Beazley’s switch to US Treasuries limits investment loss to $55m/1%

Written by Adam Cadle

22/04/2020

Beazley has reported an investment loss for the three months ended 31 March 2020 of $55m or 1%, as the insurer reduced its exposure to a number of capital growth assets, temporarily lengthened the duration of its fixed income investments and turned to US Treasury securities in order to control the impacts of volatile markets and COVID-19.

For the same period last year, Beazley saw an investment gain of $98m or 2%. The weighted average duration of Beazley’s fixed income portfolio was 2.0 years at 31 March 2020 (31 March 2019: 1.9 years). 

The yield on its core portfolio as at 31 March 2020 was 1.6% (31 December 2019: 2.1%) and the average credit rating of this portfolio at 31 March 2020 was 'A+' (31 March 2019: 'A') following the sale of nearly all sub-investment grade credit exposures during the first quarter, with proceeds reinvested in US Treasury securities.

Generally, the insurer holds around 85% of assets in its fixed income portfolio, and the remaining in capital growth assets which include equities, hedge funds, illiquid credit and absolute return portfolios.

Gross premiums written for the three months ended 31 March 2020 increased by 13% YOY to $840m.

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