LIKE other insurers, Beazley benefited from an unusually quiet year for catastrophes in 2009. With the global economy crumbling, perhaps the gods decided to spare the world from natural disasters. The tragic Chilean earthquake was proof that the benign period was over. Thanks to its diversification, however, Beazley is set to suffer less than rivals, with pre-tax exposure between $55m and $75m. That equates to around six per cent of net tangible assets, compared to a UK peer group average of between seven and nine per cent.
The impact on the bottom line will be relatively minor, however, as Beazley has carried over hefty catastrophe reserves. Analysts at Numis reduced their full-year pre-tax profit forecasts by £10m to £142m yesterday, but remained upbeat on the overall outlook. They expect net tangible assets to grow by a sector-beating 25 per cent in 2010, compared to 20 per cent for Amlin and 17 per cent for Hiscox.
Trading at a 13 per cent discount to prospective net tangible assets, the shares are pretty good value. Any short-term uncertainty over catastrophe losses should be taken as a buying opportunity.