- Non-life insurer reports lower annual profits as it recommends takeover by Zurich
- Lloyd’s of London syndicate manager flags it has limited exposure to the Middle Eastern conflict
- Tangible net assets grow 7% in 2025 to 584p a share, so the valuation paid by Zurich leaves Lancashire and Hiscox looking cheap by comparison
“A dip in profits in 2025 means that Beazley is not quite going out on a high as it recommends the cash-and-dividend takeover bid from Zurich Insurance, but the Lloyd’s of London syndicate manager’s share price strongly suggests that shareholders are going to support the deal,” says AJ Bell investment director Russ Mould.
“That may also catch the eye of shareholders in other listed non-life insurance plays, since both Hiscox and Lancashire look cheap relative to the valuation implied by the Swiss offer for Beazley.
“Beazley manages seven syndicates at Lloyd’s of London and specialises in the insurance and reinsurance of risks across a range of specialist areas, including property, catastrophe, marine, and cybercrime.
“It has built a strong track record of combining growth, funded by opportunistically timed rights issues, as well as organic cash generation, and shrewd risk management. However, the full-year results showed a third consecutive miss relative to analysts’ expectations for an increase in premiums written, which came in slightly down, compared to autumn’s downgraded guidance for flat-to-low growth. Gross premiums written fell 1% to $6.1 billion in 2025.
Source: Company accounts
“However, the combined ratio of 77% did beat management’s guidance for a figure in the low-80s, even if it represented a slight deterioration relative to 2024’s outcome of 75%.
“The combined ratio adds together expenses and the sum of any claims losses and divides that total figure by the premium earned. A figure below 100% shows that an insurer is in the black, and the lower the combined ratio the higher the profits, all other things being equal.
Source: Company accounts
“The slight drop in premiums and the increased combined ratio meant that the headline pre-tax profit number dropped to $1.1 billion from $1.4 billion in 2024. Analysts expect a further drop in profit in 2026, thanks in part to an ongoing $500 million investment in a new platform in Bermuda. Management has, however, reassured that its exposure to the conflict in the Middle East is limited and profits should not be materially impacted going forward.
Source: Company accounts, Marketscreener, analysts' consensus forecasts
“This was still a solid performance in 2025, among the best in the company’s history, and this was reflected in a 7% increase in tangible net asset value (TNAV) across the year to a new peak of 584p.
Source: Company accounts
“Growth in TNAV is one sign of the quality, as well as the quantity of earnings, but it also has important implications from a valuation point too, as price to tangible net asset, or book, value per share is a useful metric.
“At the end of 2025, Beazley’s TNAV was 584p per share, based on shareholders’ funds of $4.9 billion, intangible assets of $224 million and a period-end share count of 611 million.
“Zurich’s bid offer of £13.35p per share therefore values Beazley at 2.25 times historic book value. By contrast Hiscox trades on 1.75 times and Lancashire 1.44 times, so it will be interesting to see if investors take any greater interest in these two names, even allowing for their different business mixes.”
Source: Company accounts, Marketscreener, analysts' consensus forecasts. *Beazley based on Zurich bid price. **Prospective earnings and dividend numbers based on £/$ cross rate of $1.3385. ***Lancashire dividend yield assumes payment of a special dividend
