details of Directors’ shareholdings and remuneration can be found in the Directors’ remuneration report on pages 124
to 145.
32c Other related party transactions
At 31 December 2023, the Group had purchased services from Falcon Money Management Holdings Limited of $3.1m (2022:
$2.9m) throughout the year. All transactions with the associates and subsidiaries are priced on an arm’s length basis.
244
Beazley | Annual report 2023
www.beazley.com
33 Contingencies
Funds at Lloyd’s ("FAL")
The following amounts are held in trust by Lloyd’s to secure underwriting commitments:
Financial assets at fair value and cash¹
Letters of credit ("LOC")
Total Funds at Lloyd’s
2023
2022
$m
1,277.8
225.0
1,502.8
$m
1,307.6
225.0
1,532.6
1 Included within 'financial assets at fair value' and 'cash and cash equivalents' on the statement of financial position.
The funds are held in trust and can be used to meet claims liabilities should syndicates fail to meet their claim liabilities. The
funds can be only used to meet claim liabilities of the relevant member.
Letters of credit (FAL)
The Group has a syndicated short term banking facility which was renewed on 25 May 2023, under which $450.0m may be
utilised as LOC placed as FAL to provide capital support for the Group’s underwriting at Lloyd’s. 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. As at 31
December 2023, $225.0m (2022: $225.0m) has been issued as LOC and is being utilised to support FAL requirements. LOC
issued under the facility are uncollateralised. No liability is recognised in these financial statements for the LOC (2022: $nil), as
amounts would only become due if called upon to fund liabilities. These borrowings are subject to covenants, with which the
Group has complied throughout the year. The Group considers the risk of covenants being breached to be remote.
Letters of credit (US)
During the year, the Group has also placed LOC totalling $47.0m (2022: $35.0m) with the State of Connecticut Insurance
Department to collateralise reinsurance arrangements between the Group’s US admitted carrier, Beazley Insurance Company
Inc. (“BICI”) and Beazley NewCo Captive Company Inc. These amounts are guaranteed by Beazley plc. In addition, BICI has a
standby letter of credit of $7.5m (2022: $5.3m) in place to secure certain reinsurance transactions settled through Lloyd’s. No
amounts relating to these letters of credit are recognised in the Group's statement of financial position (2022: $nil).
34 Subsequent events
On 6 March 2024, the Board of Beazley plc approved a share buyback of its ordinary shares for up to a maximum aggregate
consideration of $325m which is expected to commence on 8 March 2024. The buyback will reduce the Group's net asset
value by approximately $325m.
www.beazley.com
Beazley | Annual report 2023
245
Company financial
statements
247
248
249
250
Company statement of financial position
Company statement of changes in equity
Company statement of cash flows
Notes to the financial statements
246
Beazley | Annual report 2023
www.beazley.com
Company statement of financial position
as at 31 December 2023
Investment in subsidiaries
Other receivables
Current tax asset
Cash and cash equivalents
Total assets
Share capital
Share premium
Merger reserve
Foreign currency translation reserve
Other reserves
Retained earnings
Total equity
Other liabilities
Total liabilities
Total equity and liabilities
Notes
7
5
6
2023
$m
724.6
799.3
4.3
0.9
1,529.1
46.7
10.6
55.4
0.7
(20.2)
1,431.9
1,525.1
4.0
4.0
2022
$m
724.6
919.1
0.3
3.4
1,647.4
46.6
9.7
55.4
0.7
(14.3)
1,545.1
1,643.2
4.2
4.2
1,529.1
1,647.4
No statement of profit or loss is presented for the parent company as permitted by Section 408 of the Companies Act 2006.
The result after tax of the parent company for the year was a loss of $14.0m (2022: profit of $303.6m).
The financial statements were approved by the Board of Directors on 6 March 2024 and were signed on its behalf by:
C Bannister
Chair
S M Lake
Group Finance Director
6 March 2024
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Beazley | Annual report 2023
247
Company statement of changes in equity
for the year ended 31 December 2023
Share
capital
Share
premium
Merger
reserve¹
Foreign
currency
translation
reserve
Other
reserves
Retained
earnings
Total
$m
Notes
$m
(7.6)
4
5
5
6
6
6
6
Balance at 01 January 2022
Total comprehensive income
Dividend paid
Issue of shares
Equity raise
Transfer of merger reserve to retained earnings
Equity settled share based payments
Acquisition of own shares held in trust
Transfer of shares to employees
Balance at 31 December 2022
Total comprehensive loss
Dividend paid
Issue of shares
Equity settled share based payments
Acquisition of own shares held in trust
Transfer of shares to employees
Balance at 31 December 2023
1 A merger reserve was created through a scheme of arrangement on 13 April 2016, in which Beazley plc became the parent company of the Group.
$m
$m
943.2 1,039.9
0.7
303.1
— 303.1
—
(103.0)
— (103.0)
—
—
—
0.9
—
— 404.4
—
—
—
— 397.2
—
—
15.7
—
15.7
— (17.8)
— (17.8)
—
4.6
(4.6)
—
(14.3) 1,545.1 1,643.2
0.7
(14.0)
— (14.0)
—
(107.7)
— (107.7)
—
1.0
—
—
—
—
—
36.2
36.2
— (33.6)
— (33.6)
—
—
8.5
(8.5)
(20.2) 1,431.9 1,525.1
0.7
$m
$m
55.4
5.3
—
—
—
—
—
0.8
397.2
3.6
— (397.2)
—
—
—
—
—
—
55.4
9.7
—
—
—
—
—
0.9
—
—
—
—
—
—
55.4
10.6
$m
42.9
—
—
0.1
3.6
—
—
—
—
46.6
—
—
0.1
—
—
—
46.7
4
5
6
6
6
248
Beazley | Annual report 2023
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Company statement of cash flows
for the year ended 31 December 2023
Cash flows from operating activities:
(Loss)/profit before tax
Adjustments for non-cash items:
Interest and dividends receivable
Finance costs payable
Equity settled share based compensation
Other non-cash items
Changes in operational assets and liabilities:
Increase in other receivables1
(Decrease)/increase in other liabilities
Interest received on financial assets
Net cash inflows from operating activities
Cash flows from investing activities:
Dividend received from subsidiaries
Decrease/(increase) in loan to subsidiary1
Net cash in/(out)flows from investing activities
Cash flows from financing activities:
Acquisition of own shares in trust
Equity raise
Finance costs paid
Dividend paid
Net cash (out)/inflows from financing activities
Net (decrease)/increase in cash and cash equivalents
Opening cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Closing cash and cash equivalents
1 Loan to subsidiary is included within Other receivables on the Company balance sheet.
2023
$m
2022
$m
(18.0)
303.3
(0.1)
5.9
36.2
3.0
(21.4)
(0.2)
0.1
5.5
—
141.2
141.2
(33.6)
—
(5.9)
(107.7)
(147.2)
(0.5)
3.4
(2.0)
0.9
(305.0)
4.8
15.7
—
(3.4)
3.5
—
18.9
305.0
(600.7)
(295.7)
(17.8)
404.4
(4.8)
(103.0)
278.8
2.0
0.3
1.1
3.4
www.beazley.com
Beazley | Annual report 2023
249
Notes to the financial statements
1 General information
Nature of operations
Beazley plc ("the Company", 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 is
to act as a holding company for the Beazley group of companies.
Basis of preparation
The separate financial statements of the Company have been prepared in accordance with UK adopted International Financial
Reporting Standards ("IFRS") and the requirements of the Companies Act 2006. The exemption under Section 408 of the
Companies Act 2006 from presenting its own profit and loss account has been applied. The Company financial statements are
prepared on the historical cost basis. All amounts presented are in US dollars and millions, unless stated otherwise.
New standards and amendments to existing standard
In the current year, the Company has applied new standards and amendments to IFRS issued by the International Accounting
Standards Board ("IASB") and endorsed by the UK Endorsement Board ("UKEB") that are mandatorily effective for accounting
periods beginning on or after 01 January 2023. These amendments are consistent with those set out in Note 1 of the Group
financial statements. None of the amendments issued by the IASB and endorsed by the UKEB have had a material impact to
the Company.
Going concern
The basis of the assessment for going concern as set out in Note 1 of the Group's consolidated financial statements also
applies to the Company. The Directors consider it appropriate to continue to adopt the going concern basis of accounting in
preparing these financial statements for the year ended 31 December 2023.
2 Material accounting policies
Foreign currency translation
The Company financial statements are presented in US dollars, being its functional and presentational currency.
Subsidiary undertakings
Equity financial investments made by the Company in subsidiary undertakings and associates are stated at cost and are
reviewed for impairment when events or changes in circumstances indicate the carrying value may be impaired.
Other receivables
Other receivables primarily relate to amounts due from other Group companies and are carried at amortised cost less any
impairment losses. Intercompany receivables and payables are disclosed on a net basis as the Company intends to settle
these on a net basis. Under IFRS 9, expected credit losses are recognised for all financial assets held at amortised cost. The
amount of expected credit losses held by the Company on a standalone basis in 2022 and 2023 was not material.
Other reserves
The employee share options reserve is held in accordance with IFRS 2: Share-based payment. The Company accounting policy
follows that of the Group which is detailed within Note 3 of the Group's consolidated financial statements.
Dividends paid
Dividend distributions to the shareholders of the Company are recognised in the period in which the dividends are paid.
250
Beazley | Annual report 2023
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3 Risk and sensitivity analysis – Company risk
Foreign exchange risk
The functional and presentational currency of Beazley plc is US dollars. As a result, the Company is mainly exposed to
fluctuations in exchange rates for non-dollar denominated transactions and to net asset translation risk on non-dollar functional
currency entities.
Exposure and risk concentrations by currency
The following table summarises the carrying value of total assets and total liabilities categorised by the Company's main
currencies:
2023
Investment in subsidiaries
Other receivables
Current tax asset
Cash and cash equivalents
Total
Other liabilities
Total
2022
Investment in subsidiaries
Other receivables
Current tax asset
Cash and cash equivalents
Total
Other liabilities
Total
EUR €
$m
—
(1.2)
—
0.5
(0.7)
—
—
EUR €
$m
—
(0.7)
—
0.1
(0.6)
—
—
UK £
$m
724.6
(136.5)
4.3
0.4
592.8
3.4
3.4
UK £
$m
724.6
(118.1)
0.3
1.3
608.1
3.5
3.5
US $
$m
—
937.0
—
—
937.0
0.6
0.6
US $
$m
—
1,037.9
—
2.0
1,039.9
0.7
0.7
Total $
$m
724.6
799.3
4.3
0.9
1,529.1
4.0
4.0
Total $
$m
724.6
919.1
0.3
3.4
1,647.4
4.2
4.2
Credit risk
Credit risk arises where counterparties fail to meet their financial obligations in full as they fall due. The other receivables in
2023 consist of amounts owed from other entities within the Group. The maximum exposure to credit risk has been assessed
within Note 8 of the Company financial statements and is not material to the Company. All other receivables are intergroup in
nature and the directors are of the view that the Group companies have sufficient liquidity and assets to pay all loans as and
when they fall due.
4 Dividends per share
A dividend of 14.2p per share (2022: 13.5p per share) will be payable on 3 May 2024, as described in Note 15 of the Group
consolidated financial statements.
5 Share capital
Details of the ordinary shares in issue at 31 December 2023 are set out in Note 22 of the Group consolidated financial
statements.
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Beazley | Annual report 2023
251
Notes to the financial statements
continued
6 Other reserves
Balance at 01 January 2022
Share based payments
Acquisition of own shares held in trust
Transfer of shares to employees
Balance at 31 December 2022
Share based payments
Acquisition of own shares held in trust
Transfer of shares to employees
Balance at 31 December 2023
Employee
share options
reserve
$m
(8.3)
15.7
(7.2)
0.2
36.2
Employee
share trust
reserve
$m
0.7
—
— (17.8)
2.6
(14.5)
—
— (33.6)
6.3
(41.8)
(14.8)
21.6
Total
$m
(7.6)
15.7
(17.8)
(4.6)
(14.3)
36.2
(33.6)
(8.5)
(20.2)
The employee shares are held in accordance with IFRS 2 Share-based payment. For more information refer to Notes 23 & 24 of
the Group's consolidated financial statements.
7 Subsidiary undertakings
Beazley plc holds a 100% ownership interest in Beazley Ireland Holdings plc. All other entities in the Group are held directly or
indirectly as subsidiaries of that entity. For a full list of subsidiary undertakings of the Company at 31 December 2023, refer to
Note 31 of the Group’s consolidated financial statements.
8 Related party transactions
Beazley plc lends funds to subsidiary entities to help meet group working capital and liquidity requirements. Such loans are
repayable on demand and no interest is payable. A summary of amounts due to Beazley plc from other group entities is set out
below:
Balances due:
Due from Beazley Furlonge Holdings Limited
Due from Beazley Management Limited
Due from Beazley Underwriting Limited
Due from other Group companies
2023
$m
192.6
58.9
519.7
28.3
2022
$m
192.7
39.0
667.2
20.2
The key management of Beazley plc as a standalone entity is deemed to be the same as that of the wider Beazley Group.
Further details of related party relationships can be found within Note 32 of the Group's consolidated financial statements.
9 Subsequent events
On 6 March 2024, the Board of Beazley plc approved a share buyback of its ordinary shares for up to a maximum aggregate
consideration of $325m which is expected to commence on 8 March 2024. The buyback will reduce the Company's net asset
value by approximately $325m.
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Alternative performance measures ("APMs")
Beazley plc uses APMs to help explain its financial performance and position. These measures are not defined under IFRS. The
Group is of the view that the use of these measures enhances the usefulness of our financial reporting and allows for improved
comparison to industry peers.
Information on APMs used by the Group is set out below. Unless otherwise stated, amounts are disclosed in millions of dollars
($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.
Insurance written premiums
Earnings adjustment
Insurance revenue
Insurance ceded premiums
Earnings adjustment
Allocation of reinsurance premiums
Insurance written premiums
Add insurance ceded premiums
Net insurance written premiums
2023
$m
2022
$m
5,601.4 5,246.3
(397.9)
5,442.4 4,848.4
(159.0)
2023
$m
(905.2)
(222.1)
(1,127.3)
2022
$m
(1,473.9)
508.5
(965.4)
2023
$m
2022
$m
5,601.4 5,246.3
(1,473.9)
4,696.2 3,772.4
(905.2)
CSM sustainability index
The CSM reflects the expected profit of contracts within the liability for remaining coverage. The sustainability index (%) is
calculated by dividing the closing CSM at 31 December by the opening CSM at 1 January. A ratio of 100% and above shows that
the expected profit within the LRC is higher than the previous valuation.
Closing CSM
Divided by opening CSM
CSM sustainability index
Gross
2023
344.0
341.0
101 %
Net
Gross
Net
2023
214.4
183.7
117 %
2022
341.0
190.9
179 %
2022
183.7
144.2
127 %
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Claims, expense & combined ratios
Claims ratio (%) is calculated as insurance service expenses less directly attributable expenses, net of reinsurance recoveries,
divided by insurance revenue net of reinsurance ceded revenue. Expense ratio (%) is calculated as the sum of insurance
acquisition cash flows amortisation and other directly attributable expenses, divided by insurance revenue net of reinsurance
ceded revenue. Combined ratio (%) is calculated as insurance service expenses net of reinsurance recoveries, divided by the
insurance revenue net of reinsurance ceded revenue. This is also the sum of the claims and expense ratios. The combined ratio
below is shown with and without the impact of discounting.
Insurance service expenses ($m)
Less directly attributable expenses ($m)1
Amounts recoverable from reinsurers for incurred claims ($m)
Net claims ($m)
Insurance revenue ($m)
Allocation of reinsurance premium ($m)
Divided by net insurance revenue ($m)
Claims ratio
Directly attributable expenses ($m)1
Divided by net insurance revenue ($m)
Expense ratio
Combined ratio
Effect of discounting
Combined ratio (undiscounted)
2023
3,592.6
(1,362.6)
(528.5)
1,701.5
5,442.4
(1,127.3)
4,315.1
39 %
1,362.6
4,315.1
32 %
71 %
3 %
74 %
2022
4,014.0
(1,217.6)
(953.9)
1,842.5
4,848.4
(965.4)
3,883.0
47 %
1,217.6
3,883.0
32 %
79 %
3 %
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 4.
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.
Net assets* ($m)
Less intangible assets ($m)
Net tangible assets* ($m)
Divided by the shares in issue at the period end (millions)1:
Net assets per share (cents)*
Net tangible assets per share (cents)*
Converted at spot rate:
Net assets per share (pence)*
Net tangible assets per share (pence)*
1 Shares in issue at the period end exclude those held by the employee benefits trust.
2023
(165.3)
2022
3,882.1 2,955.0
(128.8)
3,716.8 2,826.2
665.4
444.1
424.7
0.82
364.2
348.3
662.7
585.8
560.9
0.80
468.6
448.7
Return on equity
Return on equity (%) is calculated by dividing the consolidated profit after tax by the average equity for the period. Average
equity for the period was previously calculated as the monthly weighted average closing equity position. We have updated our
approach to use an average of the opening and closing equity positions, and this is reflected in both the current and
comparative periods.
Profit after tax* ($m)
Divided by average total equity* ($m)
Return on equity*
2023
1,026.8
3,418.6
30 %
2022
483.3
2,572.6
19 %
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APMs continued
Investment return
Investment return (%) is calculated by dividing the net investment income by the average financial assets at fair value and cash
and cash equivalents held by the Group over the period.
Net investment income/(loss) ($m)
Opening invested assets:
Financial assets at fair value ($m)
Cash and cash equivalents ($m)
Invested assets at the beginning of the period ($m)
Closing invested assets:
Financial assets at fair value ($m)
Cash and cash equivalents ($m)
Invested assets at the end of the period: ($m)
Divided by average invested assets ($m)
Annualised investment return
2023
480.2
2022
(179.7)
8,345.6
652.5
8,998.1
7,283.5
591.8
7,875.3
9,665.5
812.3
10,477.8
9,738.0
4.9 %
8,345.6
652.5
8,998.1
8,436.7
(2.1) %
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255
Beazley plc
22 Bishopsgate
London
EC2N 4BQ
T +44 (0)20 7667 0623
info@beazley.com
www.beazley.com
Beazley online annual report and accounts 2023
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