Beazley plc | Annual report and accounts 2022

Insurance. Just different.

Preface to Beazley 2022 Annual Report and

Accounts

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 final results for the year ended 31 December 2022 on 2 March 2023. The final

results reported an alternative performance measure of net assets per share that had been calculated using the weighted

average of shares for the year. This alternative performance measure was used by Beazley to determine the LTIP awards for

Adrian Cox and Sally Lake that were initially approved by the Remuneration Committee and 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 published an RNS

entitled ‘Alternative performance measure correction NAVps’, which provided updated information on the net asset value per

share calculation. On 8 March 2023, Beazley published an RNS entitled ‘Alternative performance measure correction NAVps –

update', which provided updated information on the LTIP awards for Adrian Cox and Sally Lake once the Board had considered

the updated net asset value per share calculation. 

The Company, having taken advice, has 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Board therefore rescinded its approval of the version of the accounts that were approved on 1 March 2023 and, in their place,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 this version of the accounts as the 2022 Annual Report and Accounts on 12 March 2023. As a result, this final

version of the 2022 Annual Report and Accounts reflects the updated figures set out in the RNSs published on 7 and 8 March

2023. Other than as described in those RNSs and the related changes, no changes have been made to the annual report and

accounts as initially approved by The Board on 1 March 2023.

The Company acknowledges that a hyperlink was contained in the announcement of its final results to the version of the

accounts that were approved on 1 March 2023 which appeared temporarily on the Company's website. No reliance should be

placed on that document which was removed as soon as the error came to light. 

The updated information announced by Beazley on 8 March 2023 (which is reflected on page 121 in this 2022 Annual Report

and Accounts) is set out below: 

£			Fixed pay				Pay for performance
			Salary	Benefits	Pension	Total fixed pay	Total annual bonus	Long term incentives (LTI)1	Total variable pay	Total remuneration
Adrian P Cox	Revised	2022	525,250	19,760	65,656	610,666	787,875	106,663	894,538	1,505,204
	Original	2022	525,250	19,760	65,656	610,666	787,875	245,127	1,033,002	1,643,668
	Adjustment	2022	0	0	0	0	0	-138,464	-138,464	-138,464
Sally M Lake	Revised	2022	414,000	2,938	45,960	462,898	621,000	71,190	692,190	1,155,088
	Original	2022	414,000	2,938	45,960	462,898	621,000	179,310	800,310	1,263,208
	Adjustment	2022	0	0	0	0	0	-108,120	-108,120	-108,120

1  The LTI figures for 2022 have been calculated using the average share price in the last three months of 2022 of 630.7p.

Strategic report

01Highlights

02Key performance indicators

03Our purpose

04Our business model

08Statement of the Chair

11Chief Executive Officer’s statement

13Chief Underwriting Officer’s report

18Performance by division

21Responsible business

29Task Force on Climate-Related

Financial Disclosures (TCFD) 2022

50Stakeholder engagement

55Section 172 statement

58Financial review

58  Group performance

63  Balance sheet management

64  Capital structure

67Risk management & compliance

Governance

73Letter from our Chair

75Statement of corporate governance

77Board of Directors

79Governance Framework

87Shareholder engagement and investor relations

88Board evaluation

91Audit and Risk Committee

100Nomination Committee

106Remuneration Committee

108Letter from the Chair of our

Remuneration Committee

111Directors’ remuneration report

139Statement of Directors’ responsibilities

140Directors’ report

146Independent auditor’s report

Financial statements

157Consolidated statement of profit or loss

158Statement of comprehensive income

159Statements of changes in equity

161Statements of financial position

162Statements of cash flows

163Notes to the financial statements

232Alternative performance measures

Highlights

Financial
Gross premiums written		Net premiums written		Net earned premiums
$5,268.7m		$3,876.2m		$3,614.2m
(2021: $4,618.9m)		(2021: $3,512.4m)		(2021: $3,147.3m)
Net investment (loss)/income		Cash and investments		Investment return
$(179.7)m		$8,998.1m		(2.1)%
(2021: $116.4m)		(2021: $7,875.3m)		(2021: 1.6%)
Rate increase on renewals		Profit before tax for the financial year
14%		$191.0m
(2021: 24%)		(2021: $369.2m)

www.beazley.com Beazley | Annual report 2022 01

Key performance indicators

Financial

Average five year return on equity of 8%.

Our combined ratio has averaged 98% over five

years.

The Group is of the view that some of the above metrics constitute alternative performance measures (APMs).

Further information on our APMs can be found in the financial review on page 59.

Non-financial
Female representation in senior leadership roles		People of Colour representation in the workforce		Overall carbon emissions
43%		25%		5,283.0tCO2e
(2021: 38%)		(2021: 23%)		(2021: 2,228.5 tCO2e)
Employee engagement		Employee favourability
85%		80%
(2021: 86%)		(2021: 81%)

02 Beazley | Annual report 2022 www.beazley.com

www.beazley.com Beazley | Annual report 2022 03

04 Beazley | Annual report 2022 www.beazley.com

www.beazley.com Beazley | Annual report 2022 05

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www.beazley.com Beazley | Annual report 2022 07

Statement of the Chair

Beazley posted a pre-tax profit in 2022 of $191.0m (2021: $369.2m), and an impressive

89% (2021: 93%) combined ratio, a result that demonstrates the impact of our disciplined

underwriting. I am also pleased to confirm that The Board has declared a dividend of

13.5p. Our business is grateful for the support of our shareholders, partners and

customers during a challenging year of geopolitical uncertainty. I am particularly proud

of the confidence our investors placed in us during our equity raise in November 2022,

which will help us further invest in the sustainable growth of our business.

A specialty insurer that delivers sustainable growth

Our deepest sympathy is with all the people suffering from the

devastation in Turkey and Syria, and those impacted by the

human tragedy of the war in Ukraine. These events have made

us acutely aware of this kind of geopolitical uncertainty. This

uncertainty is compounded by the pervasive economic stress

of high inflation and the cost of living challenges it creates for

so many. In this environment our role, as a sustainable,

specialty insurer, is to support clients and broker partners to

manage the additional risks as we all adapt and deliver value

for our shareholders. Beazley adds tangible value when things

are complex, volatile and changing in areas such as Cyber,

Specialty, Marine and Political Risk, where we have

consistently demonstrated our ability to help our clients grow,

while allowing our insureds to explore, create and build.

We believe growth is driven by our ability to assess external

realities and use our platforms, people and geographical

strengths to lean into emerging opportunities as conditions

change, rather than just be dictated by hard or soft market

conditions. I like to think of this as anticipatory competence.

During 2022 the rating environment in Property insurance and

reinsurance reached a transition point, as the market

understood that it was unsustainable to continue to

underwrite this business in a commoditised way, in the face of

overwhelming evidence about the impact of climate change.

This is a moment where our market expertise and underwriting

competence becomes a differentiating factor and where we

are able to add real value to our brokers and clients. We are

excited about the opportunity these changes offer to grow and

develop our Property portfolio as we move through 2023.

This enthusiasm is based on the long-term approach we have

taken to Property, which saw our exposure, on both our

Property and Reinsurance books within our Property Risks

division, reduce as rates were depressed and the impact of

climate change began to be felt. During this time, we invested

in expertise and modelling tools to explore how the changing

climate is impacting Property Risks. The knowledge gained is

now allowing us to grow our share of the Property market as

the underwriting environment significantly improves.

Our successful equity raise in November 2022, puts us in an

excellent position to take up the opportunity in Property and

also deliver against our Cyber ambitions, while extending our

market share across our classes of business, delivering

sustainable, diversified growth for shareholders across a

balanced portfolio. Focusing on sustainable growth has

resulted in our gross premiums written doubling between

2018 and 2022 - and saw our US platform reach a significant

milestone as it passed gross premiums written of $2bn.

08 Beazley | Annual report 2022 www.beazley.com

Strong culture guides us through change

In autumn 2022, I assumed the role of Interim Chair of

Beazley, I was previously the Senior Independent Director and

Chair of the Remuneration Committee. The role of Chair has

offered a fresh perspective on our business and I have been

energised by the exciting future our fast changing and growing

business has ahead of it.

On 25 April, at the conclusion of the 2023 Annual General

Meeting, I will relinquish this role to our outstanding new

Chair, Clive Bannister and I will return to my previous role.

Clive is currently the Chair of the Rathbones Group plc and the

Museum of London. He was previously the CEO of the Phoenix

Group plc. He will bring deep strategic, commercial and

transformational experience to The Board.

In the selection process we drew on our corporate values and

founding principles, which have propelled Beazley to be the

business it is today. We are a value driven, growth minded

and disciplined company which has created a respectful and

inclusive workplace and I believe that in Clive, we have a

leader who embodies these values and who will be an

outstanding advocate for Beazley.

On behalf of The Board, I would like to thank David Roberts for

his leadership as we faced the challenges of COVID-19, for

the transformation of our executive management team and for

his genuine conviction that by creating a diverse environment

that is respectful and open, you achieve better outcomes. He

has left us a stronger business and we wish him well as he

takes up the challenge as Chair of the Court of the Bank of

England.

I would also like to thank Robert Stuchbery for assuming the

role of the Senior Independent Director and Nicola Hodson for

chairing the Remuneration Committee, while I undertook the

Interim Chair role. Nicola will remain Interim Chair of the

Remuneration Committee following the 2023 AGM.

On behalf of The Board, I would also like to recognise

Catherine Woods for her excellent service as a Non-Executive

Director, having stepped down following the conclusion of two

three-year terms in March 2022. On 31 May 2022, The Board

appointed two new Non-Executive Directors, Fiona Muldoon

and Cecilia Reyes Leuzinger. Fiona is a member of the Audit

and Risk Committees and Cecilia the Audit, Risk and

Remuneration Committees. They both bring insight and offer

experience-led advice to The Board.

A talented team that champions diverse thinking

Our company has thrived because our people can thrive.

People are the bedrock on which we continue to build and

grow our business. They are a vital asset and one that

becomes more valuable over time. Understanding this leads

us to commit to creating a market leading workplace.

Building a highly differentiated, talented, cross functional

team means recruiting and retaining the best people. In 2022

we recruited 410 new joiners and our turnover rate was 10%.

We give our people the tools, support and create a learning

environment where they are able to grow in their roles, make

decisions and execute with autonomy. By remaining a mostly

flat organisation, our team knows that they are making

individual contributions to the collective success of the

company. This approach results in positive behaviours and

outcomes and a willingness to seize opportunities - which I

believe is not just what makes Beazley a market leading

workplace, but is also the key to our ongoing success as a

business.

We are able to attract and keep top talent because of this

compelling culture and the inviting workplace we have created,

which resonates with both new and long-standing staff, as is

reflected in our annual employee survey. Our engagement

score, which measures whether colleagues are willing to go

above and beyond for the organisation, was 85% and we

remain above the global benchmark for both favourability and

engagement. We continue to see parity in the demographics

of respondents such as gender, ethnicity, age and length of

service to the employee survey.

Only with a team that embraces the purpose of our business

to explore, create and build will we deliver the innovation that

our clients and broker partners expect. It is no surprise,

therefore that during 2022 innovation remained at our core.

We collaborated with the market to explore and create new

insurance solutions to the emerging or changing risk

landscape and in 2022 these included the build out of Carbon

Offset Invalidation and specialist parametric property

products, and building on our long-standing expertise in space

underwriting by offering the first commercial insurance for

vehicles on the moon. We are constantly looking to the risk

horizon to identify where our specialist underwriting can add

value.

www.beazley.com Beazley | Annual report 2022 09

Statement of the Chair continued

Being a responsible business

Beazley is committed to being a responsible business and in

2022 we launched our ESG Consortium and Syndicate 4321.

We also made significant strides towards embedding ESG

criteria through the underwriting process with the addition of

tools and talent to truly get our arms around this challenge.

We continue to make progress at pace against our 2023

targets of 45% senior leadership roles held by women, and

25% of our people being people of colour. The same is true of

our target of a 50% reduction in greenhouse gas emissions by

2023, where we have in fact achieved a reduction of 55% so

far to date. The Board will closely monitor our achievements

against these targets and looks forward to reconfirming our

Responsible Business commitments and presenting new

targets for beyond 2023.

Dividend

The Board is pleased to continue with its progressive dividend

policy, which will be paid annually, and as such has declared

an interim dividend of 13.5p for the full year of 2022.

New Era, consistent vision

In December 2022, Beazley joined the FTSE 100 for the first

time. We welcome the additional responsibility, visibility and

scrutiny that comes with this and expect to be better for it. It

is worth reflecting that we have reached this point not through

acquisition or merger but by focusing on growing and

developing our business organically through our talented

people, expertise and skill.

It has been a pleasure to lead such a committed and talented

team of Directors as Chair of The Board for the past several

months. Together we are steering your company as it

continues to grow successfully and offer meaningful solutions

to the challenges that risk presents to our clients and broker

partners.

As a business we operate within a framework of underwriting,

responsibility and financial probity that we can all be proud of,

driven by an extremely skilled team. Our vision of being a

leading sustainable, Specialty insurer, is both lived every day

and drives our aspirations, as our products, people, platforms

and culture all come together. As Clive succeeds me as Chair,

I can reflect that our new brand descriptor perfectly

encompasses what it is about Beazley that makes us stand

out from the crowd.

Christine LaSala

Interim Chair

10 Beazley | Annual report 2022 www.beazley.com

Chief Executive Officer’s statement

Beazley’s combined ratio of 89% (2021: 93%) and gross premiums written of $5,268.7m

(2021: $4,618.9m) are testament to our hard work over the last few years, and are

particularly pleasing given that 2022 witnessed geopolitical uncertainty unseen since the

Cold War. The overall result, a profit before tax of $191.0m (2021: $369.2m), consisted of a

strong underwriting performance, offset by a reduced investment performance, driven by

mark to market losses as a result of the volatile interest rate environment.

I am proud of Beazley’s progress throughout 2022. We

delivered a strong underwriting result, raised capital that will

enable us to make the most of a structural change in the

Property insurance and reinsurance markets, realigned our

underwriting teams to better deliver for clients and launched

Lloyd's first ESG syndicate. All against a backdrop of high

inflation, an energy price crunch and the overhang of war in

Europe.

Specialty insurance in a time of geopolitical turmoil

The war in Ukraine has shaken us all, causing real human

suffering; and, as we all take stock, it is right to reflect on the

impact it has had on our business. Firstly, the conflict resulted

in us provisioning for claims directly from the war itself, for

which our estimate of loss remains unchanged since our

2022 interim report. Secondly, the energy price spike and

rising inflation caused central banks to increase interest

rates, leading to mark to market losses in our fixed income

portfolio resulting in an $179.7m investment loss. Finally, the

war has reinforced the value a specialty insurer like Beazley

brings in complex situations. From our claims team’s support

for mariners injured by missiles in the conflict zone, or

enabling shipments of grain needed by some of the world’s

poorest people, to offering clients reassurance as they

navigate a complex sanctions regime - the innovation and

responsiveness of the Beazley team has shone through and

I’d like to thank everyone for their hard work and focus on

supporting clients.

Sustainable growth

Our business received a strong endorsement from the capital

markets in November 2022 as we raised $404m in new

equity capital to support our exciting growth agenda. We see a

multi-dimensional opportunity to show our agility and grow in

response to changes in market conditions whilst continuing to

pursue our sustainable long-term growth strategy, which this

additional capital will further support.

The market dislocation in Property is a signal of structural

change as it adjusts to the increased exposure climate

change brings. This gives us a strategic opportunity to

accelerate rather than simply re-grow our Property franchise

(which used to be a significantly larger proportion of the

business than it is now) but also to retain more of our Cyber

and Specialty Risks business.

www.beazley.com Beazley | Annual report 2022 11

Chief Executive Officer’s

statement continued

Firm foundations

Our ability to pivot our business to take up new opportunities

as they emerge is part of our DNA. Platform strength, product

and geographical diversity are cornerstones of this. Our

strategy is to achieve the successful intersection of platforms

and products to offer our brokers and clients access to our

expertise and specialist underwriting capacity where and when

they do business. We believe that a mix of international,

wholesale and domestic platforms delivers straightforward

access to us and adds real value.

People are, of course, Beazley’s most important asset and

in October 2022 we had to say goodbye to one of the best,

David Roberts, our Chair of five years, who left to become

Chair of the Court of the Bank of England. We are grateful for

David’s leadership and I would like to thank him personally for

his counsel and wisdom over his time with us, but particularly

when I transitioned to CEO last year. David’s calm presence

during COVID-19 and his personal drive and commitment to

diversity and inclusion have had a profound impact on

Beazley. Christine LaSala has ably assumed the role of

Interim Chair and returns to her role as Senior Independent

Director and Chair of the Remuneration Committee with our

sincere thanks. I look forward to working with our incoming

Chair, Clive Bannister, who brings a wealth of experience with

him which will aid us as we enter the next phase of Beazley's

journey.

Developing and supporting our employees is crucial to our

success and in June 2022 we reflected the cost-of-living

challenges we are all facing by making a one-off payment of

up to £3,000 (or equivalent currency) to the people in the

company most impacted. As we approached the end of year

salary and bonus cycle this was also upper most in our minds

and we awarded eligible staff an additional 2% cost of living

pay rise in addition to an average company wide annual uplift

of 5%.

What we say is what we do

Beazley believes that fundamentally we must deliver what we

promise; and in 2022, we did just that with the launch of the

ESG consortium and Syndicate 4321, Lloyd’s first ESG

syndicate. Since its launch on 1 January 2022 the new

syndicate has offered additional capacity to clients who

achieve high scores on ESG metrics, the syndicate is also

helping Beazley to understand more about how high scoring

businesses operate and test our hypothesis that companies

which do well on ESG criteria are also likely to be less risky.

We are using the lessons learnt as part of a wider effort,

which got fully underway in 2022, to embed ESG thinking into

all our underwriting.

We also know that what gets measured, gets done and that is

why in 2019 we set robust and challenging targets for our own

ESG efforts. Specific highlights include targets of 45% of

senior leadership roles being held by women, 25% of our team

being people of colour and a 50% drop in carbon emissions,

from 2019 levels; all to be achieved by the end of 2023.

I believe we are firmly on track to deliver our target on senior

leadership roles held by women, having reached 43% by the

end of 2022, and I am delighted to have already hit our 25%

people of colour target and reached a 55% reduction in carbon

emissions (for more information please see pages 21 to 28)

and I look forward to reporting our progress in next year’s

annual report, when we will recommit ourselves to additional

and equally challenging targets for the next three year cycle.

Insurance. Just different

Beazley’s Cyber team took a leading role in the market this

year on the issue of systemic Cyber risk. If the Cyber

insurance industry is to achieve its potential and play its role

in managing and mitigating Cyber risk, it needs to define and

build parameters that will allow insurers to manage their

balance sheet prudently, whilst encouraging more capital to

come into the sector. We are fully committed to supporting

this adjustment to happen. Innovation has come right across

our business, from insuring the first commercial moon rover

vehicle to providing an insurance solution for e-sports events.

In early 2023 we launched the market's first cyber

catastrophe bond, an innovation that will see new capital

come into a cyber market that needs to grow at pace in the

next decade to meet business demand. All have the same

characteristics in common - they require a specialist approach

to insurance as the issues raised are complex; but with the

right investment they offer significant long-term potential.

As you can see from our digital version of this annual report;

beazley.com/2022-annual-report, in 2022 we refreshed our

brand identity to better reflect the age in which we live. Our

fresh look and feel retains the essential qualities for which

Beazley is well known, reflects our three corporate values of

being bold, striving for better and doing the right thing, but

introduces a more engaging and forward-looking approach to

communication which better represents how our business is

growing and changing.

The support of all our stakeholders is key. Brokers are our

first, vital link in the chain, but the purpose of our business is

to help our clients explore, create and build their businesses.

To better achieve this in 2022 we established our client

engagement team which will actively ensure clients have

access to our full product range and our research and

expertise. We see this a two-way process that will allow us to

develop more relevant products and insurance solutions that

better meet the needs of our clients going forward.

As we start 2023, and we see positive market conditions,

Beazley is able to look at that opportunity from a strong

capital position, with a talented and committed team and the

platform strength and product range to deliver for our clients,

brokers and shareholders. For 2023 our growth expectations

are for higher net premium growth than gross premium growth,

with net growing in the mid 20s while gross is at mid teens. 

The difference is caused by us no longer writing portfolio

underwriting through the Group in 2023 (as syndicate 5623

became a standalone syndicate and no longer requires the

Group to cede the majority of the business written to it),

alongside our reduction in purchased reinsurance on both

Cyber Risks and Specialty Risks.  These changes have the

impact of increasing the net premium growth compared to the

gross premium growth. Taking the above into account, we

expect to deliver a high-80s combined ratio for 2023

assuming average claims experience. Although significant

geopolitical headwinds remain, I believe we are in an excellent

position to sustainably grow our company and I am looking

forward to all we will achieve together in 2023.

Adrian Cox

Chief Executive Officer

12 Beazley | Annual report 2022 www.beazley.com

Chief Underwriting Officer’s report

Beazley achieved gross premiums written growth of 14% and a very strong combined

ratio of 89% (2021: 93%). We delivered this impressive underwriting result by executing

against our underwriting strategy of deploying specialist products in markets that value

expertise and are demand driven, combined with an agility to pivot in new directions as

opportunities from changing market conditions emerge.

Balanced underwriting combined with agility

2022 was a year of global dislocation and complexity, but

throughout we remained true to our core values, executing our

ambitious strategy to deliver profitable growth across all lines.

We achieved this by underwriting a balanced book of business

across multiple platforms, with the agility to respond to

changing market conditions. Innovation also remained at our

core with the development of new insurance solutions such as

CryptoGuard and Carbon Offset Invalidation. We also continue

to evaluate and support various parametric Property products

to provide the market with solutions beyond traditional

insurance.

Market conditions moved markedly during 2022. The Directors

and Officers insurance (D&O) market saw competition emerge

and a slow down in IPOs and SPACs, resulting in an over

supply of capacity and lack of demand driving rates down.

Cyber rates continued an upward path, albeit at a more

conservative pace following the much needed price correction

of the previous two years. In Property Risks we have reached a

market turning point, and we anticipate significant rate

increases in Treaty reinsurance and the direct Property market

in 2023. However as the market changes, our approach to

underwriting remains consistent – our focus is on underlying

pricing and risk dynamics, market knowledge and experience,

and standing by our clients.

New structure – more specialism

In March 2022 we restructured our underwriting teams to

improve interconnectivity and achieve synergies. We now have

an underwriting structure of four more equally sized divisions,

which ensures a balanced book of business and is better able

to manage short and long tail drivers of risk and reward.

Bringing together the Property insurance and Reinsurance

teams to form Property Risks, and the Executive Risk and

Speciality Lines teams to create Specialty Risks, has given us

access to deep and broad insights into market dynamics,

allowing us to better anticipate trends, identify opportunities

or raise the alarm if risks are rising.

MAP Risks underwriters are experts in their specialist

products and segments and while the specifics of risk differ

between classes, their clients are sometimes the same and

often face similar challenges, making for an ideal environment

for cross fertilisation of ideas and growth of our underwriting

via our international platforms.

Cyber Risks has exciting growth opportunities ahead as

digitalisation sees demand for Cyber insurance protection

grow exponentially. As a Cyber market leader, we have the

experts in-house who continue to build our comprehensive

Cyber ecosystem and in 2022 led the market wide debate on

catastrophic Cyber, to protect our clients, the market and

shareholders from the growing threat of a Cyber catastrophe.

www.beazley.com Beazley | Annual report 2022 13

Chief Underwriting Officer’s

report continued

Small business underwriting

Alongside these four divisions, Beazley Digital offers cross

class specialist digital underwriting capabilities to the SME

market. Our SME brokers and clients can now access our

expert underwriting team via multiple channels, ensuring ease

of doing business. In its first full year of trading the new

division has experienced significant increased demand.

Data driven specialists

To ensure we continue to add greater insight and build

knowledge and expertise in exposure management and the

use of data, we are actively investing further and adding

specialists to our team. Beazley hired its first Chief Data

Officer in 2022, appointed a Senior Financial Climate Risk

Specialist, and we are focused on building our pricing and

exposure management team. As we make a concurrent

investment into modelling tools, we will continue to need

highly skilled specialists who can turn data into useful tools

and benchmarks for underwriting action.

Agility in action

New structures, platform strength and a high-quality team are

the firm foundations from which we can respond and change

as market conditions move. In the second half of 2022 we

saw movement in Property markets and as rates began to

harden, we were able to optimise our Property portfolio as

both a seller and buyer of reinsurance. Our Property Risks

division will take advantage of this excellent opportunity for

growth as the market is rapidly hardening into 2023. However,

it will do so in the certain knowledge that the ongoing work we

are doing to manage climate risk will mean we are not just

here for short-term gain but to sustainably underwrite this core

class of business.

D&O, long one of our key areas of specialism, has seen

competition come into the market at a point where our

assessment is that the risk landscape remains extremely

high. As a result, when we do not believe the rate justifies the

risk we have pulled back, reduced our appetite as we continue

our disciplined approach to underwriting D&O. This is a

caution we will maintain in 2023, although we believe the

market will likely stabilise with supply and demand coming

more in line.

Our US business continues to grow, and we hit our goal of

$2bn gross premiums written through the platform in

December 2022. Beazley’s ‘Insurance. Just different.’

message resonates strongly in the thoughtful way we

underwrite and the client centric approach we take to claims

in the world’s largest insurance market. Growth also continues

at pace in Europe, where we see significant opportunities and

where we are investing in underwriting expertise. Our Lloyd’s

wholesale platform sees our underwriters leading global

thinking on the challenges our client and brokers face. In

particular, we can be proud of innovations that come from our

specialist teams in this market, such as underwriting the first

commercial insurance policy for projects on the moon.

We underpin our strategy by flexing our reinsurance

purchasing and choosing to retain risk or share it based on

the pricing dynamic. This thinking came to the fore in the

second half of 2022 as we anticipated dramatic changes to

Property Treaty reinsurance rates, and with our November

equity raise, we are well placed to retain more risk and profits

on our own balance sheet rather than extend our use of

outwards reinsurance.

Successful strategy

I joined Beazley just over a year ago because I was impressed

by the quality of the underwriting team and the effective and

considered way in which they execute our underwriting

strategy. In 2022, it was testament to this approach that we

have delivered a 89% combined ratio and seen growth of 14%

despite perhaps the most challenging geopolitical situation in

a generation.

Underwriting focused on rigorous attention to detail and

delivered by a team of experts who question decision making

and actively value challenge and follow up have been key to

this result.

This is combined with an agile approach to seizing

opportunities as they emerge, whilst always keeping the

interests of our shareholders and clients at the forefront of

our minds. These will remain our defining principles

throughout 2023.

Cyber Risks

Cyber Risks continued to see strong rate increases of 40%

(2021: 88%) leading to an increase in gross premiums written

to $1,156.1m (2021: $814.3m).

A successful year

New business was strong across all geographies with our

business outside of our core US client base growing

exponentially. In the US, we are seeing strong demand from

the mid-market segment which is driving ongoing growth.

Outside of the US, demand came from Europe, Asia, Australia

and beyond and we expect this trend to continue as business

becomes increasingly aware of and keen to protect itself from

the Cyber threat. The substantial rate increases we have seen

over the last two years, did begin to moderate during 2022,

but they remained at very significant levels, reflecting the

scale of the challenge that Cyber poses.

Our positive result reflects the good work we have done since

October 2020, to build our Cyber ecosystem, which focuses

on pre-underwriting and post-loss mitigation efforts. In 2022

we also added our threat intelligence and Beazley Cyber

Council to this offering.

14 Beazley | Annual report 2022 www.beazley.com

To reflect the demand we are experiencing and to respond to

that opportunity, the team has continued to grow during the

year, we’ve invested in people, expertise and resources

across the globe. We also made specific investments into

threat and intelligence pilots during 2022, of which, the

successful ones, will become operational during 2023.

Adapting now, to grow tomorrow

We are a market leader in Cyber and we believe we need to

use that position to address the challenges the market faces.

In 2022 this saw us tackle the issue of Cyber catastrophes.

To date no Cyber attack has been big enough to create a

widespread breakdown in essential services; however, we

have modelled the possible scenarios and believe now is the

time to actively build market awareness and the capital

needed to address the threat as the market grows.

Looking ahead, we believe that the flattening of rate increases

will continue through 2023, but we expect that to be a

moderation in what have been substantial, but required, rate

increases over the last two to three years. We expect to see

continued strong new business demand, particularly outside

of the US, where we see the mid-market as the largest area of

growth for our Cyber products and services. In Europe and

across the globe, we are seeing large corporations seek

greater Cyber protection and expect the level of demand to

continue. Our continued focus is on maintaining and

advancing our knowledge and understanding of the Cyber

threat, and maintaining vigilance about the threat actors and

their changing methods of operation as we move forward.

In January 2023 we launched the market's first cyber

catastrophe bond and with strong demand from investors we

expect to be able to launch additional tranches through 2023

and beyond.

Through the equity raise in 2022, we are also looking to retain

more of the business which we write, and capitalise on future

profitability in this division.

Digital

Our profit before tax of $14.4m (2021: $40.6m), reflects the

successful build out of our small business proposition across

our key territories. Demand for our digital underwriting and

distribution capabilities continues to grow and our delivery of

$204.9m (2021: $190.8m) in gross premiums written for our

first year of full operation and combined ratio of 87% (2021:

76%), demonstrate our success.

It is testament to the outstanding work of our team, that in

our first year of operating as a separate division we have

delivered a strong performance. Throughout the year we have

made considerable progress in technology innovation and are

seeing the benefits of a multi-skilled team working across all

lines of business.

Digital started underwriting as a separate division in January

2022. It was created to build on the success of our myBeazley

portal and to respond to demand from clients and brokers for

accessible Digital insurance placement for small to medium

sized risks. Digital gives brokers one Beazley point of contact,

supported by a cross functional team, to access multiple

product lines and digital services via their preferred platform

or channel.

By committing to our strategy of meeting the client where they

want to be met, we are seeing success across all access

points: the myBeazley portal, APIs, on digital market hubs and

our artificial intelligence enhanced email submission

capabilities.

Take up of each channel differs depending on location. In the

US, the prevalent method of placement remains via email, but

through 2022 we have seen a shift to engagement via APIs

and market hubs. In Europe and the UK, myBeazley has

established itself as a key link in the insurance chain, while

for our German business, market hubs or ‘broker pools’ are

increasing in use.

Specialist insurance for small business

We recognise that not all small businesses are the same and

neither are the risks they face. A small manufacturing

business has very different exposures to business interruption

risk than a small financial consultancy. By leveraging the

deep-seated specialist knowledge that we are known for and

that is prevalent across our organisation, we are able to

effectively design and price relevant cover for a myriad of

organisation types and sizes, which can be accessed at the

touch of a button and delivered digitally.

At our core, we have a broad Specialist Lines portfolio,

focused on lines such as Professional Indemnity,

Management Liability, Tech Professions Errors and Omissions,

Medical Malpractice for small scale health and care services

providers, Event Cancellation and Pleasure Craft. During

2022, we have also matured the way we underwrite flagship

products like Cyber for small business, where we are seeing

significant demand and there is an opportunity to grow at

pace.

Growth going forward

We remain confident about our growth trajectory going into

2023 and expect to see moderate rate increases across the

portfolio.

Service is key, and we continue to invest in the people and

technology of our customer success team who support our

brokers with client queries, providing product information, and

transacting business. Similarly, our dedicated territory

manager sales team continues to grow and expand our

distribution by region and by digital channel.

In the year ahead, we are targeting growth in all regions. We

see plenty of opportunity to expand our digital distribution in

the US, and Europe. In 2023, we will also launch the

myBeazley portal in Canada, with the support of our well

establish specialist teams in Toronto, Montreal and

Vancouver.

Although Digital is tailored for the small to medium business

segment, looking ahead, we see opportunities to direct more

digitally placed larger risk business to our complex risk

underwriting teams via channels such as APIs.

www.beazley.com Beazley | Annual report 2022 15

Chief Underwriting Officer’s

report continued

MAP Risks

MAP Risks reported gross premiums written of $1,107.8m

(2021: $897.5m), and a combined ratio of 84% (2021: 85%).

The division is exposed to the war in Ukraine in its Marine,

Aviation, Political Risk and Terrorism lines of business - yet,

despite the claims arising from the conflict, delivered a profit

of $91.6m (2021: $167.5m).

Positive results from specialist team

The 2022 result was impacted by the war in Ukraine, and this

has represented a potentially material loss to our book which

remains unchanged since our 2022 interim report. Despite

this, MAP Risks delivered a profit for 2022, which is a credit

to the expertise and hard work of our team, who have been

focusing on helping clients as they have faced extraordinary

difficulties.

Bringing together Beazley’s Marine division with the Political,

Accident and Contingency division and Portfolio Underwriting

has brought synergies and opportunities for cross selling. Our

specialist underwriting teams are leading members of the

Lloyd’s market and we see positive opportunities to expand

access to their technical skill and sector knowledge by

leveraging our domestic underwriting platforms: in the US and

Europe alongside Asia via our Singapore operation, where

business comes into our Lloyd’s syndicates.

Value of expert underwriting reflected in rates

The rating environment remains buoyant, with an overall rate

increase of 4%, although we are now seeing pressure in some

lines, including Aviation where capacity has returned after

COVID-19. The war in Ukraine has impacted a range of

classes and as a result we have seen significant uplifts in the

rating environment in some of these areas. As a responsible

business we are mindful of the importance of Ukraine as an

exporter of grain, and the negative impact the conflict is

having on world food supplies, and are supportive of market

efforts to assist in facilitating the flow of these vital global

commodities.

2022 saw our Contingency underwriting recover from the

impact of COVID-19 with positive premium growth and, despite

recessionary fears, we expect that trend to continue into

2023.

The value of our Political Risk cover has been fully

demonstrated by the geopolitical turmoil of the past 12

months and we are seeing heightened interest from

businesses looking to protect overseas assets, and the rating

environment remains robust for this class.

Our Portfolio Underwriting business, which is primarily

reinsured to an external special purpose Syndicate 5623, has

delivered three consecutive years of profit. In January 2023,

Syndicate 5623 became a full stand alone syndicate, writing

all Portfolio Underwriting business directly. Beazley will be

providing circa 18% of the capacity for the 2023 year of

account for this syndicate.

ESG Syndicate 4321 launched in the year and wrote $10.5m

of premium which the Group has a 10% share of. The

syndicate provides additional follow capacity across several

different classes of business to over 250 Beazley clients with

a strong ESG rating since January 2022, building momentum

through the year. A unique offering, the ESG consortium has

been particularly successful for clients actively seeking to

include ESG within their insurance programme and we have

registered strong take up for both Financial Lines and Cyber

clients in particular, and we are exploring growth opportunities

in Europe.

Our specialist underwriters continue to innovate in established

lines, be it on Marine, Cyber, embedding ESG principles and

helping clients transition to net zero, or in underwriting the

first commercial insurance on the moon and acting as the

leader in the development of insurance for commercial space

ports.

While there are rating pressures beginning to be felt in some

classes, the geopolitical turbulence of the last 12 months only

serves to demonstrate the importance of the specialist

insurance and sector expertise that our underwriters

consistently deliver.

Property Risks

2022 saw the combining of our Property insurance and

Reinsurance business. Non-catastrophe exposed business

performed well contributing to an increase in gross premiums

written to $859.8m (2021: $812.6m). Hurricane Ian has, in

line with expectations for such a large event, dampened our

overall result, which nevertheless saw the combined ratio

improve to 98% (2021: 106%).

The success of work painstakingly done in recent years to

address the impact of climate events and refine our risk

selection, has seen the book progressively improve. With

market conditions reaching a pivot point during 2022, we are

now in a great position to reap the rewards. While Hurricane

Ian will see a claims burden in the range of a $120m net loss

and has undoubtedly had an impact on the 2022 result, we

comprehensively plan for events of this size, and it falls within

our expectations for such an event.

Ready for the future

The combined expertise of our Property insurance and

Reinsurance teams is allowing us to look across our portfolio

strategically and benefit from both detailed site level insights

and high-level trends, giving us a bird’s eye view of market

dynamics. Over time we believe this bottom up and top down

approach will deliver competitive advantages as we address

the sector’s challenges of which climate change is perhaps

the most urgent.

Throughout 2022 we continued to further our understanding of

and implement enhancements to our underwriting approach

and analysis around climate risk. We believe we are ahead of

the curve, having actively invested in modelling tools and

taking steps to embed the learnings into our underwriting

processes. We are also making strides in regards to the

impact of climate change on non-modelled perils such as

wildfire, flood, and severe convective storm.

Our non-catastrophe business continues to benefit from the

work we’ve done in the last few years to improve risk

selection. A key driver of that has been the use of better,

more insightful, modelling and tools. In particular, we released

a new dynamic Property underwriting tool that provides the

16 Beazley | Annual report 2022 www.beazley.com

teams with the ability to analyse, model and rate all aspects

of a risk at a location level with an informed view.

A significant opportunity

These focused efforts have put us firmly on the front foot to

strongly build our Property premium base through 2023 - not

just as we respond to an immediate and much needed

improvement in the rating environment, but for the long term.

As the rating environment remains favourable we will lean into

the market opportunity; the equity raise of November 2022,

has given further charge to this effort as we anticipate

Property Treaty rate increases of up to 50% and over 15% in

the direct Property book during 2023.

In contrast, as a buyer of reinsurance we are seeing an

increase in costs; but balanced against the overall benefit of

more effective market pricing and our dual role as a Property

reinsurer, we believe this environment creates excellent

opportunities for Beazley as a leading specialist Property

insurer.

Specialty Risks

Specialty Risks achieved gross premiums written of

$1,940.1m (2021: $1,903.7m) with rate increases of 2%.

The combined ratio improved to 93% (2021: 95%). Through

2022 we achieved synergies and gained insights as we

brought together our Executive Risk and Specialty Lines

teams.

Specialty Risks offers scale and diversification over 27

different product lines, across global geographies, serving

insureds from SME’s to the world’s largest companies. Our

distribution methods are equally diverse and include; broker

partners along the insurance value chain, coverholders,

delegated authority arrangements and reinsurance. This not

only creates a truly diversified book of casualty business but

actively offers diversification benefits to Beazley as whole.

The newly combined division leverages its expertise and

interconnected broker relationships to deliver strong and

effective cycle management across our diverse book, by

pushing and pulling the relevant levers of geographies,

platforms and products and moving our focus as market

conditions evolve and change.

Active cycle management

Our focus on active cycle management lets us see where risks

are growing, or the rating environment is becoming

unattractive and move swiftly to protect that business area.

A good example of how this works is in the current D&O

market cycle. We avoided growing in the depth of the soft D&O

market by methodical underwriting, and when the market

changed direction in 2020/21 we stepped up and seized the

opportunity. As conditions have moderated since the second

quarter of 2022, we’ve become more selective on rate and in

some instances, reduced our appetite. We are hopeful that

conditions will stabilise during this year and we will adjust our

underwriting as opportunity emerges.

This year we’ve seen growth across areas where innovation

plays a key role, such as our Safeguard Product and Beazley

Product Solutions embedded reinsurance segment. Here we

take a market leading position in these smaller or niche lines

and invest significantly, giving them airtime to grow at pace.

This approach sees us able to move swiftly into new or

emerging areas where growth potential and client demand is

high for Beazley's unique solutions. Another new area for

2022 was our geographic expansion of Product Recall to

Singapore alongside our overall Specialty Risks growth in the

Asia Pacific region.

Outperformance is our focus

Discipline is the watch word of our approach to underwriting;

while growth makes the headlines, profit is the real mark of

success. The current economic environment is challenging but

the hard de-risking work we undertook during the last

recession gives us confidence that we are well placed at the

start of 2023.

Our underwriting capabilities are fully demonstrated by how we

behave at these moments and this includes leveraging our net

growth and varying our reinsurance purchasing, to ensure we

deliver market share and a positive result in any given year,

regardless of market conditions. Our November equity raise

will see us keep more of our carefully selected risk within our

own business rather than purchase additional, more

expensive, reinsurance thus maintaining our outperformance.

It takes discipline to leave our egos at the door, invest in

future business areas and to pull back on some of our most

respected classes of business if the rating environment is

wrong.

However, this mantra is key to our strategy of growing in a

smart, sustainable way.

Bob Quane

Chief Underwriting Officer

www.beazley.com Beazley | Annual report 2022 17

Performance by division

Growth across all of our divisions, with two divisions growing in double digits.

Growth of managed gross premiums written by division $m

18 Beazley | Annual report 2022 www.beazley.com

www.beazley.com Beazley | Annual report 2022 19

Performance by division continued

20 Beazley | Annual report 2022 www.beazley.com

Responsible Business

Our vision is to be the highest performing sustainable specialist 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 local and global 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 not only 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.

On pages 29 to 49 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. In the following pages we have

set out our key responsible business metrics for 2022.

Building a responsible culture

We define our culture, through our brand and values which

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.

We are proud of our culture, which is embodied by our

people. We attract and nurture curious people, that value

constructive challenge and a collaborative approach to

problem solving. We provide an environment where this

approach can thrive by creating an inclusive culture, true to

our values, to ensure our success now and for the future.

Together our people and culture make it easy to do

business with Beazley.

Inclusion and Diversity

Our culture and people strategy is underpinned by our

approach to inclusion and diversity, which is powered by

our 5 employee networks. These play an important role in

embedding our inclusion and diversity strategy, ensuring

that colleagues right across our company have clear

channels through which their voices can be heard.

•Beazley Families – Our newest network supports parents-

to-be and experienced parents on the parental journey in

the company

•Beazley Proud – Our LGBTQ+ employee network

•Beazley RACE – Focused on raising awareness 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.

www.beazley.com Beazley | Annual report 2022 21

22 Beazley | Annual report 2022 www.beazley.com

www.beazley.com Beazley | Annual report 2022 23

24 Beazley | Annual report 2022 www.beazley.com

www.beazley.com Beazley | Annual report 202225

Responsible business continued

Inclusion & diversity

Inclusion and diversity are a key element of being a responsible business. 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 five 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.

Network Activity

The five networks are:

Beazley Families – Our newest network supports parents-to-be and experienced parents focusing on enhancing the support

and resources available for those on the parental journey.

Beazley Proud – Our LGBTQ+ employee network.

Beazley RACE – Focused on raising awareness and celebrating People of Colour.

Beazley SHE – Our women’s network.

Beazley Wellbeing – Seeks to create supportive content to help break the stigma around talking about mental health.

Climate change

For more information please see page 29.

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 2022 we continued to use our environmental management

system and leveraged ESG data to appraise and inform our procurement decisions.

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 very high 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.

Non-financial information statement

Beazley presents its non-financial information statement in compliance with sections 414CA and 414CB of the

Companies Act 2006.

Certain aspects of the non-financial information required pursuant to the Companies Act 2006 is provided in this report

by cross reference to the following locations:

Non-financial information	Section	Pages
Business model	Our business model	4
Principal risks	Risk management and compliance	67
Key non-financial performance indicators	Key performance indicators Responsible business metrics	2 22

26 Beazley | Annual report 2022 www.beazley.com

Policy embedding, due diligence and outcomes

We have a range of policies in relation to environmental matters, employees, human rights, social matters 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 key performance indicators is an important way in which we measure the

effectiveness of our strategy and associated policies. The Board ensures that the relevant policies are in place, remain

appropriate and are operating effectively through setting a review cycle for the key policies. As part of this process, the key

policies are reviewed by the person within Beazley who is the subject matter expert and responsible for the policy. This may

include obtaining external advice, where appropriate. The Board also reviews and approves the key policies annually or

bi-annually, as well as reviewing non-financial information, KPIs and other monitoring data through its regular reporting.

Our key non-financial policies, a brief description of their purpose and any important outcomes from our due diligence

processes during 2022, are set out in the table below.

Reporting requirement	Policy or standard, its purpose, and outcomes	Relevant non-financial KPIs and other metrics	Further information
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.	Environmental policy Details our approach to environmental matters aligned with ISO14001:2015 and is reviewed every two years, with the next review by the Board in 2023. 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. Responsible investment policy This financial policy sets out how environmental, social and governance matters are incorporated into investment analysis and decision-making processes.	Weighted average carbon intensity of corporate bond and equity portfolios Overall carbon emissions Greenhouse gas emissions per full time equivalent Energy procured from certified renewable sources	Responsible business (page 21) TCFD (page 29) Section 172 statement (page 57) Directors' report (carbon emissions) (page 144)
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.	Inclusion and diversity policy and Board inclusion and diversity policy These policies cover Beazley’s commitment to creating a truly inclusive environment that operates zero tolerance to discrimination or harassment and fully supports and celebrates differences. The Board’s inclusion and diversity policy was adopted in 2022, and specifically sets out how the Board can use its influence in meeting our diversity objectives. 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 of the policies and procedures for employees in their local jurisdiction and includes items such as our equal opportunities policy, policy for employees with disabilities, and parental leave amongst others. The employee handbooks are owned by the Head of Culture and People and are kept up to date with changing legislation globally through regular review both internally and externally. 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 information, associated risk assessments and accident reporting. All employees receive a health and safety induction on training and refresher training where required.	Female representation in senior leadership roles People of colour representation in the workforce Employee engagement score Employee favourability score	Responsible business (page 21) Stakeholder engagement (our people) (page 50) Nomination Committee (inclusion and diversity) (page 104)

www.beazley.com Beazley | Annual report 2022 27

Responsible business continued

Reporting requirement	Policy or standard, its purpose, and outcomes	Relevant non-financial KPIs and other metrics	Further information
Human rights Beazley is committed to respecting human rights and human rights are integrated across our responsible business strategy.	Human Rights policy In 2022, we introduced a new Human Rights policy. The 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 plc 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 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 follow applicable standards, and 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 other appropriate policies in place. 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. Responsible business strategy See above under environmental matters.	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.	Responsible business (page 21) Stakeholder engagement – suppliers (page 54) Modern Slavery Act statement (our website)
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. We also partner with a chosen charitable organisation on a rotating basis, to allow us to have a deeper relationship with the chosen partner and a greater impact on our communities. The policy sets out the approach taken to charity and community donations, including matched funding, and ensuring organisations receiving donations are registered charities and do not operate discriminatory policies. Responsible business strategy See above under environmental matters	Number of hours volunteered and charitable donations (to match responsible business metrics).	Responsible business (page 21) Stakeholder engagement (communities) (page 54)
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.	Financial crime policy In 2022 our policies in relation to anti-corruption and anti-bribery were combined into one policy: Beazley Financial Crime Policy. This policy 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.  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. All of the 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 has been vital during 2022 in keeping our business protected during a time of increased geopolitical uncertainty and sanctions in connection with the Russia-Ukraine conflict. 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. Whistleblowing Policy We operate a separate 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. During 2022, following review, an independent whistleblowing hotline was introduced as an additional method for the workforce and others to report concerns. The policy was enhanced using external guidance and benchmarking. 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 Chair of the Audit Committee is the whistleblowing champion.	The Board does not monitor any non- financial KPIs in relation to these policies, however the Board and relevant committees receive reporting and updates from Compliance, which includes monitoring data including information in relation to any breaches.	Risk management and compliance (page 67) Audit and Risk Committee (page 91)

28 Beazley | Annual report 2022 www.beazley.com

Task Force on Climate-related

Financial Disclosures (TCFD) 2022

1. Governance

1.1 Board oversight on climate-related risks and opportunities

1.1.1 plc Board oversight

A summary of Beazley’s corporate governance structure, the general responsibilities of the plc Board and plc Board

Committees, on behalf of Beazley plc, are outlined on page 80 of this report.

A description of how the plc Board, and supporting Committees, have oversight of climate-related issues, is set out in the table

below. Board members are informed through a combination of Board papers, training and awareness. The corporate governance

team support the Chair of the relevant Board/Committee in putting in place a yearly agenda plan and agreeing the agenda for

each meeting.

Board/ Committee	Description of how climate-related matters are considered
Plc Board	The plc Board considers climate-related matters as part of the annual process to approve: •the risk framework; •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 Throughout the year the plc Board monitors progress against the goals and targets set to address climate-related issues, through update papers provided primarily from the following functions: responsible business, risk and underwriting.
Beazley plc Audit and Risk Committee	The plc Board has delegated oversight of the risk management framework to the Audit and Risk Committee. Committee responsibilities include overseeing the effectiveness of the risk management framework at Beazley, of which climate-related risk is one element. In 2022, the Committee reviewed the draft TCFD report and accompanying improvement report. A paper providing an update on the development of TCFD reporting was also reviewed. One audit on TCFD reporting was undertaken during the year, for which the audit findings were sent to the Committee for review. On 9 December 2022 The Board approved the proposal to replace the Audit and Risk Committee with a separate Audit Committee and Risk Committee from 1 January 2023.
Beazley plc Nomination Committee	The Committee considers the current and anticipated future needs of the organisation to operate effectively. Given the growing importance of climate change, this is a consideration in assessing candidates for future Board and senior executive positions. The Committee also recommends, for approval by the plc Board, the annual board knowledge and training plan. Climate-related matters can form part of this plan.
Beazley plc Remuneration Committee	This Committee is responsible for ensuring climate-related risk is considered within executive remuneration. Evidence that this occurs is documented within each Executive Director’s remuneration scorecard, where climate-related risk matters are considered as part of Beazley’s wider approach to ESG. Remuneration is reviewed on an annual basis.

1.1.2 Training and awareness

The culture and people team are responsible for maintaining

both board skill matrices and the annual board training plan.

To facilitate increased knowledge on climate-related matters,

and thus enable The Board to make informed decisions,

Board members receive additional training and awareness

throughout the year. The scope of this training and awareness

is shaped by a combination of emerging trends and market

developments, stakeholder expectations, progress against

Beazley’s Responsible Business Strategy, and regulatory

demands. In 2022, The Board received an awareness raising

session on Beazley’s proposed expected future state

scenario. Sessions on the impact the transition to net zero

will have on key sectors were included as part of the 2022

Board away day.

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, and

ensure the subsidiary company is operating in accordance

with both legal and regulatory requirements and relevant

Beazley Group policies and procedures. These entities are

more insurance-risk-focused than the plc Board, and therefore

the impact of climate-related risk on underwriting is

considered in greater detail at these Boards.

The subsidiary Boards consider climate-related matters as

part of the annual process to approve the risk framework and

ORSA. Further updates on climate-related matters are also

provided throughout the year, via the Responsible Business

report.

www.beazley.com Beazley | Annual report 2022 29

TCFD 2022 continued

1.2 Summary of management’s role on climate-related matters

1.2.1 Key individuals at Beazley for climate-related issues

At management level, the responsibility for ensuring climate-related issues are managed/ assessed is covered by

a number of roles across the organisation. In summary these are as follows:

Responsible individual	Summary of engagement
Chief Executive Officer (CEO)	The CEO provides a quarterly update to The Board and Executive Committee summarising discussions at the responsible business steering group. This is contained within the CEO report. The CEO is an Executive Director, and a member of both the plc Board and Executive Committee.
Chief Risk Officer (CRO)	The CRO has responsibility for risk management framework, of which climate-related risk is one part. They provide updates on risk matters (including climate-related risk) to the plc Board, Executive Committee, and Audit and Risk Committee. The CRO is a member of the Executive Committee. The role of senior management function (SMF) for climate-related risk is split within Beazley between the Chief Underwriting Officer (CUO) and Chief Risk Officer (CRO).
Group Finance Director (GFD)	The GFD provides updates on the financial performance of the company (including investments and capital) to The Board, Executive Committee and Audit and Risk Committee. The GFD is an Executive Director, and a member of both the plc Board and Executive Committee.
Chief Underwriting Officer (CUO)	The CUO has responsibility for ensuring climate-related matters are embedded within the underwriting process. The Head of Financial Climate Risk and Head of Exposure Management report into the CUO. The CUO has ownership of 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, Executive Committee, Audit and Risk Committee. The CUO is a member of Executive Committee. The role of senior management function (SMF) for climate-related risk is split within Beazley between the CUO and CRO.
Chief Operating Officer (COO)	The COO has responsibility for business operations, which includes office energy consumption; managing data demands for the business (including the use of data centres); and procurement.
Group Head of Strategy	The Group Head of Strategy has responsibility for overseeing the delivery of Beazley’s business strategy. The Head of Incubation and Head of Responsible Business report into this role. The Group Head of Strategy provides updates on at least an annual basis to the plc Board and Executive Committee in respect to business strategy. The Group Head of Strategy is a member of the Executive Committee.
Chief Investments Officer (CIO)	The CIO 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 Capital	The Head of Capital oversees the assessment of climate-related capital requirements. They do this using modelled and non-modelled information to help determine the impact of climate change on the business. The Head of Capital reports into the Executive Committee and plc Board on a regular basis. The Head of Capital provides updates on a quarterly basis to the plc Board, Audit and Risk Committee and Executive Committee in respect of capital. This includes the allocation of capital to address the potential impacts of climate-related events occurring and Beazley being liable for insurance claims.
Head of Responsible Business	The Head of Responsible Business leads on the development and delivery of the objectives set within the Responsible Business Strategy, including those in relation to climate-related responsibility. They also ensure all ESG and climate-related disclosures are delivered in line with regulatory and voluntary requirements. The Head of Responsible Business provides a quarterly update 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, climate- related risk, climate-related responsibility, and an overview of items discussed at the responsible business steering group. An annual update is also provided to the Audit and Risk Committee.
Head of Financial Climate Risk	This role was created in 2021 to firstly deliver the CBES return and then to become part of the business as usual approach to managing climate-related financial risk. Their responsibilities include overseeing the day-to-day delivery of embedding climate-related risk into underwriting, coordinating climate risk activities and initiatives across business functions, and providing subject matter expertise to strengthen Beazley's technical capabilities of managing climate risk. This role reports to the CUO, and also reports to the Underwriting Committee and Responsible Business Steering Group on a quarterly basis.

30 Beazley | Annual report 2022 www.beazley.com

Responsible individual	Summary of engagement
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. The Head of Compliance reports into the CRO.
Head of Internal Audit and internal audit department	The Head of Internal Audit is responsible for overseeing a robust audit function within Beazley. From the perspective of climate-related matters, this role holds the responsibility for ensuring appropriate audits are undertaken on underwriting functions, investments and TCFD disclosures.
Head of Exposure Management	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 exposure management team is supported by the Head of Financial Climate risk.

1.2.2 Summary of management-level

reporting structure

To help the business address climate-related issues, the roles

outlined in 1.2.1 report into a number of different committees,

steering groups and working groups. A brief description of

these committees, steering groups and working groups is as

follows:

Executive Committee

The Executive Committee is responsible for: managing all

operational matters of the Group; reviewing the risk

management framework; and having oversight of the Group's

sub-committees and business functions. The Executive

Committee receives updates throughout the year on both

climate-related matters and ESG issues. Throughout 2022,

and prior to the plc Board for final sign off, the Executive

Committee has approved the updates to Beazley’s

Responsible Business Strategy, its ESG disclosures, and

TCFD report. It also reviewed applications to join global

sustainability initiatives for the insurance industry such as the

Net Zero Insurance Alliance (NZIA) and Sustainable Market

Initiatives (SMI) Terra Carta. In these instances, the matters

have been discussed at the Responsible Business Steering

Group (RBSG) prior to being submitted to the Executive

Committee.

Responsible business steering group

The RBSG is scheduled to meet 11 times during the year. The

RBSG oversees the delivery of responsible business across

Beazley, monitoring progress against the objectives set out in

the responsible business strategy. It provides a forum for

strategic matters relating to ESG and climate-related issues to

be discussed, and knowledge to be shared. In 2022, agenda

items have included: progress updates from the climate risk

working group and ESG in underwriting project; reviewing the

application to join the NZIA and SMI Terra Carta; reviewing

progress against key climate-related KPIs e.g. GHG emissions;

and the finalisation of the annual responsible business

strategy refresh. The RBSG is chaired by the CEO, and

attended by the Chief Risk Officer, Chief Underwriting Officer,

Chief Operating Officer, Group Head of Strategy, Head of

Responsible Business, Head of Financial Climate Risk, and

investment manager responsible for ESG matters. On a

quarterly basis, Non-Executive Directors from across the

Beazley plc Board and key regulated subsidiaries are also in

attendance. This provides a further link between management

and the plc Board on climate-related matters.

The RBSG's role is to provide recommendations to the

decision-making Committees within Beazley i.e. Executive

Committee, Underwriting Committee, Investment Committee.

There is often dialogue between the RBSG and these

Committees/Boards, which demonstrates that responsible

business matters are becoming embedded across the

organisation.

Investment Committee

Chaired by the Group Finance Director, this Committee is

responsible for overseeing the investment strategy, and

ensuring there is a robust framework and appropriate

resources to deliver against this strategy. It is also

responsible for ensuring investment risk aligns with overall

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. Beazley

has undertaken to invest up to $100m of its assets in

investments with a measurable social and/or environmental

impact and the Committee is responsible for reviewing and

approving these impact investments.

www.beazley.com Beazley | Annual report 2022 31

TCFD 2022 continued

Underwriting Committee

The Underwriting Committee is responsible for monitoring

progress and ensuring the delivery of underwriting, claims

and reinsurance business plans. Chaired by the CUO, the

Underwriting Committee includes representation from the

underwriting teams, the Group Head of Claims, the Group

Actuary, Chief Risk Officer, Group Head of Strategy, and Digital

Head of Underwriting. Within its remit is a responsibility to

ensure ESG, with prominence given to climate risk and

opportunities, is implemented as efficiently as possible within

underwriting. The Underwriting Committee has ultimate

oversight and decision- making power on climate-related risk

matters related to underwriting. As a minimum, a quarterly

update to the Underwriting Committee is made by the Head of

Responsible Business, who summarises key discussions at

the RBSG, updates are also provided by the Head of Financial

Climate Risk on climate-related risk matters. The Underwriting

Committee reports into the Executive Committee on a monthly

basis, with the outputs summarised within the Chief

Underwriting Officer’s report.

Underwriting sub working groups

Feeding into the Underwriting Committee are the following

working groups:

Physical damage exposure management group (PDEMG)

This group is responsible for monitoring: the natural

catastrophe risk appetite set by the plc Board; the 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 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 reports to the

Underwriting Committee on a monthly basis.

Casualty and Cyber Management Group (CCMG)

The CCMG has responsibility for the Group view of Cyber and

Casualty risk written within the underwriting teams. This

includes how climate change can impact the underwriting. The

CCMG provides governance for climate litigation scenario

development and monitoring. The CCMG reports to the

Underwriting Committee on a monthly basis.

Climate risk working group (CRWG)

This group was set up following the delivery of the CBES

return in 2021, to further embed climate-related risk into the

underwriting process. The CRWG's work forms part of the

climate risk strategy, as approved by the plc Board. In 2022 it

has been chaired by the CUO and its 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 four divisions. The CRWG meets monthly and

oversees and tracks climate risk projects and activities in

relation to underwriting risk. The CRWG reports into the

Underwriting Committee and RBSG on a quarterly basis.

ESG in underwriting project group

This group was established to oversee the further embedding

of ESG matters within underwriting. Its work includes:

•Enhancing data collection within the underwriting process to

facilitate the collection of 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.

This project group reports to the Chief Underwriting Officer,

with regular progress updates also provided to the

Underwriting Committee and RBSG. its membership includes

the Head of Financial Climate Risk, the Head of Responsible

Business, and underwriting representatives from each of the

four divisions.

Risk and regulatory Committee

The plc Board has delegated executive oversight of the risk

management department to the Executive Committee, which

in turn has delegated immediate oversight to the Risk and

Regulatory Committee, which meets monthly. The roles,

responsibilities and oversight of this Committee are further

discussed in the risk section.

32 Beazley | Annual report 2022 www.beazley.com

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 Beazley’s

approach to business planning, the type of products Beazley provides, and the investment decisions the company makes.

These time horizons are outlined in the table below, along with a summary of climate-related issues which could potentially

have a material financial impact on the company within each timeframe. The summary of climate-related issues is based on a

general review of external research and information. A more detailed review of how climate-related risks specifically apply to

Beazley over the three time horizons will be developed in 2023.

Time horizon	Description
Short term (1 year)	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
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. Some emerging risks may crystallise over several years. Through the medium term, 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. Liability related claims associated with a failure to prepare or adapt to climate change are expected to increase in severity and likelihood. Transitional issues are also expected to arise over the medium term, whether from policy intervention, market forces, or technology advances. Some of Beazley's strategic objectives are typically set over the medium term to deliver the strategy.
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

It is acknowledged that climate-related issues are likely to manifest more over the medium and long term. As set out in the

table below, Beazley uses a variety of qualitative and quantitative tools to help manage and prioritise our approach to climate-

related risks and opportunities. This ensures we can prioritise those with the most material financial impact.

Processes used to identify risks and opportunities	Description
Materiality assessment process (hereafter referred to as the materiality assessment)	Using 2020 written premium and modelled losses, in 2021 Beazley undertook a materiality assessment by country and physical risk peril. The outputs of the materiality assessment determined that the US is the most material geographical location, and the material perils are US tropical cyclone, US inland flood, US wildfire, US severe convective storm, US winter storm, European windstorm, and Japan tropical cyclone.
Scenario analysis	Beazley participated in the CBES Stress Test in 2021, the results of which have been used to inform Beazley’s identification of climate-related risks. The outputs of this exercise are discussed later in this disclosure. Beyond the physical peril analysis, climate litigation risk was identified as a material risk to Beazley, given our exposure on specialty risks. Climate litigation risk will continue to be reviewed by a cross-functional team at Beazley. We are engaging with a third-party expert that could assist us with reviewing and challenging our scenario development and analysis, and wider thinking on climate litigation risk
Focus group deep dives	In 2022, Beazley commenced a strategic project to further embed ESG considerations within the underwriting process. To facilitate this, the project engaged with each underwriting focus group, through a series of deep dive workshops, to help identify both the risks and opportunities associated with ESG issues. A number of these opportunities are linked to climate-related issues. The output of this work has informed the project objectives for 2023.
Wider peer and investor engagement	As part of our wider approach to responsible business, Beazley is involved in a number of market initiatives. This engagement enables us to identify emerging workforces and disclosure requirements. This work is also supported by feedback from our investors on ESG matters. The outputs of this correspondence can be found within our responsible business strategy and ESG disclosures.

www.beazley.com Beazley | Annual report 2022 33

TCFD 2022 continued

2.1.3 Process to identify climate-related opportunities with a material financial impact

Beazley has a number of processes to identifying  climate-related opportunities with a material financial impact. These

processes complement one other, and which ones we use depends on their alignment with existing products and services, the

knowledge required to ascertain the size of the opportunity, and the resources required to deliver the opportunity. In summary,

therefore, this means that climate-related opportunities can be identified through the mechanisms described in the following

table:

Method of identification	Description
Identified as a result of determining a risk	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.
Incubation process	The Incubation Underwriting team develops new products that sit outside of existing underwriting team business plan and appetite. New product opportunities are 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 meet the threshold to pursue further, the incubation team will engage with experts within Beazley before presenting the opportunity to the head of strategy and the underwriting strategy manager. Following feedback from these internal stakeholders, a decision paper is prepared. 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. If suitably ‘proven’ in the underwriting pilot, and following approval, the opportunity will be handed over to an existing Beazley team, where suitable. Currently the Incubation team is investigating solutions for 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	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.

2.1.4 Summary of risks and opportunities

identified

Physical climate-related risks and opportunities

Based on the materiality assessment, the US was determined

the most material geographical location in which the Group

operates and underwrites. The material perils are US tropical

cyclone, US inland flood, US wildfire, US severe convective

storm, and US winter storm. Perils not related to the US are

European windstorm, and Japan tropical cyclone, which are

material to our Property and Treaty underwriting business.

The opportunities related to these areas for Beazley lie, in the

first instance, in further developing our understanding of these

perils and the impact they may have on the business. By

enhancing our understanding of the risk and being able to

improve the quantification of this this risk then we will be able

to better mitigate the risk. Such mitigation measures may

include; better risk selection and pricing; diversification of our

underwriting portfolio to avoid any material risk concentration

thus optimizing our portfolio to increase underwriting

performance; better transfer of the risk through reinsurance;

supporting our clients to mitigate climate risk and improve

their risk management.

Liability-related climate risks and opportunities

Climate liability risk could be a material risk given Beazley’s

exposure on speciality risks. We continue evolving our

understanding of climate liability risk, and understanding how

our policy wording could respond to climate liability scenarios,

and engaging with clients to understand the risks better. This

risk could also bring products and services opportunities that

we will keep exploring.

Transition-related climate risks and opportunities

For Beazley, it is important to support a just transition to a net

zero world. Whilst there are risks associated with the

transition, opportunities are also available in this area for

Beazley. These opportunities include Beazley developing its

own transition plan, incubating products which provide

coverage for clean/green technology, and supporting our

clients as they begin their transition. From an investment

perspective, seeking to align our investment portfolio with a

1.5 degree Celsius pathway is important, and work has been

undertaken to help establish the current alignment of our

investment portfolio.

34 Beazley | Annual report 2022 www.beazley.com

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, in

respect of developing long-term value for Beazley. We do not

see this value just in being their insurer, but in the

partnerships we can create to support our clients as they

themselves address climate-related risk. Both Beazley’s

climate risk strategy, and wider responsible business strategy.

help set out how we manage our material climate-related risks

and opportunities. A summary of our approach to climate-

related matters across our underwriting, investments and

operations and how they are helping to inform our strategy is

provided in the following section.

2.2.1 Developing Beazley's plan for the

transition to net zero

The transition to net zero is an important topic for Beazley,

and cuts across our approach to our operations, investments

and underwriting. The development of the first iteration of our

transition to net zero plan will be completed in 2023, and will

form a key part of our strategic approach to ESG and climate-

related matters going forward. This plan can be broken down

into three key areas:

Underwriting

In 2022, Beazley became a member of the NZIA, which is an

industry initiative led by the United Nations Environment

Program Finance Initiative (UN EPFI) to develop an appropriate

methodology for measuring the apportioned GHG emissions

arising from the underwriting portfolio. The methodology - the

NZIA target setting protocol 1.0 was published in January

2023, and will enable all NZIA members to develop their first

round of targets relating to the decarbonisation of the

underwriting portfolio by 2050. As a condition of continued

membership of the NZIA, Beazley is mandated to publish its

first target by the end of July 2023, for which work has already

commenced.

Operations & Investments

Beazley has also committed to adopting a Science Based

Targets initiative (SBTi) target. The SBTi methodology is a well

established framework by which Beazley can set a credible

pathway for the decarbonisation of our operations and

investments to near to net zero emissions by 2050. In

accordance with the SBTi requirements, the plan will set a

number of clear qualitative and quantitative targets, at a

maximum of five year intervals, for both the operations and

investments.

In brief, for the operations element, this will include the

continued decarbonisation of the material GHG emissions

generated by Beazley across our Scopes 1, 2 and 3. This plan

will build on the GHG reductions the Group has already

achieved, as reported within the Metrics section. For our

investments, our initial transition plan will cover our approach

for the decarbonisation of the relevant asset classes set out

within the latest version of the SBTi finance sector guidance.

This work will build on the metrics reported in the Metrics

section of this report. We will of course, look to expand the

reporting of the emissions arising from our investments as

and when new guidance is published for asset classes not

currently covered within existing methodologies, i.e. sovereign

bonds.

For the elements of our transition plan which can be verified

by the SBTi, Beazley has set the objective to achieve this

verification by the end of 2023.

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,

approaches. The strategy covers four key areas:

•embedding climate risk into underwriting;

•underwriting product opportunities;

•risk mitigation; and

•financial stewardship

Approach to embedding climate risk into underwriting

The CBES stress test conducted in 2021 has moved us forward in the work required to fully embed climate-related matters into

underwriting and has triggered a series of key projects and activities, all of which are overseen by the CRWG. A summary of

progress is as follows:

Initiative	Summary of progress and plan for 2023
1. Strengthen catastrophe modelling capabilities and develop forward looking view of risk	In 2022, we validated and implemented a US hurricane climate-change-conditioned model for use as our view of risk for 2023. This takes account of the fact that hurricane risk is elevated due to climate change and allows us to develop a forward-looking view of risk. This view of risk for US hurricane is implemented in portfolio management, pricing, and capital setting. We also validated the US wildfire model during 2022 and the model is planned to be implemented in 2023. In 2023, we also plan to further review US hurricane climate change impacts including storm surge and tropical cyclone induced flooding to update our view of risk. For US wildfire and inland flood, we will continue evaluating the models and develop a forward- looking view of risk. We will also continue strengthening our modelling approach for other key perils.
2. Develop climate adjusted pricing for key perils	In 2022, we introduced key peril model calibration pricing. We introduced climate loss trends in pricing for US wildfire, US inland flood at the end 2022, and US hurricane in January 2023. In 2023, we plan to review and incorporate other key peril climate loss trends (US hail, US tornado, and US winter storm). We plan to investigate and evaluate whether catastrophe model outputs for US wildfire and inland flood could be used in pricing. If they are proven to be better than the current climate risk models used in pricing, we will incorporate the catastrophe model outputs for US wildfire and inland flood into the pricing tool and provide underwriters with training to help them understand any changes in pricing methodology and outputs.
3. Develop underwriting climate change metrics	We developed a climate change metric on US hurricane risk during 2022 to be implemented in January 2023 into our key property pricing tool. This metric has been developed by 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 is to be implemented first, given that it is the most material peril. This metric will help underwriters understand future climate change impact in the assessment of their portfolio, which will support underwriting decision-making. At this stage it will not impact the modelled premium as this is already captured in the hurricane adjusted climate loss trends. This metric could also be shared with clients to support client engagement. During 2023, we plan to embed this metric into the underwriting process and provide training to underwriting teams to understand uses of this metric and how it can be used in underwriting. Additionally during 2023, we also plan to review and evaluate the third-party climate-change- conditioned data and scores, and develop and incorporate into the pricing tool climate change metrics for other key perils.

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TCFD 2022 continued

Initiative	Summary of progress and plan for 2023
4. Portfolio management: develop and implement catastrophe optimisation framework and tools	In 2022, we developed a catastrophe optimisation framework and tool. This framework and tool enables underwriters to optimise the US property risks portfolio using risk appetite metrics and performance metrics. This allows underwriters to manage their portfolios dynamically and make decisions on where we would like to expand or retract our exposure to optimise the overall portfolio. In 2023, we will implement this framework and tool and proactively manage the US property risks portfolio using the optimisation tool. We will consider how climate risk can be further incorporated into the framework and tool.
5. Climate litigation: scenario development	In 2022, we have developed an internal realistic disaster scenario on greenwashing to assess and quantify the potential impact of greenwashing and consider actions needed to mitigate this risk. In 2023, we plan to work with a third party partner that could assist us with reviewing and challenging our scenario development and analysis, underwriting questions development, wording impact assessment, and our wider thinking on climate litigation risk.
6. Wording analysis	An analysis of wording was carried out in 2022 to investigate if there were any potential ambiguities of peril coverage in underwriting policies.
7. Development of climate change risk assessment framework	To enhance our approach to defining material issues, Beazley is working to further incorporate scientific research into our materiality assessment. This process is going to be part of the climate change risk assessment framework which will be developed in 2023.  This framework will enable Beazley to further communicate not just the material issues, but also the actions being undertaken to manage the risks (e.g. model validation, model adjustment, actions to pricing and underwriting).  This work, will be supported by the establishment of a natural hazards research team, which will further strengthen our model evaluation and research capabilities.

Underwriting product opportunities

It is important to consider climate risk impact on end-to-end

insurance operations that will drive opportunities for new and

changes to existing products and propositions. The processes

we have in place, as discussed in section 2.1.3, will help

facilitate the development of product opportunities.

In 2022, we undertook a review on how Beazley's current and

planned product suite applies for industries and sub-industries

that are key to carbon transition (i.e. green/clean tech). 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).

The exercise also enabled Beazley to identify the challenges

to underwriting green/clean tech, which include:

•a lack of available historical data, such as claims

performance, creating significant challenges for underwriting

and pricing new products; and

•having difficultly in predicting which green technologies will

prove most successful, or how quickly they will be adopted.

Risk mitigation services opportunities

We feel it is important to be able to support our clients in

better understanding, mitigating and managing their climate

risks. This work is to commence in 2023.

Financial stewardship

In 2023, work will commence to investigate further how we

can best support our clients during their transition to net zero.

We wish 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.

For Beazley, a key part of the transition to net zero is to

ensure it occurs in a just manner, and the short term social

needs of energy security are balanced 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 which generated more than 5% revenues from

these areas. However, in November, due to the ongoing war in

Ukraine, it was decided that the exclusion for thermal coal,

would be revised. This revision applies only to our Marine and

Political Risk underwriting classes, where Beazley is prepared,

until June 2024, to insure new clients who are transporting

thermal coal from existing coal mines. This approach was

adopted in order to support the need for energy security, and

the fact that a number of global countries are having to

increase their use of thermal coal plants to provide electricity.

Working with brokers

Brokers are a key link between Beazley and our clients and

therefore our relationship with our brokers will be central to

our response on climate-related matters. We have recently

begun working with external analytics teams to enhance our

knowledge of the latest research of climate change impacts to

physical risk perils, catastrophe models and tools, and

climate scenario analysis. This will enhance our ability to

model and manage climate risks, and allow us to keep

abreast of latest market developments on catastrophe and

climate risk analytics.

36 Beazley | Annual report 2022 www.beazley.com

2.2.3 Investments

In 2021 Beazley published, for the first time, its Responsible

Investment Policy, which sets out how ESG factors and

climate risk are considered as part of the investment decision-

making process. In 2022, we took a number of steps to

further enhance this approach, which include:

•Moving the calculation of climate risk metrics for our

corporate bond and listed equity exposures to a specialist

platform to improve consistency and quality of data. This

has enabled Beazley to determine the apportioned carbon

emissions and weighted average carbon intensity (WACI),

which we now report as part of our climate-related metrics;

•Using the same platform to access information on the Paris

alignment of our assets and physical and transition risks,

this knowledge will help us to monitor and manage our

climate risk on an ongoing basis; and

•Commencing work to develop and incorporate climate data

and emission factors for sovereign exposures. It is

anticipated these numbers will be incorporated into our

annual reporting at the end of 2023.

Alongside this work, Beazley also made its first impact

investment. This was based on a Beazley commitment in

2021 to invest, over time, up to $100m of the investment

portfolio in impact investments (these are defined as

investments that have a measurable positive social and

environmental impact as well as a financial return). In 2022,

following detailed analysis, we made our first such

investment, in a fund focused on the creation of renewable

energy capacity. This fund is managed by a member of the

Natural Capital Investment Alliance (NCIA) which was

established through the Sustainable Markets Initiative (SMI)

to increase the scale of natural capital investment. In 2023,

we will maintain our focus and momentum in searching for

impact investments. Progress will be overseen by the

Investment Committee.

For 2023, in addition to supporting the development of

Beazley's plan for the transition to net zero, will also focus on

developing our analysis on the impact of different climate

scenarios on the EBITDA of the companies we invest in, over

various time horizons out to 2050, to enable us to reduce

exposure to climate risk across our investments.

For our internally managed investment-grade fixed income

portfolios, we will look to reduce our exposure by disinvesting

from companies not making sufficient progress to

decarbonise. We feel this approach is appropriate given the

size and nature of investments are not sufficient scale to

allow us to effectively engage directly with companies we

invest in. Equity investment is a small proportion of our

portfolio and the management of these assets is outsourced

to external investment managers; we do require that they

exercise our voting rights and engage with our investee

companies on climate issues. We continually monitor

available investments to ensure we are invested in the most

sustainable comparable option and/or engage with the

manager to apply pressure to make changes to the mandate

where possible.

2.2.4 Operations

Greenhouse Gas reduction strategy

Beazley operates from a number of offices across the globe.

Whilst these locations could be impacted by physical climate-

related events, in the short term the focus of business

strategy is on how Beazley can best work to reduce our

contribution to climate change, particularly in respect to the

greenhouse gases (GHGs) we generate. As laid out within our

Responsible Business Strategy, a 40% reduction in GHG

emissions was targeted for 2022, and a 50% reduction

sought in 2023; both targets are set against a 2019 baseline.

Progress against these figures is reported in the metrics

section. Beazley’s GHG emissions predominantly arise from

our Scopes 2 and 3 emissions, as set out in within our GHG

emissions disclosures. We aim to deliver our targets through

the following actions:

Office space selection

We are selecting our office spaces based on our changing

needs as a business. The move to an activity-based working

approach means that our office space is smaller than in

previous years. Furthermore, by selecting offices which

achieve a BREEAM or LEED certificate, we can guarantee that

the energy performance of the fabric and technology within the

building is energy efficiency.

Carbon travel budget

Business travel is a significant part of our scope 3 emissions.

To help address the impact of business travel, a carbon

budget was introduced at the beginning of 2022. As with a

financial budget, each division has a total amount of carbon

they can ‘spend’ on GHG emissions arising from business

travel. Updates on performance were provided throughout the

year, so teams could track budget spends.

For 2023, we have developed this further to improve the

alignment between the carbon travel budget and the financial

budget for business travel. We will monitor both the financial

and carbon budgets in 2023 in order to identify where

improvements to this revised approach can be made.

Supply chain

Currently we do not disclose emissions arising from our supply

chain, beyond those produced by two of the data centres we

lease. However, Beazley has committed to embedding ESG

matters into our procurement, including a focus on GHG

emissions arising from our suppliers' operations. We will

begin to develop this procurement strategy in 2023. Progress

against targets, and the emissions arising from our supply

chain, will be reported in subsequent years in the metrics

section.

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TCFD 2022 continued

3. Scenario analysis

3.1 Climate Biennial Exploratory Scenario

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 – 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), with their key characteristics summarised in the table below:

	Early Action	Late Action	No Additional Action
Physical Risks	Limited	Limited	High
Mean global warming rise by end of scenario (since pre-industrial times)	1.8	1.8	3.3
Mean sea level rise in UK (m)	0.16	0.16	0.39
Transition risks	Medium	High	Limited
Transition begins	2021	2031	n/a
Nature of transition	Early and orderly	Late and disorderly	Only policies that were in place before 2021
Impact on output	Temporarily lower growth	Sudden contraction (recession)	Permanently lower growth and higher uncertainty.

The exercise focussed 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. A quantitative questionnaire also

accompanied the qualitative exercise, asking for the

disclosure of potential management actions to improve the

management and mitigation of climate-related risks.

It was determined that the overall balance sheet impact is

material over the long term, particularly in the NAA scenario

which sees greater physical and transitional risk. However, in

no scenario is Beazley rendered unviable as an organisation.

On physical risk, the biggest impact on loss occurs 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). There is however, a range of reliability of

climate data and this leads to significant uncertainty as to the

impacts of climate change on individual perils and regions. As

a result, the modelling of physical risk triggered a series of

further actions on improving catastrophe modelling by

developing climate change conditioned view of risk,

incorporating climate risk trends for most material perils.

On transition risk, the largest asset portfolio loss occurs in

the NAA scenario and the smallest in the EA scenario. The

‘balance sheet shock’ approach has its limitation, however we

continue to decarbonise our investment portfolio.

The climate litigation risk scenarios have been useful to

stimulate discussion, raise awareness, and consider timing of

impact on industry sectors. The impact on the underwriting

portfolio was estimated to be the highest for the

greenwashing scenario. This led to development of an internal

deterministic greenwashing scenario.

38 Beazley | Annual report 2022 www.beazley.com

3.2 Post CBES actions

CBES has significantly moved us forward in embedding

climate risk into our business and has triggered a number of

actions, as discussed previously in section 3.1. From a

scenario analysis perspective, our focus in 2022 was to

develop a Beazley most likely future state climate scenario, a

deterministic greenwashing scenario, and a plan for further

scenario development in 2023. Progress on these matters is

summarised in the section below.

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. This scenario has been

developed to support internal business activities (e.g. view of

risk selection, underwriting and pricing decisions, capital

investment choices). The scenario is based on NGFS

scenarios and the Intergovernmental Panel on Climate Change

(IPCC) scenarios. The proposed ‘Beazley most likely’ scenario

parameters are:

•a 3 degree celcius warmer world at 2050;

•a 0.6m sea level rise at 2050; and

•a very late and more aggressive policy transition. Assumes

annual emissions do not decrease to 2030.

This corresponds to the NGFS ‘Delayed transition’ scenario

and the IPCC RCP4.5 scenario. We also proposed stressed

versions of the scenario, for both physical risk and transition

and liability risk. The likely future state scenario will be

reviewed on a regularly basis to ensure the continued

appropriateness of the parameters.

The 'likely future state' scenario parameters have already

been used to decide which view of risk we should take in our

US hurricane climate-change-conditioned model, and also

when developing climate change metrics for US hurricane for

underwriters.

Deterministic climate litigation scenario

Post CBES, we found that one of the climate litigation

scenarios merited further investigation internally, and this has

resulted in the development of a deterministic greenwashing

scenario to assess and quantify the potential impact of

greenwashing and consider actions needed to mitigate this

risk.

Scenario analysis plan for 2023

On physical risk, we have already assessed the impacts on

key perils in our CBES exercise. Recognising the need to

continue carrying out such scenario analysis, however, we

plan to keep developing short-term, medium-term, and long-

term scenarios. We will link these to our business planning

and decision making. We plan to link the future likely state

scenarios to individual perils when developing physical risk

scenarios. This will enable Beazley to understand what the

physical risk impacts would be under future likely state

scenario, and the stressed version of the scenario.

On litigation risk, we are investigating the merit of working with

a third-party partner to review and challenge the way we

undertook the CBES litigation scenario, and also our internal

climate litigation scenario. This would potentially not only

allow us to better understand and assess our climate

litigation risk, but also refine/update the scenario and design

more scenario(s) if necessary. The internal climate litigation

scenario will be monitored on a quarterly basis. We will review

the quarterly movement in scenario results linked to climate

ligation claims and the risk landscape, enabling us to review

the scenario and its use for decision making.

3.3 Climate-related issues and the financial

planning process

The outputs from scenario analysis and risk modelling help to

determine Beazley's capital allocation for risks. The risk

modelling continues to be updated to reflect the latest

consensus of scientific opinion. For example, the US hurricane

model includes assumptions that are based on climate-

conditioned output. The process also informs the amount of

reinsurance which needs to be purchased to cover claims

arising from climate-related issues. This work is conducted on

an annual basis, as part of the business planning process,

and ensures Beazley has sufficient capital to cover ongoing

claims.

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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.

Scenario analysis

Scenario analysis includes stressing the scenarios of the first

line or developing additional scenarios to consider climate

related risks.

Natural catastrophe modelling

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.

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 Realistic Disaster

Scenarios (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.

Deterministic scenarios

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. In the

context of climate-related matters, strategic risks relate to

Beazley’s approach overall to climate risk and behaving as a

responsible business by seeking to minimise our

environmental impact. This includes our approach to the

transition to net zero, key disclosure requirements, and

embedding climate risk and responsibility actions into

business as usual approaches.

Strategic risks are also reviewed, twice a year, by the risk

team as part of Beazley’s risk assessment process. These

reviews are a collaborative effort with all the business

functions, and are an opportunity to identify emerging risk,

review existing risks, and provide appropriate mitigation

measures to reduce/manage the risk. This assessment is

inward looking and primarily concentrates on operational

processes, whilst helping to encourage open dialogue with

risk owners. This assessment is also where Beazley’s own

response to climate change is noted, and the appropriate

action to deliver improvements is documented.

40 Beazley | Annual report 2022 www.beazley.com

Identification of emerging 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, or the

Net Zero Insurance Alliance; 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.

4.3 Management of climate-related risks

4.3.1 Consideration of climate-related risk

within the Risk Management Framework

The classification of climate-related risk has evolved at

Beazley. The Board identified it as an emerging risk in 2019

before being reflected under enterprise risk which is a

principal risk within the risk framework in 2021. However,

enterprise risks including climate-related risks are pervasive

and span multiple risk categories and risk owners.

A brief outline of how climate-related matters are reflected in

the risk categories wider than enterprise risk, is outlined in

the tables below.

Insurance risks

Risk type	Relevance to climate-related matters
Market cycle risks	This is the risk of systematic mispricing of the medium-tailed speciality risks business, which could arise due to a change in the US tort environment, changes to the supply and demand of capital, 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 risks events	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. 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.
Reserve risk	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 clients 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 claims liabilities. The Group maintains a consistent approach to reserving to help mitigate the uncertainty within the reserves estimation process.

Asset, credit and liquidity risks

Risk type	Relevance to climate-related matters
Risk to earnings	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. 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.
Reinsurance credit risk	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 neccesary financial resources to meet obligations.

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Strategic risk

Risk type	Relevance to climate-related matters
Strategic decisions	The Group’s performance would be affected in the event of making strategic decisions that do not add value. 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). In the context of climate-related matters, this relates to decision making around the transition to net zero across underwriting, investments and our operations.
Communication	Having the right strategy and environment is of little value if the strategy is not communicated internally so that the whole Group is heading in the same direction, or if key external stakeholders are not aware of Beazley’s progress against its strategy. Beazley regularly communicates internally and externally on responsible business matters. This is underpinned by the responsible business strategy.
Senior management performance	There is a risk that senior management could be overstretched or could fail to perform, which would have a detrimental impact on the Group’s performance. 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.

Enterprise risk

Risk type	Relevance to climate-related matters
Climate financial risk	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, including stress and scenario analysis.
Environmental, social, and governance (ESG)	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.
Reputation	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. 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.

Operational risk

Risk type	Relevance to climate-related matters
External event	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.
Commercial management	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.
Regulatory and legal	Regulators, 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 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.

42 Beazley | Annual report 2022 www.beazley.com

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

these risks, whilst also operating within the risk appetite agreed by The Board. In addition, our risk management processes are

designed to continuously monitor our risk profile against risk appetite and to exploit opportunities as they arise. As a specialist

insurer, a number of classes of business that we underwrite are susceptible to the impact (or potential impact) of climate

change. There are broadly four options that we have as an insurance company in relation to these risks: we can accept the risk,

avoid the risk, mitigate the risk, or transfer the risk.

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	Description of use
Stress and scenario framework	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. 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.
Monitoring of aggregation of exposure	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.
Capital modelling	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.
Risk appetite	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 trading 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 obviously 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, risk appetite statements and specific Board-level key risk indicators (KRIs) have been developed for climate-related financial risk, which includes investment and underwriting. These are being monitored from 2023 onwards.

Quantitative and qualitative assessment of climate-related risks within the Risk Management Framework

Specific Board-level key risk indicators (KRIs), as set out in the risk appetite statements, are being monitored, as part of the

risk management framework from 2023 onwards. They are designed to provide triggers that through monitoring can be

addressed through Beazley’s governance structure. They set out tolerance levels using red, amber and green ('RAG') ratings to

help indicate the extent to which a risk is inside or outside appetite and whether any escalation is required. The climate change-

related KRIs will be as follows:

Area of the business	Key Risk Indicator
Underwriting	Phase 1 Climate change in underwriting and pricing objectives met Regulatory disclosure requirements met
Investments	Compliance with responsible investment policy and transition risk
Operations	Reduction in carbon emissions for our operations compared to the 2019 baseline of 40% in 2022, and 50% in 2023.

Where possible, these KRI’s have been reported in the metrics section of the TCFD disclosure, with full incorporation expected

from 2023.

www.beazley.com Beazley | Annual report 2022 43

TCFD 2022 continued

5. Metrics 

5.1 Enhancing our approach

to climate-related matters

The creation of the CRWG in 2022 has enabled the Group to

work to begin to enhance our approach to climate-related

matters within underwriting. For 2022, there are two

quantitative metrics which we can report against as a

measure of initial progress, with the expectation that we will

develop more metrics to measure our progress against our

climate risk strategy in 2023.

Number of perils with climate- change- conditioned

view of risk

Beazley is investigating the climate change conditioned

models in the market and updating our understanding of

climate change impact on physical risk perils from dedicated

research, in order to develop a forward-looking climate-change-

conditioned view of risk. We developed and introduced a

climate change conditioned view of risk for US hurricane, our

most material peril, in 2022, and plan to develop climate

change conditioned view of risk for other key perils in 2023.

2021	2022
0	1 (US hurricane)

Number of perils with climate loss trends introduced

into pricing model calibration

Beazley is in the process of incorporating climate trends for

key perils into the model calibration for pricing. This is the first

step in the process to fully embed climate loss trends for key

perils into pricing. In 2022, we reviewed climate loss trends

for US hurricane, US wildfire, and US inland flood. These were

introduced into the key property pricing tool in December

2022 for US Flood and US Wildfire and January 2023 for

US Hurricane. We plan to further embed these perils within

pricing, whilst also reviewing and incorporating other key peril

climate trends.

2021	2022
0	2 (US wildfire, US inland flood)

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 in 2021

and 2022 is as outlined in the table below. The scope of

inclusion is for estimated insurance premiums written for

policies related to energy efficiency and low and net zero

carbon technology, including renewable energy insurance,

energy savings warranties, and carbon capture and storage

insurance).

2021	2022
$4.5m	$8.0m

5.3 Investments 

Beazley uses data from Standard & Poor's Market Intelligence

Capital IQ pro (S&P CAP IQ pro) to help determine a number of

metrics across our investment portfolio.

Total apportioned GHG emissions arising from

our investments

This is the total Carbon Emissions apportioned to Beazley's

portfolio of publicly listed equities, which are 1.8% of our

overall holdings. The value of holdings is $159m. This metric

is the starting point for carbon footprinting of our listed equity

portfolios. It adopts the equity ownership approach, consistent

with the GHG Protocol accounting standard, allocating

emissions based on levels on equity ownership (market

capitalisation) on an enterprise value including cash (EVIC)

basis.

The GHG emissions data is based on Scope 1 and 2

emissions only. Data to complete the calculation has been

sourced from S&P CAP IQ pro. The data was reported as at

1st January 2023, and is the first year we have reported this

figure. This metric will form part of the suite of metrics Beazley

will report on going forward.

	2022
Apportioned GHG emissions (tCO2e) arising from our investments (Publicly listed equities only)	2,359.29

Weighted average carbon intensity (WACI)

The weighted average carbon intensity (WACI) of our corporate

bonds and equity 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 current value of the holding to the

current value of the total holdings as at 1 January 2023). 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 GHG emissions

data is sourced from S&P CAP IQ. Emissions have been

reported for 90.23% of the portfolio of publicly listed equities

and corporate bonds. Work continues to source data required

to report on the remainder of the portfolio.

	2021	2022
WACI (tCO2e/$m sales) arising from our investments (Publicly listed corporate bonds (investment grade and high yield) and publicly listed equities)	75.50	49.92

44 Beazley | Annual report 2022 www.beazley.com

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 each year 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 market capitalisation 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 1 January 2023.

Emissions have been reported for 90.23% of the portfolio.

Work continues to source the missing data required to report

on the remainder of the portfolio.

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 and will continue to work

towards this in 2023.

	2022
Current Temperature Pathway Alignment	2-3 degree Celsius

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. Beazley Group’s

(hereafter Beazley) GHG emissions are, where possible,

calculated using emission factors for ‘kgCO2e’ (i.e. the sum of

emission factors for carbon dioxide, methane and nitrous

oxide). The full methodology for calculating the GHG emissions

is available on Beazley's website. The exceptions to this are:

1Emissions associated with refrigerants, which are reported

as GHG dioxide equivalent (tCO2e) emissions;

2GHG emissions for company cars are calculated using

information provided on: the yearly mileage agreement,

make, model, registration and fuel type. Consumption has

been based on the maximum agreed mileage for the car in

2022, as set out in the lease agreement.

3GHG emissions associated with the Dublin office electricity

use are calculated using information reported by the

Sustainable Energy Authority of Ireland (SEAI) and reported

as gCO2/kWh (NCV). The kgCO2e emission figure was

calculated by adding BEIS NO2 and CH4 emission factors to

SEAI’s kgCO2 figure.

4Due to data coverage, US office electricity use and heating

energy (Scope 2) are estimated using the office floor area

and the 2021 CIBSE Guide F for Energy Benchmarking.

5US office electricity use (Scope 2) and US grid electricity

transmission and distribution (Scope 3) where the

Environment Protection Agency (EPA, 2020) EPA US State

emission factors are used

6US office business travel by rental car, personal car, air and

rail (Scope 3) where the US Environment Protection Agency

(EPA, 2020) emission factors are used.

7Where emissions factors are not listed by BEIS for the

country of hotel stay, then data from the Cornell Hotel

Sustainability Benchmarking (CHSB) index is applied

8Emission figures for electricity used in ‘ROW’ offices

(Barcelona, Dublin, Munich, Montreal and Paris) are country

emission factors sourced from Carbonfootprint’s GHG

Footprint emissions document

9Car hire for business use has been estimated, as data is

unavailable to assess the mileage travelled as part of the

rental period. Calculations have been based on an

assumption that the user would travel 100 miles per day as

part of the rental.

The parameter of Scope 1 and Scope 2 reporting in 2022

includes 16 sites covering London (UK), Birmingham (UK),

Dublin (Ireland), Munich (Germany), Paris (France), Barcelona

(Spain) and Atlanta, Boston, Chicago, Dallas, Farmington, New

York, San Francisco, Philadelphia, Miami (USA) and Montreal

(Canada) and two third party data centres. Additional offices

are located across the globe, many of which are considered

shared space or serviced office suites. Beazley pays a service

charge for their use, however, has no control over the

operation or use of utility provisions. Responsibility for energy

consumption and carbon emissions, therefore, falls to the

landlord, and is considered out of scope for the purpose of

these calculations. The global emissions reported do not

include data for the following office locations: Houston, Los

Angeles, Denver, Singapore, Rio de Janerio, Shanghai, and

Vancouver. These offices make up 8% of Global FTE in 2022.

This equates to 94% of Beazley employees including

contractors. The 2022 reporting scope is comparable with the

GHG emissions reported for 2019 to 2021. Beazley’s two

subsidiaries, Lodestone & BHI, are excluded due to data

quality and will aim to be incorporated in future reporting.

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.

www.beazley.com Beazley | Annual report 2022 45

TCFD 2022 continued

5.4.2 Location- based GHG emissions 

Our Green House Gas (GHG) emissions normalised for Beazley's full-time equivalent (FTE) were 2.49 tonnes carbon dioxide

equivalent (tCO2e/ FTE) in 2022. This equates to an 55% reduction when compared to our 2019 baseline. This sizeable

reduction is a reflection of the actions taken over the last three years, which have included the relocation of our office in London

to more energy efficient premises at 22 Bishopsgate, the outsourcing of our data centres, and a reduction in business travel.

Location- based GHG Emissions (tCO2e)	2019	2020	2021	2022
Scope 1	21.08	16.50	8.23	65.20
Scope 2	2,010.84	1,773.92	1,412.87	1,144.79
Scope 3	6,735.91	1,647.04	807.37	4,073.96
Total tCO2e	8,767.83	3,437.46	2,228.46	5,283.00
Total tCO2e/FTE	5.52	2.09	1.22	2.49

5.4.3 Market- based GHG emissions 

Beazley Group’s market-based GHG reporting for 2022, taking into account the procurement of 538,589.43 kWh of electricity

from certified renewable sources, is summarised in the table below. Renewable energy was procured for our Dublin, Barcelona,

Paris and London offices, and equates to renewable energy being 53.46% of Beazley's overall in scope energy use. The

procurement of renewable energy resulted in a saving of 116.63 tonnes of CO2 equivalent. The contribution of renewable energy

to our overall energy consumption is lower than the 65.55% saving achieved in 2021. This is because we were reporting energy

arising from both our new and old London offices whilst in the process of relocating. Both offices used renewable energy, and

therefore both our overall energy consumption and the contribution from renewable energy was temporarily higher than in a

normal operating year.

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.

Market-based GHG Emissions (tCO2e)	2021	2022
Scope 1	8.23	65.20
Scope 2	1,038.22	1,027.79
Scope 3	776.12	4,066.63
Total tCO2e	1,822.57	5,158.65
Total tCO2e/FTE	1.00	2.43

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 are as follows for 2022:

UK	USA	Europe
5.71	0.00	59.49

46 Beazley | Annual report 2022 www.beazley.com

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:

UK 

	2019	2020	2021	2022
Total location-based GHG Emissions (tCO2e)	856.10	615.26	319.02	135.28
Total market-based GHG Emissions (tCO2e)		173.94	19.97	72.73

USA 

	2019	2020	2021	2022
Total location-based GHG Emissions (tCO2e)	1,013.76	1,013.76	964.18	909.32

EUROPE 

	2019	2020	2021	2022
Total location-based GHG Emissions (tCO2e)	140.98	144.90	129.67	100.19
Total market-based GHG Emissions (tCO2e)		50.62	54.08	45.73

SCOPE 3 

A breakdown of our Scope 3 is detailed below, with travel being a predominant part of our overall reported emissions. The UK/

Rest of World (ROW) data includes travel booked through our UK/ROW travel partner, which is predominantly for staff located

within all offices except those in the USA. The data cited for the USA includes travel booked through our US travel partner,

which is predominantly for staff located within all US offices.

UK/Rest of World GHG emissions

	2019	2020	2021	2022
	(tCO2e)	(tCO2e)	(tCO2e)	(tCO2e)
Air travel	4,318.84	825.05	165.79	2,139.48
Rail travel	18.32	3.68	3.54	9.16
Hotel stays	126.22	24.31	8.88	50.79
Car hire use	9.19	1.39	0.07	–
Electricity transmission & distribution losses (location-based)	67.99	46.71	34.18	9.19
Taxi use	89.40	30.20	9.91	56.11
Personal car use	19.51	6.07	4.81	7.79
Electric vehicle charging transmission & distribution losses	–	0.28	0.26	0.27
Imported heat transmissions & distribution losses	0.46	0.45	0.45	0.45
Data centres	–	–	128.24	134.25
Total	4,649.94	938.14	356.13	2,407.49

USA GHG Emissions 

	2019	2020	2021	2022
	(tCO2e)	(tCO2e)	(tCO2e)	(tCO2e)
Air travel	1,755.20	612.65	361.60	1,527.01
Rail travel	89.33	2.01	0.66	2.78
Hotel stays	57.00	10.42	21.93	45.34
Car hire use	14.33	1.86	2.67	9.56
Electricity transmission & distribution losses (location-based)	39.99	39.99	37.25	37.92
Taxi use	75.71	28.93	12.78	43.86
Personal car use	54.41	13.04	14.34	0.00
Electric vehicle charging transmission & distribution losses	0.00	0.00	0.00	0.00
Imported heat transmissions & distribution losses	0.00	0.00	0.00	0.00
Data centres	0.00	0.00	0.00	0.00
Total	2,085.98	708.90	451.24	1,666.48

www.beazley.com Beazley | Annual report 2022 47

TCFD 2022 continued

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.

	2019	2020	2021	2022
	(tCO2e)	(tCO2e)	(tCO2e)	(tCO2e)
Air travel	6,074.04	1,437.70	527.39	3,666.49
Rail travel	107.65	5.69	4.20	11.93
Hotel stays	183.22	34.74	30.81	96.13
Car hire use	23.52	3.24	2.74	9.56
Electricity transmission & distribution losses (location-based)	107.98	86.70	71.43	47.11
Taxi use	165.11	59.13	22.68	99.97
Personal car use	73.92	19.11	19.15	7.79
Electric vehicle charging transmission & distribution losses	0.00	0.28	0.26	0.27
Imported heat transmissions & distribution losses	0.46	0.45	0.45	0.45
Data centres	0.00	0.00	128.24	134.25
Total	6,735.92	1,647.04	807.37	4,073.96

	2019	2020	2021	2022
	(tCO2e)	(tCO2e)	(tCO2e)	(tCO2e)
Electricity transmission & distribution losses (market-based)	107.98	42.92	40.18	39.77
Total revised for market-based emissions	6,735.92	1,603.27	776.12	3,932.38

5.4.4 Carbon offsets 

Whilst Beazley does purchase carbon offsets, it does not use these as a mechanism to enable more emissions to be generated

during the year. The targets we have set for carbon reductions do not include any allowance of the use of carbon offsets.

5.4.5 Water Consumption

As part of the Building Management System, Beazley has sub meters on the incoming water feed to the two floors we occupy

within 22 Bishopsgate. This sub metering covers the water consumption arising from the use of our kitchenette facilities, and in

2022 resulted in 1,013m3 of water being used. This is an increase on the 305m3 used in 2021, however, office occupancy

rates were lower due to the impact of social distancing for COVID-19. The consumption figures cited do not include for the water

being used for the toilets being used on our floors, nor water consumption arising from central functions across the remainder

of the building. These elements are controlled and measured by the building's landlord. Water consumption is cited only for our

22 Bishopsgate office, as this is the only office for which we currently have accurate water data for. This office is occupied by

42.51% of FTEs.

5.4.6 Waste Consumption and Recycling Rate

Beazley is also able to measure the amount and type of waste being generated from our London office, Data is provided by our

landlord, who is responsible for coordinating the collection and disposal of the waste generated by all building occupants. This

information confirms the amount and type of waste stream being generated, by weight. This data is recorded and collated by

the landlord's appointed waste contractor, before being provided to Beazley. Based on the information provided, for 2022,

Beazley generated a total of 10.98 tonnes of waste, with 6.58 tonnes of this waste being recycled across multiple waste

streams. We were able to achieve a recycling rate of 59%. This is an increase on the 1.12 tonnes of waste recycled in our

London office in 2021, however, office occupancy rates were lower due to the impact of social distancing for COVID-19. This

office is occupied by 42.51% of FTEs.

5.5 External Benchmarks

Beazley uses a number of external ESG ratings to help benchmark our progress on ESG matters. Of the ESG ratings we

participate in, two are relevant to benchmarking climate-related matters: – Climatewise and Carbon Disclosure Project (CDP).

The 2022 scores are detailed in the table below, with historic data provided for comparison.

Rating Scheme	2020	2021	2022	Improvement in 2022?
Climatewise	46	72	72	No Change
CDP	C	C	B	Yes

48 Beazley | Annual report 2022 www.beazley.com

5.6 Remuneration

As set out within the remuneration dashboard on page 124, 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. A quantitative key element of the

scorecard is the ESG ratings we achieve, based on third-party

ESG rating agencies' assessment of Beazley’s ESG

performance. The CDP rating cited in this report forms part of

the scorecard.

Compliance with TCFD Requirements

Beazley has included on pages 29 to 49 in the Strategic

Report and various notes within our Financial Statements on

page 157 to 232, 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. In

2023, as part of the development of the Beazley's transition

plan we will work to further understand the sectoral impact of

climate-related risk. Beazley expect it will add real value to the

business to be able to disclose not just the risks, but also the

opportunities arising on a sector by sector basis. Beazley has

also committed to publish the first iteration of the Group’s

transition to net zero plan by the end of 2023. This document

will include detail on future GHG targets for Beazley. 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 2023

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 organization 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 2023

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 in underwriting. Once developed these metrics

will compliment the metrics already reported. Beazley is a

member of the NZIA, and has also committed to publish the

first iteration of the Group’s transition to net zero plan by the

end of 2023. 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 does not comply 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 2023 TCFD disclosure.

www.beazley.com Beazley | Annual report 2022 49

Stakeholder engagement

Our key stakeholders

The following pages describe how Beazley engages with its

stakeholders to enable us to fulfil our purpose, deliver our

strategy and deliver great outcomes for all our stakeholders.

Beazley is focussed 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.

The Board reviews who it determines to be its key

stakeholders. The key stakeholder groups continue to be: our

people, our clients and broker partners, our shareholders and

our regulators. The Board also continues to recognise

suppliers and communities as important groups.

This section of the report provides further information on how

Beazley and The Board engage with each of these key

stakeholder groups, what have been the outcomes of this

engagement in 2022, and how the views of stakeholders have

been considered in the key decisions taken by The Board

during the year.

Our people

Why we engage?

Our people are fundamental to Beazley’s long-term success

and as such have been identified as one of the five key pillars

supporting our strategy. We believe that by listening, sharing

ideas, and learning we help each other strive for better. We

seek to be open and honest in our dealings with our

employees and contractors and support Beazley’s values and

culture of ‘doing the right thing'.

How does Beazley engage?

Employee engagement takes place informally and formally at

all levels of the organisation. Our managers are encouraged to

communicate actively with their teams, seeking engagement

at team meetings and in their day-to-day work.

We have five employee networks consisting of individuals from

across the business in different roles and locations. Each

network is focussed on raising awareness of different

elements of our inclusion and diversity strategy and are able

to give an employee view on matters within their remit. You

can read more about these networks in the responsible

business report.

Members of our Executive Committee support the overall

approach to engagement, including through hosting ‘executive

coffees’ with groups of employees and ‘executive Q&A panel

events’ held virtually with the entire workforce. These

sessions provide an opportunity for two-way engagement and

for the executive to keep our people updated on what is

happening across Beazley. Members of the Executive

Committee are also regular contributors to our ‘weekly news’

emails, and other employees are also encouraged to

contribute on relevant work developments and with interesting

personal stories.

Our Chief Executive Officer regularly engages with the

workforce through his email and spoken updates and

encourages questions on all topics through the ‘Ask Adrian’

forum.

More formal workforce engagement takes place at our ‘how

are we doing? Live’ strategy event. This event is held annually

in person in multiple locations globally and gives an

opportunity for the Executive Committee members and other

employees to present on key developments. There are also

annual all-employee surveys on engagement and leadership,

the findings of which are presented to the Executive

Committee and Board in order that plans can be developed to

address any findings. There is regular reporting to the

Executive Committee and Board by the Head of Culture &

People on employee matters.

An important element to support our employee engagement is

our whistleblowing hotline. This enables employees and other

members of the workforce to raise in confidence any specific

concerns, and we undertake to investigate fully any matters

raised.

How does The Board engage?

As previously mentioned, The Board receive regular updates

from the Head of Culture & People on employee matters in

general and on the findings from the annual surveys on

employee engagement and leadership.

In addition, and in line with the Corporate Governance Code,

we have appointed a Non-Executive Director with responsibility

for bringing the ‘employee voice’ into Board level decision

making. For the majority of 2022 this role was held by Bob

Stuchbery, with Fiona Muldoon taking on the role from

November.

Fiona will continue Bob’s work on providing updates to The

Board on her formal and informal engagement with the

workforce. This engagement includes attendance at meetings

of the NexCo (an alternative Executive Committee of high

potential employees from across the business which runs in

parallel to the usual Executive Committee meetings), and

attendance at informal meetings held virtually between

members of the Executive Leadership team and a small

number of employees. There is also ongoing engagement with

employees through matters raised via the dedicated

‘employee voice’ pages on our intranet site. In 2022, some of

the Non-Executive Directors hosted a live virtual panel for all

employees, discussing their role and experience and

answering employee questions. During the event Bob

Stuchbery talked about his role as the ‘employee voice’ in the

boardroom.

What is important to our people?

Our annual employee survey continues to highlight the

importance of engagement to our employees, and our 2022

survey showed continued high levels of employee

engagement. Particular themes from the 2022 survey were

the importance of working collaboratively, of feeling trusted

and listened to, and being able to share their thoughts,

opinions and ideas. Further information on the findings from

the 2022 employee survey are contained in the Statement of

the Chair on page 8.

50 Beazley | Annual report 2022 www.beazley.com

Outcomes from engagement with our people in 2022

Various steps have been taken during 2022 in response to

our engagement with the workforce including:

•Steps to support individual growth and career development

–much of our business requires individuals with specialist

knowledge built up over a number of years. However, we

have addressed feedback around helping individuals

further in their own career development. This has

included hosting careers fairs and workshops, helping

people get to know other areas of Beazley,

communicating internal opportunities and sharing

examples of how others have developed their careers at

Beazley. We have also developed specific career

pathways for our underwriters, distinguishing between the

technical and managerial elements of the role, and

sought to provide further clarity to individuals wishing to

sit on our various leadership forums.

•Providing greater transparency on remuneration and bonus

setting

–remuneration is a key matter for our employees. We have

encouraged open and honest conversations between

managers and employees on remuneration topics and

continued our ‘your compensation explained’ sessions

where the Chief Executive Office and Group Finance

Director provided information and answered questions. In

response to specific feedback on challenges faced due to

the cost of living crisis, the Executive Committee and

Board gave their support to making a one-off cost of living

payment to those individuals where the impacts were

believed to be hardest felt. These impacts were also

considered in agreeing salary increases for 2023.

•Support around mental health – the pandemic brought into

sharp focus the importance of mental health, and we have

continued to receive feedback from employees seeking

support in this area. Our Beazley Wellbeing network has led

on promoting a number of campaigns encouraging

colleagues to strike the right balance between work

pressures and their mental health, including encouraging

people to take a break when needed. Our Culture & People

business partners also work with their teams locally to

identify key issues and resolve them.

•Supporting those with, or intending to start, a family – we

launched the new Beazley Families network in 2022, with a

focus on supporting those colleagues already with a family,

those seeking to start a family and those with caring

responsibilities. Further resources have been developed for

employees and managers on our policies around families,

including the ability for employees to take up to six months’

parental leave. A buddy system has been set up for parents

returning to the office who may need informal support.

•Promoting Juneteenth – the Beazley RACE network received

feedback from our US workforce on the importance of

recognising Juneteenth as an official holiday. As a result,

the executive leadership team gave its support to granting

Juneteenth as a holiday for all of our US workforce from

2023.

Clients and broker partners

Why do 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

talk about this further in the Chief Underwriting Officer's

report.

We strive for two-way dialogue with our clients 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

Direct engagement with our insureds and broker partners is

fundamental to how we do business. There is constant

engagement by 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. We are extremely proud that in 2023, for the

seventh year running, we were awarded the Outstanding

Service Quality Marque for claims service by Gracechurch

Consulting.

More coordinated engagement with our broker partners takes

place via our dedicated Broker Relations team. Our Broker

Relations team ensure we are maintaining and fostering the

best possible relationships with brokers to complement our

business teams.

During 2022, and building on the work of our ‘Closer to the

Client’ strategic initiative, we created the role of Client

Engagement Manager (CEM). The CEM has responsibility for

coordinating activities across the business to focus on our

ultimate clients. Their work has included appointing a number

of strategic relationship officers, who are specifically focussed

on the needs of their portfolio of clients, establishing

workstreams to engage with medium-sized and SME clients,

reviewing customer survey findings and liaising with product

development teams to address client feedback on new

products. The continued adoption of a customer relationship

management (CRM) tool will be key in gathering information

on clients from across teams and be able to respond to their

needs.

How does The Board engage?

The Chief Executive Officer is actively engaged with key clients

and broker partners and brings the insight he receives to

Board discussions. Maintaining good relationships with our

broker partners is a key priority of the Chief Executive Officer,

and his engagement takes the form of discussions on specific

and general topics in conferences and at other formal and

informal settings.

A number of our Non-Executive Directors also maintain contact

with broker networks from their previous executive roles and

are able to bring relevant insights to the boardroom.

The Board receives reports on key areas of client and broker

engagement via reporting from the Chief Executive Officer,

Chief Underwriting Officer, and other teams.

www.beazley.com Beazley | Annual report 2022 51

Stakeholder engagement

continued

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, to allow our clients to focus on running their

businesses.

Outcomes from our engagement with clients and broker

partners during 2022

Examples of direct engagement with clients and broker

partners during 2022 included:

•holding a summit with Beazley and key client

representatives on the healthcare claims environment – this

summit was very well received by attendees and provided a

great opportunity to share insight into the healthcare claims

environment on a non-specific basis.

•engagement on developments in our cyber policies – we

have engaged with brokers to explain the evolving nature of

cyber risk, particularly in the context of war, and how

Beazley intends to respond to this risk. This engagement

has helped support brokers in their discussions with

insureds.

•development of the ESG product suite – we have engaged

with our clients and broker partners on how we can bring

more innovative ESG products to the market that provide

value to them. The Chief Executive Officer has also provided

input on ESG matters through the feedback he receives as

a participant in the Sustainable Markets Initiative.

Our shareholders

Why we engage?

At Beazley, we recognise the needs of our different types of

shareholder, which range from individuals to large institutions.

We place great importance on communicating with our current

shareholders and with potential future investors.

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.

How does Beazley engage?

We communicate formally with our entire shareholder base

through regulatory news, results announcements and the

annual report and in conjunction with shareholder meetings.

All of our shareholders are also able to access useful

information on the company through our website. The annual

general meeting provides a formal opportunity for engagement

by shareholders with The Board.

Regular engagement with investors is co-ordinated by our

Head of Investor Relations. The Chief Executive Officer and

Group Finance Director regularly meet with our investors. Any

feedback or themes are shared with the wider Board through

the Chief Executive Officer's report and the report from the

Head of Investor Relations.

We invite investors and analysts to meet with management

twice a year following the announcement of the annual and

interim results. We have also increased our level of formal

investor engagement and, in 2022, management attended

four European investor conferences in 2022 and conducted a

number of ad hoc investor meetings. Additionally, Beazley

hosted a capital markets day in May, where the Chief

Executive Officer, Group Finance Director and the Chair met

with our investors. The opportunity was used to remind the

market about Beazley’s products and the platform and

distribution strategy which underpins our planned growth. The

Chief Executive Officer and Group Finance Director also met

with investors as part of the equity raise. More information is

included in the Directors' report (page 140).

How does The Board engage?

The Board receives regular reports from the Head of Investor

Relations on activity during each quarter, which includes

feedback from engagement with analysts and institutional

shareholders. Key shareholder matters are also reported to

The Board via the reports from the Chief Executive Officer and

Group Finance Director.

The Chair of the Remuneration Committee also engages with

shareholders on matters relating to remuneration. In 2022,

there has been specific shareholder engagement by the chair

of the Remuneration Committee and the Interim Chair on

changes to the remuneration policy which are being proposed

for approval by shareholders at the 2023 AGM.

What is important to our shareholders?

All of our shareholders are interested in seeing Beazley grow

profitably. However, they are also keen 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.

52 Beazley | Annual report 2022 www.beazley.com

Outcomes from our engagement with shareholders

and investors in 2022.

Examples of actions taken in response to dialogue with

shareholders during 2022 included:

•Giving shareholders greater visibility of our longer-term

outlook - during the year, a number of our larger

shareholders have expressed a change in their focus to

Beazley's long-term strategy, including the strategy for the

Cyber business and other future opportunities. This follows

shareholders being more focussed on the shorter term

during Covid-19.

•Helping shareholders to understand our platform strategy –

an agenda topic at the capital markets day in May was to

provide specific information on how Beazley carries out its

business globally across multiple platforms. This followed

feedback that the global reach of the business and the

platform strategy were not well understood by some

shareholders.

•Seeking shareholder support in our equity raising – our

shareholders gave us strong support in the raising of new

equity capital in November. The additional capital serves to

not only support our business plans, but also address

feedback from some shareholders on the level of debt to

equity that was maintained in the business. The Board's

decision to raise equity is further discussed in the Section

172 statement on page 55.

•Providing information to shareholders to support the

proposed changes to our remuneration policy – we actively

engaged with the top 100 shareholders and with proxy

agencies on the proposed changes to our remuneration

policy. As part of this, we provided some worked examples

on how the changes to the remuneration policy could work

in practice. Further information on the engagement with

shareholders on the remuneration policy are included on

page 90.

Our regulators

Why do 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’.

We have a number of regulators globally including the

Prudential Regulation Authority (PRA), Financial Conduct

Authority (FCA), Central Bank of Ireland (CBI), Lloyd’s, the

Connecticut Insurance Department (CIT) and other US state

regulators, and regulators in other jurisdictions where Beazley

operates.

How does Beazley engage?

Our Compliance function coordinates the Group’s regulatory

relationships, engaging with each of its regulators on a

frequent basis and help the Group meet their 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 CIT and the Group’s Chief

Executive Officer, Group Finance Director, Chief Risk Officer

and Head of Compliance. Regulators may also request

meetings with other members of senior management and The

Board 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.

How does The Board engage?

The 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 as required to support their overall supervision.

Following such meetings, Directors share the outcomes and

feedback with the wider Board.

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 2022

During 2022, we specifically engaged with our regulators on

various matters including business plans and strategy, the

war in Ukraine, climate change, cyber insurance, the

modernisation programme and governance.

Outcomes from regulatory engagement activities during 2022

included valuable feedback on the PRA climate biennial

exploratory scenario (CBES), cyber underwriting and delegated

authority thematic reviews. The Group has also participated in

the general insurance stress test (GIST) during 2022 and is

looking forward to receiving feedback in early 2023.

www.beazley.com Beazley | Annual report 2022 53

Stakeholder engagement

continued

Other stakeholder groups

The Board also recognises suppliers and the communities in

which Beazley operates as important stakeholders.

Suppliers

We actively engage with our suppliers and outsource providers

and recognise the important role they play in helping us run

our business. This engagement takes a number of forms and

is underpinned by a desire to maintain equitable relationships.

Prior to any new engagement, we carry out thorough due

diligence, including face-to-face communication on 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

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 annual monitoring of material suppliers and

outsource providers to ensure both performance and practices

continue at a high standard. This annual monitoring is a good

opportunity for open engagement with suppliers outside of

day-to-day activities, and two-way feedback on areas for

improvement is encouraged. We also encourage suppliers to

raise any concerns independently 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 also reviews and approves changes to the

key policies governing Beazley’s ethical relationships with its

suppliers and other third parties.

Communities

Beazley is committed to actively engaging with and supporting

the communities in which it operates. Community engagement

is a core part of our responsible business strategy, which is

overseen by the Responsible Business Steering Group

(‘RBSG’) and supported through the work of the global charity,

community and environmental committees. We invite a

number of our Non-Executive Directors to attend meetings of

the RBSG on a quarterly basis to give their own perspectives

and they in turn, help update The Board on key initiatives.

Our approach to being a responsible business is described in

the responsible business section of this report on page 21

and the separate responsible business report, which is

available on our website.

Beazley operates in a significant number of local

communities, and employees are encouraged to engage in

their communities through our ‘Make a Difference’

programme. This programme encourages all employees to

devote one working day a year to volunteering, and Beazley

also matches charitable funds raised by our employees.

Beazley’s charitable efforts are overseen by the Global Charity

Committee and take the form of supporting charitable work

both in our local communities and globally.

In 2021 and 2022, our global charitable efforts have been

focussed on our partnership with Renewable World and

supporting the provision of affordable renewable energy

programmes in third world countries. For the next two years,

our employees have voted that our global charitable efforts

should be focussed on providing support to World Central

Kitchen, an organisation which provides meals to communities

impacted by natural disasters and during prolonged

humanitarian crises. Please see the responsible business

report for more information.

The Board receives regular updates on the work of the RBSG

and reviews and approves changes to Beazley’s charity and

community donation policy.

54 Beazley | Annual report 2022 www.beazley.com

Section 172 statement

The Board of Directors confirm that during the year ended 31 December 2022 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 Board is responsible for ensuring that the principal decisions it takes promote Beazley’s long-term success for its members

as a whole and have regard to the matters set out in Section 172 of the Companies Act 2006. Section 172 states that:

A Director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the

company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

(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,

(e) the desirability of the company maintaining a reputation for high standards of business conduct, and

(f) the need to act fairly as between members of the company.

The Board has determined the company’s key stakeholder groups to be its employees, clients and broker partners,shareholders

and regulators. 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.

Principal decisions of The Board

Decision	Section 172 and stakeholders
Approval of an updated dividend strategy	✓consequences of decisions in the long term ✓interests of stakeholders: shareholders and regulators ✓the need to act fairly as between members of the company ✓reputation for high standards of business conduct
Approval of a medium-term plan to support the long term strategy	✓consequences of decisions in the long term ✓interest of stakeholders: employees, clients and broker partners, shareholders, regulators and suppliers
Steps to diversify and strengthen Beazley’s overall business, supported by the raising of additional equity	✓consequences of decisions in the long term ✓interests of stakeholders: shareholders, policyholders and regulators ✓the need to act fairly as between members of the company ✓reputation for high standards of business conduct
Commitment to specific targets and market initiatives around net zero	✓consequences of decisions in the long term ✓impact on the environment ✓reputation for high standards of business conduct ✓interests of all stakeholder groups
Creation of separate Audit and Risk Committees	✓consequences of decisions in the long term ✓reputation for high standards of business conduct

www.beazley.com Beazley | Annual report 2022 55

Section 172 statement

continued

Board decision making in action

Approval of an updated dividend strategy

In February 2022, The Board approved that Beazley resumes

the payment of dividends and adopted a new dividend

strategy. The new policy is for a single annual dividend

payment to be considered based on the year-end results, with

the intention being to grow the level of dividend annually but

recognising that some earnings fluctuations are to be

expected.

The Board paused the payment of dividends following the

payment in March 2020. The decision to resume dividend

payments in March 2022 was taken in consideration of the

views of Beazley’s established shareholder base, which

includes a large number of employee shareholders. The

decision to move to an annual cycle of dividend payments was

also taken to give better alignment to business and capital

planning cycles, including to the annual capital planning cycle

with Lloyd’s (and other regulators) and give Beazley greater

flexibility to be able to respond to the needs of its customers.

Approval of the medium-term plan to support the long-

term strategy

In April 2022, The Board reviewed a plan for a number of key

medium-term projects to support Beazley’s longer-term

ambitions. The plan was formulated in consideration of our

purpose of helping our customers explore, create and build,

with key areas of focus around de-risking, simplification,

efficiency and product suite.

The medium-term plan has been developed in consideration of

the interests of all of Beazley’s key stakeholder groups. This

has included the views of clients and broker partners on the

role they would like Beazley to play over the medium term, and

the views of shareholders and regulators to ensure plans are

profitable and sustainable.

A key element in the delivery of the medium-term plan is the

execution of steps under Beazley’s modernisation programme.

The modernisation programme impacts all of our people, and

there has been a particular focus on communicating to the

entire workforce and obtaining feedback to ensure that there

is a culture of engagement and openness around this

important programme. The Board has received updates on the

modernisation programme during the year, including reviewing

and approving the overall governance framework for ensuring

the modernisation programme is implemented successfully.

The establishment of the Risk Committee is discussed below

and a key role of this Committee will be to provide assurance

to The Board around the mitigation of risk on delivery of the

modernisation programme.

Steps to strengthen and diversify Beazley’s overall

business, supported by the raising of additional equity

2022 has been a year of particular turbulence, with the

impacts of war, energy prices and rising inflation impacting all

of our stakeholders. The Board has monitored closely the

developing economic situation to ensure that steps are taken

to support Beazley in remaining resilient through this time.

In the Chief Executive Officer’s report, we talk about the

support we have provided to our employees most likely

impacted by the cost of living crisis, through a one-off payment

in June 2022. In the remuneration report, we have provided

details of the steps we took for year-end salary adjustments

for the workforce.

During the year The Board has also closely monitored the

impact across Beazley’s markets of the macroeconomic

situation. In particular, The Board have noted a strong

opportunity to grow the Property book in response to rising

rates in Property Treaty. Engagement with senior employees

was key to determining that Beazley had the capacity to

support growth to its Property book, which would have the

further benefit of creating greater diversification across

Beazley’s overall book.

In November, The Board approved that steps be taken to seek

to raise additional equity to support the planned growth. This

followed an assessment of market opportunities, including

obtaining the views of brokers, and the need to raise

additional capital versus other alternatives to support these

opportunities. The capital raising is an enabler for the further

diversification of Beazley’s overall book of business to support

long-term and sustainable business growth for the interests of

all of its stakeholders.

Prior to launching the equity raise, the views of most

significant shareholders were assessed via Beazley’s

stockbrokers, to the extent possible under a pre-emptive

equity raising. The recently published recommendations of the

Pre-emption Group were also considered, as Beazley was the

first FTSE 350 company to seek to raise capital under the new

regime.

Via the company’s subsidiary, Beazley Furlonge Limited, The

Board also proactively engaged with Lloyd’s to obtain views on

the impacts to plans for business written in the Lloyd’s

market.

Overall, the equity raise concluded with £340.8m ($404.4m)

of equity capital being raised through an institutional placing

and small retail offering. Some further detailed information on

the equity raise is contained in the Directors’ report on page

140 and in note 21 to the financial statements.

56 Beazley | Annual report 2022 www.beazley.com

Commitment to specific targets and market initiatives

around net zero

During 2022, The Board made a number of decisions to

further support Beazley’s commitments to making a positive

contribution to society and the environment. These decisions

were taken not only in consideration to Beazley’s impact to its

communities and the environment, but also in consideration

of the views of shareholders, customers and other

stakeholders, given their fundamental impacts.

The specific decisions taken were as follows:

•Committing to a target date for net zero - The Board

approved that Beazley commit to a target date of 2050 for

transition to net zero across all of its operations.

•Becoming a signatory to the United Nations backed Net

Zero Insurance Alliance (NZIA) - The Board approved that

Beazley become a signatory to the NZIA. The NZIA is

focussed on supporting insurers through the specific

challenges they face in their transition to net zero, and

Beazley is now a key participant in its work.

•Obtaining membership of the UN Global Compact - The

Board also approved that the company seek membership of

the UN Global Compact. The UN Global Compact is a

voluntary ESG initiative with a membership of over 15,000

international companies. In order to satisfy the membership

requirements, Beazley has committed to taking a number of

steps to further strengthen its approach to ESG matters.

•Approving of a revised responsible investment policy - The

Board approved revisions to the responsible investment

policy to include an allocation for impact investments.

Impact investments are investments which provide a

measurable social and environmental impact, as well as a

financial return. The Board also considered the work done

to measure the carbon transition pathway of the investment

portfolio, with an aim of setting targets for carbon reduction

by the end of 2022 and further supporting its commitments

as a signatory to the UN Principles for Responsible

Investment.

•Supporting the Terra Carta - The Board approved a proposal

to give formal support to Terra Carta. This is an initiative led

by HM King Charles III to drive engagement and

commitment from corporations to ensure nature, people

and planet are at the core of business value creation. This

support builds on Beazley’s existing commitments as a

member of the Sustainable Markets Initiative taskforce.

Creation of separate Audit and Risk Committees

In December 2022 The Board approved the proposal to

establish a separate Audit Committee and Risk Committee

from 1 January 2023. This step was taken to strengthen the

Group’s overall approach to corporate governance and enable

each committee to give greater focus to their areas of

responsibility.

The key function of the Audit Committee is to support The

Board in relation to the oversight of the financial reporting

process, the system of internal financial controls and the

audit process. The key function of the Risk Committee is to

provide oversight of the Beazley group’s risk management

framework and processes for monitoring compliance with laws

and regulations. Specific duties of the Risk Committee include

oversight of the Group’s whistleblowing arrangements and

providing assurance to The Board in relation to key group-wide

transformational projects, including the modernisation

programme.

The Board approved the establishment of the separate Audit

and Risk Committees as an important step to strengthen

Beazley’s overall approach to corporate governance in light of

the interests of all of its stakeholders. The decision also

supports Beazley’s culture of risk management and the long-

term and sustainable development of the business.

www.beazley.com Beazley | Annual report 2022 57

Financial review

Group performance

Beazley delivered a profit before tax in 2022 of $191.0m, which consisted of a

strong underwriting performance offset by a reduced investment performance,

and a return on equity of 7%.

Result

Profit before tax in 2022 was $191.0m (2021: $369.2m).

This was achieved through a substantial underwriting profit of

$402.0m or a combined ratio of 89% (2021: 93%) offset by

an investment loss of $179.7m (2021: gain of $116.4m) or

an investment return of (2.1)% (2021: 1.6%).

Premiums

Gross premiums written increased by 14% in 2022 to

$5,268.7m (2021: $4,618.9m). Rates on renewal business

on average increased by 14% across the portfolio (2021:

increased by 24%). All of our five divisions saw growth in

2022, with Cyber Risks and MAP Risks achieving double-digit

growth of 42% and 23% respectively.

Our net premiums written increased by 10% in 2022 to

$3,876.2m (2021: $3,512.4m). The slower growth in net

premium compared to gross is due to an increase in

reinsurance purchased during the period. The main drivers of

our additional reinsurance purchasing were areas of

significant growth, particularly Cyber Risks, so as to manage

our net exposure.

58 Beazley | Annual report 2022 www.beazley.com

Statement of profit or loss

	2022	2021	Movement
	$m	$m	%
Gross premiums written	5,268.7	4,618.9	14
Net premiums written	3,876.2	3,512.4	10
Net earned premiums	3,614.2	3,147.3	15
Net investment (loss)/income	(179.7)	116.4	(254)
Other income	32.1	28.2	14
Gain from sale of business	–	54.4	(100)
Revenue	3,466.6	3,346.3	4
Net insurance claims	1,956.4	1,826.2	7
Acquisition and administrative expenses	1,255.8	1,104.8	14
Foreign exchange loss	24.0	7.2	233
Expenses	3,236.2	2,938.2	10%
Finance costs	(39.4)	(38.9)	1%
Profit before tax	191.0	369.2	(48)%
Income tax expense	(30.2)	(60.5)	(50)%
Profit after tax	160.8	308.7	(48)%
Claims ratio	54%	58%
Expense ratio	35%	35%
Combined ratio	89%	93%
Rate increase	14%	24%
Investment return	(2)%	2%

www.beazley.com Beazley | Annual report 2022 59

Financial review

Group performance continued

The Group is of the view that some of the above metrics

constitute alternative performance measures (APMs). Further

information on our APMs can be found in the key performance

indicators on page 2 and the APM tables on page 232.

Reinsurance purchased

Reinsurance is purchased for a number of reasons:

•to mitigate the impact of natural catastrophes such as

hurricanes, and non-natural catastrophes such as cyber

attacks;

•to enable the Group to put down large lead lines on the

risks we underwrite; and

•to manage capital to lower levels.

The amount the Group spent on reinsurance in 2022 was

$1,392.5m (2021: $1,106.5m). As a percentage of gross

premiums written it increased to 26% from 24% in 2021.

Combined ratio

The combined ratio of an insurance company is a measure of

its operating performance and represents the ratio of its total

costs (including claims and expenses) to total net earned

premium.

A combined ratio under 100% indicates an underwriting profit.

Consistent delivery of operating performance across the

market cycle is clearly a key objective for an insurer. Beazley’s

combined ratio improved in 2022 to 89% (2021: 93%).

Claims

2022 proved to be a year of several market events, including

Hurricane Ian and the war in Ukraine. Despite this our claims

ratio for 2022 reduced to 54% (2021: 58%), with our estimate

for the war in Ukraine remaining unchanged since our 2022

interim report. Our expectation of losses for Hurricane Ian

remains at $120m net of reinsurance.

Reserve margin

Beazley has a consistent reserving philosophy, with initial

reserves being set to include risk margins that may be

released over time as and when any uncertainty reduces.

Historically these margins have given rise to held reserves

within the range of 5-10% above our actuarial estimates,

which themselves include some margin for uncertainty. The

margin held above the actuarial estimate was 5.3% at the end

of 2022 (2021: 6.4%). Reserve monitoring is performed at a

quarterly ‘peer review’, which involves a challenge process

contrasting the claims reserves of underwriters and claim

managers, who make detailed claim-by-claim assessments,

and the actuarial team, who provide statistical analysis. This

process allows early identification of areas where claims

reserves may need adjustment. During years where we

experience large losses we tend to see the margin we monitor

being lowered as often we hold the same estimates within

both the actuarial and held reserve estimates.

With the move to IFRS 17 from IFRS 4, we have taken the

opportunity to revisit our reserving strategy. What is currently

held under IFRS 4 will change under IFRS 17. The main

changes will be how we will set and disclose the level of

reserve margin (known as risk adjustment for non-financial

risk under IFRS 17) and that the insurance liabilities will be

discounted. Currently, Beazley has an approach of setting

reserves within a preferred range of 5-10% above the actuarial

estimate. The actuarial estimate itself has a level of prudence

already embedded, and is higher than the corresponding best

estimate reserve.

Under IFRS 17, we will move to a preferred confidence level

range of between the 80th and 90th percentile, which will be

disclosed. This will show a percentile giving an indication

about where the reserves sits compared to the best estimate

and the capital requirement. IFRS 17 requires that the level of

this additional amount above a best estimate reserve, known

as the risk adjustment for non-financial risk, needs to be

considered against a number of principles of which there are

two dominant ones. 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 2022, our margin above actuarial estimates of

5.3% equated to a confidence level at the upper end of the

80th to 90th percentile range. At the date of transition to IFRS

17, 1 January 2022, our reserve confidence level was also at

the upper end of this range, with an equivalent margin of 6.4%

above actuarial estimates. Under IFRS 17, we expect the

confidence level on transition to be nearer the middle of this

range. Accordingly, the Group expects the provision for claims

recognised on adoption of IFRS 17 to be lower than IFRS 4

technical provisions, which have historically been near the

upper-end or above the preferred reserve range we will be

using under IFRS 17. This is because under IFRS 17, the level

of reserve margin has been calculated on a ground up basis

with consideration of the compensation we target for each line

of business, in line with IFRS 17 principles.

Reserve releases

Prior year reserve releases in 2022 totalled $132.6m (2021:

$209.8m) which represented 3.7% of earned premium. The

reduction in reserve releases was driven primarily by a

reduction in releases from Cyber Risks and Property Risks.

Once again each of the divisions released reserves off of prior

years in total. MAP Risks saw strong releases across all year

of account totalling $66.2m, while the other four divisions

released off two of the prior years.

60 Beazley | Annual report 2022 www.beazley.com

Prior year reserve adjustments

	2018	2019	2020	2021	2022	5 year average
	$m	$m	$m	$m	$m	$m
Cyber Risks	17.5	51.1	54.5	26.3	8.0	31.5
Digital	22.5	23.4	31.9	39.7	15.5	26.6
MAP Risks	27.3	10.4	14.4	63.0	66.2	36.3
Property Risks	(23.5)	(47.2)	25.1	59.1	14.7	5.6
Specialty Risks	71.2	(28.2)	(32.8)	21.7	28.2	12.0
Total	115.0	9.5	93.1	209.8	132.6	112.0
Releases as a percentage of net earned premium	5.5%	0.4%	3.5%	6.7%	3.7%	4.0%

Acquisition costs and administrative expenses

Business acquisition costs and administrative expenses

increased during 2022 to $1,255.8m from $1,104.8m in

2021. The breakdown of these costs is shown below.

Brokerage costs are the premium commissions paid to

insurance intermediaries for providing business. As a

percentage of net earned premiums they have increased to

23% in the current year (2021: 22%). Brokerage costs are

deferred and expensed over the life of the associated

premiums in accordance with the Group’s accounting policy.

Other acquisition costs comprise costs that have been

identified as being directly related to underwriting activity (e.g.

underwriters’ salaries and Lloyd’s box rental). These costs are

also deferred in line with premium earning patterns.

	2022	2021
	$m	$m
Brokerage costs	825.0	707.5
Other acquisition costs	127.1	114.3
Total acquisition costs	952.1	821.8
Administrative expenses	303.7	283.0
Total acquisition costs and administrative expenses	1,255.8	1,104.8

Beazley focuses on improving our expense ratio during times

of strong growth. Given our increased spend in 2022 on our

infrastructure, plus the world fully opening again after

COVID-19 restrictions, it is pleasing that we maintained a flat

expense ratio of 35% compared to 2021.

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 loss taken through the statement of profit or loss in

2022 was $24.0m (2021: $7.2m loss). The higher than

average loss was driven primarily by the revaluation of our

non-monetary items, such as deferred acquisition costs and

unearned premium reserve, back to historic rates. From 2023,

this revaluation of our non-monetary items will no longer take

place as IFRS 17 mandates that all insurance items are now

treated as monetary.

Investment performance

Recent rapid growth in our financial assets continued in 2022

as the business grew significantly and the value of our

investments, cash and cash equivalents increased to

$8,998.1m at year end (2021: $7,875.3m). We generated an

investment return of $(179.7)m, or (2.1)% (2021: $116.4m,

1.6%) on these assets during the year.

Inflation became the key consideration for financial markets in

2022, as remaining supply-chain pressures arising from the

COVID-19 pandemic were exacerbated by the war in Ukraine,

affecting energy and food costs. Earlier expectations that

higher inflation would be temporary were revised and central

banks became increasingly aggressive in raising interest rates

as inflation accelerated. Unusually, both Sovereign bonds and

risk assets saw significant losses, as yields rose and

economic growth forecasts declined.

US Treasury yields at shorter maturities increased by more

than four percentage points during 2022; the biggest increase

in more than half a century. We acted to reduce portfolio

duration for much of the period, which helped to reduce the

adverse impact of rising yields, but our fixed income

investments still generated a loss of 3.0%. Global equities

lost more than 18% in 2022 and our equity portfolio, which

reflects our responsible investment objectives, saw modestly

greater losses. However, equities make up less than 3% of

our portfolio and all of our other capital growth investments

achieved positive returns. Our hedge funds, in particular,

proved resilient in the difficult market conditions, returning

more than 7% in a year when the hedge fund universe

recorded losses. Overall, our capital growth investments

returned a small gain, of 0.3%. As part of our responsible

investment initiative we have committed to build an ‘impact’

portfolio, of up to $100m, targeting investment opportunities

which have measurable social or environmental benefits. We

made our first such investment in the fourth quarter of 2022,

in a private equity fund supporting the creation of renewable

energy capacity in Europe. We expect to make further

investments throughout 2023.

www.beazley.com Beazley | Annual report 2022 61

Financial review

Group performance continued

The unrealised investment loss in 2022 is significant,

notwithstanding some recovery in the fourth quarter, as yields

stabilised. However, losses were mostly the result of rising

yields, which have also acted to reduce the present value of

our Solvency II liabilities, such that our capital position has

not been materially affected. Bond yields are now much higher

than they were a year ago (our fixed income portfolio yield at

31 December 2022 was 4.7%), suggesting that future

investment returns may be better than we have seen for some

years. However, many of the factors that drove financial

market volatility in 2022, including rampant inflation and rising

interest rates, remain unresolved, such that investment

returns are likely to remain volatile.

The table below details the breakdown of our portfolio by asset class:

	31 Dec 2022		31 Dec 2021
	$m	%	$m	%
Cash and cash equivalents	652.5	7.3	591.8	7.5
Fixed and floating rate debt securities
– Government issued	5,006.3	55.6	4,008.1	50.9
– Corporate bonds
– Investment grade	2,050.5	22.8	1,861.9	23.6
– High yield	308.7	3.4	402.3	5.1
Syndicate loans	32.5	0.4	37.9	0.5
Derivative financial instruments	34.7	0.4	7.6	0.1
Core portfolio	8,085.2	89.9	6,909.6	87.7
Equity funds	159.4	1.8	209.6	2.7
Hedge funds	530.6	5.9	478.2	6.1
Illiquid credit assets	222.9	2.4	277.9	3.5
Total capital growth assets	912.9	10.1	965.7	12.3
Total	8,998.1	100.0	7,875.3	100.0

Comparison of return by major asset class:

	31 Dec 2022		31 Dec 2021
	$m	%	$m	%
Core portfolio	(182.8)	(2.4)	7.2	0.1
Capital growth assets	3.1	0.3	109.2	11.9
Overall return	(179.7)	(2.1)	116.4	1.6

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 21.2% (2021:

17.2%). The tax rate of 21.2% is higher than last year due

to this year’s composition of profits and losses across the

Group.

The effective tax rate has decreased in 2022 to 15.8%

(2021: 16.4%). The decrease has been a result of

favourable prior year tax adjustments in 2022.

62 Beazley | Annual report 2022 www.beazley.com

Financial review

Balance sheet management

Summary statement of financial position

	2022	2021	Movement
	$m	$m	%
Intangible assets	128.8	123.5	4
Reinsurance assets	3,286.6	2,386.4	38
Insurance receivables	1,811.7	1,696.1	7
Other assets	873.8	726.1	20
Financial assets at fair value and cash and cash equivalents	8,998.1	7,875.3	14
Total assets	15,099.0	12,807.4	18
Insurance liabilities	10,354.2	8,871.8	17
Financial liabilities	562.5	554.7	1
Other liabilities	1,608.8	1,250.1	29
Total liabilities	12,525.5	10,676.6	17
Net assets	2,573.5	2,130.8	21
Net assets per share (cents)	386.7c	351.6c	10
Net tangible assets per share (cents)	367.4c	331.2c	11
Net assets per share (pence)	315.6p	265.8p	19
Net tangible assets per share (pence)	299.8p	250.4p	20
Number of shares1	665.4m	606.1m	10

1Excludes shares held in the employee share trust and treasury shares.

Intangible assets

Intangible assets consist of goodwill on acquisitions of

$62.0m (2021: $62.0m), purchased syndicate capacity of

$13.7m (2021: $10.7m), US admitted licences of $9.3m

(2021: $9.3m) and capitalised expenditure on IT projects of

$43.8m (2021: $41.1m).

Reinsurance assets

Reinsurance assets represent recoveries from reinsurers in

respect of incurred claims of $2,487.4m (2021: $1,829.4m),

and the unearned reinsurance premiums reserve of $799.2m

(2021: $557.0m). The reinsurance receivables from

reinsurers are split between recoveries on claims paid or

notified of $420.6m (2021: $371.4m), and an actuarial

estimate of recoveries on claims that have not yet been

reported of $2,066.8m (2021: $1,458.0m).

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. We continue to provide against impairment of

reinsurance recoveries and at the end of 2022 our provision

in respect of reinsurance recoveries totalled $29.3m (2021:

$11.5m). The increase is driven by a provision made

against reinsurance on our Cyber book.

Insurance receivables

Insurance receivables are amounts receivable from brokers in

respect of premiums written. The balance at 31 December

2022 was $1,811.7m (2021: $1,696.1m). The amount of

estimated future premium that remains in insurance

receivables relating to years of account that are more than

three years developed at 31 December 2022 is $29.8m

(2021: $15.4m).

Insurance liabilities

Insurance liabilities of $10,354.2m (2021: $8,871.8m)

consist of two main elements, being the unearned premium

reserve (UPR) and gross insurance claims liabilities. Our UPR

has increased by 20% to $2,971.7m (2021:$2,472.7m). The

majority of the UPR balance relates to current year premiums

that have been deferred and will be earned in future periods.

Current indicators are that the business is profitable.

Gross insurance claims reserves are made up of claims which

have been notified to us but not yet paid of $1,758.4m

(2021: $1,627.5m), and an estimate of claims incurred but

not yet reported (IBNR) of $5,624.1m (2021: $4,771.7m).

These are estimated as part of the quarterly reserving process

involving the underwriters and Group Actuary. Gross insurance

claims reserves have increased 15% from 2021 to

$7,382.5m (2021: $6,399.1m).

www.beazley.com Beazley | Annual report 2022 63

Financial review

Balance sheet management

continued

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 $250m of

5.875% subordinated tier 2 notes due in 2026; and

•in September 2019, Beazley Insurance dac issued $300m

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 $450m. Under

the facility $450m may be drawn as letters of credit to

support underwriting at Lloyd’s, and up to $225m 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 23 July 2024,

whilst letters of credit issued under the facility can be used to

provide support for the 2021, 2022 and 2023 underwriting

years. In 2022 $225m 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:

•deferred acquisition costs of $550.1m (2021: $477.8m);

and

•deferred tax assets available for use against future taxes

payable of $35.2m (2021: $16.3m).

Judgement is required in determining the policy for deferring

acquisition costs. Beazley’s policy assumes that variable

reward paid to underwriters relates to prior years’ business

and is not an acquisition cost. As a result, the quantum of

costs classified as acquisition is towards the lower end of the

possible range seen across the insurance market. Costs

identified as related to acquisition are then deferred in line

with premium earnings.

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.

The Group actively seeks to manage its capital structure. Our

preferred use of capital is to deploy it on opportunities to

underwrite profitably.

Beazley has a number of requirements for capital at a Group

and subsidiary level. Capital is primarily 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). We comply with

all relevant SII requirements.

Further capital requirements come from rating agencies which

provide ratings for Beazley 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.

Beazley holds a level of capital over and above its regulatory

requirements. The amount of surplus capital held is

considered on an ongoing basis in light of the current

regulatory framework, opportunities for organic or acquisitive

growth and a desire to maximise returns for investors.

In November 2022 we raised $404m of new capital through a

non-pre-emptive share issuance. The decision to raise this

additional equity was taken following the market dislocation

across the Property market. We see this as an opportunity to

expand our Property and Reinsurance books, whilst also

enabling further growth within our Cyber Risks and Specialty

Risks books, net of reinsurance.

	2022	2021
	$m	$m
Shareholders’ funds	2,573.5	2,130.8
Tier 2 subordinated debt (2026)	249.4	249.1
Tier 2 subordinated debt (2029)	298.6	298.3
Drawdown of letter of credit	225.0	225.0
	3,346.5	2,903.2

During 2022 the equity raise further strengthened our capital

base which will enable us to deliver our underwriting plan. Our

funding comes from a mixture of our own equity alongside

$548.0m ($550.0m gross of capitalised borrowing costs) of

tier 2 subordinated debt. We also have a banking facility of

$450m (31 December 2021: $450m) of which, $225m has

been utilised and placed as a letter of credit at Lloyd’s to

support our Funds at Lloyd’s (FAL).

64 Beazley | Annual report 2022 www.beazley.com

The following table sets out the Group’s capital requirement

selected for our internal measure of the Group’s capital

surplus position:

	2022	2021
	$m	$m
Lloyd’s economic capital requirement (ECR)	2,577.1	2,225.3
Capital for US insurance companies	180.9	247.8
	2,758.0	2,473.1

The final Lloyd’s economic capital requirement (ECR) at year

end 2022, as confirmed by Lloyd’s, reflects the business we

expect to write through to the end of 2023 as per our

business plan which is targeting net growth of upwards of

20%. Furthermore, rather than taking a one year view of this

business, it assumes that all risks run to ultimate. Finally,

Lloyd's apply a 35% uplift to this number. These three factors

make the ECR requirement considerably more onerous than

the standard Solvency II measure which considers a one year

time horizon and contains no uplift.

In general we expect our capital requirement to grow broadly

in line with the net written premiums in our business plan,

which in the short term should be double digit growth;

however, premium growth due to rate change has a more

limited impact on the capital requirement, as the amount of

risk stays broadly the same.

At Beazley we aim to hold excess capital over the Lloyd’s ECR

and US capital requirement, expressed as a percentage of

Lloyd’s ECR, and have a preferred range of 15-25%. Given the

stringent nature of the Lloyd’s ECR as noted above, our Group

surplus capital ratio is not directly comparable to the standard

Solvency II capital ratio which is based on a one year time

horizon.

At 31 December 2022, we have surplus capital (on a Solvency

II basis) of 44%, above our current preferred range of 15% to

25% of ECR. Following payment of the proposed interim

dividend of 13.5p, this surplus reduces to 40%.

In addition to the surplus above, we have two further capital

levers which may be called upon. Firstly, the remaining

undrawn banking facility of $225m may be utilised and is not

included within the capital stack used in the capital surplus

calculation. Secondly, we continue to use reinsurance as a

tool to manage our capital position.

To ensure capital efficiency is maintained for our operations in

the US, we continue to use a captive arrangement through

Beazley NewCo Captive Company, Inc. that we set up in 2020.

Both tier 2 subordinated debt issuances issued by Beazley

Insurance dac in 2016 and 2019 were assigned and maintain

an Insurer Financial Strength (IFS) rating of ‘A+’ by Fitch.

Solvency II

The Solvency II regime came into force on 1 January 2016.

Beazley continue to provide quarterly Solvency II pillar 3

reporting to both Lloyd’s for the Beazley managed syndicates

and the Central Bank of Ireland and the Prudential Regulation

Authority for Beazley Insurance dac and Beazley plc.

Under Solvency II requirements, the Group is required to

produce a Solvency Capital Requirement (SCR) which sets out

the amount of capital that is required to reflect the risks

contained within the business. Lloyd’s reviews the syndicates’

SCRs to ensure that SCRs are consistent across the market.

The current SCR has been established using our Solvency II

approved internal model approved by Central Bank of Ireland

(CBI) which has been run within the regime as prescribed by

Lloyd’s. In order to perform the capital assessment:

•we use sophisticated mathematical models that reflect the

key risks in the business allowing for probability of

occurrence, impact if they do occur, and interaction between

risk types. A key focus of these models is to understand the

risk posed to individual teams, and to the business as a

whole, of a possible deterioration in the underwriting cycle;

and

•the internal model process is embedded so that teams can

see the direct and objective link between underwriting

decisions and the capital allocated to each team. This gives

a consistent and comprehensive picture of the risk/ reward

profile of the business and allows teams to focus on

strategies that improve return on capital.

IFRS 17

The implementation of the IFRS 17: Insurance Contracts

standard came into force for accounting periods commencing

on 1 January 2023. Applying this standard has been a major

undertaking and involved a multi-functional project over the

past six years.

Since the start of 2023, we have been accounting under IFRS

17 for insurance contracts at a Group level. The expected

impact on equity at the date of transition, 1 January 2022, is

an increase of at least 2% of equity. This increase is primarily

driven by discounting, alongside a reduction in reserves held

on the balance sheet. As discussed on page 60, these

reserve reductions are driven by the different approach to

calculating the reserve margin between IFRS 4 and IFRS 17,

moving to a confidence level led approach. It is important to

note that interest rates have increased since the date of

transition, so the discounting effect on more recent balance

sheet dates is expected to be more significant at other dates.

www.beazley.com Beazley | Annual report 2022 65

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 2022, 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

writing business through syndicates 2623, 3622 and 3623;

•Beazley Furlonge Limited – managing agency for the seven

syndicates managed by the Group 623, 2623, 3622, 3623,

6107, 5623 and 4321;

•Beazley Insurance dac – insurance company based in

Ireland that accepts non-life reinsurance premiums ceded

by the corporate member Beazley Underwriting Limited, and

also writes business directly from Europe;

•Syndicate 2623 – corporate body regulated by Lloyd’s

through which the Group underwrites its general insurance

business excluding accident, life and facilities. Business is

written in parallel with syndicate 623;

•Syndicate 623 – corporate body regulated by Lloyd’s which

has its capital supplied by third party names;

•Syndicate 6107 – special purpose syndicate writing

reinsurance business, and from 2017 cyber, on behalf of

third party names;

•Syndicate 3622 – corporate body regulated by Lloyd’s

through which the Group underwrites its life insurance and

reinsurance business;

•Syndicate 3623 – corporate body regulated by Lloyd’s

through which the Group underwrites its personal accident,

BICI reinsurance business and, from 2018, Market Facilities

business;

•Syndicate 5623 – corporate body regulated by Lloyd’s

through which the Group underwrites across a diverse mix

of classes;

•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;

•Beazley America Insurance Company, Inc. (BAIC) –

insurance company regulated in the US. In the process of

obtaining licenses to write insurance business in all 50

states;

•Beazley Insurance Company, Inc. (BICI) – 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; and

•Beazley NewCo Captive Company, Inc. – provides internal

reinsurance to BICI on older accident years.

66 Beazley | Annual report 2022 www.beazley.com

Risk management

and compliance

In a year of geopolitical instability, our risk

management and compliance functions

supported our business, and ultimately our

clients, successfully through challenging

times.

Risk management oversight

and framework

The Beazley plc Board delegates direct oversight of the risk

management function and framework to its Audit and Risk

Committee, and the primary regulated subsidiary Boards and

their Audit and Risk Committees. The 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

key 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 risk management reports support senior

management and The Board in discharging their oversight and

decision-making responsibilities. The risk reports include

updates on risk appetite, risk profiles, stress and scenario

testing, reverse stress testing, emerging and heightened

risks, a report to the Remuneration Committee, and the Own

Risk and Solvency Assessment (ORSA) report.

The Board approved the Group risk appetite statements during

2022 and received updates on monitoring against risk

appetite throughout the year.

Risk management

We pride ourselves on understanding the drivers of risk;

supporting and challenging management on managing

those risks for the Group and its clients. Whilst we

managed the challenges that growth can bring, we

remain mindful of emerging risks as well as regulatory and

legal changes. The risk function continues to engage in

key strategic projects to provide second line challenge

and ensure the risk management framework adapts

accordingly.

During the year, we made refinements to the risk

management framework including our approach to

articulating and monitoring risk appetite. This work will

continue during 2023 to ensure the framework adapts to

the Group risk profile and continues to embed a strong

risk culture. We have continued working with our

colleagues across the first and second lines of defence to

ensure effective risk management practices remain

embedded in business processes. Ultimately, this will

help ensure achievement of the Group’s strategic

objectives.

Our approach to managing the risks arising from climate

change are set out within the TCFD section of this report.

The latest report to The Board confirmed that the control

environment identified no significant failings or

weaknesses in key processes and that Beazley plc was

operating within risk appetite as at 31 December 2022,

with the systems having been in place for the entirety of

2022.

The business operated a control environment which supported

mitigating risks to stay within risk appetite. The risk

management function reviewed and challenged the control

environment through various risk management activities

throughout the year. In addition, the risk management function

worked with the capital model and exposure management

teams, particularly in relation to validation of the internal

model, preparing the ORSA, monitoring risk appetite and

through the business planning process. These teams provided

regular reports to the Underwriting Governance Committee

which the Chief Risk Officer chairs.

The risk management plan considers, among other inputs, the

inherent and residual risk scores for each risk event. 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.

In 2022, the Group's approach to identifying, managing and

mitigating emerging risks was enhanced to include inputs from

the business,  post-risk incident lessons learned and industry 

thought leaders. 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 2022 included

geopolitical risks, the macroeconomic environment (e.g.

inflation, global insurance market trends) and ESG. The Board 

carried out a robust assessment of the Group's emerging and

principal risks.

www.beazley.com Beazley | Annual report 2022 67

Risk management

and compliance continued

Principal risks the Group faces

Below summarises the principal risks the Group faces, the

control environment, governance and oversight that mitigate

these risks.

Key to below table:

▲ Within risk appetite

► Trending outside of risk appetite

▼ Outside of risk appetite

Principal risks and summary descriptions	Mitigation and monitoring
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.	Beazley used a range of techniques to mitigate insurance risks including pricing tools, analysis of macro trends and claim frequency- including alignment with pricing and ensured exposure was not overly concentrated in any one area, especially those with higher risk. The strategic approach to exposure management and a comprehensive internal and external reinsurance programme helped to reduce volatility of profits in addition to managing net exposure by the transfer of risk. The prudent and comprehensive approach to reserving helped ensure that claims covered by the policy wording were paid, delivering the right outcome to clients. High calibre claims and underwriting professionals deliver expert service to insureds and claims handling. The Underwriting Committee oversaw these risks.
Market (asset)▲ The value of investments may be adversely impacted by financial market movements of values of investments, interest rates, exchange rates, or external market forces. Expected asset returns may not align to risk and capital requirements.	Beazley operated a conservative investment strategy with a view to limiting investment losses that would impact the company’s financial result. Beazley mitigated 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 report. The Investment Committee oversaw the investment strategy and its implementation.
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.	Beazley traded with strategic reinsurance partners over the long term that support Beazley through the cycle despite catastrophic claim events. The Group did not have significant concentration to reinsurers, ensuring these partners meet internal approval criteria overseen by the Reinsurance Security Committee. Credit risk arising from brokers (non- payment of premiums or claims) and coverholders being low, has relied on robust due diligence processes and ongoing monitoring of aged debt and financial status.
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.	Group risk culture was centred on principles of transparency, accountability, and awareness. This expected outcome continued to help maintain a strong risk culture that supported the embedding of risk management within Beazley, such that it makes a difference and was overseen by The Board. An effective risk culture supported strong risk management, encouraged sound risk taking, created an awareness of risks and emerging risks. The Executive Committee and The Board oversaw this risk.
Liquidity ▲ Investments and/or other assets are not available or adequate in order to settle financial obligations when they fall due.	By managing liquidity Beazley maximised flexibility in the management of financial assets, including investment strategy, without incurring unacceptable liquidity risks over any time horizon; and in doing so helped to ensure that clients and creditors were financially protected. The Group periodically assessed the liquidity position of Beazley and each entity, and this was overseen by the Audit and Risk Committee. This included a benchmarking view from a third-party assessment.
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 leading to being unable to underwrite, manage claims, fines, etc.	The control environment supports the nature, exposure scale and complexity of the business with oversight from 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 held defined roles with regulatory requirements, were experienced and maintained regular dialogue with regulators. Beazley horizon scans for regulatory and legal matters and considers their potential impacts on the business.

68 Beazley | Annual report 2022 www.beazley.com

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.	We attract and nurture 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 required duties. The Group invests in technology and re-engineering processes to support the operation of these activities which are overseen by the Operations Committee. Beazley has policies and procedures across the organisation which ensure effective and efficient operations and drive productivity and quality across people, processes and systems to continue to enable scalable growth. The business continuity, and 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. There were effective controls in the day-to-day operations around information security, including cyber resilience, to mitigate the damage that loss of access to data or the amendment of data can have on the ability to operate.
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.	Beazley continuously addresses key strategic opportunities and challenges itself to be the highest performing sustainable specialist insurer. Beazley commits to ensuring 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 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.
Enterprise ▲ Pervasive risks impacting multiple areas of the Group (e.g. conduct, reputation, ESG, concentration and/or viability) 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.	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- it focusses 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. Being Beazley includes considering the needs of our clients in everything we do. We deliver the right outcomes to our clients through the product lifecycle. The conduct review group oversees this risk. We aim to do the right thing to minimise reputational risk via stakeholder management and oversight through governance. We carry out periodic analysis to identify significant areas of concentration risk across our business and monitor solvency regularly to ensure we are adequately capitalised.

www.beazley.com Beazley | Annual report 2022 69

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 risk profile

of a portfolio of diversified short-tailed and medium-tailed

insurance liabilities.

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 business plan sets out a view of the emerging risks

that impact this area (e.g. social and economic inflation) and

how the business will respond to these trends. The business

planning process also considers key risks: for example,

natural catastrophe risk was compared to the capital surplus

and the cyber exposure as a share of the total is monitored.

Scenarios were also tested that allow for a range of gross

rates, volume, and reinsurance rates and availability. The

impacts of climate related trends were allowed for in the plan

and The Board has also assessed the impact of climate

change and concluded that it does not lead to unviability.

A range of stresses, scenarios and modelled exposures were

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 were reviewed

and approved by The Board. We also considered several

reverse stress tests, which identified extreme scenarios which

could trigger unviability (either through insolvency or a loss of

stakeholder confidence) and the possible mitigations and

actions. Based on our related risk profile, this considered

events such as a natural catastrophe, cyber catastrophe, and

major operational incident (e.g., internal fraud). Much of the

above stress and scenario testing was incorporated into the

annual ORSA that was presented to The Board and

summarised the short-term and longer-term risks to the Group

and the capital implications.

In the unlikely event that capital surplus falls below the

internal 15% threshold, 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/manage plan growth;

•Stop/delay infrastructure investment;

•Sell off business units;

•Suspension of dividends;

•Additional reinsurance purchases;

•Posting of available unutilised letter of credit as funds at

Lloyd’s; and

•Accessing additional external capital via debt or equity

markets.

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.

The recent challenging geopolitical environment has

heightened the importance of ensuring compliance with

rapidly changing regulations and laws, such as

sanctions, and ensuring there is a robust anti-financial

crime control environment. We have supported the

business, and our clients, to navigate through this

evolving landscape.

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:

70 Beazley | Annual report 2022 www.beazley.com

Culture, controls, training and oversight

A mandatory annual staff training programme covers topics

such as financial crime, underwriting due diligence, conduct,

and information security. We provide training to staff 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.

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 2022.

Anti-financial crime controls

A key risk for the Group, operating a global organisation is

financial crime. There is no appetite for Beazley 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, such as the events in 2022. 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

staff 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. All

concerns have been treated with the utmost confidentiality

and in accordance with all applicable legal and regulatory

requirements. Annual reports were presented to The Board on

the effectiveness and operation of our whistleblowing

procedures.

www.beazley.com Beazley | Annual report 2022 71

Governance

 

73	Letter from our Chair
75	Statement of corporate governance
77	Board of Directors
79	Governance Framework
87	Shareholder engagement and investor relations
88	Board evaluation
91	Audit and Risk Committee
100	Nomination Committee
106	Remuneration Committee
108	Letter from the Chair of our Remuneration Committee
111	Directors' remuneration report
139	Statement of Directors' responsibilities
140	Directors' report
146	Independent auditor's report

72 Beazley | Annual report 2022 www.beazley.com

Letter from our Chair

In my statement on pages 8 to 10, I comment on Beazley’s

performance, the uncertain geopolitical and economic

environment and how Beazley’s strategy, business model and

culture add value when things are complex and changing.

The company maintains a robust governance framework,

which helps contribute to the company's long-term strategy,

and I am pleased to confirm that the company has complied

throughout the year with all the principles and provisions of

the 2018 UK Corporate Governance Code. In particular, the

work of the Nomination Committee has enabled an orderly and

smooth transition of succession following David Roberts’

stepping down as Chair of The Board on 21 October 2022 as

a result of his appointment as Chair of the Court of the Bank

of England. The Board remains highly engaged in fulfilling its

principal tasks of leading the company and overseeing the

governance of the Group and ensuring its long-term

sustainable success.

Board changes

The Board takes seriously its responsibility for and oversight

of effective succession planning for Board and senior

management positions. I succeeded David as Interim Chair

with effect from 21 October 2022 until a Chair was found, to

ensure continuity of good governance across the Group in this

interim period. Bob Stuchbery has taken on the role as Interim

Senior Independent Director and Nicola Hodson is acting as

Interim Chair of the Remuneration Committee.

On 8 February 2023 we announced that Clive Bannister had

joined The Board and would be appointed as Chair with effect

from 25 April 2023. Clive brings a breadth of commercial,

strategic and significant transformational experience to The

Board from both the financial and insurance industries. He

has been serving as Chair of investment and wealth

management provider, Rathbones Group plc, since 2021 and

is the former Group Chief Executive Officer of Phoenix Group

plc. The Board and I are delighted that he has joined Beazley

to lead The Board and company as we implement our

ambitious growth plans in 2023 and beyond. More information

about the search for the new Chair is included in the

Nomination Committee report on page 100.

We have a strong Board of diverse experience, background

and personal skillsets, and there is a good balance of new

and more established directors. The 2022 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

effectiveness review on page 88.

During 2022, The Board welcomed Cecilia Reyes Leuzinger

and Fiona Muldoon as newly appointed Directors with effect

from 31 May 2022. Cecilia brings a wealth of deep experience

to The Board in banking, risk management, investment and

asset management covering Europe, Asia Pacific and the

Americas. Equally, Fiona augments The Board's strengths

through her extensive leadership experience and senior

finance positions in listed firms, general insurers and at the

Central Bank of Ireland. With these new appointments, I

strongly believe that Beazley’s Board has the breadth and

depth of experience and skills to support the company’s

strategic aims, purpose and values and this has been further

enhanced by the new Board members. I am pleased to report

that The Board is currently well-balanced in terms of gender.

Following Clive Bannister joining The Board in February 2023,

The Board is comprised of 45% women. In addition to David

Roberts stepping down as Chair, Catherine Woods also

stepped down from The Board in March 2022. Catherine was

an extremely dedicated and diligent Director over a six year

period and provided excellent insight in board discussions.

She moved on with the best wishes of the entire Board.

Committee structure

To further support strong governance and evolving

requirements, The Board have agreed to separate the Audit

and Risk Committees from 1 January 2023. Further

information is included in the governance framework on page

79, The Board evaluation report on page 88, and the Audit

and Risk Committee report on page 91.

Risk management and compliance

Beazley’s strong approach to risk management and regulatory

compliance has been especially important through the

turbulent environment in 2022. The Beazley plc Board, with

the support of its Committees, plays a key role in overseeing

Beazley’s risk management framework and has close visibility

of its engagement with regulators. Key emerging risks that The

Board has overseen in 2022 have included geopolitical risks,

the macroeconomic environment (e.g., inflation, global

insurance market trends) and ESG.

www.beazley.com Beazley | Annual report 2022 73

Letter from our Chair

continued

Culture and our people

At Beazley we define our culture by our values and brand:

being bold, striving for better and doing the right thing. They

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. Keeping and renewing our strong culture is key for

Beazley in achieving its purpose of helping our clients and

people to explore, create and build in a complex and uncertain

world.

We are proud of our culture, it resonates with our people, and

it always scores very highly in our employee engagement

surveys. The Board monitors culture through various

mechanisms including: the annual employee engagement and

leadership surveys, turnover statistics, whistleblowing and

grievance data, feedback from leavers, periodic internal audit

reviews, and routine board reporting. The Board is very

focused on helping to promote an open culture and

maintaining regular engagement with the workforce. This is a

key focus of the director with responsibility for bringing the

employee voice to The Board. Fiona Muldoon succeeded Bob

Stuchbery in this role in November 2022. The stakeholder

engagement report on page 50 provides further information on

how Beazley’s culture supports the interactions with all of its

stakeholders, and how The Board oversees stakeholder

engagement and considers it in decision making.

The findings of the 2022 employee engagement survey will be

assessed by The Board in early 2023. A brief overview is

included in the stakeholder engagement report on page 50.

Inclusion and Diversity

The Board is committed to promoting inclusion and diversity in

all its forms and is pleased to have met the Parker Review

recommendations and other targets in relation to Board

diversity. However, we recognise our work in this area is never

done. To make more impactful progress in this area, Beazley

updated its global diversity policy and introduced a Board

diversity policy in January 2022, which details a set of pledges

aimed at building a diverse, inclusive environment that

operates zero tolerance to discrimination or harassment and

fully supports and celebrates differences. These policies are

aligned to each other and to the Company's strategy.

We also recognise that aspiring to have a diverse workforce is

not enough. We remain committed to our race and ethnicity

diversity goals to have at least 25% of the global workforce

consisting of people of colour. We also committed to reaching

at least 45% female representation in senior leadership. Both

of these targets were set for the end of 2023. We have

already met the race target and are on track to meet the

gender target. More information on Beazley’s inclusion and

diversity initiatives can be found in the responsible business

report and the Nomination Committee report.

Remuneration policy

In accordance with the normal three-year cycle, our

shareholders will have an opportunity to vote on a revised

remuneration policy at the 2023 AGM. Over the last 12

months the Remuneration Committee has undertaken a full

review of the policy to ensure that it supports our strategy,

promotes Beazley’s long-term success, and is aligned with our

purpose and shareholder expectations. For more information

on the proposed changes to the policy, please see the

Directors' remuneration report on page 111.

Stakeholder engagement

The Board has continued to identify employees, clients and

broker partners, shareholders and regulators as its key

stakeholders. In addition, we also recognise that Beazley’s

suppliers and the communities in which the Group operates

are important stakeholders to be considered in decision

making. On pages 50 to 57 we discuss how these

stakeholder groups have been considered in key decisions

taken during the year.

Looking ahead

As ever, we welcome any and 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 of my colleagues on The Board for

their contributions during the year.

Christine LaSala

Interim Chair

74 Beazley | Annual report 2022 www.beazley.com

Statement of corporate governance

How have we applied the principles of the Corporate Governance Code?

We are pleased to confirm that the company has applied all the principles and complied with the provisions set out in the 2018

UK Corporate Governance Code (the ‘Code’) throughout the year ended 31 December 2022. The Code can be viewed on the

www.frc.org.uk website. The governance report describes how The Board and its Committees have applied the main principles

of the Code and complied with its detailed provisions.

Application of UK Corporate Governance Code Principles
Code Provision and Application		See further information
Board leadership and company purpose
A	The role of The Board Our Board is comprised of individuals with a wide range of experience, skills and backgrounds which we believe strongly supports Beazley’s strategic vision and success. The Board is strengthened by its robust governance framework which enables directors to discharge their duties effectively in promoting the long-term sustainable success of the company and strong performance. The Board is committed to frequent and open communication with both shareholders and stakeholders and this is at the forefront of agenda planning throughout the year.	Board of Directors (page 77) Governance framework (page 79) Stakeholder engagement (page 50)
B	Purpose, Values, Strategy and Culture Beazley’s purpose, culture and values centre around being bold, striving for better and doing the right thing. This is reflected in the business model of the organisation, including how we engage with our stakeholders and colleagues, and how we treat our customers and behave as a responsible business. The Board reviews strategy and culture throughout the year via reports it receives from the Group Head of Strategy and the Group Head of Culture & People. Reporting includes topics such as strategy and business plans, employee engagement and leadership surveys (which include cultural metrics) and the employee voice of The Board updates. Internal audit periodically review culture as part of their audits. In addition to their regular reporting, an analysis of their findings in relation to culture was included in the internal audit annual report to the Audit and Risk Committee during 2022. Investing in and rewarding our people We aim to create a company-wide culture of learning in line with our values of striving for better and doing the right thing for our people. Supported by our workforce policies and practices, we empower our people to be the best they can be and develop their career at Beazley. There is a wide range of resources available through the Beazley learning management system, including access to training and learning materials. Employees are supported to gain relevant professional qualifications, and we give individuals the opportunity to both receive mentoring, and to provide mentoring to colleagues. We support our managers in encouraging the development of their teams through the formal appraisal process and in their ongoing conversations. Job opportunities are advertised internally, and we encourage employees to apply for different or more senior roles as part of their career progression. We offer our employees an attractive remuneration and benefits package, which recognises their efforts and achievements. Our smart working approach also offers an agile and flexible approach to how, when and where people can work and prioritises talent over traditional working practices.	Our purpose (page 3) Our business model (page 4) Statement of the Chair (page 8) Chief Executive Officer's statement (page 11) Stakeholder engagement report (page 50) Directors' remuneration report (page 111)
C	Resources and controls 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. Beazley has established an Audit and Risk Committee (separated into two different committees from 1 January 2023) and operates a three lines of defence model which allows for a strong governance framework of internal controls and managing risk.	Risk management and compliance (page 67) Governance framework (page 79) Audit and Risk Committee (page 91)
D	Shareholder and stakeholder engagement The Board is committed to open and regular communication and engagement with shareholders and other stakeholders.	Stakeholder engagement (page 50) Stakeholder engagement and investor relations (page 87)
E	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.	Stakeholder engagement: our people (page 50) Whistleblowing (page 71) Non-financial information statement (page 26)
Division of responsibilities
F	The role of the Chair Christine LaSala (and prior to that David Roberts) leads The Board and facilitates constructive and open debate between The Board and management. The Board is responsible for the overall effectiveness of itself and its Committees, for agreeing and shaping the culture of the organisation and ensuring high standards of corporate governance. The chair reviews the performance of Non-Executive Directors and the Senior Independent Director leads a review of the Chair. The Nomination Committee reviews the performance of the Executive Directors. Clive Bannister will be appointed as the new Chair on 25 April 2023.	Governance framework (page 79) Board evaluation (page 88) Nomination Committee (page 100)
G	Board composition and division of responsibilities The Board comprises eleven directors including the Chair: two Executive Directors and nine independent Non- Executive Directors, one of whom is the Senior Independent Director. None of the Non-Executive Directors have served on The Board for more than nine years. The Board considers all of the Non-Executive Directors to be independent. The Chair was deemed independent on appointment.	Board of Directors (page 77) Governance framework (page 79)
H	Role of the Non-Executive Directors Non-Executive Directors are required to attest on appointment that they are able to allocate sufficient time to discharge their duties effectively and all have done so. The Nomination Committee is responsible for monitoring and reviewing each Non-Executive Director’s commitments. All Directors receive information in a regular and timely fashion to enable them to provide challenge, guidance and advice and to hold management to account.	Governance framework: The Board (page 81) Training, information and support (page 85) Nomination Committee (page 100)
I	Ensuring the Board functions effectively and efficiently The Company Secretary works with the Chair, the Chairs of the Committees and the Chief Executive Officer to ensure that The Board has the policies, information, time and resources it needs in order to function effectively and efficiently. There is a detailed programme of training for the Directors throughout the year. If a Director requires professional advice in the furtherance of discharging their duties they are authorised to seek advice from independent advisors at the company's expense.	Training, information, and support (page 85)

www.beazley.com Beazley | Annual report 2022 75

Statement of corporate governance

continued

Application of UK Corporate Governance Code Principles
Code Provision and Application		See further information
Composition, succession and evaluation
J	Succession planning for The Board A key remit of the Nomination Committee is reviewing any skills gaps of the Directors and the composition of The Board (including the diversity of The Board, their cognitive and personal strengths and tenure) to allow for smooth succession planning. Succession planning processes are well embedded at Beazley and are formal, rigorous and transparent. Where Beazley uses external search consultants, we ensure that consultants are and remain independent.	Nomination Committee (page 100)
K	Skills, experience and knowledge of The Board 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.	Nomination Committee (pages 100)
L	Board evaluation During the 2022 financial year, The Board undertook an internally facilitated review in line with the UK Corporate Governance Code guidance. The last externally facilitated board evaluation was conducted in 2021.	Board evaluation (page 88)
Audit, risk and internal control
M	Ensuring the independence and effectiveness of the internal and external audit A key remit of the Audit and Risk Committee is reviewing the effectiveness and quality of the financial and narrative statements, the audit process and the independence and objectivity of the external auditor. From 2023 onwards, the responsibilities of this will fall under the separate Audit Committee. The Committee also reviews and monitors the independence and performance of the internal audit function.	Audit and Risk Committee (page 91)
N	Fair, balanced and understandable assessment The Board and the Audit and Risk Committee consider the annual report and ensure that it presents a fair, balanced, and understandable assessment of the company’s position and prospects. The Board receives a report from management to assist with making this assessment.	Fair, balanced and understandable assessment (page 95) Audit and Risk Committee (page 91)
O	Risk management and internal controls The Board and the Risk Committee (previously the Audit and Risk Committee) are responsible for reviewing the effectiveness of the risk management activities from a strategic and operational perspective. These activities are designed to identify and manage the risk of failure to achieve business objectives or to successfully deliver our business strategy. An annual review of the internal controls is undertaken by the internal audit function.	Risk management and compliance (page 67). Audit and Risk Committee (page 91)
Remuneration
P	Designing remuneration policies The Remuneration Committee is responsible for determining remuneration policies and practices which support the strategy and promote the long-term sustainable success of the company. The remuneration policy is being put forward for shareholder approval at the 2023 AGM and there has been significant shareholder engagement on the proposals.	Remuneration Committee (page 106) Directors’ remuneration report (page 111)
Q	Executive remuneration We have benefited from open and constructive shareholder engagement which leads to the proposals being put forward in our remuneration policy for shareholder approval at the 2023 AGM. We continue to ensure that executive remuneration is fit for purpose and aligned with our long-term strategy.	Remuneration Committee (page 106) Directors’ remuneration report (page 111)
R	Remuneration outcomes and independent judgement The Remuneration Committee determines remuneration outcomes for the Directors and senior management. It exercises independent judgement and discretion around individual performance and the wider circumstances. No individual is involved in determining their own pay.	Remuneration Committee (page 106) Directors’ remuneration report (page 111)

76 Beazley | Annual report 2022 www.beazley.com

Board of Directors

The Beazley Board is comprised of individuals with broad skillsets and a range of experience in leadership roles, making them 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.

The Board strengthened its composition with the appointments of Fiona Muldoon and Cecilia Reyes Leuzinger in 2022.

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. As stated in the interim Chair's letter, it is intended that Clive will take up the role of Chair at the conclusion of the

Company's AGM on 25 April 2023.

1. Christine LaSala

Interim Chair and

independent Non-Executive

Director

Appointed: 1 July 2016

Experience: Christine became the

Interim Chair of The Board with effect

from 21 October 2022. She was the

Senior Independent Director prior to

this interim appointment and chaired

the Remuneration Committee from

March 2021 to October 2022. Based

in New York, she was previously chair

of Willis Towers Watson North America.

She has over 45 years of

management, client leadership and

financial experience in the insurance

industry including work as an

underwriter and 27 years as an

insurance broker, leading large

business units and working with

corporate and public institution clients.

Christine’s experience includes board

and leadership roles at Johnson &

Higgins and Marsh and 10 years as

Chief Executive Officer of the WTC

Captive Insurance Company.

Committee: NC (Interim Chair), RC

Skills: insurance, distribution, strategy,

risk management, client leadership,

regulatory, governance and talent and

leadership development

2. Clive Bannister

Independent Non-Executive

Director and Chair Designate

Appointed: 8 February 2023

Experience: Clive was appointed as a

non-executive director on 8 February

2023 and will take up the role of Chair

at the conclusion of the company's

AGM on 25 April 2023. He will also

join and Chair the Nomination

Committee following the AGM. Clive is

currently the Chair of Rathbones Group

plc and the Museum of London. Clive

has extensive leadership and strategy

experience, having previously been the

CEO 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 transformational

experience to The Board. 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 a

number of non-executive directorships

as well as his current chair positions.

Committee: Will join NC as Chair from

25 April 2023

Skills: strategy, transformation,

mergers and acquisitions, commerce,

banking and insurance, leadership

and governance

3. Adrian Cox

Chief Executive Officer

Appointed: 6 December 2010*

Experience: Adrian was appointed as

Chief Executive Officer in April 2021.

He began his career at Gen Re in 1993

writing short tail facultative reinsurance

before moving to the treaty department

in 1997, where he wrote both short

and long tail business specialising in

financial lines. He joined the Specialty

Lines division at Beazley in 2001

where he performed a variety of roles

including underwriting manager,

building the long tail treaty account,

managing the private enterprise teams

and the large risk teams before taking

responsibility for Specialty Lines in

2008. He took on the role of Chief

Underwriting Officer in January 2019.

Adrian was also appointed to The

Board of Beazley Furlonge Limited in

2008.

Committee: EC, DC

Skills: insurance, management,

international business development,

strategy, leadership and people

management and governance.

4. Sally Lake

Group Finance Director

Appointed: 23 May 2019

Experience: A Fellow of the Institute of

Actuaries since 2004. Sally joined

Beazley in 2006 initially working with

the Specialty Lines division, the largest

underwriting division, for six years. This

gave her a breadth of exposure to

many aspects of the business at

Beazley, especially focusing on claims

analytics and reserving. In 2012 Sally

became reserving manager and then

Group Actuary in 2014. As Group

Actuary, Sally covered both pricing and

reserving, as well as capital model

validation. She became Group Finance

Director in May 2019.

Committee: EC, DC

Skills: reserving and actuarial pricing,

capital modelling and management,

leadership and people management,

strategy and governance

www.beazley.com Beazley | Annual report 2022 77

Board of Directors

5. Rajesh Agrawal

Independent Non-Executive

Director

Appointed: 1 August 2021

Experience: Raj is Senior Vice

President and Chief Financial Officer at

Arrow Electronics, Inc which is

headquartered in Centennial, Colorado.

He was appointed to Arrow in

September 2022 following a career at

Western Union spanning from 2006 to

2022. At Western Union, Raj was a

member of the executive team

responsible for leading Western

Union’s global finance organisation,

including financial reporting, financial

planning and analysis, tax, treasury,

internal audit and investor relations as

well as providing guidance on the

Company’s operations and strategic

direction. Raj holds an MBA from

Columbia University.

Committee: AC, RC

Skills: finance, strategy, operations,

international business development

6. Pierre-Olivier Desaulle

Independent Non-Executive

Director

Appointed: 1 January 2021

Experience: Pierre-Olivier has over 25

years of experience as an international

insurance executive, with a focus on

products and distribution innovation.

He joined the Beazley plc Board in

January 2021. Since 2017, he has

been a Non-Executive Director of

Beazley Insurance dac and has chaired

The Board since 2021. He served as

Chief Executive Officer of Hiscox

Europe until 2017 and has held a

number of other executive roles within

the (re)insurance industry including

strategic planning, operations and

systems director at Marsh. With a

background in strategy consulting,

having been at Strategic Planning

Associates (now Oliver Wyman), he

transitioned to insurance helping

Marsh with the integration of a leading

French broker. He is currently the chief

insurance officer of the InsurTech

startup, Pattern.

Committee: RIC, NC

Skills: insurance, reinsurance, strategy,

operations and distribution

7. Nicola Hodson

Non-Executive Director

Appointed: 10 April 2019

Experience: In January 2023, Nicola

was appointed as the Chief Executive

officer of IBM, UK and Ireland. Nicola

was previously Vice President Field

Transformation, for Microsoft Global

Sales and Marketing and prior to this

chief operating officer for Microsoft UK.

She is also a Non-Executive Director on

The Board of Drax Group plc and is

chair of its Remuneration Committee.

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.

Committee: RIC, RC (Interim Chair)

Skills: strategy, leadership and

management, business and digital

transformation, Information

Technology, and sales and marketing

8. Fiona Muldoon

Independent Non-Executive

Director

Appointed: 31 May 2022

Experience: Fiona has over 30 years’

experience in the insurance industry.

Fiona was the CEO 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, in Dublin,

London, and Bermuda. Fiona is

currently an independent Non-Executive

Director of the Bank of Ireland group,

where she is a Director on the Group

Board and on the board of New Ireland

Life Assurance, its wholly owned life

insurance subsidiary.

Committee: AC, RIC

Skills: insurance, strategy, stakeholder

management, governance, finance,

capital management and leadership

9. John Reizenstein

Independent Non-Executive

Director

Appointed: 10 April 2019

Experience: John has more than 30

years’ experience in financial services,

most recently as Chief Financial Officer

of Direct Line Insurance Group plc,

from which he retired in 2018. 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. In

addition to the Beazley plc Board, John

is also a non-executive Director of

Beazley Furlonge Limited and chairs its

Audit Committee. He is a Non-

Executive Director of Scottish Widows,

a member of the Takeover Panel, chair

of Farm Africa and a trustee of

Nightingale Hammerson.

Committee: AC (Chair), RIC, NC

Skills: finance, strategy, leadership,

investment and mergers and

acquisitions

10. Cecilia Reyes Leuzinger

Independent Non-Executive

Director

Appointed: 31 May 2022

Experience: 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 spent 17

years with Zurich Insurance Group,

latterly as its group chief risk officer,

leading the global risk function. Prior to

that she was its group chief investment

officer and spent eight years on the

Group executive committee while

holding these positions. Prior to that

Cecilia spent her career at ING

Barings, ING Asset Management and

Credit Suisse Group in various senior

roles. Cecilia is a member of the

Supervisory Board of NN Group NV.

Committee: AC, RIC, RC

Skills: risk management, insurance

investment management, strategy,

leadership and management,

responsible investment strategy

11. Robert Stuchbery

Independent Non-Executive

Director and interim Senior

Independent Director

Appointed: 11 August 2016

Experience: Bob was previously the

president of international operations of

The Hanover Group until he retired

from the Group in May 2016. He brings

extensive Lloyd’s experience, having

been Chief Executive Officer of Chaucer

until 2015 and having held numerous

management roles at the company for

over 25 years, He has a deep

knowledge of the Lloyd’s market and

distribution and operational strategies.

In addition to The Beazley plc Board,

Bob is also a non-executive Director of

Beazley Furlonge Ltd, and chairs its

risk committee. Bob acted as the

Employee Voice of The Beazley plc

Board until November 2022, and he

took on the role of Interim Senior

independent Director from 21 October

2022. Bob 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.

Committee: AC, RIC (Chair), RC

Skills: insurance, risk management,

distribution, and strategy

78 Beazley | Annual report 2022 www.beazley.com

Governance Framework

The company operates through the main Board and a number of

Committees. During 2022, those committees were the Audit and Risk,

Nomination and Remuneration Committees and details of their main

responsibilities and activities in 2022 are set out on pages 91 to

110.

With effect from 1 January 2023, the combined Audit and Risk

Committee has been 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.

Adrian Cox is the Chief Executive Officer 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 governance framework of the main Board

and its Committees is shown in the diagram on page 80.

The roles of the Chair and Chief Executive Officer are separate, with

each having clearly defined responsibilities as set out in the corporate

governance framework diagram. 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

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.

www.beazley.com Beazley | Annual report 2022 79

80 Beazley | Annual report 2022 www.beazley.com

Separation of Audit and Risk Committee

On 9 December 2022 The Board approved the proposal to

replace the Audit and Risk Committee with a separate Audit

Committee and Risk Committee from 1 January 2023. This

step was taken to strengthen the Group’s overall approach to

corporate governance and enable each of the new committees

to give greater focus to their areas of responsibility.

The key objectives of the Audit Committee are to assist The

Board of Directors in fulfilling its oversight responsibilities for

the financial reporting process, the system of internal financial

controls and the audit process.

The key objectives of the Risk Committee are to provide

oversight of the Beazley Group’s risk management framework

and processes for monitoring compliance with laws and

regulation. Specific duties of the Risk Committee include

oversight of the Group’s whistleblowing arrangements and

providing assurance to The Board in relation to key Group-wide

transformational projects.

More detail regarding the role of each Committee, including

the terms of reference, is available on the website.

The Board

Beazley plc’s Board consists of Executive and Non-Executive

Directors with responsibility for overseeing the company’s

activities. The Board is responsible for establishing the

company’s purpose, values and strategy, and satisfying itself

that these and its culture are aligned. The Board is required to

ensure that the necessary resources are in place for the

company to meet its objectives and measure performance

against them.

All Directors must act with integrity, lead by example, and

promote the company’s culture. Non-Executive Directors are

required to allow sufficient time to meet their Board

responsibilities and provide constructive challenge, strategic

guidance, offer specialist advice and hold management to

account.

Matters reserved for The Board

The Board has a schedule of matters reserved for its decision.

This includes, inter alia: strategic matters; statutory matters;

matters intended to generate and preserve value over the

longer term; acquisitions and disposals over a certain

quantum; approval of financial statements and dividends;

appointments and terminations of Directors, officers and

auditors; and appointments of committees and setting of their

terms of reference. The Board is responsible for: setting the

company’s values, strategy and purpose; oversight of the

Group’s long-term commercial and sustainable success;

reviewing Group performance against budgets; generation of

long-term shareholder value; approving material contracts;

determining authority levels within which management is

required to operate; overseeing the internal control framework;

reviewing the Group’s annual forecasts; and approving the

Group’s corporate business plans, including capital adequacy

and the Own Risk and Solvency Assessment (ORSA). The

Board is responsible for determining the nature and extent of

the principal risks it is willing to take in pursuing its strategic

objectives. To this end, The Board is responsible for the

capital strategy, including the Group’s Solvency II internal

model. The Board is responsible for climate-related matters

including the company’s own impact on the environment and

climate-related risks. Furthermore, The Board is responsible

for considering how stakeholder interests have been

considered within decision-making processes and to perform

their duties as outlined in Section 172 of the UK Companies

Act 2006. Details of how The Board has put this into practice

are outlined on pages 50 to 57.

Regulated 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 regulated subsidiary Boards.

There are Beazley plc directors on the principal regulated

subsidiary Boards, with four Beazley plc Non-Executive

Directors also serving on the Beazley Furlonge Limited Board.

Pierre-Olivier Desaulle chairs the Beazley Insurance

designated activity company Board and Adrian Cox chairs the

Beazley Insurance Company Inc Board. The links between our

Group Board and principal regulated subsidiary Boards help

ensure effective information flows and collaboration across

the Group. The Board encourages positive and collaborative

relationships between the Boards and further enhancements

are being made to the framework following the board

effectiveness review. For more information see the board

evaluation report on page 88.

www.beazley.com Beazley | Annual report 2022 81

Governance Framework

continued

Board composition

During 2022, The Board was headed by the Non-Executive

Chair David Roberts, who was independent on appointment,

until his resignation on 21 October 2022. Following this,

Christine LaSala, who was independent on appointment to

The Beazley plc Board, was appointed as Interim Chair and

has led The Board whilst the recruitment process for a new

Chair was being conducted. In addition to the Chair, at 31

December 2022, The Board consisted of seven independent

Non-Executive Directors. Prior to David’s resignation, there

were eight independent Non-Executive Directors in addition to

the Chair. Christine LaSala was the Senior Independent Non-

Executive Director until her appointment as interim Chair on

21 October 2022. Robert Stuchbery was appointed as the

Interim Senior Independent Director on 21 October 2022. The

Board also consists of two Executive Directors, Adrian Cox

who is Chief Executive Officer and Sally Lake who is the Group

Finance Director. The Non-Executive Directors, who have been

appointed for specified terms and are subject to annual

election or re-election by the shareholders, are considered by

The Board to be independent of management and free of any

relationship which could materially interfere with the exercise

of their independent judgement.

On 8 February 2023, the new Chair Designate Clive Bannister

was announced. Following this appointment there are nine

independent Non-Executive Directors including the Chair

Designate, who was independent on appointment.

The Senior Independent Director will, if required, deputise for

the Chair and 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.

On 25 March 2022, The Board appointed Pierre-Olivier

Desaulle to the Nomination Committee and on 26 April 2022

The Board appointed Raj Agrawal to the Remuneration

Committee. Cecilia Reyes Leuzinger and Fiona Muldoon were

appointed as Non-Executive Directors to The Board and as

members of the Audit and Risk Committee with effect from 31

May 2022. Cecilia Reyes Leuzinger was also appointed to the

Remuneration Committee on the same date.

Following David Roberts standing down as Chair, and until the

new Chair commences the role, Christine La Sala is acting as

Chair of the Nomination Committee. Nicola Hodson is acting

as Interim Chair of the Remuneration Committee. Bob

Stuchbery, as confirmed above, is acting as Interim Senior

Independent Director.

Board information

The Company Secretary, Christine Oldridge, ensures that

board members receive timely and accurate financial and

operational information to enable them to discharge their

duties appropriately. Board papers are circulated digitally,

usually one week in advance of board meetings. Directors also

have access to independent professional advice at the

company’s expense, if they consider this appropriate. During

2022, independent professional advice was sought on

conflicts of interest in relation to proposed group transactions.

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.

Biographies of current board members appear in The Board of

Directors section on page 77. The biographies indicate the

high level and wide range of business experience that are

essential to manage a business of this size and complexity.

An established operational and management structure is in

place and the roles and responsibilities of senior executives

and key members of staff are clearly defined.

Board meeting attendance

The full Board meets at least five times each year and more

frequently where business needs require. In 2022, there were

six regular board meetings. The activities of The Board are set

out on pages 83 and 84. During the year, there were also ad

hoc meetings to consider senior management changes, the

conflict in Ukraine and the impact on the Group, the equity

raise and the business plan and scheduled joint meetings of

The Boards and Committees of Beazley plc and other

regulated 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 ad hoc meetings as

required to discuss specific matters. The Chair holds

meetings with the Non-Executive Directors without the

Executive Directors being present.

In addition to its regularly scheduled meetings, The Board met

on an additional seven occasions throughout the year with

nearly full attendance. In total, there were 13 board meetings

throughout 2022. Attendance at the regular board and

committee meetings is set out in the table on page 83.

82 Beazley | Annual report 2022 www.beazley.com

Board meeting attendance table

Director	Board		Audit and Risk Committee		Remuneration Committee		Nomination Committee
	No. of meetings	No. attended	No. of meetings	No. attended	No. of meetings	No. attended	No. of meetings	No. attended
Rajesh K Agrawal1	6	6	10	10	4	3	–	–
Adrian P Cox	6	6	–	–	–	–	–	–
Pierre-Olivier Desaulle2	6	6	10	10	–	–	3	3
Nicola Hodson3	6	6	10	9	6	6	–	–
Sally M Lake	6	6	–	–	–	–	–	–
Christine LaSala	6	6	–	–	6	6	4	4
Fiona Muldoon	4	4	7	7	–	–	–	–
A John Reizenstein	6	6	10	10	–	–	4	4
Cecilia Reyes Leuzinger	4	4	7	7	4	4	–	–
David L Roberts4	4	4	–	–	–	–	3	3
Robert A Stuchbery	6	6	10	10	6	6	–	–
Catherine M Woods5	1	1	2	2	2	2	1	1

1Raj Agrawal was appointed to the Remuneration Committee on 26 April 2022. He was unable to attend the December Remuneration Committee due to a long-

standing scheduling clash.

2Pierre-Olivier Desaulle was appointed to the Nomination Committee on 25 March 2022.

3Nicola Hodson was unable to attend the November Audit and Risk Committee due to a long-standing scheduling clash.

4David Roberts stepped down from The Board and Nomination Committee on 21 October 2022.

5Catherine Woods stepped down from The Board and Committees on 25 March 2022.

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.

Board discussions during the year

At each scheduled meeting The Board receives reports from the Chief Executive Officer 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

and the Chairs of Board Committees. In addition, The Board receives updates on operational matters, strategy and business

planning, major projects and corporate governance.

www.beazley.com Beazley | Annual report 2022 83

Governance Framework

continued

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 of all matters. During the year, The Board has spent time on the following key areas:

	For further information, see:
Strategy
•2023 business plans and budgets	Financial review (page 58)
•Medium and long-term plans	Financial review (page 58)
•Responsible business strategy, including a net zero strategy and joining the Net Zero Alliance, United Nations Global Compact initiative and the Terra Carta Sustainable Markets Intiative •Oversight of key strategic projects •Equity raise	Responsible business (page 21) Responsible business report (www.beazley.com) Section 172 statement (page 55) Directors’ report (page 140)
Performance
•Capital position/allocation and the dividend policy	Capital structure (page 64) Dividends (page 95)
•2021 preliminary results and annual report and accounts 2022 interim results and trading updates •Implementation of IFRS 17	Interim results (www.beazley.com) Financial review (page 58)
•Business performance reports including underwriting and investments from the Chief Underwriting Officer and Chief Investment Officer respectively •Impact of economic and social inflation including on financial performance and actuarial reserving	Chief Executive Officer's statement (page 11) Chief Underwriting Officer's report (page 13) Financial review (page 58)
•Regular dashboard and milestone reports	Key performance indicators (page 2)
•Dividend proposals	Dividends (page 95)
•Ongoing investment in operational infrastructure	Section 172 statement (page 55)
Culture & people
•New corporate brand and strategy	Chief Executive Officer's statement (page 11)
•Share plan rule amendments, including the LTIP, deferred plan and UK SAYE plan	Directors’ remuneration report (page 111)
•Talent development and succession planning	Nomination Committee (page 100)
•Inclusion and diversity updates	Nomination Committee (page 100) Directors' report (page 140)
•Employee engagement and staff surveys	Stakeholder engagement (page 50)
•Issues impacting employees, including the cost of living crisis	Chief Executive Officer's statement (page 11) Stakeholder engagement (page 50)
Governance & risk
•Changes to the composition of The Board, in particular the appointment of a new Chair	Board of Directors (page 77) Nomination Committee (page 100)
•The impact of the war in Ukraine, including the implementation of Russian sanctions	Chief Executive Officer's statement (page 11)
•Board and Committee evaluations	Board evaluation (page 88)
•Cyber Risks including threats to the business from cyber attacks, and review of lessons learned from attempted attacks •Review of threats and opportunities to the business model from cyber risks •Cyber systemic risk adjustments	Chief Executive Officer's statement (page 11) Chief Underwriting Officer's report (page 13)
•Risk management framework, including risk appetite, risk governance and the Own Risk and Solvency Assessment	Risk management & compliance (page 67) Audit & Risk Committee (page 91)
•Legal and regulatory compliance including UK Corporate Governance Code, Companies Act and listed company obligations	Statement of corporate governance (page 75)
Stakeholder engagement
•Engagement with the workforce, including employee voice updates	Stakeholder engagement (page 50) Section 172 statement (page 55)
•Engagement with clients and broker partners
•Engagement with regulators and regulatory correspondence and feedback
•Reports from Investor Relations including shareholder engagement, ongoing shareholder consultations, investor relations strategy, and share price performance	Stakeholder engagement (page 50) Engagement in action: spotlight on the remuneration policy (page 90) Shareholder engagement and investor relations (page 87)
•Major shareholders and share register analysis	Shareholder engagement and investor relations (page 87)

84 Beazley | Annual report 2022 www.beazley.com

Training, information and support

New directors receive appropriate induction training when they

join The Board. They 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. Where appropriate, mentoring is

provided to new directors by an external provider. Annual

training is provided for all directors. The training sessions

include business and industry specific topics and information

on changes to director duties and responsibilities and to legal,

accounting, information security and tax matters. Standard

training modules are regularly reviewed to ensure they meet

best practice and the changing business environment.

Bespoke training will also be provided if requested by any

director.

In 2022, director training included: reinsurance strategy and

economics, IFRS 17, European operating structure and cyber

scenarios. The training sessions include 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.

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 2022 a series of briefings

were held on IFRS 17 to provide director with sufficient detail

on the requirements and key judgements which would need to

be made by The Board and Committees upon transition to the

new standard in 2023.

To enable The Board to function effectively and directors to

discharge their responsibilities, full and 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.

During the year, there has been a continued focus on

improving the quality of board reporting to promote better

discussions and further assist decision-making. Refresher

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.

Board performance evaluation

The report on the internal Board evaluation carried out during

2022 and progress against the outcomes of the 2021

externally facilitated evaluation is on page 88.

Inclusion and diversity

The Board firmly believes that having an inclusive and diverse

workplace will support us in our ambitions to outperform the

markets in our chosen areas of business. The Board has

continued to meet the ethnic diversity targets set by the

Parker Review. The Board is currently comprised of 45%

women directors.

We were pleased to already be meeting the new Listing Rule

requirements that at least one of the chair, senior

independent director, chief executive officer or finance director

roles is held by a woman; that 40% of The Board are women;

and that at least one member of The Board is from a minority

ethnic background (as categorised by the UK Office of

National Statistics). We have voluntarily disclosed this

information for 2022 in the Nomination Committee report.

In addition, we have met the voluntary recommendations of

the FTSE Women Leaders Review, that 40% of senior

leadership positions are held by women by the end of 2025.

Our own goal is 45% representation by the end of 2023, which

we are on target to meet.

The current composition, gender, tenure and diversity of The Board members are set out below.

www.beazley.com Beazley | Annual report 2022 85

Governance Framework

continued

We look to set our own stretching diversity targets in line with

our responsible business strategy. During the year The Board

approved a new target to increase the representation of

people of colour in senior leadership roles. More information

is included in the responsible business report on page 21 and

the Nomination Committee report on page 100.

The Board has adopted a global Inclusion and Diversity policy,

which sets out the approach to inclusion and diversity across

the business. In January 2022, The Board also adopted its

own Inclusion and Diversity policy. Diversity of thought is also

championed, and our Board reflects this, with the skills and

experience of the directors set out in the biographies on

pages 77 and 78. There is a mix of tenures on The Board

which brings a fresh perspective as well as a long-term

understanding of the business, how it has grown and its

culture.

The Nomination Committee continually reviews our approach

to diversity and our aim is to promote diversity in the hiring of

new employees and in creating opportunities for individuals to

progress their career within Beazley.

Further details regarding The Board’s approach are included in

the report from the Nomination Committee on page 100. The

responsible business report on page 21 looks at our approach

to inclusion and diversity including how we monitor the targets

set by the business for female and people of colour

representation in senior roles and how we collect data for the

purposes of making these disclosures in accordance with the

Listing Rules.

Audit 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 139 and the Independent Auditor’s Report on page 146.

The Board is responsible for the Group’s system of 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 2022 and

continue to operate up to the date of approval of the annual

report and accounts. More information is provided in the Audit

and Risk Committee report on page 91.

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 risk KPIs and reviews of specific risk

areas. There is ongoing reporting of risk matters to the Audit

and Risk Committee and Board, via the risk management

team. Risk management also provide The Board with specific

assessments of risk to support key decision-making. Early in

the year, risk management provided a risk assessment for the

Ukraine/Russia conflict, with particular regard to our MAP and

Cyber classes, which identified key themes and areas of focus

as well as recommendations for The Board’s consideration.

The Board also discussed a risk assessment on inflation

(including economic and social inflation) highlighting key

recommendations and the mitigations in place across core

functions. In addition, risk management provided an opinion

on the approach to, and risks around, loss estimates for

Hurricane Ian. Other ongoing assessments throughout the

year included regular reviews of the Group’s modernisation

programme, data management control framework and

economic downturn risk. During the year the risk management

framework and risk appetite statements were reviewed and

refreshed. Further information is provided in the risk

management and compliance report on page 67.

During 2022, the Audit and Risk Committee and Board have

reviewed and provided comment on the Own Risk and

Solvency Assessment (ORSA) report. The ORSA provides a

detailed assessment of the short- and long-term risks faced by

the company to ensure that solvency needs can be met. The

ORSA policy is reviewed and approved annually by The Board.

The Audit and Risk Committee receives regular reports on the

findings of reviews undertaken by internal audit. The

Committee also considered any significant findings raised by

the external auditors during their reviews of the annual and

interim results. Members of the Audit and Risk Committee

could also discuss relevant matters with the internal and

external auditors without members of management being

present.

On 1 January 2023, the Audit and Risk Committee was

replaced by a separate Audit Committee and Risk Committee

to enhance oversight responsibilities and committee

effectiveness. Recommendations for the membership of both

Committees were provided to The Board by the Nomination

Committee.

Further information on the activities of the Audit and Risk

Committee in 2022 is set out in the Audit and Risk Committee

report on page 91 and further information on risk

management at Beazley is set out in the risk management

report on page 67.

86 Beazley | Annual report 2022 www.beazley.com

Shareholder engagement and investor relations

The company places great importance on communication with its shareholders. Further information on how we engage with

shareholders is contained in the stakeholder engagement report on page 50. Useful shareholder information is also available in

the investor relations section of the company’s website www.beazley.com.

The company has the authority within its articles of association to communicate with its shareholders using electronic and

website communication and to allow for electronic proxy voting.

Regular dialogue with shareholders is coordinated by the investor relations team. Presentations of the annual and interim

results are made to analysts by the Chief Executive Officer, Group Finance Director and, where appropriate, other members of

senior management. The Head of Investor Relations, senior management and members of The Board meet with institutional

shareholders to discuss relevant matters. The views of shareholders are communicated to The Board via a regular report from

the Head of Investor Relations and through feedback from Directors following meetings.

The company’s shares are listed on the London Stock Exchange. The share price is available from the company’s website.

There are currently 17 analysts publishing research notes on the Group. In addition to research coverage from Numis and JP

Morgan, the company’s joint corporate broker, coverage is provided by Autonomous, Barclays, Berenberg, Bank of America, Citi,

Goldman Sachs, HSBC, Jefferies, Keefe Bruyette & Woods, Morgan Stanley, Panmure Gordon, Peel Hunt, Exane Paribas, RBC,

and UBS.

Analysis of share register

The company’s shareholders at 31 December 2022 are analysed below:

Number of shares held	Number of shareholders	Percentage of total shareholders	Number of ordinary shares	Percentage of issued share capital
1-500	120	8.24%	29,835	—%
501-1,000	122	8.38%	90,825	0.01%
1,001-2,000	151	10.37%	223,513	0.03%
2,001-5,000	223	15.32%	743,296	0.11%
5,001-10,000	158	10.85%	1,141,481	0.17%
10,001-100,000	337	23.15%	11,652,650	1.74%
100,001-1,000,000	229	15.73%	86,621,234	12.91%
1,000,001-999,999,999	116	7.96%	570,701,186	85.03%
Totals	1,456	100.00%	671,204,020	100.00%

Category of shareholder	Number of ordinary shares	Percentage of issued share capital
Institutional	663,021,917	98.78%
Retail	8,182,103	1.22%
Totals	671,204,020	100.00%

www.beazley.com Beazley | Annual report 2022 87

Board evaluation

Board and Committee performance evaluation

An evaluation of the performance of the Beazley plc Board and its committees is carried out annually. The evaluation is

designed to assess whether The Board and its Committees are operating effectively and whether the Chair and individual

Directors are making effective contributions. 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.

An externally facilitated performance evaluation is carried out every three years, and the evaluation is conducted internally in

other years. As an external evaluation was conducted by Clare Chalmers Limited in 2021, the Nomination Committee

determined that it was appropriate for the 2022 performance evaluation to be conducted internally. The external and internal

evaluations complement Beazley’s overall approach to board evaluation.

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 scope of the evaluation. This scope is designed to build on Beazley’s experience from previous evaluations, whilst also enabling the evaluator to use their own experience and independence to provide insight. The evaluator will conduct interviews with Directors, attend board and committee meetings and review meeting materials to support assessments of the effectiveness of The Board and its Committees. On conclusion of their work, the evaluator will provide a detailed report on their findings, which they will present to The Board for review and discussion. The Board will therefore have the opportunity to challenge any of the findings before an action plan is agreed. Progress against these actions is monitored by The Board throughout the year. This process is undertaken for Beazley plc and other key Group subsidiaries.		The Chair and Company Secretary meet 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 a number of specific questions are asked to each director to determine overall Board and Committee effectiveness. The findings from this work are presented to The Board and an action plan is created to address specific findings. Progress against these actions is monitored by The Board throughout the year. 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 this review of the Chair. The findings from these discussions are considered alongside individual Directors’ skills self- assessments to identify any areas for individual or collective board training for the following year. This process is undertaken for Beazley plc and other key group subsidiaries.

Findings from the 2022 evaluation

Performance of The Board and its Committees

Overall, the 2022 evaluation concluded that The Board and

each of its Committees are operating effectively. The overall

findings were that The Board and Committees have strong

compositions and good diversity of background and

experience; there is an inclusive culture in the board room,

which encourages challenge and contribution from the

Directors; and that the newer Non-Executive Directors have

brought new insights and perspectives which are helpful and

positive. A number of actions were agreed to address specific

observations and support the continued effectiveness of The

Board and Committees, and these actions are set out below.

Specific comments are made in the committee reports on

relevant findings from the evaluation of that Committee.

Chair and individual Director performance

Overall, the evaluation concluded that the Chair and each

Director are operating effectively and contributing to the

effective operation of The Board and Committees. A number of

areas to support Directors’ individual or collective

performance were identified, and action plans have been

formulated. This includes delivery of the 2023 Board

knowledge and training plan.

The 2022 review concluded that the Chair provided support to

the effective operation of The Board through strong leadership

and driving an open and inclusive environment where debate

is encouraged. This feedback was considered by the

Nomination Committee when assessing candidates for the

role as the new Chair of Beazley plc.

88 Beazley | Annual report 2022 www.beazley.com

Recommendations and actions from the 2022 Board performance evaluation

Recommendations		Actions
Seek to further improve the efficiency of corporate governance across Boards and Committees without impacting effectiveness.		A governance review project is underway to address this recommendation, with input from Directors and management. The introduction of separate Audit and Risk Committees was strongly supported by Directors – there will be specific focus on the efficient implementation of these Committees.
Improve the processes around short- and longer- term business planning.		Steps will be taken to improve interactions between short- and longer-term business plans and how The Board provides input into these plans.
Create an integrated scorecard as a more impactful means of monitoring the performance of businesses and key programmes.		An integrated performance scorecard is being developed for implementation in 2023.
Ensure meeting agendas are appropriately focussed.		Agenda planning work will seek to ensure meeting agendas have the right focus, including to allow sufficient time to fully discuss strategic and commercial items.
Ensure The Board has appropriate oversight and understanding of IFRS 17 changes.		For the first part of 2023 up to the full implementation of IFRS 17, necessary time will be 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.
Maximise the effectiveness of the overall board timetable.		In 2023, we will take steps to improve the overall effectiveness of the board timetable. This will include consideration of the sequencing of meetings and the use of in-person/hybrid formats to support the effective operation of The Board and Committees and encourage free-flowing conversations.

Progress made on action areas from the 2021 external Board performance evaluation

Action areas		Progress
Ensure Non-Executive Directors continue to provide a creative contribution by stepping back from the detail in areas where management can provide assurance.		Through 2022, Directors have been focussed on providing the right level of input and oversight, and avoiding getting into too much detail where this is not needed. This has been supported by improvements to the quality of board reporting (as mentioned below). The Executive Committee also received specific training on how to best manage relationships with The Board.
Continuing to improve Board reporting.		Following the work commenced in 2021, steps have continued in 2022 to embed improved reporting to Boards and Committees. At each meeting, views are sought from Directors on areas where reporting can be further improved. Feedback is then shared with authors and support and training provided. A suite of reporting templates and training materials has been made available to all employees to support in preparing board reports.
Considering sequencing of meetings to streamline agendas and achieve efficiency between The Board and Committees, and key subsidiary boards, by assigning responsibility for oversight of different topics.		Specific focus has been given to the timetable of meetings in 2023 to support efficiency of operation and decision-making across Boards and Committees. Work to further drive the efficiency of corporate governance will continue through the governance review action identified in the 2022 evaluation.
Sharpening The Board’s strategic focus by giving more attention to a five- and ten-year time horizon		Improving long-term strategy and planning have been key areas of focus in 2022. The board reviewed specific medium-term and long-term plans in 2022, and approved steps for their further development and implementation. In line with previous years, The Board met over a number of days in May to discuss strategic matters. This included consideration of longer-term market trends, technological developments, ESG and overall business strategy. The Board will continue to consider and debate matters of longer-term strategic importance.
Exploring ways to enhance workforce engagement.		A re-launch of the employee voice took place during 2022 and included the enhancement of board reporting of employee engagement. Fiona Muldoon was appointed as the employee voice of The Board in November 2022, and will continue the work with Culture & People and other stakeholders to review the process and channels for engagement between the workforce and The Board. See the stakeholder engagement report on page 50 for more information on engagement channels.
Continuing to lead the Group on ESG matters and ensuring there is sufficient reporting to subsidiary Boards to enable them to fulfil their regulatory responsibilities.		During 2022, the Beazley plc Board’s role in overseeing the Group’s overall approach to ESG has been embedded. The Board oversees the work of the Responsible Business Steering Group in embedding best ESG practices across the Group, and ensuring appropriate reporting to subsidiary Boards.

www.beazley.com Beazley | Annual report 2022 89

Engagement in action:

spotlight on the

remuneration policy

In accordance with the Code, our remuneration policy is

subject to a binding vote from shareholders every three years.

The policy was last approved at the 2020 AGM, and the

revised policy will be proposed for approval at the company's

AGM on 25 April 2023.

In advance of presenting the final policy for approval at the

2023 AGM, the remuneration committee conducted an

extensive engagement exercise to ensure that shareholders’

views were addressed. This exercise commenced in October

2022 with the chair of the remuneration committee writing to

the majority of Beazley’s shareholders (who collectively

represented 94% of Beazley’s issued share capital) and the

main proxy advisory agencies to gather shareholder feedback

for consideration in the proposed new policy. Through this

written communication, the committee was able to clearly set

out the key policy changes being considered and how they

would further align executive remuneration pay with Beazley’s

long-term strategy.

We invited shareholders to provide their responses to the

proposals and gave them the opportunity to meet with the

chair of the remuneration committee and members of Beazley

management to further discuss the proposed changes and

provide feedback. Following this, a number of meetings were

held with shareholders and written feedback was also

received. This feedback was discussed by the remuneration

committee, and has resulted in a number of changes being

made to the remuneration policy being presented for approval

at the 2023 AGM, as follows:

•Long-Term Incentive Plan (LTIP) – Around 145 employees

participate in Beazley’s LTIP each year and it represents a

critical tool to incentivise and retain senior talent.  Since

2012 the vesting of our LTIP has been wholly based on

growth in net asset value per share (NAVps).  NAVps is

Beazley’s central KPI and its use in the LTIP strongly aligns

the interests of participants with our shareholders.  LTIPs

are awarded in two tranches with 50% vesting over three

years (subject to an additional two year holding period) and

50% vesting over five years. The five year performance

period is longer than is typically seen in the market.

During the consultation we explored the idea of amending

our performance assessment so that NAVps would be

measured over five separate years. The intention being that

this would help to limit the disproportionate impact that

exceptionally good or bad years can have over the five year

performance period. The design included a number of best

practice features including an underpin, so that awards

could be scaled back if cumulative NAVps growth was

negative.

Based on some shareholder feedback the Committee decided

against the annualised LTIP approach. Taking into account the

views of shareholders the remuneration committee agreed

that it would not proceed with this change. Instead, the

committee is proposing an amendment to the policy so that

the entire LTIP is based on performance measured over three

years. This compromise more closely aligns to typical market

practice, taking on board the views of shareholders, and

reduces the impact that a single year has on multiple LTIP

awards.

•ESG in incentives – during 2022 the remuneration

committee has given careful consideration on how Beazley’s

commitment to doing the right thing for our people, partners

and the planet should be reflected in the remuneration

framework.  ESG performance forms part of the annual

bonus, and as part of the consultation, the committee

proposed that ESG metrics should be included in the LTIP.

Shareholders gave their strong support for this proposal,

and the committee has taken into account their comments

when setting ESG targets that are suitably stretching,

quantifiable and align with our external commitments.

•Chief Executive Officer salary – Although the Chief Executive

Officer’s salary is not a matter concerning the new policy,

the committee was also keen to discuss this with

shareholders.

The Remuneration Committee recognises the calibre,

experience and track record of Adrian Cox, and his key role

in supporting Beazley to deliver its long-term strategic

priorities. The committee was of the view that Adrian’s

salary did not reflect his particular skills and experience, nor

that it was appropriate for Beazley’s size and complexity.

Accordingly, the committee considered that it would be

appropriate to make an increase for 2023.

A number of shareholders commented that generally they

expect salary increases for executives directors to be in-line

with or below the increases for the workforce, and that this

issue was exacerbated by the current macro-economic

environment. The committee agrees with this principle as

can be seen by the alignment between the Group Finance

Director’s salary increase and the workforce.  In addition,

they took into account the recent support provided by

Beazley to the workforce, including one-off payments and

additional salary increases to those employees most likely

impacted by the cost-of-living crisis. Overall, the committee

believes that the proposed salary increase to the Chief

Executive Officer remains appropriate, further information on

which is found on page 122 of the directors’ remuneration

report.

The other proposed changes to the policy were strongly

supported by all shareholders that engaged with the company.

The Remuneration Committee welcomed the opportunity to

engage openly with its shareholders and appreciates the input

of all those who participated in the consultation. Full

information on the proposed changes to the remuneration

policy are available in the Directors’ remuneration report on

page 111.

90 Beazley | Annual report 2022 www.beazley.com

Audit and Risk Committee

Dear shareholder

I am pleased to report on the activities of the Audit and Risk

Committee in 2022 as we supported The Board in overseeing

accurate financial reporting and audit processes, compliance

with laws and regulations and a robust risk management

framework.

Firm foundations in a turbulent time

2022 has been a particularly turbulent time on a global level.

The devastating war in Ukraine, cost of living crisis and effects

of global inflation have further reminded us of our

interconnected world and how impacts of events can be far

reaching. This followed closely after the impacts of Covid-19

and the changes we all needed to make on a personal and

business level.

During this challenging year, the audit and risk committee

helped support Beazley’s resilience through its oversight of

reserving, its role in ensuring the quality and integrity of

financial reporting, and of a robust external audit process and

its ongoing monitoring of the appropriateness of Beazley’s risk

management framework. The committee continued to oversee

risks arising from the war in Ukraine and its secondary effects,

including assumptions around inflation and volatility in energy

prices and financial markets.

Preparedness for significant accounting and regulatory

regime changes

2023 will see a number of significant changes to the way we

are required to report and oversee our business. The

implementation of IFRS 17 from 1 January 2023 will represent

a major change to how all insurers account for their business

activities, and has particular impacts on Beazley due to the

range of business we write.

There has been a significant project undertaken across many

functions in Beazley in preparing the business for the changes

under IFRS 17, and I extend my thanks to the team for the

work they have undertaken. During 2022, the Audit and Risk

Committee closely monitored the progress of this project.

Committee members also received training and briefings to

ensure they fully understood the scope of IFRS 17 to support

their discussions with management.

The Committee was also actively involved in reviewing and

debating with management on the key accounting judgements

to be made under IFRS 17. Shareholders will ultimately see

the full impacts of IFRS 17 in our 2023 reporting, starting with

the 2023 half-year results and we are reporting on the

transition to IFRS 17 in the financial review on page 58 and in

note 1 to the financial statements on page 163.

The Committee has also overseen steps being taken across

Beazley in preparedness for changes in US requirements

relating to the oversight, monitoring and governance of

insurance business, under the Model Audit Rule (MAR).

Climate reporting

We discuss throughout this annual report Beazley’s

commitment to doing the right thing and being a responsible

business. In supporting these commitments, the Committee

has overseen further enhancement of Beazley’s reporting of

ESG matters in accordance with the ‘Taskforce on Climate-

Related Financial Disclosures’ (TCFD), and the early adoption

of reporting requirements under the Companies (Strategic

Report) (Climate-related Financial Disclosure) Regulations

2022.

Supporting our shareholders

The Committee carried out an assurance role for The Board in

relation to the successful cUSD400m equity raising in

November 2022. This role involved not only considering

financial assumptions around the capital raising, but also

challenging management to ensure the capital raising was

carried out in the best interests of all stakeholders.

Prior to any decision to pay a dividend, the Audit and Risk

Committee reviews the viability of the business over the long

term. The Audit and Risk Committee was happy to support The

Board’s decision to resume the payment of a dividend

following finalisation of the results for 2021.

Helping Beazley keep ‘different’

The audit and risk committee took a number of steps in 2022

to help support change at Beazley.

During 2022, the committee oversaw a reorganisation of the

Risk Management and Compliance teams to ensure these

functions are best aligned with to the growth of the business.

The committee maintained its strong relationship with

Beazley’s Chief Risk Officer, Rob Anarfi, in supporting the

reorganisation.

The transition to separate Audit and Risk Committees

I’d like to sign off this letter, which I write in my previous role

of chair of the audit and risk committee, by thanking my fellow

committee members. With effect from 1 January 2023, the

Beazley plc Board has taken the decision to create separate

Audit and Risk committees to further enhance Beazley’s

corporate governance framework and enable each Committee

to have greater focus on their respective roles.

On a personal level, I look forward to taking on the role of

Chair of the new Audit Committee. I am also delighted that

Bob Stuchbery has taken on the role to chair the Risk

Committee. Bob and I will continue to work together In our

new capacities.

John Reizenstein

Audit Committee Chair

(previously Audit and Risk Committee Chair)

www.beazley.com Beazley | Annual report 2022 91

Audit and Risk Committee

continued

The overall role of the Audit and Risk Committee during 2022

was unchanged from previous years. However, since 1 January

2023 The Board has established separate audit and risk

committees to enable greater focus on the different areas of

responsibility. More information on this decision is provided in

this report. The remainder of this report provides information

on the activities of the Audit Committee during 2022, with

activities already undertaken by the Audit and Risk Committee

specifically highlighted.

The Committee supported The Board of Directors in

overseeing the accuracy of financial reporting, and ensuring

the system of internal 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.

During 2022, the committee was focused on matters relating

to maintaining the Group’s strong financial performance,

notwithstanding the residual impact of COVID-19 and the

global effects of the Ukraine conflict and related sanctions

monitoring. They also considered the ongoing development of

sustainability and climate change responsibilities, the

monitoring of the consultation by the UK’s Department for

Business, Energy and Industrial Strategy (BEIS) on reforms to

audit and corporate governance and preparing for the

implementation of IFRS 9 and IFRS 17 and the US Model

Audit Rule. In the discharge of their remit, the committee gave

due consideration to all relevant laws and regulations, the

provisions of the UK Corporate Governance Code (‘Code’) and

the requirements of the UK Listing Authority’s Listing,

Prospectus and Disclosure and Transparency Rules (DTRs)

and any other applicable rules, as appropriate.

Committee membership and meetings

During the year, Fiona Muldoon and Cecilia Reyes Leuzinger

were appointed to the Committee and Catherine Woods stood

down. Fiona and Cecilia’s appointments strengthened the

Committee’s ‘recent and relevant financial experience’ and

‘sectoral experience’, as required by the Code and DTRs, both

having gained over 25 years’ experience in the insurance

industry. All Committee members were independent Non-

Executive Directors and details of each member’s relevant

experience are given in their biographies on pages 77 and 78.

Committee meeting attendance table 2022

Director	Audit and Risk Committee
	No. of meetings	No. attended
Rajesh K Agrawal	10	10
Pierre-Olivier Desaulle	10	10
Nicola Hodson1	10	9
Fiona Muldoon	7	7
A John Reizenstein	10	10
Cecilia Reyes Leuzinger	7	7
Robert A Stuchbery	10	10
Catherine M Woods2	2	2

1Nicola Hodson was unable to attend the November meeting due to a

long-standing scheduling clash

2Catherine Woods stepped down from the committee on 25 March 2022

The Committee received regular updates from the audit and

risk committees of the Group’s regulated subsidiaries and

holds a joint meeting of the audit and risk committees of

Beazley plc and other regulated Group entities to consider

policies, the internal audit plans for the forth-coming year and

other matters relevant across entities.

The Audit and Risk Committee was required to meet at least

quarterly, with meetings scheduled at appropriate intervals in

the reporting and audit cycles. Additional meetings were held

as required. In 2022, there were a total of nine scheduled

meetings in addition to the joint meeting.

Only members of the Committee had the right to attend

meetings; however, standing invitations were extended to the

Group Chair, the Senior Independent Director, the Chief

Executive Officer, the Group Finance Director, the Chief Risk

Officer, the Head of Internal Audit and external auditors. The

Chairs of the Audit and Risk Committees of the Group’s

regulated subsidiaries also attended Audit and Risk

Committee meetings during the year as and when appropriate.

The Company Secretary acted as secretary to the committee.

The internal and external auditors attended committee

meetings and 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

Chief Actuary. In addition, the Chair of the Audit and Risk

Committee had regular contact with the external and internal

auditors throughout the year and members of the committee

met individually with regulators when required.

Committee performance evaluation

The Committee reviewed its effectiveness during the year, as

part of The Board evaluation process (see page 88). The

Board confirmed that the committee was effective in its role.

However, due to the business’s growth strategy, the

increasing risk oversight required, and the increasing amount

and complexity of reporting requirements, an action arising

from the review was to consider creating separate audit and

risk committees to ensure strong governance and to allow

sufficient time for oversight of these important matters for The

Board.

92 Beazley | Annual report 2022 www.beazley.com

At its board meeting on 9 December 2022, The Board

approved the separation of the Beazley plc Audit and Risk

Committee into two separate committees. The Committee

supported the proposal for the dissolving of the Audit and Risk

Committee and the establishment of a separate Audit

Committee and Risk Committee with effect from 1 January

2023. The nomination committee provided recommendations

to The Board for the membership of both committees. Terms

of reference for the separate audit and risk committees were

also approved by The Board and are available on the website.

The Committee had oversight of the closure of actions arising

from the 2021 committee effectiveness review and reviewed

the new actions arising from the 2021 review during the year.

See the board evaluation report on page 88 for more details

on this process.

Responsibilities of the committee

The Committee’s main responsibilities are unchanged from

the prior year and are set out below:

Audit and financial reporting

a)Financial and narrative reporting

•monitor the integrity of the company’s financial and

narrative statements including any disclosures such as the

Task Force on Climate-Related Financial Disclosures (TCFD)

report, interim report, preliminary or other formal

announcement relating to the company’s financial

performance;

•review significant financial reporting judgements contained

in the financial statements;

•review and challenge the consistency of, and any changes

to, significant accounting policies both on a year-on-year

basis and across the company/Group;

•review and monitor the going concern assumption and

viability statement;

•advise The Board on whether, taken as a whole, the annual

report is fair, balanced and understandable and provides

the information necessary for shareholders to assess the

company’s performance, business model and strategy; and

•review other reporting such as the solvency and financial

condition report.

b)Internal audit

•recommend the appointment, or termination of

appointment, of the head of the internal audit function;

•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 consideration of resources.

c)External audit

•review and make recommendations to The Board regarding

the external audit contract, including appointment,

remuneration, and terms of engagement;

•review and oversee the relationship with the external audit,

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.

d)Internal control, Risk management and compliance

•review and make recommendations to The Board on the

effectiveness of the internal financial controls and the

internal control and risk management systems, including

oversight of breaches of risk appetite;

•review the risk management and compliance plans and level

of resources to perform the roles effectively and review the

effectiveness of the compliance function;

•review statements in the annual report concerning internal

control, risk management and assessment of principal and

emerging risks;

•review and recommend to The Board the annual Own Risk

and Solvency Assessment (ORSA) report;

•review whistleblowing arrangements in place for raising

concerns, in confidence;

•review procedures in place relating to fraud detection,

prevention of bribery and anti-money laundering; and

•monitor the performance and independence of consulting

actuaries used for the review of insurance reserving.

Committee activities during 2022:

a)Financial and narrative reporting

The Committee reviewed the full and half year results

announcements, the quarterly trading statements, the annual

report including viability and going concern statements to

recommend to The Board for approval. The Committee also

reviewed environmental and sustainability reporting, for

example the TCFD report and Solvency II reporting.The 2022

full year results announcement and annual report were

ultimately recommended to The Board by the Audit

Committee, which commenced its role in 2023.

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 discussion with EY, agreed

whether they were appropriate. The table on page 94 sets out

the key accounting estimates and judgements for 2022 and

how these were addressed.

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 and Risk 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, premium

income estimates and other key financial statement captions.

Based on reporting 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.

www.beazley.com Beazley | Annual report 2022 93

Audit and Risk Committee

continued

Critical financial judgements and estimates for year ended 31 December 2022

Area of focus	How addressed by the committee
Valuation of insurance contract liabilities
As further explained in note 24 to the financial statements, the Group’s policy is to hold sufficient provisions, including those to cover claims which have been ‘incurred but not reported’ (IBNR) to meet all liabilities as they fall due. The reserving for these claims represents the most critical estimate in the Group’s financial statements.	In 2022, we noted the uncertainty around the impact of the Russia/Ukraine conflict and the rise in inflation, and cost of living increases on the global economy. Accordingly, the potential that higher inflation and insolvency in certain corporate sectors will result in increased volatility, as well as greater estimation challenges in respect of insurance claims, remained a key consideration for 2022. The Group continued to monitor its exposure to ‘social inflation’ and the potential for higher than average court settlements. The key areas of exposure are within our healthcare and employment practices lines of businesses where claims can take many years to finalise. As courts continue to deal with increased litigation, the uncertainty around the level and acceleration of social inflation remains. Given the outlook for the US and European economies, reserve loadings for recession, excess economic and social inflation undergo regular monitoring by the actuarial function for potential management action. There was continued improvement in frequency measures for ransomware claims frequency on our US Cyber book for 2022. However, there are indications that these frequency trend reductions are slowing down, and therefore this remains an area of uncertainty. The Group also continued to gain more certainty around COVID-19 related claim costs in 2022 as more data materialised on claims settlements. The Audit and Risk Committee received regular reports from both the internal Group chief actuary and the external audit team (including the Senior Accounting Officer), as the output of independent projections are reviewed at key reporting quarters. In the latter part of the year, the Group Chief Actuary has reported on the results of the third-quarter reserving process, which the committee considered to be a key control as this process provides a level of informed independent challenge for the reserve position. To support the year-end view, the Committee has received a detailed paper in support of the level of margin held within technical reserves in the Group’s statement of financial position. Management confirmed that they remain satisfied that the outstanding claims reserves included in the financial statements provide an appropriate margin over projected ultimate claims costs to allow for the risks and uncertainties within the portfolio, and the Committee was satisfied that there were no errors or inconsistencies that were material in the context of the financial statements as a whole. As in prior years, the committee also considers the report of the external auditor following its re-projection of reserves using its own methodologies. On the basis of the information provided by the Group actuary and through the consistent application of Beazley’s reserving philosophy, the Audit Committee was satisfied that the reserves held on the Group statement of financial position at 31 December 2022 were appropriate.
Valuation of unquoted and illiquid 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, particularly our illiquid credit assets, requires significant judgement.	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 2022 Board-approved risk appetite, that carrying values of the portfolio as at 31 December 2022 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 2022. Further detail on the valuation of financial assets is given in note 16.
Premium estimates
A portion of gross written premiums is based on the estimated premium income (EPI) of each contract, which is an underwriters’ estimate of the ultimate premium expected to be paid over the life of the contract. Judgement is required in determining these estimates.	The Committee received a summary of the processes and controls around EPI and how they had operated throughout the year. The Committee receives comfort over EPI through managements’ quarterly review process over these estimates which validate their adequacy and reasonableness.
Assessing indicators of impairment of Goodwill
As further explained in Note 12 to the financial statements, the Group considers annually whether its Goodwill and other indefinite 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.	The Committee received information to enable it to review managements 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 respect of the carrying value of all of the Group’s intangible assets and there was no impairment of the Group’s intangible assets as at 31 December 2022.

94 Beazley | Annual report 2022 www.beazley.com

Area of focus	How addressed by the committee
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:	Materiality – the Committee considered how management determine and apply materiality in the context of preparing the financial statements. IFRS 17 Disclosure - the Committee reviewed and approved management's approach to disclosing the potential impact of IFRS 17 on the Group's 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. Accounting for defined benefit pension scheme – the Committee reviewed a summary of the third-party actuarial valuation of the defined benefit pension scheme liability. The Committee also reviewed the accounting treatment for the purchase of insurance policies by the scheme trustees during the year. Recoverability of insurance and reinsurance receivables – the Committee reviewed management’s methodology in assessing the recoverability of insurance reinsurance receivables. Taxation – The Board and Committee receive regular updates from the Group Head of Tax with regard to taxation matters. Equity raise – the Committee reviewed and agreed the accounting treatment and disclosure of the Group’s equity raise in November 2022.

Going concern and viability

Assessing the viability and going concern statements was a

key activity of the Committee. During key reporting periods,

management set out for 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. In 2022, we considered the Group’s

capital position with regards to the Group’s issuance of new

equity of approximately USD400m. This additional capital will

support the growth of our Property business and the retention

of more of the business in our Cyber and Specialty Risk

divisions.

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.

Dividends

During the year the Committee also reviewed the

appropriateness of reinstating the dividend. It was decided

that the dividend would be reassessed at the year end when

the full year result was available. In February 2023, the Audit

Committee considered the full year result and the declaration

of a 13.5p interim dividend.

Fair, balanced, and understandable assessment

It is a key requirement of the Group’s financial statements to

be 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 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 2022 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.

Solvency II reporting

The Committee reviewed and approved the Group’s 2021

solvency and financial condition report and regular supervisory

report as well as approving the Solvency II policy

documentation for the Group.

ESG reporting

During the year, the Committee has considered the quality of

ESG reporting as contained in the Responsible Business and

TCFD reports. This topic will remain an area of ongoing focus

for the plc audit committee as reporting standards and climate

change metrics develop and as Beazley’s Responsible

Business Strategy is further embedded. The Committee

received updates from the external auditor on their review of

TCFD reporting, which is performed by their specialist

sustainability reporting team. Management commissioned the

external auditor to carry out additional ‘pre-assurance’

procedures over the TCFD report. This included peer analysis

of disclosures, scrutiny of metrics and substantiation of

qualitative statements.

At the joint meeting of committees in November, the Chief

Underwriting Officer reported on the licensing of three new

Climate Change models to augment to Group’s understanding

and estimation of the impact of climate change on the

business we write. The Group also continued to hire personnel 

who strengthened the Group's oversight of Climate change,

and will look to continue this in 2023.

www.beazley.com Beazley | Annual report 2022 95

Audit and Risk Committee

continued

Monitoring forthcoming regulatory changes

The committee received updates on:

•preparedness for forthcoming key accounting and regulatory

changes, including IFRS 17 and changes which may occur

depending on the outcome of the UK Government's

consultation on reforms to audit and corporate governance.

The committee notes that management have mobilised a

project to consider the impact of these reforms and that

more clarity is expected during 2023; and

•monitoring of key reporting and regulatory updates,

including updates on accounting standards, changes in tax

legislation and changes in regulatory requirements. This

included the Model Audit Rule and Lloyd's new risk based

approach.

IFRS 17

The Committee received detailed reports on the IFRS 17

project, including key implications and judgments as well as

progress towards implementation. As well as reports from the

finance team, they also received reports from EY. Information

shared included the proposed risk adjustment methodology as

well as other assumptions and decisions required with the

introduction of IFRS 17. Several Board deep dive training

sessions were carried out during the year in relation to IFRS

17. The Committee have also concluded on the IAS 8

disclosures included in these financial statements.

External audit

One of the committee’s most important responsibilities is

managing the relationship with the Group’s external auditor,

Ernst & Young LLP (‘EY’) on behalf of The Board and having

oversight of the external audit process.

During the year, the Committee:

•Reviewed the findings from EY’s audit of the 2021 Group

Annual report and accounts and the Group’s Solvency II

Solvency and Financial Condition Report.

•Reviewed EY’s Audit Plan Audit plan for the 2022 year end

audit. The committee noted that the plan and scoping was

consistent with previous audits but responds to the Group’s

increased size and complexity. EY also set out in this plan

their proposed approach and timings with regard to the

audit work over IFRS 17.

•Reviewed the findings of EY’s review of the Group’s Interim

report in July 2022. This predominantly focused on EY’s

assessment of management’s approach to estimating

exposure to the conflict in Ukraine and the review

procedures over the interim report and key judgemental

balances such as the valuation of hard to value investments

and intangible assets.

•Oversaw the change in role of the head of compliance to

also cover risk, and associated changes in the compliance

function.

•Reviewed EY’s findings coming out of their interim audit

work ahead of the year end. This work predominantly

focused on the testing of controls over processes from

which financial information is derived, in addition to a

detailed actuarial review of our Q3 reserving position. The

actuarial review included a deep dive on management’s

treatment of inflation within our reserves, as well as

benchmarking losses to natural catastrophes such as

Hurricane Ian in the year.

•Reviewed EY’s Improvement Ideas report which they issue

in consultation with management following the conclusion of

the 2021 year end audit across all group entities. This

report sets out suggested improvements to controls and

processes which will further enhance the integrity of the

financial reporting process.

•Reviewed and agreed EY’s audit fee for the 2022 year end.

A comprehensive paper was set out by EY explaining their

proposed increase in fee and benchmarking the Group’s fee

to similar audits. The significant increase in the audit fee

this year reflects both changes in scope, the costs of

operational separation and inflationary considerations.

•Received an update from EY on the implementation of

operational separation of its audit practice in line with the

FRC’s principles for Operational Separation. The committee

noted that this had limited practical impact on the Group’s

audit, although the requirement for arm’s length rate cards

for certain specialists and other structural changes to the

audit fee as a result of separation contributed to the

increase in the Group’s audit fees.

•Were briefed by EY on their global plan to separate their

audit and consulting units into two separate businesses.

The committee will continue to monitor developments in this

area, with a focus on ensuring that the effectiveness and

quality of the audit remains high.

•Reviewed management’s assessment of the effectiveness

of the external audit process and EY’s response to the

FRC’s Audit Quality Inspection and Supervision Report which

was issued in June 2022.

The Committee regularly meet 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 meeting on a regular

basis.

i) Assessing the effectiveness of the external auditor

The Committee placed great emphasis on ensuring there are

high standards of quality and effectiveness in the external

audit process.

Audit quality and effectiveness was assessed throughout the

year, with a focus on strong audit governance and the quality

of the team, including 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

audit included the following activities:

•reviewing the quality and scope of the audit planning and its

responsiveness to changes in the business and identified

risk;

•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. The survey focused on five areas; Audit

Quality, Forward Looking & Insightful; Efficiency & Audit

Delivery; ‘No surprises’ and Service Quality & Audit Team

Engagement. Responses also covered EY’s professional

scepticism and from non-executive directors the extent to

which EY challenged management. The overall results of the

survey were favourable, concluding the external audit

process to be effective and the challenge provided to be

96 Beazley | Annual report 2022 www.beazley.com

robust. The survey also highlighted areas proposed by

management where EY and management could work

together to improve the audit process; and reviewing the

FRC’s Audit Quality Inspection and Supervision Report for

EY. Overall, the FRC concluded that EY had made progress

on previous findings raised and had sought to make

improvements in relation to audit execution and firm-wide

procedures, although the committee noted that overall EY’s

results had deteriorated compared to prior reviews. The

Committee also noted that this predominantly related to

EY’s non-listed audits and that the 2019 audit of the Group

had been subject to review by the FRC with no significant

findings raised.

After taking all of the above into account, the Committee

concluded that the external audit process was effective.

ii) Non-audit services and independence of the external auditor

The Audit and Risk Committee’s responsibility to monitor and

review the objectivity and independence of the external auditor

was supported by a policy in relation to the provision of non-

audit services by the auditor. The committee regarded the

independence of the External Auditor as of the utmost

importance in safeguarding the integrity of the external audit

process.

During 2022, our non-audit services policy was reviewed by

the committee. The objective is to ensure that the provision of

such services does not impair the external auditor’s

objectivity. The policy specifically disallows certain activities

from being provided by the auditor, such as bookkeeping and

accounting services, internal actuarial services and executive

remuneration services. 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 such proposed

appointments to ensure they have been robustly justified. The

committee receives a report from the external auditors setting

out all non-audit services undertaken, so that it could monitor

the types of services being provided, and the fees incurred for

that work.

In the year, fees for audit and audit related services were

$6.2m (2021:$3.8m). Fees for non-audit and assurance

services for 2022 were $0.7m (2021:$0.6m) 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. None of the non-audit

services provided are considered by the audit and risk

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.

EY gave the annual confirmation of their independence to the

Committee, confirming in particular that no partners or staff

held any financial interests in the Beazley Group and that their

ethics and independence policies are consistent with the

requirements of the FRC’s ethical standard.

Having taken into account 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 were in compliance 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 that

•EY have confirmed compliance of their staff and partners

with EY’s internal policies and processes around

independence, in particular that no partners or staff held

financial interests in the Group.

iii) Auditor Tenure and reappointment

The 2022 year end audit has been EY’s fourth consecutive

year end as the Group’s auditor, following their appointment in

2019 following a comprehensive tender process. The Group is

required to put the audit out to a competitive tender process

at least every ten years. It is anticipated that the next

competitive tender will be conducted prior to the

commencement of the 2029 audit. Following the conclusion of

the 2022 year end audit, the current audit partner, Stuart

Wilson, will have served as senior statutory auditor for four

years. In line with UK regulation the audit engagement partner

must rotate after their fifth year leading the audit, and thus a

new lead audit partner will be required for the 2024 audit. It is

expected that a successor will be identified in 2023.

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. There are no contractual obligations

which restrict the Group’s choice of auditor. EY have indicated

their willingness to be reappointed as the Group’s auditor and

the Audit Committee has recommended to The Board that they

be reappointed.

Internal audit

During 2022, 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. 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.

During 2022, the Committee:

•considered the results of all internal audit reports, and the

findings and themes emerging from them;

•considered the annual report from internal audit, which

included: analysis of the delivery of the audit plan;

significant findings and overdue actions; the control

environment and risk management framework and risk

management culture; control environment; and

whistleblowing.

•monitored the implementation of the 2022 internal audit

plan;

•considered the internal audit approach to monitoring change

portfolio risk including the Group’s modernisation

programme;

•reviewed the proposal for internal audit’s approach to the

monitoring of external assurance across the Group;

www.beazley.com Beazley | Annual report 2022 97

Audit and Risk Committee

continued

•reviewed and approved the basis for internal audit planning.

This included reviewing and approving the Group’s risk-

based audit universe and the internal audit plan, and

reviewing other business developments which could also

potentially be the subject of internal audit work in the

coming year. It also included challenging the frequency of

audits in certain areas of the business and the balance

between thematic reviews and full end-to-end audits;

•reviewed and approved the internal audit charter;

•reviewed and approved the internal audit budget for 2023;

and

•monitored the timely implementation of agreed

management actions and reviewed the status of the same.

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 effectiveness of internal audit was monitored by the Audit

and Risk Committee, through agreeing plans and performance

monitoring. External Quality Assurance 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. The Committee was

satisfied that the internal audit function remained effective.

Internal controls

The Board is responsible for the Group’s system of internal

control and for reviewing its effectiveness. However, as part of

this process the Audit and Risk Committee was responsible

for reviewing the effectiveness of financial controls and

internal controls and risk management framework.

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, and corporate policies

and the effective management of risks faced by the Group in

executing its strategic and tactical operating plans. In 2022

this also included the Model Audit Rule assessment.

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.

Internal Audit also noted that de-risking and simplification of

the Group’s processes is planned for 2023 as part of the

Group’s modernisation and has implemented a process to

monitor change portfolio risk.

The Committee discussed the report prepared by Internal

Audit and were satisfied that the Group’s system of internal

control and risk management framework continues to operate

effectively.

Risk management and compliance

Risk

To assist The Board, the Committee, supported by the risk

committees of the regulated subsidiary Boards, received and

reviewed reports from the risk management function focusing

on the following areas:

Regular reporting

•risk appetite: the Committee has monitored the actual risk

profile against risk appetite throughout 2022 and the Risk

Committee can confirm that Beazley plc has been operating

within risk appetite as at 31 December 2022. The

Committee has also reviewed the proposed enhancements

to the 2023 risk appetite statements and to the risk

appetite framework;

•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 and are being monitored;

•risk profiles: the Committee reviewed risk profiles, which

are focused risk assessments of specific topics. In 2022,

the Committee considered an assessment of inflation risk.

Risk management also provided an opinion on the approach

to, and risks around, estimates for Hurricane Ian in relation

to the Q32022 interim management statement which was

deemed reasonable and consistent with the approach for

previous natural catastrophe losses;

•emerging risk: the Committee specifically considered areas

of emerging risk via separate reports and through the Own

Risk and Solvency Assessment (ORSA). In addition, the

Committee requested that EY provide a schedule of key

external topics relevant to the Group for 2022 relevant to

the changing economic landscape. This resulted in EY

providing presentations on ‘Economic Trends impacting

underwriting and claims’ and ‘Leading Practices for Risk and

Internal Audit functions’;

•oversight of the control environment: the Committee

received regular risk management and second line

assurance reports which provided commentary on the

status of the control environment. These included entries

from the risk incidents log. This was supplemented by an

annual Chief Risk Officer opinion on the performance of the

enterprise risk management framework;

•reverse stress testing: the Committee received the results

of the reverse stress testing exercise, which explores what

would have to happen for the Group to be unviable and has

been able to provide assurance to The Board that this work

has been performed with the appropriate level of depth and

expertise;

•heightened risk: the Committee considered the heightened

risk register half-yearly. A risk is considered heightened if

the likelihood or the impact of occurrence is higher than

usual;

•oversight of the internal model: the Committee and the risk

committees of the subsidiary Board reviewed regular reports

associated with the internal model. These have included a

standing report on internal model output, and a validation

report 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’ use of the internal model;

98 Beazley | Annual report 2022 www.beazley.com

•ORSA: the committee received ORSA reports and reviewed

them before recommending them to The Board.

Transactional ORSA reports were produced to support half-

year and full-year financial reporting for the Group. A

transactional ORSA was considered at the April meeting of

the Committee which identified the Ukraine conflict and

inflation as key risk areas with judgements and estimations

relevant to the 2022 half-year result. The uncertainty around

potential losses was particularly related to our Marine and

PAC and Cyber classes. This resulted in the additional

measures being implemented which included the

application of a specific uncertainty provision to the booked

reserves for the Ukraine conflict, that Specialty Risk

exposures be explicitly considered, and that horizon

scanning be performed to consider exposures and losses

should the conflict escalate;

•risk function: the committee oversaw and monitored the

planning of new hires into the risk function;

•capital: the committee approved the Group solvency capital

requirement (SCR); and

•culture: the Committee received observations on risk

culture as part of the various risk reports presented.

Other topics discussed in 2022

•Climate change modelling: the committee received an

update on the three additional climate change models

licensed by Beazley in 2022; the RMS US Hurricane Climate

Change Model, the RMS US Wildfire base model and the

RMS US Flood base model. The models will provide a vital

tool in helping us to understand and estimate the impacts

of climate change on the business we write. In 2023, it is

intended that a Natural Catastrophe Research Lead will be

hired by our Exposure Management team to help deepen

our knowledge of the potential impacts of climate change.

•Strategic projects: the Committee considered of progress

updates for the Group’s modernisation programme and

measures implemented to mitigate any risks arising from

the project;

•Conflict in Ukraine: the Committee considered of regular

updates on the continued adequacy of loss estimates in

connection with the war in Ukraine against the changing

landscape of the conflict

•Inflation: the Committee obtained assurance from

management on the process for monitoring reserve loadings

for recession and excess economic and social inflation in

response to the changing economic environment.

Compliance

The Chief Risk Officer, who oversees the compliance function,

had direct access to the committee members and attended all

committee meetings.

To assist The Board, the Committee received reports and

updates from the compliance function on various issues

including, but not limited to, regulatory developments, routine

and non-routine interactions with the Group’s regulators and

any significant instances of non- compliance with regulatory or

internal compliance requirements.

During 2022, the committee:

•reviewed and approved the annual compliance plan,

including the compliance monitoring programme;

•monitored the implementation of the 2022 compliance plan;

•received updates on the appointment of the new group head

of compliance and other changes to the resourcing of the

compliance function. The committee also received updates

on the structure and effectiveness of the company’s

compliance function;

•received updates on the structure and effectiveness of the

company’s risk management function;

•reviewed changes in the regulatory environment applicable

to Beazley;

•received 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;

•reviewed updates from the money laundering reporting

officer on the adequacy and effectiveness of the company’s

anti-money laundering systems and controls;

•provided oversight of the progress of the business in

addressing identified enhancements to compliance

requirements;

•approved the Group policies and controls in respect of anti-

bribery and corruption and anti-fraud; and

•received updates on the framework, training and policy put

in place regarding whistleblowing and monitored the

implementation of Safecall, an independent whistleblowing

hotline.

In reviewing the effectiveness of the risk and compliance

functions the Audit and Risk Committee remained satisfied

that the risk and compliance functions had sufficient

resources during the year and into 2023 to undertake its

duties.

In addition, the Risk Committee and/or Boards of the Group’s

regulated subsidiaries received more locally-focused reports

which were specific to those entities.

www.beazley.com Beazley | Annual report 2022 99

Nomination Committee

“I have enjoyed leading the Nomination

Committee’s activities since October,

including the search for a new Chair. I am

delighted that our search has concluded with

the appointment of Clive Bannister who is

aligned with our commitment to creating a

respectful and inclusive workplace where our

people can thrive.”

The Board has delegated responsibility to the Nomination

Committee for oversight of the leadership needs of the

organisation including Board composition and effectiveness,

succession planning for The Board and senior executives,

oversight of appointments of new Directors and senior

executives and other related regulatory and governance

matters. The Committee’s role is to ensure that The Board, its

Committees, and the executive leadership team have the right

skills and capabilities, which promote diversity of thought and

approach to successfully oversee and implement the

company’s strategy.

Committee membership and meetings

The Nomination Committee is chaired by Christine LaSala on

an interim basis, and also comprises John Reizenstein and

Pierre-Olivier Desaulle. Until 21 October 2022, the Committee

was chaired by David Roberts with Christine LaSala, John

Reizenstein and Pierre-Olivier Desaulle as members. Pierre-

Olivier Desaulle was appointed on 25 March 2022, following

the resignation of Catherine Woods on the same date.

In 2022, there were four scheduled meetings and additional

ad hoc meetings and approvals, reflecting the workload of the

Committee during the year. This included the appointment of

new Directors, commencing a search for a new Chair and

approving interim arrangements. The activities of the

Committee during 2022 are set out below. Only members of

the Committee have the right to attend meetings; however,

other individuals, such as the Chief Executive Officer, Group

Head of Culture and People, 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.

Committee meeting attendance table 2022

Director	Nomination Committee
	No. of meetings	No. attended
Pierre-Olivier Desaulle1	3	3
Christine LaSala	4	4
A John Reizenstein	4	4
David L Roberts2	3	3
Catherine M Woods3	1	1

1Pierre-Olivier Desaulle was appointed to the Nomination Committee on 25

March 2022.

2David Roberts stepped down from The Board and Nomination Committee on

21 October 2022.

3Catherine Woods stepped down from The Board and Committees on 25

March 2022.

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.

Responsibilities of the Committee

The full responsibilities of the Nomination Committee are set

out in its terms of reference, which are available on the

company’s website.

The Committee’s main responsibilities are to:

•regularly review the structure, size and composition

(including the skills, knowledge, experience and diversity)

required by The Board compared to its current and projected

position;

•give full consideration to succession planning for Executive

and Non-Executive Directors and in particular for the key

roles of Chair and Chief Executive Officer, senior executives

and any other member of the senior management that it is

relevant to consider, whilst ensuring a diverse pipeline of

talent;

•ensure the Directors have the required skills and

competencies and receive an appropriate induction

programme;

•review annually the time required from Non-Executive

Directors;

•review the results of The Board performance evaluation

process that relate to the composition and skills and

competencies of The Board and ensure an appropriate

response to development needs;

•recommend to The Board appointments to the role of Senior

Independent Director and Chair as well as membership of

Board Committees;

•regularly review legislative, regulatory and corporate

governance developments and make recommendations to

The Board as necessary; and

•recommend, if appropriate, all Directors for election or re-

election by shareholders under the annual re-election

provisions of the UK Corporate Governance Code, having

due regard to their performance and their ability to continue

to contribute to the overall long-term success of The Board.

100 Beazley | Annual report 2022 www.beazley.com

Key Committee activities during 2022

	Activities	More information?
Effectiveness and performance	•Reviewed the actions from the 2021 effectiveness reviews. •Reviewed the knowledge, skills and training assessment for the Beazley plc and regulated subsidiary Boards, and determined whether the Boards continued to have the right mix of skills and experience. •Reviewed the plans for and outcomes of the 2022 effectiveness review for the Beazley plc Board, Committees, and key regulated subsidiary Boards and Committees.	Board evaluation (page 88).
Succession planning	•Reviewed Beazley plc and subsidiary board renewals and appointments, including succession planning. •Committee appointments and changes to membership. •Reviewed and recommended the appointment of two new independent Non-Executive Directors. •Commenced the search for a new Chair and carried out planning associated with the departure of previous Chair. •Reviewed executive performance and succession planning, including a review of the diversity of the talent pipeline. •Considered the composition of the separate Audit and Risk Committees, which became effective from 1 January 2023.	More information on succession planning and the process for appointing new Directors is included below. More information on the composition of the separate Audit Committee and Risk Committee is included on page 91.
Governance	•Reviewed diversity commitments and targets set by Beazley. •Reviewed policies including Inclusion and Diversity policies for The Board and the Group. •Reviewed the Committee's terms of reference. •Approved a change of non-executive director responsible for employee voice in the board room, in accordance with the Corporate Governance Code. •Approved interim governance arrangements until new Chair was selected and appointed.	More information on Inclusion and Diversity is included below and in the Responsible Business report on page 21. More information on the ‘employee voice’ is included in the stakeholder engagement report on page 50.

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.

The Committee also had a role in overseeing the evaluation

process for The Board and its Committees, and for the Boards

of key subsidiaries, which took part in the board and

committee evaluation process and in making

recommendations to the Boards.

In order to fulfil its responsibility to ensure The Board and its

Committees remain effective, the committee spent time

reviewing the actions from the 2021 board effectiveness

review, which was carried out by an external provider, Clare

Chalmers Limited. In addition, the Committee reviewed and

approved the plans for the 2022 internal board effectiveness

review for The Board, its Committees and for two of the

principal regulated subsidiary Boards and their Committees.

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 2023.

More information on the board evaluation process is provided

on page 88.

The Committee is responsible for evaluating the independence

of all Non-Executive Directors and undertakes an annual

review of each Non-Executive Director’s other interests. The

Board, on the recommendation of the committee, is satisfied

that each Non-Executive Director serving at the end of the year

remains independent and continues to have sufficient time to

discharge their responsibilities to the company.

Board knowledge and skills assessment

The Board and Committee recognise the importance of a

diverse and effective team with a broad mix of skills and

experience. As part of each annual board evaluation, Non-

Executive and Executive 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, along with other relevant

information and feedback. 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.

Based on the information received in 2022, the Committee

was satisfied that each of the Directors and The Board

remained effective and high-performing and that they had the

right mix skills and experience to challenge and support the

delivery of the strategy.

www.beazley.com Beazley | Annual report 2022 101

Nomination Committee

continued

Succession planning

Throughout 2022, the Committee carried out its key

responsibilities of ensuring that plans are in place for an

orderly succession to The Board, subsidiary Boards and wider

senior management positions and ensuring the continued

strong executive talent pipeline within the Group, which is a

key pillar of our strategy.

The Board and Committee believe that a regular refresh of

board membership is beneficial to a progressive, strong,

diverse, responsible and balanced leadership and therefore

the Committee regularly considered updates to the structure,

size and composition of The Board and its Committees. The

Committee receives reports which include information on the

composition of the Group and regulated subsidiary Boards,

the tenure of each of the Directors, and other information for

succession planning purposes.

The Committee reviews succession plans for the Executive

Committee members annually as well as reviewing their

performance against objectives. The succession plans for

other senior roles (such as executive committee direct

reports) or regulatory roles are also reviewed annually. The

reporting includes information regarding potential successors

for each role in the short, medium and longer term as well as

emergency cover, including whether roles could likely be filled

internally or externally. The reporting assists  with proactively

planning for future roles as well as with developing and

progressing 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, to ensure that all areas of the business are

contributing to succession planning and development of talent

is taking place. 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 2022, the Committee spent time focused on Board

succession planning and the appointment of new Board

members, including the appointment of Fiona Muldoon and

Cecilia Reyes Leuzinger in May 2022 and the search for a new

Chair following the resignation of David Roberts in October

2022. On 8 February 2023, following recommendation from

the Committee, The Board approved the appointment of Clive

Bannister as Chair Designate and an Independent Non-

Executive Director of Beazley plc. Clive will commence his role

as Chair with effect from the conclusion of the company’s

2023 AGM. He will also become Chair of the Nomination

Committee at the same point.

Since the year end, Nicola Hodson has been appointed Chief

Executive of IBM in the UK and Ireland and has joined their UK

subsidiary Boards. Nicola previously held a senior global

leadership role at Microsoft, and was able to balance well the

commitments of this role to her responsibilities as a non-

executive director of Beazley. The nomination committee

believes that this ability does not change with Nicola’s new

executive role, and is happy to support her proposed re-

election as a Beazley non-executive director. However, the

committee will keep the situation under close review to ensure

that Nicola remains able to commit the time and dedication

required as a director of Beazley.

Appointment of new Non-Executive Directors

•The Committee, led by David Roberts, spent time in April

reviewing the short list and recommended appointments for

independent Non-Executive Directors to replace Catherine

Woods who stepped down from The Board on 25 March

2022 at the conclusion of the AGM.

•An independent external search consultancy, Hedley May,

was engaged to help with the appointment of a new

independent Non-Executive Director to replace Catherine

Woods. The company and its Directors have no other

connection with Hedley May.

•A detailed role description was prepared which included

focus on skills and experience, and a diverse candidate list

was requested.

•The Committee was pleased with the diverse and

experienced candidates available and the Committee

therefore decided to recommend two of the four short-listed

candidates for appointment as two other Non-Executive

Directors would be reaching the end of their second three-

year term in 2023. Fiona Muldoon and Cecilia Reyes

Leuzinger were appointed in May 2022.

•Fiona Muldoon was recommended because of her vast

leadership experience in the insurance industry as well as

having recent experience as a public company CEO and

having spent time working for the Central Bank of Ireland.

Cecilia Reyes Leuzinger was recommended because of her

insurance, risk and investment management experience to

add more in-depth investments experience to The Board.

Both candidates had styles which would complement but

also bring fresh challenge and diversity of opinion to The

Board. Both Directors were assessed to have sufficient time

to fulfil the responsibilities of the role.

•Following appointment, an induction programme is arranged

to onboard new Directors. This includes: meetings with key

individuals across the organisation; board procedures and

governance; corporate communications; compliance

training; meetings with key external parties such as the

auditors and regulators where relevant; and deep dives to

aid understanding of strategy and the different divisions

within the business.

102 Beazley | Annual report 2022 www.beazley.com

Chair succession
In July 2022, David Roberts announced that he was to be appointed as Chair of the Court of the Bank of England in the autumn. The appointment date was unknown at that time. The Board, led by the Nomination Committee began a process to ensure that plans were in place to ensure an orderly transition of the role of Chair and to commence a rigorous selection procedure for a new Chair of Beazley plc. The process was led by Christine LaSala, notwithstanding that she was Interim Chair of the Company during the process. Robert Stuchbery, the interim Senior Independent Director also provided key support to the process. David Roberts was not involved in the process prior to his resignation on 1 October 2022.
Stage 1: Interim arrangements	The Committee determined that interim arrangements should be put into place, based on emergency succession plans previously developed, while the search for a new Chair commenced. In October, David’s resignation was confirmed, and the interim arrangements, as set out in the announcement on 21 July 2022, explained in the corporate governance report were put in place. David Roberts spent time providing an induction and handing over responsibilities to Christine LaSala prior to his departure to ensure an orderly transition.
Stage 2: Appointment of search agency	It was agreed that Christine LaSala (initially as Senior Independent Director) would lead the search, with support from Robert Stuchbery and George Blunden, a Non-Executive Director of Beazley Furlonge Limited. In September, the Committee (excluding David Roberts) considered information regarding the process for appointing a new Chair, including the appointment of an independent external consultancy to lead the search. A review of executive search agencies, including presentations to a panel, was undertaken to identify a firm with the right level of expertise and cultural fit. Russell Reynolds was selected following the process. Russell Reynolds has no other connection with the company or its directors.
Stage 3: Role specification	To develop the role specification, Christine LaSala led chair specification workshops with Directors to draw out the key skills, competencies, experience and character attributes required in the new Chair and to help ensure that the new Chair would be a good fit for Beazley’s growth ambitions culture and taking into consideration Beazley’s opportunities and challenges over the next five years. Relevant policies such as the Inclusion and Diversity Policy requirements were incorporated, with the nomination committee having responsibility under the board inclusion and diversity policy for ensuring appointments are made based on objective criteria with due regard to diversity. A key specification for the role was a candidate who demonstrated commitment to inclusion, equity and diversity with evidence of leadership in this regard. A timetable was drawn up with Russell Reynolds and a comprehensive external search process was undertaken.
Stage 4: initial interviews	Russell Reynolds reviewed a wide range of diverse candidates which resulted in a long list of candidates which were assessed initially, 37.5% of whom were women. Christine LaSala, Bob Stuchbery and George Blunden carried out initial interviews with eight of these candidates, two of which were women. Four candidates were put forward for second stage interviews with the Chief Executive Officer.
Stage 5: final interview panel	The Committee appointed a panel of independent Non-Executive Directors to conduct third stage interviews, with two candidates, one man and one woman, put forward.
Stage 6: selection	Following the process, Clive Bannister was considered by the Committee to be the most suitable candidate for the role due to his valuable experience and credentials as a Chair, his extensive executive career at HSBC group and Phoenix Group plc, and his wealth of experience including strategic, commercial, and significant transformational skills leading the turnaround and significant growth of Phoenix Group plc as its Chief Executive Officer. Interviews with Clive also demonstrated that he would be a good fit for Beazley and showing the right balance of challenge and support needed by a Chair. In addition, the Committee noted that as chair of Rathbones Group plc, Clive had made a number of board appointments to strengthen The Board and improve its diversity. The Committee were also satisfied that Clive Bannister has capacity to dedicate sufficient time to Beazley. Clive Bannister was appointed as an independent Non-Executive Director of Beazley plc with effect from 8 February 2023. He will commence his duties as Chair and Chair of the Nomination Committee from the close of the AGM on 25 April 2023. At this time, all other Directors fulfilling interim roles will revert to their original duties.

www.beazley.com Beazley | Annual report 2022 103

Nomination Committee

continued

Inclusion and diversity

Beazley’s inclusion and diversity policy is largely unchanged

from previous years. In January 2022, The Board 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).

The Beazley 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 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. We continue to set measurable

targets at an organisational level and clear objectives at an

individual level as we work to become a truly diverse and

inclusive organisation where everyone is able to contribute

their best work and develop fully.

The Board's inclusion and diversity policy sets out the

commitment of The Board to using 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 be

in line with, or in betterment of, 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 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 takes into account

diversity considerations when appointing Directors to Board

committees.

As at 31 December 2022, The Board has exceeded the

targets set out by the Parker Review and the FTSE Women

Leaders Review, now incorporated into the Listing Rules

following the FCA’s consultation on Diversity and Inclusion on

company Boards and Executive Committees. In relation to the

changes to the Listing Rules (which will be effective for the

year ended 31 December 2023 for the Company and are

voluntarily disclosed) The Board has achieved the following:

•At least 40% of the individuals on The Board are women: as

at 31 December 2022, 50% of our Board were women,

compared with 40% at 31 December 2021. Following the

appointment of Clive Bannister on 8 February 2023, 45% of

our Board are women.

•At least one of the senior board positions (Chair, CEO, SID,

or CFO) is held by a woman: Sally Lake is our Finance

Director and Christine LaSala is our Interim Chair (and was

and will return to being our Senior Independent Director

following the conclusion of the AGM on 25 April 2023.

•At least one member of The Board is from a non-white

ethnic minority background: Raj Agrawal and Cecilia Reyes

Leuzinger are from a non-white ethnic minority backgrounds.

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. The diversity of The

Board in terms of gender and ethnic background is also set

out on page 85.

The Committee has agreed targets for gender diversity for the

senior leadership, which have been monitored by the

Committee during the year. The Committee monitors the

diversity of the workforce through reporting as well as through

the succession planning activities for the Executive

Committee. During the year we have continued to embed the

strategy for gender equality to help us reach our target of 45%

female representation in senior leadership roles by the end of

2023. At the end of 2022, 43% of the senior leadership team

were women.

In 2020, the Committee agreed targets for increasing the

representation of people of colour in the Beazley workforce to

at least 25% by the end of 2023, with a quarter being black

people. We are pleased that this was achieved during 2022

and had increased from 23% at the end of 2021, and we are

on track for 25% of this group to be black people by the end of

2023.

The Committee has continued to review broader targets for

the Group’s race and ethnicity strategy to ensure that these

remain progressive. At the end of 2022, we introduced a new

target to improve the representation of people of colour in

leadership roles by 6% points from 11% to 17% by the end of

2027.

For more information on our inclusion and diversity activities,

including our strategy, objectives and outcomes, please see

our responsible business report on page 21.

104 Beazley | Annual report 2022 www.beazley.com

Collection of diversity data

As required by the Listing Rules, the approach taken by the company with regards to the collection of diversity data is the same

for the directors, senior management and employees. Data is held securely on our human resources system and is only

accessible by a select number of employees for reporting at aggregate level. We ask new joiners, where we are able in

accordance with local legal requirements, for their diversity information and then periodically ask employees to check that the

data we hold about them is still correct. We also analyse diversity data through our employee survey, reward and recognition

processes, talent mapping system and through our appraisal systems.

Gender and ethnicity of the Beazley plc Board in accordance with the Listing Rules

The following information has been disclosed voluntarily by the company for the year ended 31 December 2022. Numerical data

on gender identity or sex of the individuals on The Board and executive management as at 31 December 2022, as required by

Listing Rule 9.8.6(10):

	Number of board members	Percentage of The Board	Number of senior positions on The Board (CEO, CFO, SID and Chair)	Number in executive management	Percentage of executive management
Men	5	50%	2	8	57%
Women	5	50%	2	6	43%
Not specified/prefer not to say	–	–	–	–	–

Numerical data on ethnic background of the individuals on The Board and executive management as at 31 December 2022, as

required by Listing Rule 9.8.6(10):

	Number of board members	Percentage of The Board	Number of senior positions on The Board (CEO, CFO, SID and Chair)	Number in executive management	Percentage of executive management
White British or other White (including minority-white groups)	8	80%	4	13	93%
Mixed/Multiple Ethnic Groups	–	–	–	–	–
Asian/Asian British	2	20%	–	–	–
Black/African/Caribbean/Black British	–	–	–	1	7%
Other ethnic group, including Arab	–	–	–	–	–
Not specified/ prefer not to say	–	–	–	–	–

Numerical data regarding gender of senior leadership and employees in accordance with the Companies Act 2006

The numerical data about the number of persons of each sex who were directors of the company, senior managers of the

company (other than directors) and company employees, as required by section 414(8) of the Companies Act 2006, as at 31

December 2022 is disclosed in the Responsible Business section on page 25. In the data, senior managers includes the

members of the Executive Committee (excluding Directors of Beazley plc), the Company Secretary and directors of subsidiary

undertakings, as required by the Companies Act 2006.

Gender balance of senior management in accordance with the Corporate Governance Code (the 'Code')

The gender balance of those in senior management and their direct reports is comprised of 57% men and 43% women with a

total population of 129 people. This group comprises the executive committee members, the Company Secretary and their

direct reports, as required by the Code.

However, historically Beazley has used the population of its Strategy and Performance Group and Extended Long-term

Investment Plan leadership groups to monitor and track the inclusion and diversity of its leadership population. These groups

drive both Beazley’s strategy and business plan; and whilst it comprises 129 leaders from across the business, the population

is slightly different to the Code’s definition of senior management. The gender balance of Beazley’s senior management is the

same when compared to the Code definition of senior management.

www.beazley.com Beazley | Annual report 2022 105

Remuneration

Committee

The Board has delegated responsibility to the Remuneration

Committee for oversight of the remuneration policies of the

Group 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 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.

Attendance at scheduled committee meetings

Director	Remuneration committee
	No. of meetings	No. attended
Rajesh K Agrawal1	4	3
Nicola Hodson	6	6
Christine LaSala	6	6
Cecilia Reyes Leuzinger2	4	4
Robert A Stuchbery	6	6
Catherine M Woods3	2	2

1Appointed 26 April 2022. Raj Agrawal was unable to attend the December

remuneration committee due to a long-standing scheduling clash.

2Appointed 31 May 2022

3Resigned 25 March 2022

The Remuneration Committee is chaired by Nicola Hodson on

an interim basis, and also comprises Christine LaSala, Robert

Stuchbery, Raj Agrawal and Cecilia Reyes Leuzinger. Until 21

October 2022, the Committee was chaired by Christine LaSala

with Nicola Hodson, Robert Stuchbery, Raj Agrawal and Cecilia

Reyes Leuzinger as members. Christine stepped down as

Chair of the Committee when she was appointed as Interim

Chair of The Board on 21 October 2022, so that she would

have sufficient time to carry out her duties. Raj Agrawal was

appointed to the Committee on 26 April 2022 and Cecilia

Reyes Leuzinger was appointed on 31 May 2022. Catherine

Woods resigned on 25 March 2022.

In 2022, there were six scheduled meetings and two

additional ad hoc meetings and approvals, reflecting the

workload of the Committee during the year. The additional

meetings and approvals were pertaining to the remuneration

policy review and remuneration arrangements for senior hires

within the firm. The activities of the committee during 2022

are set out below. Only members of the committee have the

right to attend meetings; however, other individuals, such as

the Group Head of Culture and People, 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.

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.

Responsibilities of the Committee

The full responsibilities of the Remuneration 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 for approval at the

annual general meeting. The objective of such policy shall

be 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 long-term incentive arrangements.

•Recommend and approve the remuneration of the chair of

the company.

•Recommend the remuneration of the Chief Executive

Officer, the other executive directors, the direct reports to

the Chief Executive Officer, 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.

106 Beazley | Annual report 2022 www.beazley.com

Key Committee activities during 2022

	Activities	More information?
Remuneration policy	1Performed a full review of Beazley’s remuneration policy for approval at the 2023 AGM, including seeking the views of shareholders regarding the proposals, and ensuring shareholders received comprehensive information on the rationale for the proposed changes to the policy, which was of upmost importance to the committee.	Directors' remuneration report (page 111) Engagement in action: spotlight on the remuneration policy (page 90)
Remuneration of Chair, Executives and other senior management	1Approved the remuneration arrangements and bonus awards of the executive directors, executive leadership team, and other senior management, including the Company Secretary. 2Ensured incentives continued to be appropriate to align company and shareholders. 3Considered the salary and bonus awards for 2022 for heads of control functions and material risk takers.	Directors' remuneration report (page 111)
Remuneration of the workforce	1Satisfied itself that the current remuneration structure is appropriate to attract and retain talented people and took appropriate action that was necessary throughout the year. 2Approved specific matters to support the retention of key employees. 3Considered the aggregate remuneration approach for the wider workforce, including consideration of annual compensation increases in light of inflation and cost of living increases in the regions in which the company operates, to ensure fair compensation across the company.	Directors' remuneration report (page 111) Cost of living - see Chief Executive Officer's statement (page 11) and Stakeholder engagement (page 50)
Share plans	1Approved new all employee share incentive plan for approval at the 2023 AGM. 2Approved the grant of share awards under the Group’s deferred, retention and LTIP plans.	Directors' remuneration report (page 111)
Governance	1Considered 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. 2Approved the gender pay gap report. 3Reviewed the remuneration landscape for FTSE 250 and FTSE 100 companies and guidance from proxy agencies and investors.	Our gender pay gap report is available on the website

www.beazley.com Beazley | Annual report 2022 107

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 2022. This report includes both the annual report

on remuneration and our proposed remuneration policy (pages

111 to 138), for which we will be seeking shareholder

approval at the 2023 AGM.

Performance and reward for FY22

Focus on the wider workforce

2022 presented new and difficult challenges for the workforce

in the form of rising inflation and a cost-of-living crisis. The

remuneration committee is cognisant of these challenges and

fully supports the decisions management have taken to

support employees. In June 2022, those most impacted by

cost-of-living received a one-off payment of up to £3,000 to

help with increasing financial demands. This helped more than

half of the workforce. In addition, at year-end, to recognise the

challenges created by rising inflation, those most impacted

received greater salary increases than those earning at higher

levels, again to support those facing the greatest pressures

from the cost-of-living crisis. Those earning at higher levels

received c.5%, compared to 10% to 20% for those most

impacted. This commitment to ensuring available funding went

to those most impacted has been well received across the

business.

Business performance and incentive out-turns

The resilience of our business strategy and the dedication and

motivation of our team met the continuing challenges and

uncertainty throughout 2022 such as high inflation, energy

price crunch and the continuing tragedy of war in Europe.

Despite these challenges the Group maintained profitability

with a ROE performance of 7%. We achieved a profit of

$191.0m and an impressive 89% combined ratio from strong

underwriting performance which was offset by a reduced

investment performance driven by mark to market losses due

to the volatile interest rate environment. Having carefully

considered the financial performance and personal

achievements for the year, the Remuneration Committee

determined that the executive directors would receive annual

bonuses of 37.5% of maximum in respect of FY22.

Beazley’s Long-Term Incentive Plan (LTIP) vests in two equal

tranches based on net asset value (NAV) growth measured

over a three-year and five-year period. The second tranche of

the 2018 LTIP vested at 14.9% of maximum following NAV

growth per annum of 10.1%. The first tranche of the 2020

LTIP vested at 20.0% of maximum following NAV growth per

annum of 10.5%. 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 2020 awards were granted in February 2020

prior to the fall in share price resulting from the outbreak of

COVID-19.

The remuneration committee considers that the remuneration

policy operated as intended during 2022 and that the

incentive out-turns are aligned with our pay for performance

culture, accordingly no additional discretion was applied.

Review of the remuneration policy

In accordance with the normal triennial schedule, we are

submitting our remuneration policy for shareholder approval at

the 2023 AGM. During the year the remuneration committee

undertook a detailed review of the policy to ensure that it is fit

to support our strategy to be the highest performing

sustainable Specialty insurer. Following the review, the

committee believes that now is the right time to make some

important changes to ensure that Beazley is appropriately

positioned to retain the talent necessary to continue to deliver

long-term value to our shareholders. However, we are not

proposing any changes to the broad framework or the overall

incentive opportunity.

I would like to thank those shareholders who took the time to

discuss the policy with us during the year. The committee

greatly values the views of our shareholders, and their

invaluable feedback was carefully considered when finalising

our proposals.

Context of the review

The current remuneration framework has operated largely

unchanged since 2012 and has supported Beazley well during

this period. However, Beazley is a much larger and more

complex organisation than it was when the policy was

developed and therefore refinements are necessary to allow

us to continue to flourish going forward. Over the past two

years Beazley has performed exceptionally, and we continue

to execute against our strategy and deliver value to

shareholders, culminating in our recent promotion to the FTSE

100. We have also achieved a number of significant

milestones over the past year, including the streamlining of

our underwriting structure, launching Lloyd’s first dedicated

ESG syndicate and realigning our digital business to be

managed under one segment.

108 Beazley | Annual report 2022 www.beazley.com

Reweighting incentives to the long-term

At Beazley, we operate with a genuine long-term focus. In

order to further align executives with shareholders over the

longer term and reward management for the delivery of our

long-term strategic objectives the Committee is proposing a

reweighting between the short-term and long-term incentives.

From 2023, we are proposing a reduction to the bonus

opportunity of 100% of salary and an increase to the LTIP

opportunity of 100% of salary. There is no change to the

overall incentive opportunity.

LTIP performance period

A key feature of the Beazley business model is exposure to

catastrophes within a robust risk management framework.

Because of this, there is an inherent level of volatility in

company performance. We have an established pay-for-

performance culture, a track record of aligning individual

reward with performance and we do not believe in rewarding

failure. During the review of the policy, the remuneration

committee identified that the volatility of our annual results

can have a disproportionate impact on LTIP awards, which is

exacerbated by our longer-than-normal five-year performance

period.

Taking this into account the committee gave consideration to

moving to an annualised approach so that the LTIP is split into

five equal tranches with performance assessed pro-rata in

years one to five. We discussed the proposal with the majority

of our shareholders (top 100) in order to gauge the potential

levels of support. During the consultation process, it became

clear that a significant proportion of shareholders had

reservations due to the atypical nature of the proposal and

there was a preference for a more market-typical approach,

that maintained a longer term performance period.

Based on some shareholder feedback the committee decided

against the annualised LTIP approach. As an alternative, and

aligned with our shareholders’ preference for a more market-

typical approach, the committee is proposing to simplify the

LTIP performance period by removing the five-year

performance element so that the entire award is subject to

cumulative performance measured over a three year period.

We believe that this change is appropriately aligned with the

interests of our shareholders, improves the clarity of the LTIP

and makes it simpler for both participants and investors. The

vesting of awards will continue to be subject to stretching

performance targets and shares will be subject to a two-year

post-vesting holding period. Ultimately the committee believes

that this change, in conjunction with including an ESG metric,

will help to continue to incentivise and retain our high calibre,

experienced executive team.

Incorporation of ESG metrics

The committee is mindful of evolving shareholder views

around the use of relevant and robust ESG metrics in

incentive plans. During our review, the Committee considered

how Beazley’s commitment to doing the right thing for our

people, partners and the planet was reflected in our current

remuneration framework. Our bonus structure already includes

consideration of ESG measures, and the committee

determined that it would be appropriate for executives to be

aligned with our long-term ambitions by incorporating ESG

measures into our LTIP. For 2023 the LTIP will include targets

linked to our carbon reduction, gender and ethnic diversity

goals. These targets will be assessed over three years and

will have a weighting of of 17-20% of the overall LTIP award

and will pay up to a maximum of 50% of salary.

Other changes to policy

From 2023, we intend to increase the CEO shareholding

requirement from 200% to 300% of salary to align with the

LTIP opportunity. We are also proposing refinements to the

policy to ensure that it is aligned with the latest best practice

and shareholder expectations. The post cessation

shareholding guideline will be increased to 100% of the in-

employment guideline for two years following departure. From

2023 the level of bonus deferred into shares will be fixed at

one-third, moving away from the current approach whereby the

portion of bonus deferred varies depending on the outturn. We

also plan to introduce a global share match programme which

we believe further aligns employee experience with that of the

shareholder as well as creating another form of retention.

www.beazley.com Beazley | Annual report 2022 109

Letter from the Chair of our

Remuneration Committee

continued

Remuneration approach for 2023

Review of Executive Directors’ salaries

As part of the policy review, the Remuneration Committee

carefully considered the salary levels for the CEO and Group

Finance Director to ensure that they remained reflective of

their skills and expertise as well as being appropriate for a

company of Beazley’s size and complexity.

The Committee has identified that the CEO’s salary has fallen

out of step with the transformative changes that have taken

place in our recent history. As context, since 2017, CEO pay

has only increased by c.3% per annum and when Adrian Cox

replaced Andrew Horton as CEO, the Committee did not

increase the CEO salary (£525,25k). However, the Committee

were cognisant a review would be required in the near future

to permit Beazley to compete for executive talent globally and

more importantly to recognise that over the last 5 years,

Beazley has grown significantly in terms of scale and

complexity. Our annual market capitalisation to 31 December

2017 was c.£2.45bn. During 2022 our market capitalisation

exceeded £4.5bn, with an annual average of c.£3.25bn (total

growth of more than 300%). Gross written premiums have

more than doubled from $2.1bn to $5.3bn and the number of

Beazley employees has increased two-fold to c.1,900. We are

now Lloyds’ largest syndicate and in 2019 and 2022

respectively we commenced writing business on our Smart

Tracker and ESG syndicates.

Speciality insurance is a global business, and our operations

are increasingly US and European based, with few businesses

in the Speciality insurance domiciled in the UK with the same

scale and scope of Beazley. The Remuneration Committee is

therefore mindful that our talent spans across a global

footprint and the Committee is mindful that other companies

of similar size and scale can offer significantly more attractive

packages. We want to retain our best talent and manage an

effective succession slate over the long term, ensuring that

our remuneration framework remains competitive against

these markets. Although benchmarking is not a primary driver

for decisions around pay, the Committee took into account

market data which showed that the CEO’s salary was below

the market competitive range against all relevant comparator

groups and the other UK-listed Lloyd’s of London underwriters.

The Remuneration Committee believes Adrian Cox has an

exceptional track record of high performance. Having joined

Beazley in 2001, he has served as an Executive Director since

2010 and was appointed as CEO in April 2021. He has

continued to prove himself to be a high calibre executive with

an extensive knowledge of the insurance industry and a

primary driver of Beazley’s success. The Remuneration

Committee are therefore proposing that his salary is increased

to £625,000. On balance, the Committee believes that the

enhancements made to the remuneration policy which is

considered appropriate within the context set out above and

his considerable experience in the industry.

Sally Lake’s salary as Group Finance Director was considered

to be appropriately positioned following the change made last

year in-light of her increased responsibilities. It has therefore

been increased by 5% for 2023, which is in-line with the

approach for senior management and below the average rate

of the workforce.

Non-Executive Director fees

In October 2022 David Roberts stepped down as Chair of The

Board. As announced in February 2023 Clive Bannister will be

appointed as chair with effect from 25 April 2023. Until Clive

Bannister’s official appointment Christine LaSala has been

appointed as Interim Chair of The Board, Robert Stuchbery

has been appointed Interim Senior Independent Director and I

have been appointed Interim Remuneration Committee Chair.

The fees for the three roles have been pro-rated to reflect the

additional responsibilities.

As announced in December 2022, The Board decided to split

the Audit & Risk Committee into two separate committees

from 1 January 2023. The fees for the roles on the new

committees have been set with reference to the

responsibilities and time commitments required and are set

out on page 131. Following the annual fee review, it was

determined that the non-executive director fees should be

increased by 3%, below the general increase for the

workforce.

2023 AGM

At the forthcoming AGM there will be an advisory vote in

respect of the directors’ remuneration and a binding vote on

the proposed new remuneration policy. There will also be a

vote to approve amendments to the LTIP rules. These

amendments are necessary to affect the reweighting and

revised measurement approach set out above. I hope you will

feel able to support these proposals and look forward to your

continued support.

Nicola Hodson

Interim Remuneration Committee Chair

110 Beazley | Annual report 2022 www.beazley.com

Directors’ remuneration report

Remuneration in brief

Remuneration policy

When developing the revised remuneration policy and considering its implementation for 2023, the Committee was mindful of a

wide range of factors including guidance from institutional investors, the requirements of Solvency II and the provisions of the

UK Corporate Governance Code. 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	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.
Simplicity Remuneration structures should avoid complexity and their rationale and operation should be easy to understand	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 the Policy review we have simplified our approach to bonus deferral so that one-third of any bonus is deferred into shares for three years and we have also simplified the LTIP performance period.
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	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 130.
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	Page 118 provides 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 set out on page 127 demonstrates how historic annual bonus out-turns have reflected profit and ROE performance.
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	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.
Alignment to culture Incentive schemes should drive behaviours consistent with company purpose, values and strategy	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.

www.beazley.com Beazley | Annual report 2022 111

Directors’ remuneration report

Performance in 2022

Beazley returned a profit in 2022 of $191.0m and an impressive 89% combined ratio (2021: $369.2m) through a strong

underwriting performance, offset by a reduced investment performance, driven by mark to market losses as a result of the

volatile interest rate environment. For the fifth year in a row, Beazley achieved double-digit premium growth, with gross

premiums written up by 14% to $5,268.7m (2021: $4,618.9m).

112 Beazley | Annual report 2022 www.beazley.com

Outcomes for 2022 and implementation for 2023

Overview of Policy and implementation for 2022	Overview of Policy changes and implementation for 2023
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 2022 were as follows: •A P Cox£525,250 •S M Lake£414,000	No change to Policy. During the year the Committee reviewed A P Cox’s salary and is proposing an increase above the workforce rate. Further details are provided in the Letter from the Chair of the Remuneration Committee. S M Lake’s salary is being increased by 5.0%, below the average rate for the wider workforce. Salaries for 2023 are as follows: •A P Cox£625,000 •S M Lake£434,700
Benefits
Benefits include private medical insurance, travel insurance and company car or monthly car allowance.	No change to Policy.
Pension
Pension allowance of 12.5% of salary, in-line with the rate available to the wider UK workforce.	No change to Policy.
Annual Bonus
Discretionary annual bonus determined by reference to both financial and individual performance. The maximum bonus opportunity for executive directors in 2022 was 400% of salary. ROE for year was 7%. Profit before tax was $191.0m. Bonus outcomes were 38% of maximum. 25% of the award will be deferred into shares for three years. Further details are set out on page 126.	Annual bonuses will continue to be determined by reference to both financial and individual performance. As part of the rebalancing of incentives to the longer-term the maximum bonus opportunity will be reduced from 400% of salary to 300% of salary. In order to simplify arrangements the level of deferral will be fixed at 33% of any award. Amounts will be deferred into shares for three years.
Long-term Incentive Plan (LTIP)
Vesting of LTIP awards is subject to stretching net asset value per share (NAVps) growth targets. 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 •The first tranche of the 2020 LTIP award vested at 20.0% of maximum following three year NAVps performance of 10.5% p.a. •The second tranche of the 2018 LTIP award vested at 14.9% of maximum following five year NAVps performance of 10.1% p.a. Awards granted during the year In 2022, executive directors received the following grant levels subject to the usual NAVps performance condition: •A P Cox: 200% of salary •S M Lake: 150% of salary	As part of the rebalancing of incentives to the longer-term the maximum LTIP opportunity will be increased by 100% of salary. From 2023, the maximum LTIP opportunity will be: •A P Cox: 300% of salary •S M Lake: 250% of salary Awards will continue to be subject to stretching NAVps growth targets. NAVps performance will continue to be assessed on an cumulative basis, however, the performance period has been 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. From 2023 a portion of the LTIP will be subject to measures linked to our ESG priorities. A total of 50% of salary for both the CEO and GFD will be based on ESG metrics. For 2023 the ESG metrics relate to carbon reduction and diversity & inclusion targets. Further details of the revised LTIP structure and the performance targets are set out on page 129.
Shareholding guidelines
Executive Directors are expected to build up and maintain a shareholding of 200% of salary. A P Cox and S M Lake have exceeded their guideline. Executives are expected to maintain 100% of their shareholding requirement for the first year post-departure and 50% of their shareholding requirement for the second year post-departure.	The shareholding guideline for the CEO has been increased to 300% of salary. The GFD’s shareholding guideline will continue to be 200% of salary. In line with best practice, the post-employment guideline has been enhanced so that executives are expected to maintain 100% of their shareholding requirement for two years after departure.

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Directors’ remuneration report

Directors’ remuneration policy

This part of the report sets out Beazley’s Directors’

remuneration policy which will be subject to a binding vote at

the 2023 AGM.

Changes to the remuneration policy

The Remuneration Committee followed a robust decision-

making process to determine the new remuneration policy,

including an in-depth review of the current policy taking into

account input from management and our independent

advisors. The Committee also sought the views of the Group’s

major shareholders and took these into account in

determining the final policy.

The key changes between this policy and the policy which was

approved by shareholders at Beazley’s 2020 AGM are as

follows:

•Reweighting of incentives to the long term. In recognition

that shareholders have generally expressed a preference for

longer-term incentives, a reweighting between the bonus

and LTIP maximum opportunities is being proposed. The

maximum annual bonus opportunity will reduce by 100% of

salary for both executive directors and the maximum LTIP

opportunity will increase by 100% of salary. There are no

proposed changes to total incentive opportunities.

•Introduction of ESG to the long-term incentive. Historically

the LTIP award has been assessed against a single metric.

Taking into account the importance of ESG and

shareholders’ preference for the use of multiple measures

the policy has been amended to allow for the introduction of

ESG measures in the LTIP.

•Simplified LTIP performance period. From 2023 LTIP awards

will be measured over a three-year period only. Awards will

continue to be subject to a holding period so that no shares

are released until the end of year five.

•Fixed rate of deferral. From 2023, the level of annual bonus

that is normally deferred into shares for three years will be

fixed at one-third of the bonus.

•Increased shareholding guidelines. The shareholding

guideline for the CEO has been increased from 200% to

300% of salary.

•Enhanced post-employment shareholding guidelines. Our

post-employment shareholding guidelines have been

enhanced. From 2023, executives will be expected to

maintain 100% of their in-employment shareholding

requirement for two years post departure.

Remuneration policy table

The following tables set out descriptions of each component of Director remuneration packages comprised in the Beazley

Directors’ remuneration policy.

Executive Directors

Element	Purpose and link to strategy	Operation	Maximum	Performance conditions
Base salary	Salaries are set at a level to appropriately recognise responsibilities and to be broadly market competitive.	Salaries are normally reviewed annually. Salaries for 2023 will be as follows: A P Cox: £625,000 S M Lake: £434,700	There is no maximum salary opportunity. Any salary increases will generally reflect our standard approach to all-employee salary increases across the Group. Higher increases may be made in a range of circumstances where the Committee considers that a larger increase is appropriate, including (but not limited to): •a new appointment; •a change in role or adoption of additional responsibilities; •development of the individual in the role; •increased size, scope or complexity of the organisation; and •alignment to market levels.	None, although performance in role is taken into account in determining any salary increase.
Benefits	To provide market levels of benefits.	Benefits include, but are not limited to, a company car or car allowance, season ticket, private medical insurance, death in service benefit and income protection insurance. Further benefits may be provided, if the committee considers it appropriate. Executive Directors may participate in Beazley’s all-employee share plans on the same basis as other employees. Tax equalisation policies may apply.	There is no overall maximum as the cost of insurance benefits will vary depending on the individual’s circumstances and the cost of relocation will vary depending upon the jurisdiction. The limits on participation in all- employee share plans reflect the rules of those plans and any limits imposed by applicable tax legislation from time to time.	None.
Relocation benefits	To support Beazley’s growth as an international business.	Benefits in the event of relocation may include, but are not limited to, relocation allowance, housing allowance and school fees.

114 Beazley | Annual report 2022 www.beazley.com

Element	Purpose and link to strategy	Operation	Maximum	Performance conditions
Pension	To provide market levels of pension provision.	Current policy is to contribute to a defined contribution pension plan. An equivalent cash alternative may be offered. Legacy defined benefit pension arrangements are in place for A P Cox. Further service accruals ceased on 31 March 2006.	For defined contribution plans, maximum company contribution of 12.5% of salary. The maximum pension contribution for any executive director may be increased to reflect any increase in the pension available to the UK workforce. Legacy defined benefit pension arrangements will be honoured.	None.
Annual bonus	To link reward to short term financial performance and individual contribution. Additional alignment with shareholders’ interests through the operation of bonus deferral.	Discretionary annual bonus to individuals. Bonuses are determined by reference to financial, corporate/strategic and individual performance. One-third of any annual bonus earned by executive directors will normally be deferred into shares, with the remainder delivered in cash. The deferral period will normally be at least three years. Deferred shares may have dividend equivalents as described below this table. In certain circumstances deferred share awards may be subject to malus provisions and annual bonus payments may be subject to clawback, as described below. Additional amounts may be voluntarily deferred into the Investment in underwriting arrangements described below.	An individual overall cap of 300% of salary will apply.	An incentive pool will be calculated as a percentage of profit and by reference to group return on equity, subject to a minimum return on equity and risk adjustment. While bonus awards are determined by reference to the profit pool, the bonus plan is discretionary and the Committee may take into account any other factors it considers appropriate. Individual payouts to executive directors are discretionary and take into account broader corporate objectives, the individual’s contribution and, where relevant, the performance of their division. Solvency II requires that performance measures for incentives are based on a combination of group, business unit and individual performance. The Committee may make year-on- year adjustments to the performance framework, in particular to take into account developments in Solvency II requirements.
LTIP	To align the senior management team’s interests to the long term performance of the Group by linking reward to performance over the longer-term.	Awards of shares with performance conditions. Awards are normally in the form of nil-cost options with a ten-year term, but may also be in the form of a conditional award. LTIP awards vest over a three-year performance period. Awards will normally be subject to an additional holding period following the date on which the award vests, up to the fifth year of the award. LTIP shares may have dividend equivalents, as described below this table. In certain circumstances LTIP awards may be subject to malus and clawback provisions, as described below.	Awards of up to 300% of salary in respect of any financial year.	Vesting of LTIP awards is dependent on performance measures selected by the Committee. For awards made in 2023, vesting will be dependent on net asset value per share (NAVps) performance against the risk-free rate of return and ESG performance. Performance will be measured over a three-year period. No more than 25% of the award may vest for threshold performance.
Investment in underwriting	To align personal capital with underwriting performance.	Under the plan, Executive Directors and selected staff may voluntarily defer part of their bonus into an underwriting syndicate. Capital commitments can be lost if underwriting performance is poor.	Payments are limited to the returns on the investment in the underwriting syndicate. The level of capital commitment is limited by the bonus opportunity.	The plan mirrors investment in an underwriting syndicate.

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Directors’ remuneration report

Directors’ remuneration policy

continued

Shareholding requirements

During employment, the CEO and Group Finance Director are expected to build up and maintain a shareholding of 300% and

200% of salary respectively. Post-employment, executive directors will ordinarily be expected to maintain their shareholding

requirement, or the number of shares owned at departure if lower, for two years post-departure.

Non-Executive Directors

Non-Executive Directors’ fees comprise payment of an annual basic fee and additional fees to reflect specific responsibilities,

where applicable. No Non-Executive Director participates in the Group’s incentive arrangements or pension plan.

Basic fee

Payment of a basic annual fee

Additional fees

Additional fees are paid to reflect additional responsibilities of certain Non-Executive Directors, as follows: •Senior Independent Director fee •Audit and Risk Committee Chair fee •Remuneration Committee Chair fee •subsidiary Board membership and Chair fee •membership fee for Non-Executive Directors on the Audit and Risk Committee •membership fee for Non-Executive Directors on the Remuneration Committee •fee for Non-Executive Director representing employee voice Non-Executive Directors may receive additional fees in the future if in the view of The Board this was considered appropriate, including in circumstances of additional Committees, other Non-Executive Director positions, or to reflect additional time commitments in appropriate circumstances. Expenses incurred in the performance of non-executive duties for the company may be reimbursed or paid for directly by the company, including any tax due on the expenses. Non-Executive Directors do not normally receive any benefits however these may be provided in the future if in the view of The Board this was considered appropriate. Total fees paid to non-executive directors will remain within the limit stated in the Articles of Association.

Notes to the remuneration policy table

Recovery provisions (clawback and malus) apply as follows to

awards granted from 1 January 2020 onwards (provisions

applying to previous awards are described in previous

Directors’ Remuneration Reports).

Malus

Annual bonuses are discretionary and may be reduced or

cancelled before payment. LTIP awards and deferred bonus

awards may be reduced or cancelled in the event of conduct

which justifies summary dismissal, an exceptional

development which has a material adverse impact on the

Company (including extreme financial loss which has a

significant impact on the company’s share price, reputational

damage, material failure of risk management, material

restatement of group accounts, significant sanction from any

regulatory authority, material corporate failure, and other

similar events) or to comply with a law or regulatory

requirement.

Clawback

Annual bonuses paid in cash may be clawed back for up to

three years following payment and LTIP awards may be clawed

back for two years following vesting. Clawback may be applied

in the event of material misstatement of results in respect of

the bonus year or a year in the performance period for the

LTIP award (as the case may be), gross misconduct, factual

error in calculating vesting or award, reputational damage,

material corporate failure, and other similar events.

The Committee may increase the proportion of bonus deferred

into shares at any time.

For future incentive awards the committee may adjust the

performance measures to take into account developments in

Solvency II remuneration requirements, or, in the event of a

significant event or changing business circumstance. Major

shareholders would be consulted prior to any significant

changes.

LTIP and deferred share awards will be operated in

accordance with the rules of the relevant plan. In accordance

with those rules the committee has discretion in the following

areas:

•in the event of a variation of Beazley’s share capital or a

demerger, delisting, special dividend, rights issue or other

similar event, which may, in the committee’s opinion, affect

the current or future value of shares, the number of shares

subject to an award and/or any performance condition

attached to awards, may be adjusted. Awards under

Beazley’s other share plans have similar adjustment

provisions;

116 Beazley | Annual report 2022 www.beazley.com

•the Committee may determine that awards may be settled,

in whole or in part, in cash, but would only do so in

exceptional circumstances such as where there is a

regulatory restriction on the delivery of shares;

•the Committee may substitute or amend a performance

condition if one or more events occur which cause the

committee to consider that a substituted or amended

condition would be more appropriate and would not be

materially more or less difficult to satisfy;

•the Committee may in its discretion, adjust the vesting level

of LTIP awards, including to reflect underlying financial or

non-financial performance or if the vesting level would

otherwise not be appropriate in the circumstances;

•the Committee may determine the treatment of awards on a

winding up, a change of control or similar event in

accordance with the rules of the relevant plan; and

•the Committee may determine the basis on which dividend

equivalents will be calculated, which may include notional

reinvestment.

Legacy commitments

The Committee reserves the right to make any remuneration

payments and payments for loss of office (including exercising

any discretions available to it in connection with such

payments) notwithstanding that they are not in line with the

policy set out in this report where the terms of the payment

were agreed (i) before 26 March 2014 AGM (the date

Beazley’s first shareholder-approved Directors’ remuneration

policy came into effect); (ii) before the policy set out in this

report comes into effect, provided that the terms of the

payment were consistent with the shareholder-approved

Directors’ remuneration policy in force at the time they were

agreed or were otherwise approved by shareholders; or (iii) at

a time when the relevant individual was not a Director of

Beazley (or other person to whom this policy applies) and, in

the opinion of the Committee, the payment was not in

consideration for the individual becoming a Director of Beazley

or such other person. For these purposes ‘payments’ includes

the Committee satisfying awards of variable remuneration

and, in relation to an award over shares, the terms of the

payment are ‘agreed’ at the time the award is granted. This

policy applies equally to any individual who is required to be

treated as a Director under the applicable regulations.

Performance measures and targets

The following table provides further detail on why performance measures are chosen and how targets are set.

Incentive plan	Performance measures	Why performance measures were chosen and target setting
Annual bonus plan	Financial performance (including profit and ROE), corporate/ strategic performance (including risk adjustment) and individual performance	•The Committee believes the approach to the determination of bonuses creates alignment to shareholders’ interests and ensures that bonuses are affordable, while the ROE targets increase the performance gearing and the risk adjustment is consistent with and promotes effective risk management. •The Committee reviews the bonus pool framework each year to ensure that it remains appropriate and targets are set taking into account the prevailing environment, interest rates and expected investment returns, headcount and any other relevant factors. •A key principle of the process is that the Committee exercises its judgement in determining individual awards taking into account the individual’s contribution and performance.
Long term incentive plan	Growth in net asset value per share (NAVps)	•Creates alignment to Beazley’s central key performance indicator, and recognises that NAVps is a key item supporting increases in share price and shareholder returns. •Vesting of awards requires sustained growth in NAVps over a three-year time period. •The Committee reviews the NAVps targets periodically to ensure they remain appropriate with reference to the internal business plan, the external environment and market practice. •In the event that NAVps were to become unsuitable as a performance measure in the opinion of the Committee (for example due to a change in accounting standards) the Committee would substitute a measure which followed broadly similar principles.
	ESG measures	•The Committee recognises the importance of ESG to Beazley’s long-term success and believes the introduction of ESG measures to the LTIP will incentivise the delivery of our ambitions. •For 2023 the ESG measure will be assessed against three categories relating to carbon reduction, gender diversity and ethnic diversity. The Committee will review the ESG targets periodically to ensure they remain appropriate with reference to our long-term ESG priorities and market practice. •For 2023, ESG objectives are to be assessed over a three-year performance period.
Investment in underwriting	The plan mirrors investment in an underwriting syndicate	•The Beazley staff underwriting plan provides for participants to contribute personal capital to Beazley syndicates. Selected staff are invited to participate through bonus deferral with an element of cash incentives ‘at risk’ as capital commitments.

Differences in policy from broader employee population

The policy for Executive Directors follows the same broad

principles in place for all employees in Beazley. Differences in

policy for executive directors and senior management as

compared to the broader employee population reflect different

market levels for seniority, as well as their group

responsibilities. For example, incentive performance

conditions for Executive Directors and senior management are

more closely aligned to group performance, whereas

underwriters participate in incentive plans linked to the

performance of their business area.

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Directors’ remuneration report

Directors’ remuneration policy

continued

All employees in the Group may participate in a defined

contribution pension plan, and are offered benefits such as

private medical insurance and permanent health insurance.

Beazley also operates all-employee share plans to create staff

alignment and promote a sense of ownership.

Illustrations of application of remuneration policy

The table below sets out an illustration of the operation of the

remuneration policy for the current executive directors in

respect of 2023 and includes base salary, pension, benefits,

and incentives. Other than as regards the fourth scenario

(‘Maximum + share price appreciation’), the illustrations do

not reflect potential share price increases or decreases.

Dividends, dividend equivalents and any deferral of bonus into

the investment in underwriting arrangements are disregarded

for the purposes of these charts.

Assumptions used for the illustrations of the policy

Element		‘Minimum’	‘On-plan’	‘Maximum’	‘Maximum + share price appreciation’
Fixed remuneration	Base salary	Annual base salary for 2023
	Pension	12.5% of base salary
	Benefits	Taxable value of annual benefits provided in 2022
Annual variable remuneration (cash and deferred shares)		0% of maximum	50% of maximum	100% of maximum	100% of maximum
Long-term remuneration (LTIP)		0% vesting	25% vesting	100% vesting	100% vesting + assumed 50% share price appreciation

Approach to recruitment remuneration

The Committee would have regard to the following principles

when agreeing the components of a remuneration package

upon the recruitment of a new Director:

•in order to facilitate the future success of the company it is

important that we are able to recruit directors of the calibre

required to deliver our strategic priorities. Although the

company operates in a highly competitive market for

executive talent, the Committee remains conscious of the

need to avoid paying more than is necessary on

recruitment;

•the Committee will, so far as practical, seek to align the

remuneration package for any incoming Executive with the

remuneration policy table set out above;

•on recruitment, salaries will be set to take into account role

and responsibilities. For interim positions a cash

supplement may be paid rather than salary (for example a

Non-Executive Director taking on an executive function on a

short term basis);

•the Committee may, on appointing an Executive Director,

need to ‘buy out’ remuneration arrangements forfeited on

joining the company;

•any buyout would take into account the terms of the

arrangements (e.g. form of award, performance conditions,

timeframe) being forfeited in the previous package. The

form of any award would be determined at the time and the

committee could if necessary make use of LR 9.4.2 of the

Listing Rules (for the purpose of buyout awards only). The

Committee would seek to structure buyout awards to be in

line with Beazley’s remuneration framework so far as

practical. The overriding principle will be that any

replacement buyout awards would be of comparable

commercial value to the awards which had been forfeited;

•all buyout awards would normally be liable to forfeiture or

‘clawback’ on early departure. For Executive Directors early

departure is defined as being within the first two years of

employment;

•the maximum level of variable remuneration which may be

granted in the first year (excluding buyouts) is in line with

the aggregate maximums set out in the policy table. The

Committee retains the flexibility to determine that for the

first year of appointment any annual bonus award will be

subject to such conditions as it may determine; and

118 Beazley | Annual report 2022 www.beazley.com

•where an Executive is appointed from within the

organisation, the normal policy of the company is that any

legacy arrangements would be honoured in line with the

original terms and conditions (except that any pension

arrangements will be provided in line with the remuneration

policy table). Similarly, if an Executive Director is appointed

following Beazley’s acquisition of or merger with another

company, legacy terms and conditions would be honoured.

Service contracts and loss of office payment policy

It is company policy that service contracts with Executive

Directors contain notice periods, from the company or

employee, of not more than 12 months. The company may at

its absolute discretion elect to terminate an Executive

Director’s employment by making a payment in lieu of notice

of the individual’s salary for that period. Details of the

Executive Directors’ current contracts are set out on page

132.

Subject to notice requirements, there is no provision in the

service agreements for compensation to be payable on early

termination of the contract. The Committee has discretion to

structure any compensation payments in such a way as it

deems appropriate taking into account the circumstances of

departure. Any payments of compensation will be subject to

negotiation, and the Group policy is to consider whether

mitigation and phasing of payments is appropriate.

The Committee reserves the right to make any other payments

in connection with a Director’s cessation of office or

employment where the payments are made in good faith in

discharge of an existing legal obligation (or by way of damages

for breach of such an obligation) or by way of a settlement of

any claim arising in connection with the cessation of a

Director’s office or employment. Any such payments may

include amounts in respect of accrued leave, paying any fees

for outplacement assistance and/or the Director’s legal or

professional advice fees in connection with his or her

cessation of office or employment.

In the event of a Director’s departure any outstanding share

awards will be treated in accordance with the relevant plan

rules.

The following principles apply for the treatment of remuneration elements following loss of office for a Director:

Remuneration element	Treatment upon loss of office
Bonus	There is no automatic entitlement to annual bonus. Taking into account the circumstances of leaving, the Committee retains the discretion to award a bonus in respect of performance in the financial year with appropriate consideration of time pro-rating.
Deferred shares	If a Director ceases office or employment with the Group any unvested awards will lapse unless the individual is a good leaver. Good leaver circumstances are cessation by reason of injury, ill-health, permanent disability or retirement (with the agreement of the employing company) and, if the Committee so determines, redundancy, the sale of the individual’s employing company or business out of the group, or such other circumstances as the Committee may determine. In these good leaver circumstances awards may vest in full or be time pro-rated, and be delivered on cessation or at the normal time. If a Director dies his or her awards will vest in full.
Staff underwriting participation plan	For leavers, profit results are payable in respect of years of account commencing before cessation. A participant receives repayment of notional capital invested reduced by any loss result for the relevant year of account.
LTIP	If a Director ceases office or employment with the group any unvested awards will lapse unless the individual is a good leaver. An individual is a good leaver if employment ceases because of death, ill-health, injury, disability, the sale of the individual’s employing company or business out of the group or for any other reason at the committee’s discretion (except where a participant is dismissed lawfully without notice). Awards will vest on the normal vesting date, unless the committee determines that awards should vest at the time the individual ceases employment. Any applicable holding period will ordinarily continue to apply, although the Committee may bring the holding period to an end early in exceptional circumstances (for example in the event of termination due to ill health). If the participant dies awards will vest as soon as practicable after the date of death and the holding period will cease to apply. Awards will vest taking into account the satisfaction of any performance condition and, unless the committee determines otherwise, the period of time that has elapsed since the award was granted until the date of cessation of employment.
Pension	The Director will be eligible to receive the standard contribution to the defined contribution pension plan during the notice period, or cash equivalent. 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.
HMRC approved all- employee plans (or equivalent overseas plans)	Leavers will be treated in accordance with the approved plan rules.
Recruitment awards	Were a buyout award to be made under LR 9.4.2 (or in other circumstances outside of the existing share plan rules) then the leaver provisions would be determined at the time of award.

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Directors’ remuneration report

Directors’ remuneration policy

continued

In the event of a change of control or winding up of the

company, treatment of share awards will be in accordance

with the relevant plan rules. In these circumstances unvested

LTIP awards and deferred shares may vest early. The extent to

which unvested LTIP vest would be determined by the

Committee taking into account the satisfaction of any

performance conditions, the period of time that has elapsed

since the award was granted until the date of the event and

any other factors the Committee considers relevant. Deferred

shares will vest to the extent determined by the Committee

taking into account any factors it considers relevant.

Alternatively, the Committee may determine that LTIP awards

or deferred shares may be exchanged for equivalent awards

on such terms as agreed with the acquiring company. If there

is a demerger, delisting or other event which may materially

affect the company’s share price, LTIP awards may vest on

the same basis as for a takeover. In the event of a change of

control or other relevant event during the holding period

applying to an LTIP award, the holding period will come to an

end.

Non-Executive Directors’ fee policy and service contracts

The standard approach for Non-Executive Director appointment

is that the appointment expires at the AGM following the end

of the three year term, notwithstanding the fact that each

Director is subject to annual re-election at each AGM.

Although there is currently no intention to do so, The Board

reserves the right to introduce notice periods for Non-

Executive Directors in the future. Details of the Non-Executive

Directors’ current contracts are set out on pages 131 to 132.

Consideration of conditions elsewhere in the company

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. While the review

includes various statistics on the outcome of the wider

employee pay review, the review does not currently include

any direct comparison measures between Executive Directors

and wider employee pay. The company does not consult with

employees on executive director remuneration.

Consideration of shareholders views

Ahead of the 2023 AGM, the chair of the Remuneration

Committee consulted with Beazley’s largest shareholders and

proxy agencies to discuss the proposed changes to the

remuneration policy. The Committee greatly values feedback

from our shareholders and took their views into account when

finalising the proposals.

A number of the changes made to the remuneration policy

have been made in direct response to feedback received from

shareholders. For example, from 2023 we are fixing the rate

of bonus deferral and have enhanced our post-employment

shareholding requirements to align with evolving market

expectations. We have also responded to shareholders’

preference for the use of multiple measures in the LTIP by

introducing an ESG measure from 2023.

As a Committee, we monitor evolving shareholder views on

Executive remuneration and regularly review guidance from

proxy bodies, as well as from our shareholders. We continue

to value input from our shareholders and are committed to

ensuring an open dialogue.

Minor changes

The Committee may make minor amendments to the policy

set out above (for regulatory, exchange control, tax, or

administrative purposes, or to take account of a change in

legislation) without obtaining shareholder approval for such

amendments.

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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 2022 (and how these relate to

our performance in the year) and details of the operation of our policy for 2023.

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 2022 and 31 December 2021.

Executive Directors

£		Fixed pay				Pay for performance
		Salary	Benefits	Pension	Total fixed pay	Total annual bonus1	Long term incentives (LTI)2	Total variable pay	Total remuneration
Adrian P Cox3	2022	525,250	19,760	65,656	610,666	787,875	106,663	894,538	1,505,204
	2021	480,625	15,083	60,078	555,786	1,441,875	102,873	1,544,748	2,100,534
Sally M Lake	2022	414,000	2,938	45,960	462,898	621,000	71,190	692,190	1,155,088
	2021	390,000	2,873	43,323	436,196	1,170,000	33,122	1,203,122	1,639,318

1A portion of the 2021 and 2022 bonus awards shown in the table above is deferred into shares for three years. Details of the deferral in respect of 2022 awards

can be found on page 127.

2The LTI figures for 2022 have been calculated using the average share price in the last three months of 2022 of 630.7p. The share prices at the time LTI awards

were granted were 553.33p for the 2018 award and 595.50p for the 2020 award. The 2022 LTI figures therefore include share appreciation of £8,947 for Adrian

P Cox and £5,018 for Sally M Lake. See page 112 for further details. For 2021, the LTI figures have been restated to reflect the share prices at the date of

vesting of 482.77p for the 2019 award and 485.63p for the 2017 award. The Committee did not exercise any discretion in relation to share price changes.

3Adrian P Cox was appointed CEO on 1 April 2021. The 2021 figures in the table reflect the period as CUO from 1 January 2021 to 31 March 2021 and his

appointment to CEO effective 1 April 2021 until the end of the financial year.

Non-Executive Directors

	2022 plc Board fees	2022 Subsidiary Board fees	2022 Total fees1	2021 Total Fees2
Rajesh K Agrawal3, 10	77,547	0	77,547	29,417
Pierre-Olivier Desaulle	74,000	14,322	88,322	77,388
Nicola Hodson6	81,648	0	81,648	75,600
Christine LaSala4,6	128,476	28,560	157,036	119,257
Robert A Stuchbery5, 6, 11	85,633	31,100	116,733	108,080
David L Roberts6	193,846	48,462	242,308	264,000
A John Reizenstein	87,500	19,600	107,100	101,100
Catherine M Woods7	18,988	0	18,988	87,665
Fiona M Muldoon8, 11	44,438	0	44,438	–
Cecilia Reyes Leuzinger9	46,505	0	46,505	–

1Other than for the Chair, fees include fees paid to the Chair and members of Board Committees, for the role of Senior independent Director, as well as fees,

where relevant, for membership of the subsidiary Boards of Beazley Furlonge Limited (BFL) and Beazley Insurance dac, the Chair of the BFL Risk Committee and

Beazley Insurance Company, Inc. (BICI).

2For Christine LaSala, Pierre-Olivier Desaulle and Catherine M Woods the total 2021 fee has not changed but the representation has been amended in order to be

consistent with 2022. Fees are paid in multiple currencies – 2021 fees have been restated using 2022 FX rates of GBP 1 : USD 1.25 and GBP 1 : EUR 1.18.

3Rajesh K Agrawal joined as a Non-Executive Director of the plc Board with effect 1 August 2021.

4Christine LaSala became chair of the remuneration committee with effect 27 March 2021.

5Robert A Stuchbery joined as a Non-Executive Director of the Remuneration Committee with effect 14 April 2021.

6David Roberts stepped down as chair of the plc Board, with effect 21 October 2022. Until a replacement has been appointed, Christine LaSala is acting as

Interim Chair of The Board plc and Chair of the Nomination Committee, Robert A Stuchbery is acting as Interim Senior independent Director and Nicola Hodson is

acting as Interim Remuneration Committee Chair with effect from 24 October 2022. The fees for the impacted Directors has been amended accordingly to reflect

their new roles and responsibilities.

7Catherine M Woods stepped down as a Non-Executive Director of the plc Board, with effect 25 March 2022.

8Fiona M Muldoon joined as a Non-Executive Director of the PLC Board and as a member of the Audit and Risk Committee with effect from 31 May 2022.

9Cecilia Reyes Leuzinger joined as a Non-Executive Director of the plc Board and as a member of the Audit and Risk Committee and Remuneration Committee with

effect from 31 May 2022.

10Rajesh K Agrawal joined as a Non-Executive Director of the Remuneration Committee with effect 26 April 2022.

11With effect from 24 October 2022 Robert A Stuchbery stepped down as Employee Voice of the plc Board and Fiona M Muldoon took on the role.

www.beazley.com Beazley | Annual report 2022 121

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

in December of each year, with new salaries effective from 1

January.

During the year the Committee reviewed the executive

directors’ salaries and identified that Adrian P Cox’s salary as

CEO had fallen out of step with the transformative changes

that have taken place at Beazley in our recent history. The

Committee recognised that it was in the interests of

shareholders that Adrian’s salary is set at a reasonable level

in order to retain and motivate a CEO of the calibre necessary

to effectively run Beazley and to deliver our long-term strategic

priorities. Therefore the committee has made a step change

to his salary for 2023 increasing it from £525,250 to

£625,000. Further details on the Committee’s rationale are

provided on page 110.

As set out in the Remuneration Committee Chair’s statement,

the committee was cognisant of the cost-of-living challenges

facing the wider workforce in light of inflation levels. Therefore

the salary increase budget was targeted at those experiencing

the greatest pressures. For 2023 the GFD’s salary is being

increased by 5.0%, in-line with the approach for other senior

roles, and considerably below the increases awarded to more

junior staff.

The base salaries for the executive directors in 2022 and 2023 are as set out below:

	2022 base salary	2023 base salary	Increase
	£	£	%
Adrian P Cox	525,250	625,000	19.0
Sally M Lake	414,000	434,700	5.0

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, travel insurance, health-club membership, 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 2022	Increase in accrued benefit excluding inflation (A)	Increase in accrued benefit including inflation	Transfer value of (A) less directors contribution	Transfer value of accrued benefits at 31 December 2022	Transfer value less directors contribution	Normal retirement date
	£	£	£	£	£	£
Adrian P Cox	16,723	0	1,933	0	293,063	(263,120)	12 Mar 2031

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.

122 Beazley | Annual report 2022 www.beazley.com

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 2022

The process for determining 2022 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 2022

At the beginning of the financial year, the risk-free return (RFR) was set at 0.75% 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	Threshold				Maximum
ROE performance	0.75%	3.75%	10.75%	18.25%	25.75%
Guideline/illustrative bonus award as % of maximum	0%	12.5%	37.5%	75%	100%

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 2022 was 7% and the overall bonus pool (in which

executive directors as well as other senior employees

participate) was calculated based on this.

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

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Directors’ remuneration report

Annual remuneration report

continued

Assessment of achievements for 2022

In determining annual bonuses for 2022 the Committee took into account a range of (i) financial, (ii) strategic and (iii) individual

elements as set out below.

(i) Financial performance

Element	Achievement
Profit before tax	$191.0m profit before tax
Gross premiums written growth	Increased by 14%
Net assets per share growth	Achieved a NAVps growth of 10%
Investment performance (portfolio return)	(2.1)% portfolio return
Expense management	Remained at 35%

(ii) Strategic performance

Element	Expectation		Achievement
Responsible business	Improve ESG rating as measured across S&P, Carbon Disclosure Project (CDP) and Sustainalytics.		ESG rating improvement achieved. CDP rating increased from C to B. S&P score increased from 43 to 48.
	Reduce carbon emissions by 40% in 2022 in line with Responsible Business Strategy.		55% reduction achieved in 2022.
	Ensure the creation of a group-wide human rights policy, and establish key performance indicators (KPIs) in order to measure the effectiveness of our actions and progress in tackling modern slavery and human rights.		Human rights policy in place. The development of KPIs is ongoing as we work to enhance our approach to responsible procurement.
	Achieve at least 45% female representation at Board and Senior Manager level by 2023.		On track to achieve 2023 target.
	Achieve at least 25% People of Colour representation of the global workforce by end of 2023.		Achieved, in advance of deadline.
Wholesale platform growth	Increase profitable growth across wholesale platforms in London, Asia Pac and Miami.		Our Wholesale platform has a strong 2022, with growth of 13%. This platform remains our largest platform.
North American platform growth	Achieve profitable growth in the US and Canada.		Our US domestic insurance company reached a significant milestone this year, passing gross premiums written of $2bn. Overall the North American platform grew 13%.
European platform growth	Build out franchise in Europe.		Our European platform continued to perform well, writing business both on Lloyd’s paper and through our European Insurance entity. Growth across the platform was 23%.
Culture and people	Maintain high levels of employee engagement.		Employee engagement score of 85% (8% above the global average). Turnover has decreased to 10.3% at the end of 2022 from 11.4% at the end of 2021. This is below the average market benchmark of 12%.

124 Beazley | Annual report 2022 www.beazley.com

(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 Officer)	Deliver 2022 underwriting business plan, GAAP budget and provide leadership for the modernisation programme.	•Initial guidance to shareholders for 2022 was a combined ratio of around 90% and growth in the mid teens; the combined ratio was better than guidance and growth inline. •Premium growth of 14% achieved rate change of 14% and expense ratio of 35%. •Combined ratio for 2022 of 89% (93% in 2021). •Modernisation programme on track to deliver significant improvements to the business. •Managed budgets and risk appetites proactively through the year to optimise short and long-term positions for the company.
	Execute on five year plan and developing into general business strategy.	•The 2022 element of the 5 year plan achieved and well developed into general business strategy. •Vision and company strategy well embedded across the business which will be explained to shareholders at capital markets day in May 2023.
	Define three year cyber plan and associated plans to deliver (capital, diversification etc).	•Cyber plan written and signed off by The Board. •Year one of the plan has been delivered as planned. •Plan forms intrinsic part of future strategy.
	Continue to embed climate change decision making into the underwriting process, further reflecting the financial risk of climate change within our pricing.	Beazley created a Climate Risk Working Group (CRWG) to lead the delivery of the work required to further embed climate risk into the underwriting process. This work included: •Strengthening catastrophe modelling capabilities and developing forward looking view of risk. •Improving key peril model calibration in pricing and incorporating climate loss trends for key perils (US hurricane, US wildfire, US inland flood) in pricing. •Developing and introducing a climate change metric on US hurricane risk into our key property pricing tool. •Developing a catastrophe optimisation framework and tool. This framework and tool enables underwriters to optimise the US property risks portfolio using risk appetite metrics and performance metrics. •Developing an internal realistic disaster scenario on greenwashing to assess and quantify the potential impact of greenwashing and consider actions needed to mitigate this risk. Additional progression is planned for 2023, with the CRWG set further objectives to building on the successes delivered in 2022.
	Effective leadership in relation to achieving appropriate levels of capital management for current operations and future growth.	•Capital strategy delivered as required, with successful equity raise of £340.8m. •Surplus capital remained in preferred range prior to equity raise.
	Finalise and execute new governance across Boards, executive and subcommittees.	•On track and will be finalised with the appointment of new Chair.
	Deliver inclusion and diversity targets, focusing on rolling recruitment and promotion ratios.	•On track to achieve targets by end 2023.
	Sustain high levels of employee engagement and inclusivity within the business and continue to drive ways of working for a productive workforce.	•Our engagement score, which measures whether colleagues are willing to go above and beyond for the organisation, was 85%, 1% lower than 2021. We remain above the global benchmark for both favourability and engagement. This year our fully engaged category increased by 5% - meaning that while our overall score hasn’t increased, for 5% of colleagues their level of engagement has gone up. Much like last year, we continue to see parity in a majority of our demographic scores such as gender, ethnicity, age and length of service. •Turnover of 10.3% which is better than industry average of 12%.

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Directors’ remuneration report

Annual remuneration report

continued

Executive	Objectives	Achievement
Sally Lake (Group Finance Director)	Execution of planning and oversight of the IFRS 17 and 9 implementation project for January 2023.	•Delivered IFRS 17 requirements for year end 2022. •IFRS 17 programme on target for reporting during 2023.
	Align long term to strategic decisions on capital, reinsurance and expenses.	•Equity raise in November 2022 to support opportunity in Property market. •Continued focus on expenses aiming to ensure that growth in business outstrips costs increase, whilst at the same time ensuring investment in automation and simplification continues across the Group.
	Deliver capital management at appropriate levels for current operations and future growth	•Equity raise of £340.8m in November 2022 to support opportunity in Property market.
	Chair the Investment Committee and build a strong Committee that delivers an investment return for 2022.	•Investment loss of $179.7m which was below target investment return due to changes in the macro economic environment.
	Align the investment portfolio below 2 degree world.	•Building on Beazley’s Responsible Investment Policy, Beazley has commenced the work required to align the investment portfolio to below a 2 degree world. •Beazley has established baseline emissions for the apportioned carbon emissions arising from publicly listed corporate bonds (investment grade and high yield) and publicly listed equities. We have also commenced the work required to develop and incorporating climate data and emissions for sovereign exposures. It is anticipated these numbers will be incorporated into our annual reporting at the end of 2023. •Beazley has also set the objective to align the investment portfolio with a 1.5 degree pathway by 2028. This work delivered in 2022 enables Beazley to work towards this objective.
	Co-sponsor the multi-year modernisation programme with Chief Operating Office to deliver greater efficiencies including the creation of the disclosure management tool.	•Modernisation programme on track, with key 2022 deliverables achieved. •Disclosure management tool implemented.
	Strong ownership of relations with analysts and rating agencies and assured participation in investor calls and presentations.	•Investor roadshows held post half year and year end results. •Engaged with wider group of investors through the year. •Feedback collated indicated investors are pleased with the level of management interaction and overall management performance.
	Achieve a 45% female target within senior leadership positions by end of 2023.	•On target to achieve target by end 2023.
	Effective management of the Finance transformation programme.	•Finance leadership team has now been in place for the last year and are working strongly as a leadership team. •The Finance team employee engagement score moved from 83% in 2021 to 86% in 2022. •2022 plans delivered on time and in budget.

Annual bonus awards outcomes for 2022

Within the framework of the annual bonus, in respect of individual performance and achievements, awards are dependent on a

profit pool and minimum level of ROE performance.

	% of maximum	% of salary	Bonus value
Adrian P Cox	37.5%	150%	£787,875
Sally M Lake	37.5%	150%	£621,000

126 Beazley | Annual report 2022 www.beazley.com

The following graph and table set out the out-turn for 2022 against performance and illustrate the way in which bonuses over

time reflect profit and ROE performance.

	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
Pre-tax profit/ (loss)	$313m	$262m	$284m	$293m	$168m	$76m	$268m	($50m)	$369m	$191m
Post-tax ROE	21%	17%	19%	18%	9%	5%	15%	(3%)	16%	7%
Average Executive Director bonus as a percentage of salary	c.333%	c.294%	c.291%	c.272%	c.150%	c.73%	c.212%	c.0%	c.300%	c.150%

Bonus deferral

A portion of the bonus will generally be deferred into shares for three years. For 2022 the deferral rate was set at 25%.

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 130 for further details).

The following table sets out the deferred bonus awards made during 2022 in respect of the bonus for 2021:

Individual	Type of interest	Basis on which award is made	Number of shares awarded	Face value of shares1	% vesting at threshold
Adrian P Cox	Deferred shares	Deferred bonus	89,132	432,500	n/a
Sally M Lake	Deferred shares	Deferred bonus	72,326	351,000	n/a

1 The face value of shares awarded was calculated using the three day average share price prior to grant, which was 485.3p.

Annual bonus approach for 2023

The annual bonus for 2023 will continue to operate within a 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.

As part of their review of the financial targets for the 2023 annual bonus the Committee noted the potential impact of the

implementation of IFRS 17 which applies from January 2023.  The bonus ROE framework set out in this report is based on the

previous accounting standards and, if necessary, may be updated to reflect the new accounting standards.  In making any

amendments the committee will ensure that targets are no more or less stretching and that participants do not inadvertently

benefit from the change in accounting standards.

As set out earlier in the Report, the Committee are proposing two key changes to the annual bonus approach for 2023. As part

of the wider rebalancing to the longer-term the maximum annual bonus opportunity will be reduced to 300% of salary and the

level of deferral will be fixed so that one-third of any bonus for 2023 will be deferred into shares for three years.

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. As mentioned in the Letter from the Chair of the Remuneration Committee

we are proposing a number of changes to the LTIP as part of the renewal of our Directors’ Remuneration Policy at the 2023

AGM. The proposed changes are explained in more detail at the end of this segment whilst the following sections set out the

details for outstanding LTIP awards granted under our current structure.

LTIP structure for awards granted prior to 2023 ▪

Vesting of awards 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.

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Directors’ remuneration report

Annual remuneration report

continued

The NAVps performance conditions for all outstanding awards are as follows:

NAVps performance	% of award vesting
NAVps growth < risk-free rate +7.5% p.a.	0%
NAVps growth = risk-free rate +7.5% p.a.	10%
NAVps growth = risk-free rate +10% p.a.	25%
NAVps growth = risk-free rate +15% p.a.	100%

The Committee considers the LTIP NAVps growth targets to be very stretching, particularly taking into account that growth must

be over a sustained five year period. 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 2022 ▪

The LTIP awards shown in the single total figure of remuneration for 2022 include:

•the second tranche of awards granted on 13 February 2018. These will vest at 14.9%, based on the achievement of the

NAVps growth performance condition over the five years ended 31 December 2022; and

•the first tranche of awards granted on 11 February 2020. These will vest at 20.0%, based on the achievement of the NAVps

growth performance condition over the three years ended 31 December 2022.

The following table summarises the actual NAVps growth achieved over the two performance periods and the resultant vesting

levels:

LTIP award	Performance period	NAVps growth	% of award vesting
Second tranche of the 2018 awards	Five years ended 31 December 2022	10.1% p.a.	14.9%
First tranche of the 2020 awards	Three years ended 31 December 2022	10.5% p.a.	20.0%

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 2020 awards were

granted in February 2020 prior to the fall in share price resulting from the outbreak of COVID-19.

LTIP awards granted in 2022 ▪

During 2022, LTIP awards with a face value equal to 200% of salary for the CEO and 150% of salary for the GFD were granted to

Executive Directors. These awards are subject to the NAVps performance conditions set out above. The awards were as shown

in the table below:

						Performance period end
Individual	Type of interest	Basis on which award is made	Number of shares awarded	Face value of shares1	% vesting at threshold	Three years (50%)	Five years (50%)
Adrian P Cox	Nil cost option (LTIP)	200% of salary	216,464	1,050,500	10%	31/12/2024	31/12/2026
Sally M Lake	Nil cost option (LTIP)	150% of salary	127,962	621,000	10%	31/12/2024	31/12/2026

1The face value of shares awarded was calculated using the three day average share price prior to grant, which was 485.3p.

LTIP structure for awards granted from 2023 ▪

The LTIP is an important tool in the remuneration framework for incentivizing participants and aligning their interests with those

of our shareholders. During the review of the Remuneration Policy the Committee identified a number of refinements to improve

the effectiveness of the LTIP structure and to reflect evolving market practice.

128 Beazley | Annual report 2022 www.beazley.com

Award opportunity for 2023

As part of the wider rebalancing to the longer-term the

maximum LTIP opportunity will be increased by 100% of

salary. LTIP awards with a face value equal to 300% of salary

for the CEO and 250% of salary for the GFD will be granted.

Performance period

A key feature of the Beazley business model is exposure to

catastrophes within a robust risk management framework.

Because of this, there is an inherent level of volatility in

company performance. Beazley has an established pay-for-

performance culture, a track record of aligning individual

reward with performance and a policy of not rewarding failure.

During the review of the policy, the Remuneration Committee

identified that the volatility of our annual results can have a

disproportionate impact on LTIP awards, which is exacerbated

by our longer-than-normal five-year performance period.

Taking this into account the Committee gave consideration to

moving to an annualised approach so that the LTIP is split into

five equal tranches with performance assessed pro-rata in

years one to five.

This proposal was discussed with the majority of our

shareholders (top 100) in order to gauge the potential levels

of support. During the consultation process, it became clear

that a significant proportion of shareholders had reservations

due to the atypical nature of the proposal and there was a

preference for a more market-typical approach, that

maintained a longer term performance period.

Based on the shareholder feedback the Committee decided

against the annualised LTIP approach. As an alternative, and

aligned with our shareholders’ preference for a more market-

typical approach, the Committee is proposing to simplify the

LTIP performance period by removing the five-year

performance element so that the entire award is subject to

cumulative performance measured over a three year period.

The Committee believes that this change is appropriately

aligned with the interests of our shareholders, improves the

clarity of the LTIP and makes it simpler for both participants

and investors. The vesting of awards will continue to be

subject to the stretching performance targets set out below,

and shares will be subject to a two-year post-vesting holding

period. Ultimately the Committee believes that this change, in

conjunction with including an ESG metric, will help to continue

to incentivise and retain our high calibre, experienced

executive team.

NAVps performance1	% of award vesting
NAVps growth < risk-free rate +7.5%	0%
NAVps growth = risk-free rate +7.5%	10%
NAVps growth = risk-free rate +10%	25%
NAVps growth = risk-free rate +15%	100%

1As part of their review of the financial targets for the 2023 LTIP awards the Committee noted the potential impact of the implementation of IFRS 17 which applies

from January 2023.  The targets set above are based on the previous accounting standards and, if necessary, may be updated to reflect the new accounting

standards.  In making any amendments the committee will ensure that targets are no more or less stretching and that participants do not inadvertently benefit

from the change in accounting standards.

Introduction of ESG metrics

Beazley’s aspiration is to be the highest performing

sustainable specialist insurer in the market. We believe that

we must demonstrate our commitment to this and have made

a series of measurable steps to incorporate relevant

environmental, societal and governance (ESG) features into

every aspect of our business. From 2023 we are introducing 

ESG metrics into the LTIP in order to incentivise the delivery of

our ambitions over the longer-term. ESG will represent 50% of

salary.

Target	Weighting (of ESG element)	Threshold (10% of max)	Max
Reduce carbon emissions (Scope 1, 2 & 3) relative to 2019 baseline	One third	TBC1	TBC1
Increase female representation at Board and Senior Manager level	One third	44%	45%
Increase People of Colour representation at Board and Senior Manager level	One third	13%	15%

1The sustainability team are in the process of finalising the carbon reduction targets for the 2023 LTIP awards. The Committee intends to set stretching,

quantifiable targets which align with our external commitments around carbon reduction. Full details of the targets will be published on the Company’s website

when available.

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.

www.beazley.com Beazley | Annual report 2022 129

Directors’ remuneration report

Annual remuneration report

continued

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 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.

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 300 employees of the Group have committed to

put at risk £15.2m of bonuses to the underwriting results of

syndicate 623. Of the total at risk, £13.0m has already been

deferred from the bonuses awarded.

The following executive directors participated in syndicate 623 through Beazley Staff Underwriting Limited:

	Total bonuses deferred £	2021 year of accounting underwriting capacity	2022 year of accounting underwriting capacity	2023 year of accounting underwriting capacity
Adrian P Cox	216,000	400,000	400,000	400,000
Sally M Lake	54,000	100,000	100,000	250,000

Adrian P Cox has fully funded the capital requirement. Sally M Lake is fully funded for the capital requirement for 2021-2022,

the increase in capital for the 2023 capacity will be funded via future bonus deferral.

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	A portion of 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.
LTIP holding period	Outstanding LTIP awards vest over a five year period. From 2023 LTIP awards will 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.
Shareholding requirements	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.
Investment in underwriting	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.
Underwriters remuneration aligned with profit received	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.

130 Beazley | Annual report 2022 www.beazley.com

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

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 announced in February 2023, Clive Bannister will take up the role of Chair of The Board following the AGM on 25 April 2023.

Clive 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. Following the annual review, the Remuneration Committee determined that the base fees for the Non-Executive Directors

should increase by 3%, below the general increase of the workforce.

As announced in December 2022, The Board approved the proposal to split its Audit and Risk Committee into a separate Audit

Committee and Risk Committee from 1 January 2023. The fee levels have been set taking into account a number of factors,

including the expected time commitments and responsibilities of each role and the current fee structure in place.

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):

	2022 fee	2023 fee
Chair of Board fee	£300,000	£325,0001
Basic fee	£65,000	£67,000
Senior independent Director fee	£11,700	£11,700
Chair of Audit and Risk Committee fee	£22,500	–
Chair of Audit Committee	–	£22,500
Chair of Risk Committee	–	£22,500
Chair of Remuneration Committee fee	£18,100	£18,100
Membership fee for Non-Executive Directors on the Audit and Risk Committee	£9,000	–
Membership fee for Non-Executive Directors on the Audit Committee	–	£9,000
Membership fee for Non-Executive Directors on the Risk Committee	–	£9,000
Membership fee for Non-Executive Directors on the Remuneration Committee	£5,200	£5,200
Fee for designated Non-Executive Director representing employee voice	£5,200	£5,200

1Christine LaSala is currently acting as interim Chair of The Board and receives a pro-rata fee of £300,000 for the period as interim Chair. Clive Bannister will be

appointed Chair of The Board with effect from the AGM on 25 April 2023, the fee has been set at £325,000 for a fixed three-year term.

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.

www.beazley.com Beazley | Annual report 2022 131

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:

	Commencement of employment	Expires
Christine LaSala	1 Jul 2016	AGM 2023
Robert A Stuchbery	11 Aug 2016	AGM 2023
A John Reizenstein	10 Apr 2019	AGM 2025
Nicola Hodson	10 Apr 2019	AGM 2025
Rajesh K Agrawal	1 Aug 2021	AGM 2025
Pierre-Olivier Desaulle	1 Jan 2021	AGM 2024
Fiona M Muldoon	31 May 2022	AGM 2025
Cecilia Reyes Leuzinger	31 May 2022	AGM 2025

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 organization.

Other incentive arrangements at Beazley (not applicable to executive directors):

Element	Objective	Summary
Profit related pay plan	To align underwriters’ reward with the profitability of their account.	Profit on the relevant underwriting account as measured at three years and later.
Support bonus plan	To align staff bonuses with individual performance and achievement of objectives.	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.
Retention shares	To retain key staff	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

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 materials risk takers who participate in

the profit related pay plan.

132 Beazley | Annual report 2022 www.beazley.com

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

			Executive Directors
		All employees	Adrian P Cox1	Sally M Lake2
2021 -2022	Salary	4.5	3.5	3.5
	Benefits	11.3	8.8	5.8
	Bonus	-3.5	-45.4	-46.9
2020 -2021	Salary	3.2	23.2	11.4
	Benefits	11.1	22.1	9.5
	Bonus	119.3	n/a	n/a
2019 -2020	Salary	3.5	2.6	2.9
	Benefits	-12.8	-7.2	15.4
	Bonus	-30.5	-100	-100

www.beazley.com Beazley | Annual report 2022 133

Directors’ remuneration report

Annual remuneration report

continued

		Non-Executive Directors
		Christine LaSala	David L Roberts3	Robert A Stuchbery4	Catherine M Woods8	A John Reizenstein	Nicola Hodson	Pierre- Olivier Desaulle	Rajesh K Agrawal5	Cecilia Reyes Leuzinger6	Fiona M Muldoon7
2021 -20223	Salary	31.7	13.6	8.0	2.8	5.9	8.0	14.1	12.2	–	–
	Benefits	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
	Bonus	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
2020 -2021	Salary	8.7	–	3.5	-6.0	–	–	–	–	–	–
	Benefits	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
	Bonus	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
2019 -2020	Salary	40.0	2.5	16.6	18.1	2.5	2.5	–	–	–	–
	Benefits	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
	Bonus	n/a	n/a	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.

The average fee increase for 2022 was 3%. During 2021 and 2022 a number of the Non-Executive Directors joined additional Board Committees and therefore

received additional fees. Therefore, for these Non-Executive Directors, the year-on-year comparisons reflect their additional responsibilities and corresponding fees.

1Adrian Cox was appointed Chief Executive Officer on 1 April 2021. The percentage change figures for 2021 reflect that his salary increased with effect from this date.

2Sally Lake’s responsibilities as Finance Director were increased as set out earlier in this report. The percentage change figures for 2021 reflect that her salary was increased with effect

from 1 April to recognise the increased responsibilities.

3David Roberts stepped down as Chair of the PLC Board, with effect 21 October 2022. Christine LaSala is acting Interim Chair of The Board plc and Chair of the Nomination Committee (and

stepping down as Chair of the Remuneration Committee and Senior independent Director), Robert Stuchbery is acting as Interim Senior independent Director and Nicola Hodson is acting as

Interim Remuneration Committee Chair with effect from 24 October 2022. The fees for the impacted Directors has been amended accordingly to reflect their new roles and responsibilities.

4With effect from 24 October 2022 Robert Stuchbery stepped down as employee voice of the plc Board and Fiona Muldoon took on the role.

5Rajesh Agrawal joined as a Non-Executive Director of the Remuneration Committee with effect 26 April 2022.

6Cecilia Reyes Leuzinger joined as a Non-Executive Director of the plc Board, Audit & Risk Committee and Remuneration Committee with effect from 31 May 2022.

7Fiona Muldoon joined as a Non-Executive Director of the plc Board and Audit & Risk Committee with effect from 31 May 2022.

8Catherine M Woods stepped down as a Non-Executive Director of the PLC Board with effect from 25 March 2022.

Statement of Directors’ shareholdings and share interests ▪

For the year ending 31 December 2022 the Executive Directors had a shareholding requirement of 200% of salary. The CEO and

GFD have met their shareholding guidelines (see chart below). From 2023 the shareholding requirement for the CEO has

increased to 300% of salary.

134 Beazley | Annual report 2022 www.beazley.com

The table below shows the total number of Directors’ interests in shares as at 31 December 2022 or date of cessation as a

director.  As at 27 February 2023, there have been no changes.

Name	Number of shares owned (including by connected persons)	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
Adrian P Cox	1,126,545	134,472	694,707	0	-	34,288
Sally M Lake	133,281	93,736	398,473	6,250	-	10,278
Rajesh K Agrawal	23,000	-	-	-	-	-
Pierre-Olivier Desaulle	0	-	-	-	-	-
Nicola Hodson	1,824	-	-	-	-	-
Christine LaSala	53,085	-	-	-	-	-
A John Reizenstein	16,251	-	-	-	-	-
David L Roberts1	98,914	-	-	-	-	-
Robert A Stuchbery	88,073	-	-	-	-	-
Catherine M Woods2	42,698	-	-	-	-	-
Fiona M Muldoon3	0	-	-	-	-	-
Cecilia Reyes Leuzinger4	26,086	-	-	-	-	-

1David L Roberts stepped down from The Board with effect from 21 October 2022.

2Catherine M Woods stepped down from The Board at the conclusion of the 2022 AGM.

3Fiona M Muldoon joined The Board with effect 31 May 2022.

4Cecilia Reyes Leuzinger joined The Board with effect 31 May 2022.

CEO Pay versus performance

The following graph sets out Beazley’s 10 year total shareholder return performance to 31 December 2022, 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.

www.beazley.com Beazley | Annual report 2022 135

Directors’ remuneration report

Annual remuneration report

continued

Year	CEO single figure of total remuneration	Annual variable award (% of maximum opportunity)	Long term incentives vesting (% of maximum opportunity)
2013	£2,922,392	93%	100%
2014	£3,745,989	74%	100%
2015	£3,711,647	73%	100%
2016	£3,715,146	70%	100%
2017	£3,140,145	38%	98%
2018	£1,524,600	19%	41%
2019	£2,157,018	57%	37%
2020	£631,890	–	6.6%
2021 (D A Horton)1	£145,896	–	–
2021 (A P Cox as CEO)	£2,100,534	75%	17.8%
2022	£1,505,204	38%	17.5%

1DA Horton stepped down as CEO on 31 March 2021 and was succeeded by AP Cox. The figures for AP 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	Method	25th percentile pay ratio	Median pay ratio	75th percentile pay ratio
2022	Option A	28:1	16:1	11:1
2021	Option A	39:1	21:1	14:1
2020	Option A	13:1	7:1	5:1
2019	Option A	42:1	25:1	15:1

The employees used for the purposes of the table above were identified on a full-time equivalent basis as at 31 December

2022. 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 2022.

Element of pay	25th percentile employee	Median employee	75th percentile employee
Salary	£41,700	£70,268	£99,598
Total remuneration	£53,016	£93,883	£142,226

Note: Salary and bonus are compared against all employees of the UK Group.

Pay ratios have decreased this year primarily as a result of group performance being lower than 2021, driven by a downturn in

investment performance due to mark to market losses in a volatile interest rate environment. Thus, reducing variable pay

outturns which are dependent on Group performance.

In-line with our pay-for-performance culture a significant portion of the CEO’s remuneration is variable and dependant 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 2022 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.

136 Beazley | Annual report 2022 www.beazley.com

Relative importance of spend on pay

The following table shows the relative spend on pay compared to distributions to shareholders:

	Overall expenditure on pay	Shareholder distributions (dividends in respect of the year)
2022	$302.5m	$110m
2021	$287.0m	$105m

Directors’ share plan interests ▪

Details of share plan interests of those directors who served during the period are as follows:

	Outstanding options at 1 Jan 20221	Options granted	Options exercised	Lapsed unvested	Outstanding options at 31 Dec 20222
Adrian P Cox
Deferred bonus:	54,160	89,132	8,820	0	134,472
LTIP (see notes):	603,107	216,464	21,266	103,598	694,707
SAYE:	4,202	0	4,202	0	0
Sally M Lake
Deferred bonus:	24,840	72,326	3,430	0	93,736
LTIP (see notes):	309,854	127,962	6,848	32,495	398,473
SAYE:	6,250	0	0	0	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.
LTIP awards	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 2017 – 3/5 year	Awards were made on 8 February 2017 at a mid-market share price of 434.33p. Awards expire in February 2027.
LTIP 2018 – 3/5 year	Awards were made on 13 February 2018 at a mid-market share price of 553.33p. Awards expire in February 2028.
LTIP 2019 – 3/5 year	Awards were made on 12 February 2019 at a mid-market share price of 510.16p. Awards expire in February 2029.
LTIP 2020 – 3/5 year	Awards were made on 11 February 2020 at a mid-market share price of 595.5p. Awards expire in February 2030.
LTIP 2021 – 3/5 year	Awards were made on 10 February 2021 at a mid-market share price of 367.0p. Awards expire in February 2031.
LTIP 2022 – 3/5 year	Awards were made on 15 February 2022 at a mid-market share price of 485.3p. Awards expire in February 2032.

Share prices

The market price of Beazley ordinary shares at 31 December 2022 (the last trading day of the year) was 679.5p and the range

during the year was 376.4p to 679.5p.

Remuneration Committee

The Committee consists of only Non-Executive Directors and during the year the members were; Christine LaSala, Catherine M

Woods, 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 8 times during the year. Further information on the key activities of the Committee for 2022 can be found within

the statement of corporate governance on page 87.

www.beazley.com Beazley | Annual report 2022 137

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 £105,000. 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 of the 2019 remuneration policy and 2021 annual remuneration report and remuneration policy were as

follows:

	Votes for	% for	Votes against	% against	Total votes cast	Votes withheld (abstentions)
2019 remuneration policy	373,357,955	90.03%	41,349,712	9.97%	414,707,667	5,521
2021 annual remuneration report	434,012,961	89.49%	50,960,274	10.51%	484,973,235	65,027

Annual general meeting

At the forthcoming annual general meeting to be held on 25 April 2023, 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

Interim Remuneration Committee Chair

12 March 2023

138 Beazley | Annual report 2022 www.beazley.com

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.

Responsibility statement of the directors in respect of

the annual financial report

Each of the Directors, whose details can be found on pages

77 to 78, to the best of their knowledge confirm that:

•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

•we 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 LaSala S M Lake

ChairGroup Finance Director

12 March 2023

www.beazley.com Beazley | Annual report 2022 139

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. and Beazley American Insurance Company,

Inc., both of 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 71, 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

139.

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 Officer’s

statement and the financial review.

Results and dividends

The consolidated profit before taxation for the year ended 31

December 2022 amounted to $191.0m (2021: $369.2m).

The directors have approved an interim dividend of 13.5p

(2022: 12.9p) in March 2023.

Future business developments

Information relating to future business developments can be

found in the strategic report.

Going concern and viability statement

The financial review on page 58 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 1.2 to the financial

statements on page 167.

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

section on page 67.

Information to be disclosed under LR9.84R

Information on interest capitalised is shown in note 25 on

page 221. Details of long-term incentive schemes are

provided in the Directors’ remuneration report on page 111.

Details of the allotment for cash of equity securities made

during the period can be found on page 142.

140 Beazley | Annual report 2022 www.beazley.com

Equity raise

An allotment was made on 18 November 2022 otherwise than to the holders of the company’s equity shares in proportion to

their holdings of such equity shares and which was not specifically authorised by the company’s shareholders. The details of

the allotment are set out below in accordance with LR 9.8.4R(7) and the most recently published Pre-Emption Group Statement

of Principles (2022).

Transaction details	In aggregate, the equity raise of 60,959,017 ordinary shares with a nominal value of £3,047,950.85 represented approximately 9.99% of the company’s issued ordinary share capital. Settlement for the New Ordinary Shares and Admission took place on or before 8.00 a.m. on 18 November 2022.
Use of proceeds	The proceeds will be used to support organic growth and provide growth capital to fund attractive underwriting opportunities while maintaining a strong balance sheet that can withstand a range of stress scenarios. The proceeds of the equity raise are not intended to be used for any acquisition or specified capital investment.
Quantum of proceeds	In aggregate, the equity raise represents gross proceeds of approximately £350 million and net proceeds of approximately £340 million.
Discount	The Issue Price of 575 pence per share represents a discount of 8% to the closing share price of 625 pence per share on 15 November 2022.
Allocations	Soft pre-emption was adhered to in the allocations process. Management was involved in the allocations process, which was carried out in compliance with the MIFID II Allocation requirements. Allocations made outside of soft pre- emption were preferentially directed towards existing shareholders in excess of their pro rata, and wall-crossed accounts.
Consultation	The joint bookrunners undertook a pre-launch wall-crossing process, including consultation with major shareholders, to the extent reasonably practicable and permitted by law.
Retail investors	The equity raise included a Retail Offer, for a total of 529,036 Retail Offer Shares. Retail investors, who participated in the Retail Offer, were able to do so at the same Issue Price as all other investors participating in the Placing and Subscription. The Retail Offer was made available to existing shareholders and new investors in the UK. Investors had the ability to participate in this transaction through ISAs and SIPPs, as well as General Investment Accounts (GIAs). This combination of participation routes meant that, to the extent practicable on the transaction timetable, eligible UK retail investors (including certificated retail shareholders) had the opportunity to participate in the equity raise alongside institutional investors. Allocation preference was given to existing shareholders pursuant to the Retail Offer in keeping with the principle of soft pre-emption.

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 the 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 2023 AGM.

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.

www.beazley.com Beazley | Annual report 2022 141

Directors’ report continued

Directors

The Directors of the company who served during 2022 and/or

to the date of this report were as follows:

Adrian Peter Cox	Chief Executive Officer
Anthony Jonathan Reizenstein	Non-Executive Director
Catherine Marie Woods	Non-Executive Director (resigned 25/03/2022)
Celia Reyes Leuzinger	Non-Executive Director (appointed 31/05/2022)
Christine LaSala	Non-Executive Director (until 21/10/2022) / interim Non-Executive Chair (appointed 21/10/2022)
Clive Bannister	Non-Executive Director/ Chair Designate (appointed 08/02/2023)
David Lawton Roberts	Non-Executive Chair (resigned 21/10/2022)
Fiona Margaret Muldoon	Non-Executive Director (appointed 31/05/2022)
Nicola Hodson	Non-Executive Director
Pierre-Oliver Desaulle	Non-Executive Director
Rajesh Agrawal	Non-Executive Director
Robert Arthur Stuchbery	Non-Executive Director
Sally Michelle Lake	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. 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.

Further information can be found in the Statement of

Corporate Governance on page 75.

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 111. 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 77 to 78.

Directors’ indemnities

The company maintains Directors’ and Officers’ Liability

insurance which gives appropriate cover for any legal action

taken against its Directors. 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 2022 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.

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 28 February 2023, The Board had been notified of, or

was otherwise aware of, the following shareholdings of 3% or

more of the company’s issued ordinary share capital:

	Number of ordinary shares	%
Fidelity Management & Research	61,369,569	9.1
MFS Investment Management	50,528,997	7.5
Wellington Management	46,244,628	6.9
BlackRock	33,600,828	5.0
Vanguard Group	28,252,117	4.2
Platinum Asset Management	23,134,491	3.5
Janus Henderson Investors	21,558,731	3.2

Note: All interests disclosed to the company in accordance

with DTRs can be found in the news and alerts section of our

corporate website: www.beazley.com.

Share capital

As at 31 December 2022, the company’s issued share capital

comprised 671,204,020 ordinary shares, each with a nominal

value of 5p and representing 100% of the total issued share

capital. Details of the movement in ordinary share capital

during the year can be found in note 21 on page 206. There

are no restrictions on the transfer of shares in the company

other than as set out in the Articles of Association and certain

restrictions which may from time to time be imposed by law

and regulations.

142 Beazley | Annual report 2022 www.beazley.com

Authority to purchase own shares

On 25 March 2022 shareholders approved an authority, which

will expire on 25 June 2023 or, if earlier, at the conclusion of

the 2023 Annual General Meeting (AGM), for the company to

repurchase up to a maximum of 60,924,299 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. A resolution will be

proposed at the 2023 AGM to renew the authority for the

company to purchase its own share capital up to the specified

limits for a further year. More detail of this proposal is given in

the notice of AGM.

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 2021 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 2023 at

14.30. The notice of the AGM details the business to be put

to shareholders.

Corporate, social and environmental responsibility

The company’s corporate, social and environmental activities

are set out in the statement of the Chair on page 8 and the

Responsible Business section on page 21. During 2022,

Beazley and employees donated over $470,000 to charities,

details of which can be found in the Responsible Business

section.

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 the

year, regular all-employee meetings, Q&As with senior

management and smaller meetings between leadership and

groups of employees have taken place both virtually and in

person.

The Chief Executive Officer provides a periodic general

business update to all employees by email. He also

communicates the key focus areas of the Executive

Committee via a regular podcast and other areas of interest

via regular virtual meetings. The intranet is accessible by all

employees and is a useful source of company information.

During 2022, all employees were invited to participate in

surveys on the business and its culture and on Beazley’s

leadership. The key findings from these surveys and actions to

address these findings are 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, this was Bob Stuchbery, for much of 2022 and

was replaced by Fiona Muldoon in November 2022.

Throughout the year, Bob and Fiona have attended a variety of

forums with employees to get direct feedback. Further

information on our employee engagement activities and how

feedback has informed decisions can be found in the

Stakeholder engagement report on page 50.

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. The company operates a Save As You Earn

scheme to support share ownership amongst employees, and

a long-term incentive plan is offered to senior employees. A

share incentive plan is also to be put to shareholders at the

2023 annual general meeting.

www.beazley.com Beazley | Annual report 2022 143

Directors’ report continued

Inclusion & diversity

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 page 21

and in the Nomination Committee report on page 100.

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 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 for and on behalf of the company and its

subsidiaries.

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

Fuel economy data has been based on the worst-case fuel

consumption figures cited by the manufacturer. This has

enabled the kWh energy associated with the car to be

calculated. There were seven company cars used across

2022 of which six are current at the end of 2022. Five of

these cars are either hybrids or electric.

Electricity for utilities

UK locations cover our London and Birmingham offices.

Europe locations cover our offices in Dublin, Barcelona, Paris

and Munich. Rest of the World locations cover our presence in

Montreal. US locations cover our offices in New York,

Farmington, Miami, Chicago, Atlanta, Boston, San Francisco,

and Dallas.

Car hire

There was no UK car hire in 2022.

Exclusions

Energy consumption from business travel, with the exception

of company cars, has not been included as Beazley does not

operate the transport in question.

Energy report

Beazley has a total of 2,019.70 FTE staff (including

contractors) as at 1 January 2023, of which are considered in

scope for the global energy consumption reported in the

tables below. Within the UK, Beazley has 1,048.85 FTE

(including contractors). This is the equivalent of 49.5% of our

global workforce.

Company cars

The total estimated kWh equivalent for fuel consumption in

2022 is 38,644.28 kWh.

Energy for heating, cooling and small power

There was no direct gas use within Beazley operations in

2022, with landlords providing heating to our offices.

	Energy consumption kWh
Electricity	2020	2021	2022
UK	1,950,688.05	1,456,414.91	401,331.67
Europe	379,139.21	362,193.00	242,077.00
USA	2,708,550.00	2,708,550.00	2,607,072.00
Total	5,038,377.26	4,527,158.00	3,250,481.00

We were able to procure energy from certified renewable

sources for the following locations in 2022:

Office location	Energy consumption (kWh)
London	323,420.17
Dublin	124,496.26
Barcelona	51,892.00
Paris	39,410.00

Car hire

There was no in scope energy use related to car hire in 2022.

Globally energy use from car hire was estimated to be

36,130.67.

Overall energy consumption

Within the scope of the SECR, total energy consumption within

the UK was 401,331.67 kWh. This equates to 382.64kWh/

FTE down from 1,640.43kWh/FTE in 2021. This reduction is

primarily due to reduction in office space Beazley held in

2022, when compared to 2021 where there was a period of

cross over between the Group's old and new London offices.

Global energy arising from electricity use from Beazley’s

operations within the same scope was 3,250,481kWh, which

equates to 1,778.79 kWh/FTE.

144 Beazley | Annual report 2022 www.beazley.com

For carbon emissions associated with Beazley's operations in

the UK, please see pages 46 and 47 of this report for Scope

1 and Scope 2 emissions.

Target for 2023

Beazley has set itself a target to reduce normalised CO2

emissions by 50% in 2022. This is against a baseline year of

2019. This target does not allow for the offsetting of these

emissions through recognised schemes. In 2022, our energy

savings will be driven by continued efficiency of our building

operations. Although out of scope for SECR, it should be

noted that further energy savings will be achieved through

reducing our business travel, as we are using online

alternatives to undertake many of our business meetings.

Financial instruments

Derivatives are used to manage the Group’s capital position,

details of these derivatives are contained in note 17 to the

financial statements. Disclosure with respect to financial risk

is included in the Risk management and compliance report on

page 67 and in note 2 to the financial statements.

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	Chief Executive Officer's statement (page 11) Chief Underwriting Officer's report (page 13)
•Employee engagement	Section 172 statement (page 55)
•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	Section 172 statement (page 55)
•Carbon emissions and Streamlined Energy and Carbon Reporting	Responsible business (page 21)

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	Note 2 (page 176)
•Details of hedge accounting and derivative financial instruments	Note 1 (page 163)
•Details of any overseas branches	Note 31 (page 229)
•Recent developments and post balance sheet events	Note 34 (page 231)

C P Oldridge

Company Secretary

22 Bishopsgate

London

EC2N 4BQ

12 March 2023

www.beazley.com Beazley | Annual report 2022 145

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 2022 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 2022 which comprise:

Group	Parent company
Consolidated statement of profit or loss for the year then ended 31 December 2022
Statement of comprehensive income for the year then ended	Statement of comprehensive income for the year ended 31 December 2022
Statement of changes in equity for the year then ended	Statement of changes in equity for the year then ended
Statement of financial position as at 31 December 2022	Statement of financial position as at 31 December 2022
Statement of cash flows for the year then ended	Statement of cash flows for the year then ended
Related notes 1 to 34 to the financial statements, including a summary of significant accounting policies (except for note 2 where it is marked as unaudited).	Related notes 1 to 34 to the financial statements including a summary of significant accounting policies.

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. With support from our actuaries, 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.

146 Beazley | Annual report 2022 www.beazley.com

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 ((Syndicate 2623 and Beazley Insurance Company Inc (‘BICI’)) and audit procedures on specific balances for a further six components (Syndicate 3623, Beazley Insurance dac (‘ BIdac’), Beazley Furlonge Limited (‘BFL’), Beazley Management Limited (‘BML’), Beazley plc and Beazley Services USA Inc. (‘BUSA’)) and other audit procedures on group wide processes. •The components where we performed full or specific audit procedures accounted for 95% of Profit before tax, 96% of Revenue and 98% of Total assets.
Key Audit Matters	•Valuation of gross Insurance claims Liabilities and reinsurers’ share of Incurred but not reported (‘IBNR’) –Actuarial assumptions used in estimating gross IBNR and reinsurers’ share of IBNR, and –Data •Measurement of estimated premium income •Valuation of level 3 financial investments
Materiality	•Overall group materiality of $11.3m (2021: $11.2m) which represents 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. (2021: 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).

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 to the business environment and other factors when assessing the level of work to be performed at each reporting

component.

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 eight entities

covering components within UK, Ireland and US which represent the material business units within the Group. Of these entities,

we designated two as full scope components (Syndicate 2623 and Beazley Insurance Company Inc(and six as specific scope

components (Syndicate 3623, Beazley Services USA Inc., Beazley Insurance dac ’), Beazley Furlonge Limited, Beazley

Management Limited and Beazley plc).

Details of the eight reporting components are set out below:

Component	Scope	Auditor
Syndicate 2623	Full	EY Component Team (UK)
BICI	Full	EY Component Team (New York)
Syndicate 3623	Specific	EY Component Team (UK)
Beazley Services USA Inc	Specific	EY Component Team (New York)
BIDAC	Specific	EY Primary Team
Beazley Furlonge Limited	Specific	EY Primary Team
Beazley Management Limited	Specific	EY Primary Team & EY Component Team (New York)
Beazley Plc	Specific	EY Primary Team

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Auditors’ report continued

In addition to the above we perform specific audit procedures over Group wide processes.

Of the eight 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 six 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 IBNR and Reinsurers’ share of IBNR, Taxation, Cash and cash equivalents, Share based payments, Right of use

assets, Lease liabilities, Financial assets and Intangible assets (indefinite life).

The reporting components where we performed audit procedures accounted for 95% (2021:97%) of the Group’s Profit before

tax, 96% (2021: 96%) of the Group’s Revenue and 98% (2021: 99%) of the Group’s Total assets. For the current year, the full

scope components contributed 87% (2021: 90%) of the Group’s Profit before tax, 89% (2021: 90%) of the Group’s Gross

Written Premium and 7% (2021: 10%) of the Group’s Total assets. The specific scope component contributed 8% (2021: 7%) of

the Group’s Profit before tax, 7% (2021: 6%) of the Group’s Gross Written Premium and 91% (2021: 89%) 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 26 legal entities that together represent 5% (2021: 3%) of the Group’s Profit before Income Tax, none are

individually greater than 4% (2021: 4%) of the Group’s Gross Written Premium, none are individually greater than 2% (2021: 1%)

of the Group’s total assets. 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.

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 the UK and other EY global

network firms operating under our instruction.

The primary audit team provided detailed audit instructions to the component team 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, Beazley Furlonge Limited, Beazley Management Limited) and all group-wide

processes, all audit procedures were performed directly by the primary audit team whilst the other full scope components (BICI

and Syndicate 2623) and specific scope component (Beazley Services USA Inc and Syndicate 3623) were audited by

component audit teams in the United States of America and United Kingdom respectively. For the companies where the work

was performed by component auditors, the primary audit team was responsible for the scope and direction of the audit process

and the primary audit team determined the appropriate level of involvement to enable us to determine that sufficient audit

evidence has 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 virtually) 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.

148 Beazley | Annual report 2022 www.beazley.com

Climate change

There has been increasing interest from stakeholders as to 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 29 to

49 in the required Task Force for Climate related Financial Disclosures, which form part of the “Other information,” rather than

the audited financial statements as explained below. Our procedures on these 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’.

As explained in the Basis of Preparation note governmental and societal responses to climate change risks are still developing,

and are interdependent upon each other, and consequently financial statements cannot capture all possible future outcomes as

these are not yet known.  The degree of certainty of these changes may also mean that they cannot be taken into account

when determining asset and liability valuations and timing of future cash flows under the requirements of International Financial

Reporting Standards. As explained in note 1, management believe 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 audit effort in considering climate change was focused on validating this assertion, through considering the potential

effects of climate risks on asset values and associated disclosures where values are determined through modelling future cash

flows. We also challenged the Directors’ considerations of climate change in their assessment of going concern and viability

and associated disclosures. 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 are currently unable to determine the full future economic impact on their business model, operational plans

and customers to achieve this and therefore as set out above the potential impacts are not fully incorporated in these financial

statements.

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.

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Auditors’ report continued

Risk	Our response to the risk	Key observations communicated to the Audit and Risk Committee
Valuation of Gross Insurance claims Liabilities of $7,382.5m and reinsurers’ share of IBNR of $2,066.8m. (PY comparative Gross: $6,399.1m and reinsurers’ share of IBNR: $1,458.0m) Refer to the Audit and Risk Committee Report (page 94); Accounting policies (pages 168 and 170); and Note 24 of the Consolidated Financial Statements (pages 211 to 220). One of the most significant financial statement risk areas from both a business and an audit perspective is the valuation and adequacy of the claims liabilities held by the Group. Gross claims liabilities, and the related reinsurance on IBNR are inherently uncertain and subjective by nature and therefore are more susceptible to fraud or error than other financial statement balances. A small manipulation of an assumption could have a significant impact on the result for the year. This could lead to insurance liabilities not falling within a reasonable range of estimates, resulting in a misstatement in the financial statements. Additionally, the valuation process is conditional upon the accuracy and completeness of the data. We have split the risk relating to the valuation of insurance liabilities into the following component parts: •Actuarial assumptions used in estimating gross IBNR and reinsurers’ share of IBNR; and •Data
The assumptions used to develop the IBNR reserves, which make up a significant component of the insurance liabilities (gross and reinsurers’ share on IBNR), involve a significant degree of judgement. As a result we focused on this area as the valuation can be materially impacted by various factors including •The risk of inappropriate assumptions used in determining gross IBNR and reinsurers’ share of IBNR, especially on: ◦Newer or growing classes of business, due to reliance on expert judgement in management’s estimates due to the limited historical data available and limitations in use of market data; and ◦Classes subject to changing claims environment or trends such as Cyber, due to greater reliance on expert judgement in management’s estimates due to limited relevance of historical data to form a view on future claim development. •The risk that IBNR loss reserve estimates in respect of catastrophe and large claims losses are insufficient due to the size and extent of these losses being uncertain. The areas we consider as key areas of judgement include the tail development and consistency of reserves specifically on reserving classes where prior year deteriorations are seen, premium rate increases are assumed, and inflationary trends, including social inflation, are experienced.	To obtain sufficient audit evidence to conclude on the appropriateness of actuarial assumptions, we engaged our actuaries as part of our audit team and performed the following procedures: •Obtained an understanding and tested the design effectiveness of key controls over management’s process in respect of the valuation of gross IBNR and reinsurers’ share of IBNR including the setting and updating of actuarial assumptions and the reinsurance netting down process to calculate the reinsurers’ share of IBNR from the gross IBNR. •Assessed the reserving methodology on a gross basis and net of reinsurers’ share of IBNR. This also involved comparing the Group’s reserving methodology with industry practice. •Performed independent re-projections of IBNR applying our own assumptions, across all classes of business for attritional claims on a net of reinsurance and gross basis and compared these to management’s results as at 31 December 2022. •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 of the net and gross IBNR, we have formed an independent view of the additional claims cost arising from the current economic inflationary environment. •Compared premium rate increases against industry benchmarks and held discussions with management’s underwriting and actuarial teams to understand any variances seen. Additionally, we reviewed evidence of renewals to verify the cause of rate increases which included determining the reasonableness of the factors used to convert price changes to rate increases. •Benchmarking quantum of catastrophe losses, large losses, assumptions, and rates used in inherently uncertain classes and new growing classes, against other comparable industry participants to challenge and assess the reserving assumptions.	We determined that the actuarial assumptions as a whole, which are used by management are reasonable based on our analysis of the experience to date, industry practice and the financial and regulatory requirements. We therefore concluded that IBNR reserves lie within a reasonable range of possible outcomes.

150 Beazley | Annual report 2022 www.beazley.com

Risk	Our response to the risk	Key observations communicated to the Audit and Risk Committee
Data The valuation of insurance liabilities depends on complete and accurate data used in the actuarial process as this data is used to form expectations about future claims.	To obtain sufficient audit evidence to assess the integrity of premiums, paid and outstanding claims data used to determine the gross and net of reinsurance reserves, we performed the following procedures: •Obtained an understanding of the process and tested the design and operating effectiveness of key controls over management’s data collection, extraction, and validation process. •Tested the completeness and accuracy of the claims, reinsurance programme 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. •For a sample of paid and outstanding claims we corroborated to underlying supporting evidence. For paid claims this included authorisation requests and bank statements. For claims outstanding we obtained an understanding of management’s process of setting claims reserves and tested the design and operating effectiveness of key controls within the claim outstanding process. 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 lawyer or defence counsel reports provided by third parties to corroborate the year end balances. •Additionally, for claims outstanding we assessed the consistency in reserving methodology used in the current year compared to the methodology used in previous years for similar claims.	We determined based on our audit work that the data used for the actuarial model inputs was materially complete and accurate.
Measurement of estimated premium within Gross Written Premium income (Gross Written Premium $5,268.7m, PY comparative $4,618.9m) Refer to the Audit and Risk Committee Report (page 94) and Accounting policies (pages 168 and 169). For certain contracts, premium is initially recognised based on estimates of ultimate premium. This occurs where pricing is based on variables which are not known with certainty at the point of binding the policy. Subsequent adjustments to those estimates arise as updated information relating to those pricing variables becomes available and are recorded in the period in which they are determined. These estimates are judgemental and therefore could result in misstatements of revenue recognised in the financial statements.	Our procedures included: •Obtaining an understanding of the process and testing the design and operating effectiveness of key controls, including the monitoring of estimated premium income. •Performing independent re-projections of ultimate premium per underwriting year for the 2021 and prior underwriting years where ultimate premiums are booked, 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 the data used in our independent re-projections we corroborated premium data to underlying policy and finance systems in order to test the completeness and accuracy of this data set. This was performed through testing of key reconciliations to external sources such as external service organisations reports. •For a sample of policy estimates in respect of the 2022 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.	Based on the results of the procedures performed we concluded that premium estimates had been recorded appropriately.

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Auditors’ report continued

Risk	Our response to the risk	Key observations communicated to the Audit and Risk Committee
Valuation of level 3 investments ($255.4m, PY comparative $315.8m) Refer to the Audit and Risk Committee Report (page 94); Accounting policies (page 168 and 172) and Note 16 of the Consolidated Financial Statements (pages 199 to 204). 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 group 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. We consider that the key risks on the valuation of Syndicate loans relates to (i) the assumptions used, as these are largely based on non-observable inputs (ii) the appropriateness of the valuation methodology applied to derive the fair value.	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 historic consistency between the booked and final audited valuation positions in the underlying funds. This involved an analysis to establish any trends, patterns, conditions, or discrepancies allowing challenge to management’s latest valuation. •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 inquire if they are aware of any indications of impairment since the latest valuation date. •With support from our EY valuation specialists, we performed an independent valuation of the syndicate loans.	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.

152 Beazley | Annual report 2022 www.beazley.com

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 $11.3 million (2021: $11.2 million), which is 5% of pre-tax profits on a 5-year

average adjusted for Covid-19 losses ($340m) and the gain on sale of the Beazley Benefit business ($55.4m) (2021: 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. 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 $16.4 million (2021: $10.4 million), which is 1% (2021: 1%) of net

assets. 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.

We calculated materiality at the planning stage of the audit and then during the course of our audit, we reassessed initial

materiality at year end based on actual 2022 with no change as a result.

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% (2021: 50%) of our planning materiality, namely $5.6m (2021: $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 $5.6m to $1.2m

(2021: $5.6m to $1.2m).

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit and Risk Committee that we would report to them all uncorrected audit differences in excess of

$0.6m (2021: $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 232, 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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Auditors’ report continued

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 140.

•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 70;

•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 page 70;

•Directors’ statement on fair, balanced and understandable set out on page 139;

•Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 67;

•The section of the annual report that describes the review of effectiveness of risk management and internal control systems

set out on page 98; and;

•The section describing the work of the Audit and Risk Committee set out on pages 91 to 99.

Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement out on page 139, 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.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

154 Beazley | Annual report 2022 www.beazley.com

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’), Lloyd’s, Prudential

Regulation Authority (‘PRA’), the Financial Conduct Authority (‘FCA’), 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 and Regulatory Committee and attended the Audit and Risk

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 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 the valuation of insurance liabilities and the reinsurers’ share of IBNR and

estimated premium income 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 within their forward-looking information within their five-year plan,

for example. 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 CBI, Lloyd’s, FCA,

PRA, State of Connecticut Insurance Department and 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 and Risk 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 four years covering the

years ending 31 December 2019 to 31 December 2022.

•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

12 March 2023

www.beazley.com Beazley | Annual report 2022 155

Financial

statements

157	Consolidated statement of profit or loss
158	Statements of comprehensive income
159	Statements of changes in equity
162	Statements of financial position
162	Statements of cash flows
164	Notes to the financial statements
232	Alternative performance measures

156 Beazley | Annual report 2022 www.beazley.com

Consolidated statement of profit or loss

for the year ended 31 December 2022

		2022	2021
	Notes	$m	$m
Gross premiums written	3	5,268.7	4,618.9
Written premiums ceded to reinsurers		(1,392.5)	(1,106.5)
Net premiums written	3	3,876.2	3,512.4
Change in gross provision for unearned premiums		(507.3)	(545.0)
Reinsurers’ share of change in the provision for unearned premiums		245.3	179.9
Change in net provision for unearned premiums		(262.0)	(365.1)
Net earned premiums	3	3,614.2	3,147.3
Net investment (loss)/income	4	(179.7)	116.4
Other income	5	32.1	28.2
Gain from sale of business		–	54.4
		(147.6)	199.0
Revenue		3,466.6	3,346.3
Insurance claims		3,046.3	2,734.3
Insurance claims recoverable from reinsurers		(1,089.9)	(908.1)
Net insurance claims	3	1,956.4	1,826.2
Expenses for the acquisition of insurance contracts	3	952.1	821.8
Administrative expenses	3	303.7	283.0
Foreign exchange loss	3	24.0	7.2
Operating expenses		1,279.8	1,112.0
Expenses	3	3,236.2	2,938.2
Results of operating activities		230.4	408.1
Finance costs	8	(39.4)	(38.9)
Profit before income tax		191.0	369.2
Income tax expense	9	(30.2)	(60.5)
Profit for the year attributable to equity shareholders		160.8	308.7
Earnings per share (cents per share):
Basic	10	26.3	50.9
Diluted	10	25.9	50.3
Earnings per share (pence per share):
Basic	10	21.1	37.0
Diluted	10	20.8	36.5

www.beazley.com Beazley | Annual report 2022 157

Statement of comprehensive income

for the year ended 31 December 2022

	2022	2021
	$m	$m
Group
Profit for the year attributable to equity shareholders	160.8	308.7
Other comprehensive (expense)/income
Items that will never be reclassified to profit or loss:
(Loss)/gain on remeasurement of retirement benefit obligations	(12.5)	13.0
Income tax on defined benefit obligation	2.7	(1.8)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences	(12.2)	(5.9)
Total other comprehensive income	(22.0)	5.3
Total comprehensive income recognised	138.8	314.0

Statement of comprehensive income

for the year ended 31 December 2022

	2022	2021
	$m	$m
Company
Profit for the year attributable to equity shareholders	303.1	37.2
Total comprehensive income recognised	303.1	37.2

158 Beazley | Annual report 2022 www.beazley.com

Statement of changes in equity

for the year ended 31 December 2022

		Share capital	Share premium	Foreign currency translation reserve	Other reserves	Retained earnings	Total
	Notes	$m	$m	$m	$m	$m	$m
Group
Balance at 1 January 2021		42.9	5.3	(91.3)	(9.4)	1,862.0	1,809.5
Total comprehensive (loss) / income recognised		–	–	(5.9)	–	319.9	314.0
Equity settled share based payments	22	–	–	–	11.0	–	11.0
Tax on share option vestings	9	–	–	–	(3.9)	–	(3.9)
Transfer of shares to employees	22	–	–	–	(1.7)	1.9	0.2
Balance at 31 December 2021		42.9	5.3	(97.2)	(4.0)	2,183.8	2,130.8
Balance at 1 January 2022		42.9	5.3	(97.2)	(4.0)	2,183.8	2,130.8
Total comprehensive (loss) / income recognised		–	–	(12.2)	–	151.0	138.8
Dividends paid	11	–	–	–	–	(103.0)	(103.0)
Issue of shares	21	0.1	0.8	–	–	–	0.9
Equity raise1	21	3.6	3.6	–	397.2	–	404.4
Transfer of merger reserve to retained earnings1	21	–	–	–	(397.2)	397.2	–
Equity settled share based payments	22	–	–	–	15.7	–	15.7
Acquisition of own shares held in trust	22	–	–	–	(17.8)	–	(17.8)
Tax on share option vestings	9	–	–	–	3.1	0.6	3.7
Transfer of shares to employees	22	–	–	–	(4.6)	4.6	–
Balance at 31 December 2022		46.6	9.7	(109.4)	(7.6)	2,634.2	2,573.5

1In November 2022, the Company issued 60,959,017 new ordinary shares of 5 pence each, comprising the ‘Placing Shares’, the ‘Retail Offer Shares’ and the

‘Subscription Shares’. 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.

Refer to Note 21 for further details.

www.beazley.com Beazley | Annual report 2022 159

Statement of changes in equity

for the year ended 31 December 2022

		Share capital	Share premium	Merger reserve1	Foreign currency translation reserve	Other reserves	Retained earnings	Total
	Notes	$m	$m	$m	$m	$m	$m	$m
Company
Balance at 1 January 2021		42.9	5.3	55.4	0.7	(16.9)	904.1	991.5
Total comprehensive income recognised		–	–	–	–	–	37.2	37.2
Equity settled share based payments	22	–	–	–	–	11.0	–	11.0
Transfer of shares to employees	22	–	–	–	–	(1.7)	1.9	0.2
Balance at 31 December 2021		42.9	5.3	55.4	0.7	(7.6)	943.2	1,039.9
Balance at 1 January 2022		42.9	5.3	55.4	0.7	(7.6)	943.2	1,039.9
Total comprehensive income recognised		–	–	–	–	–	303.1	303.1
Dividends paid	11	–	–	–	–	–	(103.0)	(103.0)
Issue of shares	21	0.1	0.8	–	–	–	–	0.9
Equity raise²	21	3.6	3.6	397.2	–	–	–	404.4
Transfer of merger reserve to retained earnings	22	–	–	(397.2)	–	–	397.2	–
Equity settled share based payments	22	–	–	–	–	15.7	–	15.7
Acquisition of own shares held in trust	22	–	–	–	–	(17.8)	–	(17.8)
Transfer of shares to employees	22	–	–	–	–	(4.6)	4.6	–
Balance at 31 December 2022		46.6	9.7	55.4	0.7	(14.3)	1,545.1	1,643.2

1A merger reserve was created through a scheme of arrangement on 13 April 2016, in which Beazley plc became the parent company of the Group.

2In November 2022, the Company issued 60,959,017 new ordinary shares of 5 pence each, comprising the ‘Placing Shares’, the ‘Retail Offer Shares’ and the

‘Subscription Shares’. 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.

Refer to Note 21 for further details.

160 Beazley | Annual report 2022 www.beazley.com

Statements of financial position

as at 31 December 2022

		2022		2021
		Group	Company	Group	Company
	Notes	$m	$m	$m	$m
Assets
Intangible assets	12	128.8	–	123.5	–
Plant and equipment	13	14.9	–	19.2	–
Right of use assets	29	60.5	–	75.5	–
Deferred tax asset	28	35.2	–	16.3	–
Investment in subsidiaries	31	–	724.6	–	724.6
Investment in associates	14	0.4	–	0.6	–
Deferred acquisition costs	15	550.1	–	477.8	–
Retirement benefit asset	27	4.6	–	18.1	–
Reinsurance assets	19, 24	3,286.6	–	2,386.4	–
Financial assets at fair value	16, 17	8,345.6	–	7,283.5	–
Insurance receivables	18	1,811.7	–	1,696.1	–
Other receivables	30	196.4	919.1	106.7	315.0
Current income tax asset		11.7	0.3	11.9	0.7
Cash and cash equivalents	20	652.5	3.4	591.8	0.3
Total assets		15,099.0	1,647.4	12,807.4	1,040.6
Equity
Share capital	21	46.6	46.6	42.9	42.9
Share premium		9.7	9.7	5.3	5.3
Merger reserve		–	55.4	–	55.4
Foreign currency translation reserve		(109.4)	0.7	(97.2)	0.7
Other reserves	22	(7.6)	(14.3)	(4.0)	(7.6)
Retained earnings		2,634.2	1,545.1	2,183.8	943.2
Total equity		2,573.5	1,643.2	2,130.8	1,039.9
Liabilities
Insurance liabilities	24	10,354.2	–	8,871.8	–
Financial liabilities	16, 17, 25	562.5	–	554.7	–
Lease liabilities	29	72.7	–	84.3	–
Current income tax liability		8.6	–	24.5	–
Other payables	26	1,527.5	4.2	1,141.3	0.7
Total liabilities		12,525.5	4.2	10,676.6	0.7
Total equity and liabilities		15,099.0	1,647.4	12,807.4	1,040.6

No income statement is presented for the parent company as permitted by Section 408 of the Companies Act 2006. The profit after tax of the parent company for

the period was $303.6m (2021: $37.2m).

The financial statements were approved by The Board of Directors on 12 March 2023 and were signed on its behalf by:

C LaSala

Chair

S M Lake

Group Finance Director

12 March 2023

www.beazley.com Beazley | Annual report 2022 161

Statements of cash flows

for the year ended 31 December 2022

		2022		2021
		Group	Company	Group	Company
	Notes	$m	$m	$m	$m
Cash flow from operating activities
Profit before income tax		191.0	303.3	369.2	36.4
Adjustments for:
Amortisation of intangibles	12	14.3	–	20.5	–
Equity settled share based compensation	22	15.7	15.7	11.0	11.0
Net fair value loss/(gain) on financial assets	4	274.4	–	(45.8)	–
Depreciation of plant and equipment	13	3.3	–	4.9	–
Depreciation of right of use assets	29	12.3	–	15.0	–
Impairment/(write back) of reinsurance assets recognised	2	17.8	–	(3.3)	–
Increase/(decrease) in insurance and other payables		1,868.6	3.5	1,900.8	(3.1)
(Increase) in insurance, reinsurance and other receivables		(1,105.5)	(3.4)	(950.1)	(47.1)
(Increase) in deferred acquisition costs		(72.3)	–	(92.9)	–
Interest and dividends received on investments	4	(101.1)	(305.0)	(76.5)	(40.0)
Finance costs	8	39.4	4.8	38.9	3.6
Income tax paid		(61.1)	–	(22.2)	–
Net cash from/(used in) operating activities		1,096.8	18.9	1,169.5	(39.2)
Cash flow from investing activities
Purchase of plant and equipment	13	(1.0)	–	(4.5)	–
Expenditure on software development and other intangible assets	12	(22.7)	–	(17.7)	–
Purchase of investments		(6,645.4)	–	(7,979.1)	–
Proceeds from sale of investments		5,325.3	–	7,037.1	–
Proceeds from sale of business		–	–	54.4	–
Loan to subsidiary		–	(600.7)	–	–
Interest and dividends received	4	94.2	305.0	70.6	40.0
Net cash (used in)/from investing activities		(1,249.6)	(295.7)	(839.2)	40.0
Cash flow from financing activities
Acquisition of own shares in trust	22	(17.8)	(17.8)	–	–
Payment of lease liabilities	29	(11.6)	–	(12.8)	–
Equity raise	21	404.4	404.4	–	–
Finance costs	8	(36.3)	(4.8)	(35.2)	(3.6)
Dividend paid		(103.0)	(103.0)	–	–
Net cash from/(used in) financing activities		235.7	278.8	(48.0)	(3.6)
Net increase/(decrease) in cash and cash equivalents		82.9	2.0	282.3	(2.8)
Cash and cash equivalents at beginning of year		591.8	0.3	309.5	0.9
Effect of exchange rate changes on cash and cash equivalents		(22.2)	1.1	–	2.2
Cash and cash equivalents at end of year	20	652.5	3.4	591.8	0.3

162 Beazley | Annual report 2022 www.beazley.com

1 Statement of accounting policies

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 through Lloyd’s syndicates. The Group financial statements for the year ended 31 December 2022 comprise

the parent company, its subsidiaries and the Group’s interest in associates.

The financial statements of the parent company, Beazley plc, and 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.

By publishing the parent company financial statements together with the Group financial statements, the company is taking

advantage of the exemption in s408 of the Companies Act 2006 not to present its individual statement of profit or loss.

In the current year, the Group have applied amendments to IFRS issued by the International Accounting Standards Board (IASB)

and endorsed by the UK Endorsement Board (UKEB) that are mandatorily effective for an accounting period that begins on or

after 1 January 2022. The new effective amendments are:

•Amendments to IAS 37 ‘Onerous contracts – Cost of Fulfilling a Contract’ issued in May 2020;

•Annual Improvements to IFRS Standards 2018–2020 issued in May 2020;

•Amendments to IAS 16 ‘Property, Plant and Equipment – Proceeds before Intended Use’ issued in May 2020; and

•Reference to the Conceptual Framework – Amendments to IFRS 3 ‘Business combinations’ issued in May 2020.

None of the amendments issued by the IASB and endorsed by the UKEB have had a material impact to the Group.

A number of new standards and interpretations adopted by the UKEB which are not mandatorily effective, as well as standards

and interpretations issued by the IASB but not yet adopted by the UKEB, have not been applied in preparing these financial

statements. The Group does not plan to adopt these standards early; instead it expects to apply them from their effective dates

as determined by their dates of UKEB endorsement. The Group expects the following upcoming standards to have an impact on

its future financial statements:

•IFRS 9: Financial Instruments (UKEB effective date: 1 January 2018, deferred in line with implementation of IFRS 17);

•IFRS 9: Amendment: Prepayment Features with Negative Compensation (UKEB effective date: 1 January 2019, deferred in

line with implementation of IFRS 17); and

•IFRS 17: Insurance Contracts (UKEB effective date: 1 January 2023);

The IASB have issued a number of other minor amendments to standards which are not yet effective. None of these are

expected to have a material impact on the Group.

Notes to the financial statements

www.beazley.com Beazley | Annual report 2022 163

1 Statement of accounting policies continued

Significant changes in accounting policy not yet effective

International Financial Reporting Standard 17, Insurance Contracts (‘IFRS 17’)

IFRS 17, Insurance Contracts, was issued by the International Accounting Standards Board (IASB) in May 2017 and was

approved for adoption in the United Kingdom by the UK endorsement Board on 16 May 2022. UK-adopted IFRS 17 is effective

for accounting periods beginning on or after 1 January 2023. IFRS 17 will materially change the way the Group accounts for,

and reports, (re)insurance contracts issued and reinsurance contracts entered into in its consolidated financial statements.

Changes to accounting policies

The IFRS 17 general measurement model requires that the following balances are recognised on initial recognition of an

insurance contract:

•a discounted probability-weighted best estimate of future cash flows relating to the insurance contract;

•a risk adjustment for non-financial risk; and

•a contractual service margin (‘CSM’) representing the unearned profit that will be recognised over the coverage period of the

contract. The CSM is measured such that no profit arises on initial recognition.

The Group intends to measure all contracts consistently using the general measurement model set out above and does not

expect to use the simplified premium allocation approach for any portfolios or groups of insurance contracts currently issued. A

discount rate to discount future cash flows will be derived using the ‘bottom-up’ approach, based on a risk-free discount rate

that is then adjusted with an illiquidity premium. Subsequent changes in discount rates on remeasurement will be accounted for

through the statement of profit or loss.

IFRS 17 requires that insurance contracts where the underlying risks are of a similar nature and where they are managed

together be aggregated into groups of insurance contracts. These will then be subdivided based on the year coverage begins

and whether it is onerous on initial recognition. The Group intends to align its IFRS 17 groupings with the way it currently

manages and reports its business. Where a contract is onerous on initial recognition, the Group will be required to recognise

any losses up-front. The Group is currently assessing the extent to which contracts currently in issue may be onerous.

Reinsurance contracts which the Group takes out (reinsurance contracts held) will be measured similarly to (re)insurance

contracts issued. However the concept of onerosity does not exist in IFRS 17 for reinsurance and therefore the reinsurance

CSM is measured such that no income or expense is recognised on initial recognition.

Changes to presentation of financial statements on adoption of IFRS 17

The adoption of IFRS 17 will result in significant changes to the consolidated statement of profit or loss, the consolidated

statement of financial position and related notes. These include:

•An insurance service result comprised of insurance revenue, insurance service expense and insurance finance income or

expense will replace the current premium and claims lines in the statement of profit or loss.

•Reinsurance will be presented separately to insurance contracts issued.

•The statement of financial position will contain less detail, with all balances in the scope of IFRS 17 being included in

insurance assets/liabilities or reinsurance assets/liabilities.

•More extensive analysis of the IFRS 17 balances will be found in the notes to the financial statements.

Estimated impact of the adoption of IFRS 17

IFRS 17 requires that on transition comparative information is restated in accordance with the new accounting policies in force.

The Group expects to apply the fully retrospective transition approach. Contracts in the scope of IFRS 17 will be recognised and

measured as if IFRS 17 had always applied, and previously reported balances which would not have existed if IFRS 17 had

always been applied (such as certain insurance receivables and some deferred acquisition costs) will be derecognised. Any

resulting net difference will be included as a transition adjustment to retained earnings.

The Group has assessed the initial impact of IFRS 17 will have on its statement of financial position as at 1 January 2022.

Based on assessments undertaken to date, the total adjustment (after tax) to the balance of the Group’s consolidated retained

earnings is expected to be an increase of at least 2% of equity.

Notes to the financial statements continued

164 Beazley | Annual report 2022 www.beazley.com

1 Statement of accounting policies continued

This increase is due to a number of valuation differences between IFRS 4 and IFRS 17:

•IFRS 17 technical provisions are discounted to reflect the time value of money. Under IFRS 4 the Group does not discount

technical provisions, and thus under IFRS 17 net technical provisions will be less than when measured under IFRS 4.

•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 has a level of prudence within it. Under IFRS 17, reserves will be held at a

best estimate (with no prudence), with an added risk adjustment calculated to a specified confidence level. This will show a

percentile giving an indication about where reserves sit compared to the best estimate and the capital requirement. The

reserve margin at date of transition had a confidence level at the upper end of a 80th to 90th percentile range under IFRS 4.

Under IFRS 17 we expect the confidence level on transition to be nearer the middle of this range. Accordingly, the Group

expects the provision for claims recognised on adoption of IFRS 17 to be lower than current IFRS 4 technical provisions.

•Under IFRS 4 unearned premium reserves and deferred acquisition costs are treated as non-monetary and are translated to

the Group’s functional currency using historic exchange rates. These balances are eliminated upon adoption of IFRS 17 and

all insurance contract balances are considered to be monetary and are revalued using spot rates at each reporting date.

The assessment above is preliminary as we work to finalise the transition to IFRS 17. The actual impact of the adoption of IFRS

17 may change as the Group refines the accounting processes and internal controls required for applying IFRS 17 whilst

carrying out parallel runs alongside IFRS 4 reporting. Additionally, the new accounting policies, judgements and estimation

techniques which will be adopted are subject to change until the Group finalises its first set of IFRS 17 compliant financial

reporting in 2023.

As at the date of approval of these financial statements, the Group is conducting parallel runs of the IFRS 17 model which will

produce an IFRS 17 compliant result for the year ended 31 December 2022. The output of these parallel runs is currently being

reviewed by management and will be subject to external audit. As the quantification of the impact of IFRS 17 on these financial

statements for the year ended 31 December 2022 is not fully audited, the Group has not disclosed this impact.

International Financial Reporting Standard 9, Financial Instruments (‘IFRS 9’)

IFRS 9 was issued by the IASB in July 2014 and became effective for accounting periods beginning on or after 1 January 2018.

The IASB issued amendment to IFRS 4, Insurance Contracts in September 2016 and June 2020 which exempts eligible entities

from applying IFRS 9 for accounting periods beginning before 1 January 2023. The Group remains eligible to apply the

temporary exemption in IFRS 4 and thus will begin to apply IFRS 9 for accounting periods beginning on 1 January 2023.

The Group qualifies for this exemption because, as at 31 December 2015, $5,040.7m or 95% of its total liabilities were

connected with insurance. There has been no material change in the Group’s activities since 31 December 2015, therefore the

Group is still eligible to use the exemption. The Group has also disclosed information in relation to specific types of financial

instruments to ensure the comparability with the entities applying IFRS 9. As such, fair values are disclosed separately for the

Group’s financial assets which are managed and evaluated on a fair value basis and those which meet the solely payments of

principal and interest (SPPI) test under IFRS 9.

The below table sets out the disclosures required by the amendments to IFRS 4 for the deferral of IFRS 9 and sets out the fair

value of assets which are managed and evaluated on a fair value basis and those which meet the SPPI test under IFRS 9.

Information on credit exposures can be found in note 2 on page 183.

www.beazley.com Beazley | Annual report 2022 165

1 Statement of accounting policies continued

	2022	2021
Financial assets managed and evaluated on a fair value basis	$m	$m
Fixed and floating rate debt securities:
– Government issued	5,006.3	4,008.1
– Corporate bonds
– Investment grade	2,050.5	1,861.9
– High yield	308.7	402.3
Syndicate loans	32.5	37.9
Equity funds	159.4	209.6
Hedge funds	530.6	478.2
Illiquid credit assets	222.9	277.9
Derivative financial assets	34.7	7.6
Total financial assets managed and evaluated on a fair value basis	8,345.6	7,283.5
Financial assets meeting the SPPI test
Cash and cash equivalents	652.5	591.8
Other receivables	196.4	106.7
Total financial assets meeting the SPPI test	848.9	698.5

Estimated impact of the adoption of IFRS 9

The Group expects the impact of IFRS 9 on the valuation of financial assets to be immaterial at transition as these assets are

already held at fair value through profit or loss in accordance with IAS 39. This practice will continue under IFRS 9 as the Group

does not manage its investments using a ‘hold to collect’ or ‘hold to collect and sell’ business model and therefore is required

to measure its investments at fair value through profit or loss. Certain receivable balances will continue to be measured at

amortised cost and will have an expected credit loss applied on adoption of IFRS 9. The Group will continue to measure

borrowings at amortised cost. The Group does not expect the adoption of IFRS 9 to have a material impact on the Group's

earnings or the timing of when profits are recognised.

IFRS 9 is not required to be applied retrospectively, as such the new standard will be applied prospectively from 1 January

2023. At this point an expected credit loss provision will be recognised with the resulting difference recognised as an

adjustment in retained earnings. The Group expects this resulting difference to be insignificant on the date of transition.

Beazley plc as a standalone entity adopted IFRS 9 from 1 January 2018, which had an immaterial impact on its financial

statements.

Notes to the financial statements continued

166 Beazley | Annual report 2022 www.beazley.com

1 Statement of accounting policies continued

1.1 Basis of presentation

The Group financial statements 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 as the fair

value of plan assets less the present value of the defined benefit pension obligation. All amounts presented are in US dollars

and millions, unless stated otherwise.

1.2 Going concern

The consolidated financial statements of Beazley plc and the standalone financial statements of the company 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 next 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 the Group’s 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 2022, 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 for the next 12 months, 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 which, among others, assess 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 and the Group's ability to raise additional capital and/or liquidity.

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 the Group can withstand severe economic and competitive stresses.

Based on the going concern assessment performed, the directors have a reasonable expectation that the company and the

Group have adequate resources to continue in operational existence over a period of at least 12 months from the date of this

report 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.

1.3 Use of estimates and judgements

The preparation of financial statements requires the use of certain critical accounting estimates and judgements that affect the

reported amounts of assets, liabilities, income and expenses. Actual results may differ from those on which management’s

estimates are based. Estimates and assumptions are continually evaluated and are based on historical experience and other

factors, including expectations of future events that are believed to be reasonable. 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, the Russia-Ukraine conflict, and US legislation.

Specific to climate change, since responses to it 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.

Estimates are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the

estimate is revised and in any future periods affected.

www.beazley.com Beazley | Annual report 2022 167

1 Statement of accounting policies continued

a)Valuation of insurance contract liabilities

The most critical estimate included within the Group’s financial position is the estimate for insurance losses incurred but not

reported (IBNR), which is included within total insurance liabilities and reinsurance assets in the statement of financial position

and in note 24. This estimate is critical as it outlines the current liability for future expenses expected to be incurred in relation

to claims. If this estimation was to prove inadequate then an exposure would arise in future years where a liability has not been

provided for.

The best estimate of the most likely ultimate outcome is used when calculating notified claims. This estimate is based upon

the facts available at the time, in conjunction with the claims manager’s view of likely future developments. Further detail on

how the Group determines its technical provisions is included in note 24.

b)Valuation of unquoted and illiquid financial assets

Determination of fair value of unquoted and illiquid assets involves judgement in model valuations, through the incorporation of

both observable and unobservable market inputs. These inputs include assumptions that lead to the existence of a range of

plausible valuations. Further detail on the methodologies and inputs used by the Group is included in note 16.

c)Premium estimates

A portion of gross written premiums is based on the estimated premium income (EPI) of each contract, which is an

underwriters’ estimate of the ultimate premium expected to be paid over the life of the contract. Where premium is written

through delegated authority agreements, the EPI is pro-rated across the agreement period. Judgement is involved in determining

the ultimate estimates in order to establish the appropriate premium value and, ultimately, the cash to be received. EPI

estimates are updated to reflect changes in an underwriters expectation through consultation with brokers and third-party

coverholders, changes in market conditions, historic experience and to reflect actual cash received for a contract.

Due to the nature of the Lloyd’s business and the settlement patterns of the underlying business it is also not uncommon for

some contracts to take a number of years to finalise and settle, and a receivable on the balance sheet remains. The amount of

estimated future premium that remains in insurance receivables relating to years of account that are more than three years

developed at 31 December 2022 is $29.8m (2021: $15.4m).

d)Assessing indicators of impairment of Goodwill

A number of estimates are used in determining the key assumptions underlying the recoverable amounts used in assessing the

impairment of goodwill. The key assumptions used in the preparation of future cash flows are: premium growth rates, claims

experience, discount rates, retention rates and expected future market conditions. Further detail is provided in note 12.

1.4 Significant Accounting Policies

Consolidation

a)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.

Equity financial investments made by the parent company in subsidiary undertakings and associates are stated at cost in its

separate financial statements and are reviewed for impairment when events or changes in circumstances indicate the carrying

value may be impaired.

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 and these financial statements include 10% of the economic interest in this syndicate.

For the following syndicates to which Beazley is appointed managing agent, being syndicates 623, 6107, and 5623, for which

the capacity is provided entirely by third parties to the Group, these financial statements reflect Beazley’s economic interest in

the form of agency fees and profit commission to which it is entitled.

Notes to the financial statements continued

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1 Statement of accounting policies continued

b)Associates

Associates are those entities over which the Group has power to exert significant influence but which it does not control.

Significant influence is generally presumed if the Group has between 20% and 50% of voting rights. Other factors may be taken

into consideration when determining the existence of significant influence. Investments in associates are accounted for using

the equity method of accounting.

c)Intercompany balances and transactions

All intercompany transactions, balances and unrealised gains or losses on transactions between Group companies are

eliminated in the Group financial statements. Transactions and balances between the Group and associates are not eliminated.

Foreign currency translation

a)Functional and presentational currency

Items included in the financial statements of the parent and the subsidiaries are measured using the currency of the primary

economic environment in which the relevant entity operates (the functional currency). 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.

b)Transactions and balances

Foreign currency transactions are translated into the functional currency using average exchange rates applicable to the period

in which the transactions take place. Foreign exchange gains and losses resulting from the settlement of such transactions and

from translation at the period end of monetary assets and liabilities denominated in foreign currencies are recognised in the

statement of profit or loss. Non-monetary items recorded at historical cost in foreign currencies are translated using the

exchange rate on the date of the initial transaction.

c)Foreign operations

The results and financial position of the Group companies that have a functional currency different from the Group

presentational currency are translated into the presentational currency as follows:

•assets and liabilities are translated at the closing rate as at the statement of financial position date;

•income and expenses for each statement of profit or loss 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.

Insurance contracts

Insurance contracts (including inwards reinsurance contracts) are defined as those containing significant insurance risk.

Insurance risk is considered significant if, and only if, an insured event could cause Beazley to pay significant additional

benefits in any scenario, excluding scenarios that lack commercial substance. Such contracts remain insurance contracts until

all rights and obligations are extinguished or expire.

Net earned premiums

a)Premiums

Gross premiums written represent premiums on business commencing in the financial year together with adjustments to

premiums written in previous accounting periods and estimates for premiums from contracts entered into during the course of

the year. Gross premiums written are stated before deduction of brokerage, taxes, duties levied on premiums and other

deductions.

b)Unearned premiums

A provision for unearned premiums (gross of reinsurance) represents that part of the gross premiums written that it is

estimated will be earned in the following financial periods. It is calculated using the daily pro-rata method, under which the

premium is apportioned over the period of risk.

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1 Statement of accounting policies continued

Deferred acquisition costs (DAC)

Acquisition costs comprise brokerage, premium levy and staff-related costs (excluding performance related pay) of the

underwriters acquiring new business and renewing existing contracts. The proportion of acquisition costs in respect of unearned

premiums is deferred at the reporting date and recognised in later periods when the related premiums are earned.

Claims

These include the cost of claims and claims handling expenses paid during the period, together with the movements in

provisions for outstanding claims, claims incurred but not reported (IBNR) and claims handling provisions. The provision for

claims comprises amounts set aside for claims advised and IBNR, including claims handling expenses.

The IBNR amount is based on estimates calculated using widely accepted actuarial techniques which are reviewed quarterly by

the Group actuary and annually by Beazley’s independent syndicate reporting actuary. The techniques generally use projections,

based on past experience of the development of claims over time, to form a view on the likely ultimate claims to be

experienced.

For more recent underwriting years, attention is paid to the variations in the business portfolio accepted and the underlying

terms and conditions. Thus, the critical assumptions used when estimating provisions are that past experience is a reasonable

predictor of likely future claims development and that the rating and business portfolio assumptions are a fair reflection of the

likely level of ultimate claims to be incurred for the more recent years.

Liability adequacy testing

At each reporting date, liability adequacy tests are performed to ensure the adequacy of the claims liabilities net of DAC and

unearned premium reserves. In performing these tests, current best estimates of future contractual cash flows, claims handling

and administration expenses, and investment income from the assets backing such liabilities are used.

Any deficiency is immediately charged to the statement of profit or loss and subsequently by establishing a URR provision for

losses arising from liability adequacy tests.

Ceded reinsurance

Any benefits to which the Group is entitled under its outwards reinsurance contracts held are recognised as reinsurance assets.

These assets consist of balances due from reinsurers and include reinsurers’ share of provisions for claims. These balances

are based on calculated amounts of outstanding claims and projections for IBNR and URR, net of estimated irrecoverable

amounts, having regard to the reinsurance programme in place for the class of business, the claims experience for the period

and the current security rating of the reinsurer involved. Reinsurance liabilities are primarily premiums payable for reinsurance

contracts and are recognised as an expense when a contract incepts.

The Group assesses its reinsurance assets for impairment. If there is objective evidence of impairment, then the carrying

amount is reduced to its recoverable amount and the impairment loss is recognised in the statement of profit or loss.

Other income

Other income is made up of commissions received from Beazley service companies, profit commissions, managing agent’s fees

and service fees. Profit commissions are recognised and earned as the performance obligations of the related contracts are

met. Commissions received from service companies and managing agent’s fees are recognised as the services are provided,

and therefore the performance obligations of the contracts are met.

Dividends paid

Dividend distributions to the shareholders of the Group are recognised in the period in which the dividends are paid.

Plant and equipment

All plant and equipment is recorded at cost less accumulated depreciation and any impairment losses. Depreciation is

calculated using the straight-line method to allocate the cost of the assets to their residual values over their estimated useful

lives, which vary from three to ten years.

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that

the carrying value may be impaired. If any such condition exists, the recoverable amount of the asset is estimated in order to

determine the extent of impairment and the difference is charged to the statement of profit or loss.

Notes to the financial statements continued

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1 Statement of accounting policies continued

Intangible assets

a)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.

Goodwill has an indefinite life and is annually tested for impairment. Goodwill is allocated to each cash-generating unit (‘CGU’)

for the purpose of impairment testing. Goodwill is impaired when the net carrying amount of the relevant CGU exceeds its

recoverable amount, being its value in use. Value in use is defined as the present value of the future cash flows expected to be

derived from the CGU.

b)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.

c)Licences

Licences have an indefinite useful life and are initially recorded at fair value. Licenses are allocated to each CGU for the

purpose of impairment testing. Licences are annually tested for impairment and provision is made for any impairment when the

recoverable amount, being the higher of its value in use and fair value, is less than the carrying value.

d)IT development costs

Costs that are directly associated with the development of identifiable and unique software products and that are anticipated to

generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Costs include external

consultants’ fees, certain qualifying internal staff costs and other costs incurred to develop software programs. The Group does

not routinely capitalise costs relating to software products hosted in the cloud. Costs are amortised over their estimated useful

life, three years, on a straight-line basis and subject to impairment testing annually. Amortisation commences when the asset

becomes operational. Other non-qualifying costs are expensed as incurred.

e)Renewal rights

Renewal rights comprise future profits relating to insurance contracts acquired and the expected renewal of those contracts.

The costs directly attributable to acquire the renewal rights are recognised as intangible assets where they can be measured

reliably and it is probable that they will be recovered by directly related future profits. These costs are subject to an impairment

review annually and are amortised on a straight-line basis, based on the estimated useful life of the assets, which is estimated

to be between five and 10 years.

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.

a)Financial Assets

On acquisition of a financial asset, the Group is required to classify the asset into one of the following categories: financial

assets at fair value through the statement of profit or loss, loans and receivables, assets held to maturity and assets available

for sale. The Group does not make use of the held to maturity and available for sale categories.

Except for derivative financial instruments and other financial assets listed in policies (c), (e) and (f) below, all financial assets

are designated as fair value through the statement of profit or loss upon initial recognition because they are managed and their

performance is evaluated on a fair value basis. Information about these financial assets is provided internally on a fair value

basis to the Group’s key management. The Group’s investment strategy is to invest and evaluate their performance with

reference to their fair values.

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1 Statement of accounting policies continued

b)Fair value 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.

Upon initial recognition, attributable transaction costs relating to financial instruments at fair value through profit or loss are

recognised in the statement of profit or loss when incurred. Financial assets at fair value through profit or loss are continuously

measured at fair value, and changes therein are recognised in the statement of profit or loss. Net changes in the fair value of

financial assets at fair value through profit or loss exclude interest and dividend income, as these items are accounted for

separately.

c)Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active

market. Loans and receivables are carried at amortised cost less any impairment losses.

d)Hedge funds, equity funds and illiquid credit assets

The Group invests in a number of hedge funds, equity funds and illiquid credit 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 16. The fair value of our

hedge fund and illiquid asset portfolio is calculated by reference to the underlying net asset values (NAVs) 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, we will have uncalled

unfunded commitments in relation to our illiquid credit assets. These uncalled unfunded commitments are actively monitored by

the Group and are disclosed in the notes 2 and 16 to the financial statements. The additional investment into our illiquid credit

asset portfolio is recognised on the date that this funding is provided by the Group.

e) Insurance receivables and payables

Insurance receivables and payables are recognised when due. These include amounts due to and from agents, brokers and

insurance contract holders. Insurance receivables are classified as ‘loans and receivables’ as they are non-derivative financial

assets with fixed or determinable payments that are not quoted on an active market. Insurance receivables are measured at

amortised cost less any impairment losses. Insurance payables are stated at amortised cost.

f)Other receivables

Other receivables categorised as loans and receivables are carried at amortised cost less any impairment losses.

g)Investment income

Investment income consists of dividends, interest, realised and unrealised gains and losses and foreign exchange gains and

losses on financial assets and liabilities at fair value through the statement of profit or loss. Dividends on equity securities are

recorded as revenue on the ex-dividend date. Interest is recognised on an effective rate basis for financial assets at fair value

through the statement of profit or loss. The realised gains or losses on disposal of an investment are the difference between

the proceeds and the original cost of the investment. Unrealised investment gains and losses represent the difference between

the carrying value at the reporting date, and the carrying value at the previous period end or purchase value during the period.

Notes to the financial statements continued

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1 Statement of accounting policies continued

h)Borrowings

Borrowings are initially recorded at their issue proceeds less transaction costs incurred. Subsequently borrowings are stated at

amortised cost and interest is recognised in the statement of profit or loss over the period of the borrowings using the effective

interest method.

Finance costs comprise interest, fees paid for the arrangement of debt and letter of credit facilities, and commissions charged

for the utilisation of letters of credit. These costs are recognised in the statement of profit or loss using the effective interest

method.

In addition, finance costs include gains on the early redemption of the Group’s borrowings. These gains are recognised in the

statement of profit or loss, being the difference between proceeds paid plus related costs and the carrying value of the

borrowings redeemed.

i)Other payables

Other payables are stated at amortised cost determined according to the effective interest rate method.

j)Hedge accounting and 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. 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.

The Group has not designated any derivatives as fair value hedges, cash flow hedges or net investment hedges and therefore

all fair value movements are recorded through profit or loss.

k)Impairment of financial assets

The Group considers evidence of impairment for financial assets measured at amortised cost at both a specific asset and a

collective level. The Group assesses at each reporting date whether there is objective evidence that a specific financial asset

measured at amortised cost is impaired. A financial asset is impaired and impairment losses are incurred only if there is

objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the assets

and that event has an impact on the estimated cash flows of the financial asset that can be reliably estimated. Assets that are

not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics.

If there is objective evidence that impairment exists, the amount of the loss is measured as the difference between the asset’s

carrying amount and the value of the estimated future cash flows discounted at the financial asset’s original effective interest

rate. The amount of the loss is recognised in the statement of profit or loss.

In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries and

the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are

such that the actual losses are likely to be greater or lesser than those suggested by historical trends.

l)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 fair value through the profit and loss account.

m)Unfunded commitment capital

Unfunded committed capital arising in relation to certain financial asset investments is not shown on the statement of financial

position as unfunded committed capital represents a loan commitment that is scoped out of IAS 39.

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1 Statement of accounting policies continued

Leases

Where the Group is the lessee, a lease liability equal to the present value of outstanding lease payments and a corresponding

right-of use asset equal to cost are initially recognised at the commencement of the lease. The right-of-use asset is

subsequently measured at amortised cost and depreciated on a straight-line basis over the length of the lease term. The cost

of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, an estimate of any costs

to be incurred at expiration of the lease agreements and lease payments made at or before the commencement date less any

lease incentives received. Recognised right of use assets are depreciated on a straight-line basis over the shorter of its

estimated useful life and the lease term. Right of use assets are subject to impairment.

The lease term is determined as the non-cancellable term of the lease, together with any periods covered by an option to

extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is

reasonably certain not to be exercised. The Group applies judgement in evaluating whether it is reasonably certain to exercise

the option to renew. After the commencement date, the Group reassesses the lease term if there is a significant event or

change in circumstances that is within its control and affect its ability to exercise (or not to exercise) the option to renew (e.g., a

change in business strategy).

The Group applies the IFRS 16 election not to recognise any amounts on the balance sheet associated with leases that are

either deemed to be short-term, or where the underlying asset is of low-value. Lease payments on short-term leases and leases

of low-value assets are recognised as an expense in the profit or loss on a straight-line basis over the lease term.

Employee benefits

a)Pension obligations

The Group operates a defined benefit pension plan that is closed to new entrants and future service accruals. All employees

may now participate in defined contribution pension arrangements, to which the Group contributes.

A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement,

usually dependent on one or more factors such as age, years of service and compensation. The pension costs are assessed

using the projected unit credit method. Under this method the costs of providing pensions are charged to the statement of profit

or loss so as to spread the regular costs over the service lives of employees in accordance with the advice of the qualified

actuary, who values the plans annually. The net pension obligation is measured at the present value of the estimated future net

cash flows and is stated net of plan assets.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets

(excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other

comprehensive income.

The Group also determines the net interest income/expense for the period on the net defined benefit asset/liability by applying

the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit

asset/liability at the beginning of the annual period, taking into account any changes in the net defined benefit asset/liability

during the period as a result of contributions and benefit payments. Consequently, the net interest on the defined benefit

asset/ liability comprises:

•interest cost on the defined benefit obligation;

•interest income on plan assets; and

•interest on the effect of the asset ceiling.

Net interest income/expense is recognised in the statement of profit or loss.

Past service costs are recognised as an expense at the earlier of the date when a plan amendment or curtailment occurs and

the date when an entity recognises any termination benefits.

For the defined contribution plan, the Group pays contributions to a privately administered pension plan. Once the contributions

have been paid, the Group has no further obligations. The Group’s contributions are charged to the statement of profit or loss in

the period to which they relate.

Notes to the financial statements continued

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1 Statement of accounting policies continued

b)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.

Income taxes

Income tax on the profit or loss for the period comprises current and deferred tax. Income tax is recognised in the statement of

profit or loss except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in

which case it is recognised respectively in other comprehensive income or directly in equity.

Current tax is the expected tax payable on the taxable income for the year using tax rates enacted or substantively enacted at

the year end reporting date and any adjustments to tax payable in respect of prior periods.

Deferred tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and

liabilities and their carrying amounts in the financial statements. The amount of deferred tax provided is based on the expected

manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively

enacted at the reporting date.

Deferred tax assets are recognised in the statement of financial position to the extent that it is probable that future taxable

profit will be available against which the temporary differences can be utilised.

Earnings per share

Basic earnings per share are calculated by dividing profit or loss after tax available to shareholders by the weighted average

number of ordinary shares in issue during the period.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all

dilutive potential ordinary shares such as share options granted to employees. 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.

The shares held in the employee share options plan (ESOP) and treasury shares are excluded from both the calculations, until

such time as they vest unconditionally with the employees.

Provisions and contingencies

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is

probable that an outflow of resources or economic benefits will be required to settle the obligation, and a reliable estimate of

the obligation can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a

separate asset but only when the reimbursement is most probable.

Contingent liabilities are present obligations that are not recognised because it is not probable that an outflow of resources will

be required to meet the liabilities or because the amount of the obligation cannot be measured with sufficient reliability.

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2 Risk management

The symbol † by a table or numerical information means it has not been audited.

2.1 Insurance Risk

Insurance risk arises from this risk transfer due to inherent uncertainties about the occurrence, amount and timing of insurance

premium and claim liabilities. The Group seeks insurance risks as its core business. The four key components of insurance risk

are underwriting, reinsurance, claims management and reserving. Each element is considered below.

a) 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

(RDSs). 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.

One of the largest types of event exposure relates to natural catastrophe events such as windstorm or earthquake. With the

increasing risk from climate change impacts the frequency and severity of natural catastrophes, the Group continues to monitor

its exposure. 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.

Notes to the financial statements continued

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2 Risk management continued

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 2022 the Group operated to a catastrophe risk appetite for a probabilistic 1-in-250 years US event of † $438.0m (2021:

$520.0m) net of reinsurance. This represents a reduction of 16% in 2022.

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 2021 and 2022 are:

†	2022
	Modelled PML1(before reinsurance)	Modelled PML1(after reinsurance)
Lloyd’s prescribed natural catastrophe event (total incurred losses)	$m	$m
Los Angeles quake (2022: $78bn)	692.4	266.8
US Northeast windstorm (2022: $81bn)	579.6	257.2
Gulf of Mexico windstorm (2022: $118bn)	725.0	253.2

	2021
	Modelled PML1(before reinsurance)	Modelled PML1(after reinsurance)
Lloyd’s prescribed natural catastrophe event (total incurred losses)	$m	$m
Los Angeles quake (2021: $78bn)	737.6	265.2
San Francisco quake (2021: $78bn)	708.0	249.9
US Northeast windstorm (2021: $112bn)	560.4	231.5

1Probable market loss.

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 less than 1% in 2022, whereas gross exposures have reduced by 6%. The

reduction in gross exposures is being driven by less exposure being written in the Property Risks division, which has had

minimal impact on the net, as the loss is contained within the Reinsurance protections. The US Northeast windstorm scenario

has increased by 3% gross and 11% net, with the increase in gross being driven by an increase in exposure in Contingency, and

the net increasing across both Contingency & Property Risks. Windstorm exposures have increased in the Gulf of Mexico during

2022, which has resulted in the Gulf of Mexico scenario replacing the San Francisco quake scenario as one of the three largest

net scenarios for 2022. The net natural catastrophe risk appetite reduced by 16% in 2022 to $438.0m from $520.0m in 2021,

with the reduction in appetite coming from 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.

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 budget 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 & 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 2022, 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.

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The largest net realistic disaster scenario is currently just under $140m for the Group as at 31 December 2022. The

reinsurance programmes that protect the Cyber and Specialty Risks divisions would partially mitigate the cost of most, but not

all, Cyber catastrophes.

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 & a ransomware scenario.

Operating divisions

In 2022, the Group’s business consisted of five operating divisions. The following table provides a breakdown of gross

premiums written by division, and also provides a geographical split based on placement of risk.

2022	Lloyd’s Worldwide	Non-Lloyd’s US	Non-Lloyds Europe	Total
Cyber Risks	17%	3%	2%	22%
Digital	3%	1%	–	4%
MAP Risks	19%	2%	–	21%
Property Risks	16%	–	–	16%
Specialty Risks	28%	6%	3%	37%
Total	83%	12%	5%	100%

2021	Lloyd’s Worldwide	Non-Lloyd’s US	Non-Lloyd’s Europe	Total
Cyber Risks	13%	4%	1%	18%
Digital	2%	2%	–	4%
MAP Risks	18%	1%	–	19%
Property Risks	18%	–	–	18%
Specialty Risks	31%	7%	3%	41%
Total	82%	14%	4%	100%

b)Reinsurance risk

Reinsurance risk to the Group arises where reinsurance contracts put in place to reduce gross insurance risk do not perform as

anticipated, result in coverage disputes or prove 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 183. In some cases

the Group deems it more economic to hold capital than 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.

c)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.

d)Reserving and ultimate reserves risk

Reserving and ultimate reserves risk occurs within the Group where established insurance liabilities are insufficient through

inaccurate forecasting, or where there is inadequate allowance for expenses and reinsurance bad debts in provisions.

Notes to the financial statements continued

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To manage reserving and ultimate reserves risk, our actuarial team uses a range of recognised techniques to project gross

premiums written, monitor claims development patterns and stress-test ultimate insurance liability balances. The Group aims to

hold reserves within a range of 5-10% above the actuarial estimates, which themselves include some margin for uncertainty.

The objective of the Group’s reserving policy is to produce accurate and reliable estimates that are consistent over time and

across classes of business. The estimates of gross premiums written and claims prepared by the actuarial department are

used through a formal quarterly peer review process to independently test the integrity of the estimates produced by the

underwriting teams for each class of business. These meetings are attended by senior management, senior underwriters, and

actuarial, claims, and finance representatives.

2.2 Market risk

Market risk (known as asset risk in the Group’s risk management framework) arises from adverse financial market movements

of values of investments, interest rates, exchange rates, or external market forces. Efficient management of market risk is key

to the investment of Group assets for matching to future liabilities. Appropriate levels of investment risk are determined by

limiting the proportion of forecast Group earnings which could be at risk from lower than expected investment returns, using a 1

in 10 confidence level as a practical measure of such risk. In 2022, this permitted variance from the forecast investment return

was set at † $200m. For 2023, the permitted variance is likely to be modestly increased due to the higher level of investment

assets. Investment strategy is developed to be consistent with this limit and investment risk is monitored on an ongoing basis,

using outputs from our internal model.

Changes in interest rates also impact the present values of estimated Group liabilities, which are used for solvency and capital

calculations. The four key components of asset risk are foreign exchange, interest rate, prices of assets and derivatives and

investment. Each element is in more detail considered below.

a) Foreign exchange risk

The functional currency of Beazley plc and its main trading entities is US dollars and the presentational currency in which the

Group reports its consolidated results is US dollars. The effect of this on foreign exchange risk is that 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 2022, 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 dollar. 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 17. On a forward looking basis an assessment is

made of expected future exposure development and appropriate currency trades put in place to reduce risk.

The Group’s underwriting capital is matched by currency to the principal underlying currencies of its written premiums. 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.

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The following table summarises the carrying value of total assets and total liabilities categorised by the Group’s main

currencies:

	UK £	CAD $	EUR €	Subtotal	US $	Total $
31 December 2022	$m	$m	$m	$m	$m	$m
Total assets	1,123.7	268.0	669.5	2,061.2	13,037.8	15,099.0
Total liabilities	(1,151.9)	(280.1)	(628.4)	(2,060.4)	(10,465.1)	(12,525.5)
Net assets	(28.2)	(12.1)	41.1	0.8	2,572.7	2,573.5

	UK £	CAD $	EUR €	Subtotal	US $	Total $
31 December 2021	$m	$m	$m	$m	$m	$m
Total assets	904.3	248.8	501.9	1,655.0	11,152.4	12,807.4
Total liabilities	(1,038.0)	(236.1)	(561.7)	(1,835.8)	(8,840.8)	(10,676.6)
Net assets	(133.7)	12.7	(59.8)	(180.8)	2,311.6	2,130.8

Sensitivity analysis to foreign currency fluctuations

Fluctuations in the Group’s trading currencies against the US dollar would result in a change to profit after tax and net asset

value. The table below gives an indication of the impact on profit after tax and net assets of a percentage change in the relative

strength of the US dollar against the value of sterling, the Canadian dollar and the euro, simultaneously. The analysis is based

on information on net asset positions as at the balance sheet date.

	Impact on profit after tax for the year ended		Impact on net assets
	2022	2021	2022	2021
Change in exchange rate of sterling, Canadian dollar and euro relative to US dollar	$m	$m	$m	$m
Dollar weakens 30% against other currencies	0.2	(45.3)	(13.5)	(64.0)
Dollar weakens 20% against other currencies	0.1	(30.2)	(9.0)	(42.7)
Dollar weakens 10% against other currencies	0.1	(15.1)	(4.5)	(21.3)
Dollar strengthens 10% against other currencies	(0.1)	15.1	4.5	21.3
Dollar strengthens 20% against other currencies	(0.1)	30.2	9.0	42.7
Dollar strengthens 30% against other currencies	(0.2)	45.3	13.5	64.0

b) Interest rate risk

Some of the Group’s financial instruments, including cash and cash equivalents, certain financial assets at fair value and

borrowings, 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.

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 gives a better indication than maturity of the likely

sensitivity of the portfolio to changes in interest rates.

Notes to the financial statements continued

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Duration	<1 yr	1-2 yrs	2-3 yrs	3-4 yrs	4-5 yrs	5-10 yrs	Total
31 December 2022	$m	$m	$m	$m	$m	$m	$m
Fixed and floating rate debt securities	1,962.9	3,094.1	1,430.9	441.2	434.9	1.5	7,365.5
Syndicate loans	–	6.9	25.6	–	–	–	32.5
Cash and cash equivalents	652.5	–	–	–	–	–	652.5
Derivative financial instruments	34.7	–	–	–	–	–	34.7
Borrowings	–	–	–	(249.4)	–	(298.6)	(548.0)
Total	2,650.1	3,101.0	1,456.5	191.8	434.9	(297.1)	7,537.2

2 Risk management continued

Duration	<1 yr	1-2 yrs	2-3 yrs	3-4 yrs	4-5 yrs	5-10 yrs	Total
31 December 2021	$m	$m	$m	$m	$m	$m	$m
Fixed and floating rate debt securities	1,938.5	2,624.4	1,033.2	390.8	216.6	68.8	6,272.3
Syndicate loans	–	–	7.8	30.1	–	–	37.9
Cash and cash equivalents	591.8	–	–	–	–	–	591.8
Derivative financial instruments	7.3	–	–	–	0.3	–	7.6
Borrowings	–	–	–	–	(249.2)	(298.4)	(547.6)
Total	2,537.6	2,624.4	1,041.0	420.9	(32.3)	(229.6)	6,362.0

Borrowings consist of two items. The first is $250m of subordinated tier 2 debt raised in November 2016. This debt is due in

2026 and has annual interest of 5.875% payable in May and November of each year. The second comprises $300m of

subordinated tier 2 debt raised in September 2019. This debt is due in 2029 and has annual interest of 5.5% payable in March

and September each year.

Sensitivity analysis of yields

Changes in yields, with all other variables constant, would result in changes in the capital value of debt securities and syndicate

loans as well as subsequent interest receipts and payments. This would affect reported profits and net assets as indicated in

the table below:

	Impact on profit after income tax for the year		Impact on net assets
	2022	2021	2022	2021
	$m	$m	$m	$m
Shift in yield (basis points)
150 basis point increase	(179.0)	(124.1)	(179.0)	(124.1)
100 basis point increase	(119.3)	(82.8)	(119.3)	(82.8)
50 basis point increase	(59.7)	(41.4)	(59.7)	(41.4)
50 basis point decrease	59.7	41.4	59.7	41.4
100 basis point decrease	119.3	82.8	119.3	82.8

c)Price risk of assets and derivatives

Financial assets and derivatives that are recognised in the statement of financial position at their fair value are susceptible to

losses due to adverse changes in prices. This is referred to as price risk.

Financial assets include fixed and floating rate debt securities, syndicate loans, hedge funds, illiquid credit assets, equity

investments and derivative financial assets. The price of debt securities is affected by interest rate risk, as described above,

and also by issuer’s credit risk. The sensitivity to price risk that relates to the Group’s hedge fund, syndicate loans, illiquid

credit and equity investments is presented below.

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 16). 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.

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	Impact on profit after income tax for the year		Impact on net assets
	2022	2021	2022	2021
	$m	$m	$m	$m
Change in fair value of hedge funds, equity funds and illiquid credit assets
30% increase in fair value	230.6	242.2	230.6	242.2
20% increase in fair value	153.7	161.5	153.7	161.5
10% increase in fair value	76.9	80.7	76.9	80.7
10% decrease in fair value	(76.9)	(80.7)	(76.9)	(80.7)
20% decrease in fair value	(153.7)	(161.5)	(153.7)	(161.5)
30% decrease in fair value	(230.6)	(242.2)	(230.6)	(242.2)

d) Investment risk

The value of the Group’s investment portfolio is impacted by interest rate and market price risks, as described above. Managing

the Group’s exposures to these risks is an intrinsic part of the investment strategy. Beazley uses an Economic Scenario

Generator to simulate multiple simulations of financial conditions, to support stochastic analysis of asset risk. Beazley uses

these outputs to assess the value at risk (VAR) 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 help us monitor and

manage 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, and Beazley also uses

a number of other, qualitative measures to support the monitoring and management of investment risk. These include stress

testing and scenario analysis.

Beazley’s investment strategy is developed by reference to an investment risk budget, approved annually by The Board. The

Solvency II internal model is used to monitor compliance with the budget, which limits the amount by which our reported annual

investment return may deviate from a predetermined target, at the 1 in 10 confidence level. In 2022, this permitted deviation

was set at † $200m. Additionally, a limit is specified for the net interest rate sensitivity of assets and liabilities combined and

investments are managed to ensure that this limit is not exceeded.

2.3 Credit risk

The risk arises when 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 recognizes 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 fail to pass on premiums or claims collected or paid on behalf of the Group;

•investments – issuer default results in the Group losing all or part of the value of a financial instrument or a derivative

financial instrument; and

•cash and cash equivalents.

An approval system also 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

they receive periodic review of their continued relationship with Beazley. Reinsurance recoverables are reviewed regularly to

assess their collectability.

To assist in the understanding of credit risks, A.M. Best, Moody’s and Standard & Poor’s (S&P) ratings are used. These ratings

have been categorised below as used for Lloyd’s reporting:

	A.M. Best	Moody’s	S&P
Tier 1	A++ to A-	Aaa to A3	AAA to A-
Tier 2	B++ to B-	Baa1 to Ba3	BBB+ to BB-
Tier 3	C++ to C-	B1 to Caa	B+ to CCC
Tier 4	D, E, F, S	Ca to C	R, (U,S) 3

Notes to the financial statements continued

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The following tables summarise the Group’s concentrations of credit risk:

	Tier 1	Tier 2	Tier 3	Tier 4	Unrated	Total
31 December 2022	$m	$m	$m	$m	$m	$m
Financial assets at fair value
– fixed and floating rate debt securities	6,767.0	598.5	–	–	–	7,365.5
– syndicate loans	32.5	–	–	–	–	32.5
– equity funds	–	–	–	–	159.4	159.4
– hedge funds	–	–	–	–	530.6	530.6
– illiquid credit assets	–	–	–	–	222.9	222.9
– derivative financial instruments	–	–	–	–	34.7	34.7
Insurance receivables	157.4	–	–	–	1,654.3	1,811.7
Reinsurance assets	2,487.4	–	–	–	799.2	3,286.6
Other receivables	–	–	–	–	196.4	196.4
Cash and cash equivalents	652.5	–	–	–	–	652.5
Total	10,096.8	598.5	–	–	3,597.5	14,292.8

	Tier 1	Tier 2	Tier 3	Tier 4	Unrated	Total
31 December 2021	$m	$m	$m	$m	$m	$m
Financial assets at fair value
– fixed and floating rate debt securities	5,517.1	755.2	–	–	–	6,272.3
– syndicate loans	37.9	–	–	–	–	37.9
– equity funds	–	–	–	–	209.6	209.6
– hedge funds	–	–	–	–	478.2	478.2
– illiquid credit assets	–	–	–	–	277.9	277.9
– derivative financial instruments	–	–	–	–	7.6	7.6
Insurance receivables	177.0	–	–	–	1,519.1	1,696.1
Reinsurance assets	1,829.4	–	–	–	557.0	2,386.4
Other receivables	–	–	–	–	106.7	106.7
Cash and cash equivalents	589.7	0.3	–	–	1.8	591.8
Total	8,151.1	755.5	–	–	3,157.9	12,064.5

The largest counterparty exposure within tier 1 is $3,715.8m of US treasuries (2021: $2,956.3m).

Financial investments falling within the unrated category comprise hedge funds and illiquid credit assets for which there is no

readily available market data to allow classification within the respective tiers. Additionally, insurance receivables are classified

as unrated, due to premium debtors not being credit rated with the exception of the CRI accrual element. At 31 December

2022, no cash and cash equivalents fell within the unrated category (2021: $1.8m). This was due to the Group transacting with

a bank in the US that did not have an external credit rating. Additionally the reinsurance share of unearned premium provision is

classified as unrated.

Insurance receivables and other receivables balances held by the Group have not been impaired, based on all evidence

available, and no impairment provision has been recognised in respect of these assets. Insurance receivables in respect of

coverholder business are credit controlled by third-party managers. We monitor third party coverholders’ performance and their

financial processes. These assets are individually impaired after considering information such as the occurrence of significant

changes in the counterparties’ financial position, patterns of historical payment information and disputes with counterparties.

An analysis of the overall credit risk exposure indicates that the Group has reinsurance assets that are impaired at the

reporting date.

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The total impairment in respect of the reinsurance assets, including reinsurers’ share of outstanding claims, at 31 December

2022 was as follows:

	Total
	$m
Balance at 1 January 2021	14.8
Impairment loss written back	(3.3)
Balance at 31 December 2021	11.5
Impairment loss recognised	17.8
Balance at 31 December 2022	29.3

The Group has insurance receivables and reinsurance assets that are past due at the reporting date. An aged analysis of these

is presented below:

	Up to 30 days past due	30-60 days past due	60-90 days past due	Greater than 90 days past due	Total
31 December 2022	$m	$m	$m	$m	$m
Insurance receivables	102.0	28.0	16.6	62.0	208.6
Reinsurance assets	24.7	29.2	8.9	82.6	145.4

	Up to 30 days past due	30-60 days past due	60-90 days past due	Greater than 90 days past due	Total
31 December 2021	$m	$m	$m	$m	$m
Insurance receivables	79.3	23.7	16.0	33.4	152.4
Reinsurance assets	55.6	16.7	9.9	81.9	164.1

The total impairment provision in the statement of financial position in respect of reinsurance assets past due (being

reinsurance recoverables due on paid claims) by more than 30 days at 31 December 2022 was $17.3m (2021: $2.1m). This

$17.3m provision in respect of overdue reinsurance recoverables is included within the total provision of $29.3m shown in the

table at the top of the page.

The Group believes that the unimpaired amounts that are past due more than 30 days are still collectable in full, based on

historic payment behaviour and analyses of credit risk.

2.4 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 realistic disaster scenarios are provided on pages 177 to 179. 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 borrowings, details of which can be found in note 25. Further information on the Group’s capital resources is

contained on pages 64 to 66.

Notes to the financial statements continued

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The following is an analysis by business segment of the estimated timing of the net cash flows based on the net claims

liabilities1 balance held at 31 December:

	Within 1 year	1-3 years	3-5 years	Greater than 5 years	Total	Weighted average term to settlement (years)
31 December 2022	$m	$m	$m	$m	$m	$m
Cyber Risks	219.4	321.4	112.2	30.3	683.3	2.0
Digital	70.2	56.4	10.7	1.4	138.7	1.3
MAP Risks	294.5	241.2	73.1	44.5	653.3	1.8
Property Risks	343.9	265.9	69.9	45.3	725.0	1.7
Specialty Risks	520.8	933.7	584.0	656.3	2,694.8	3.6
Net claims liabilities	1,448.8	1,818.6	849.9	777.8	4,895.1

	Within 1 year	1-3 years	3-5 years	Greater than 5 years	Total	Weighted average term to settlement (years)
31 December 2021	$m	$m	$m	$m	$m	$m
Cyber Risks	184.4	264.5	92.0	23.6	564.5	1.9
Digital	58.1	51.1	9.9	1.1	120.2	1.3
MAP Risks	270.4	230.5	69.5	40.2	610.6	1.8
Property Risks	321.8	258.5	68.3	41.7	690.3	1.7
Specialty Risks	463.4	910.4	576.2	634.1	2,584.1	3.7
Net claims liabilities	1,298.1	1,715.0	815.9	740.7	4,569.7

1 For a breakdown of net claims liabilities refer to note 24.

The following table is an analysis of the net contractual cash flows based on all the liabilities held at 31 December:

31 December 2022	Within 1 year	1-3 years	3-5 years	Greater than 5 years	Total
Net claims liabilities	1,448.8	1,818.6	849.9	777.8	4,895.1
Borrowings	31.2	62.4	295.4	327.9	716.9
Lease liabilities	9.6	20.8	7.7	37.3	75.4
Other payables	1,527.5	–	–	–	1,527.5

31 December 2021	Within 1 year	1-3 years	3-5 years	Greater than 5 years	Total
Net claims liabilities	1,298.1	1,715.0	815.9	740.7	4,569.7
Borrowings	31.2	62.4	310.1	344.4	748.1
Lease liabilities	10.6	22.2	17.4	47.0	97.2
Other payables	1,141.3	–	–	–	1,141.3

The next two tables summarise the carrying amount at reporting date of financial instruments analysed by maturity date.

www.beazley.com Beazley | Annual report 2022 185

2 Risk management continued

Maturity

	<1 yr	1-2 yrs	2-3 yrs	3-4 yrs	4-5 yrs	5-10 yrs	Total
31 December 2022	$m	$m	$m	$m	$m	$m	$m
Fixed and floating rate debt securities	1,854.9	2,651.4	1,676.5	431.0	652.8	98.9	7,365.5
Syndicate loans	–	6.9	25.6	–	–	–	32.5
Derivative financial instruments	34.7	–	–	–	–	–	34.7
Cash and cash equivalents	652.5	–	–	–	–	–	652.5
Insurance receivables	1,811.7	–	–	–	–	–	1,811.7
Other receivables	196.4	–	–	–	–	–	196.4
Other payables	(1,527.5)	–	–	–	–	–	(1,527.5)
Borrowings	–	–	–	(249.4)	–	(298.6)	(548.0)
Total	3,022.7	2,658.3	1,702.1	181.6	652.8	(199.7)	8,017.8

	<1 yr	1-2 yrs	2-3 yrs	3-4 yrs	4-5 yrs	5-10 yrs	Total
31 December 2021	$m	$m	$m	$m	$m	$m
Fixed and floating rate debt securities	1,675.6	2,316.7	953.5	706.8	361.9	257.8	6,272.3
Syndicate loans	–	–	7.8	30.1	–	–	37.9
Derivative financial instruments	7.6	–	–	–	–	–	7.6
Cash and cash equivalents	591.8	–	–	–	–	–	591.8
Insurance receivables	1,696.1	–	–	–	–	–	1,696.1
Other receivables	106.7	–	–	–	–	–	106.7
Other payables	(1,141.3)	–	–	–	–	–	(1,141.3)
Borrowings	–	–	–	–	(249.2)	(298.4)	(547.6)
Total	2,936.5	2,316.7	961.3	736.9	112.7	(40.6)	7,023.5

Illiquid credit assets, hedge funds and equity funds are not included in the maturity profile because the maturity profiles of

these asset classes cannot be determined with any degree of certainty.

The Group makes additional interest payments for borrowings. Further details are provided in notes 8 and 25.

2.5 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 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.

Notes to the financial statements continued

186 Beazley | Annual report 2022 www.beazley.com

2 Risk management continued

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 64 to

66.

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 our ability to generate cash flows. Dividends are typically paid on an

annual basis to align with the Group's capital planning cycle. Our capital management strategy is to carry some surplus capital

to enable us to take advantage of growth opportunities which may arise. At 31 December 2022, we have surplus capital of 44%

of ECR (on a Solvency II basis), above our preferred target range of 15% to 25% of ECR. The capital base has been

strengthened following the recent equity raise to enable us to continue to pursue our sustainable long-term growth strategy,

particularly in opportunities identified in Property Risks.

2.6 Company risk

The Group’s parent company is exposed to the same interest rate and liquidity risk exposure experienced on its mutual

borrowings with the Group. The Group’s exposure can be seen in sections 2.3b and 2.7. The company also experiences

operational, regulatory and legal risks as defined in section 2.4 and 2.6.

www.beazley.com Beazley | Annual report 2022 187

3 Segmental analysis

a) Reporting Segments

Segment 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 in IFRS 8.

In March 2022, the Group updated its underwriting team structure with the creation of four underwriting divisions: Cyber Risks,

Marine, Accident and Political (MAP) Risks, Property Risks and Specialty Risks.

From January 2022, the Group began separately reporting the performance of the Digital division, following the creation of that

team in 2021.

Accordingly the Group has determined that its reporting segments are now as follows:

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.

Notes to the financial statements continued

188 Beazley | Annual report 2022 www.beazley.com

3 Segmental analysis continued

b) Segment information

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, including net investment income, are split based

on each segment’s capital requirements which is taken from the Group’s most up to date business plan.

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 changes in reporting segments, prior period comparative information has been re-presented in accordance

with the requirements of IFRS 8.

	12 months ended 31 December 2022
	Cyber Risks	Digital	MAP Risks	Property Risks	Specialty Risks	Total
2022	$m	$m	$m	$m	$m	$m
Gross premiums written	1,156.1	204.9	1,107.8	859.8	1,940.1	5,268.7
Net premiums written	832.3	168.8	777.0	687.9	1,410.2	3,876.2
Net earned premiums	783.9	163.4	726.5	663.4	1,277.0	3,614.2
Net investment loss	(34.5)	(8.7)	(20.5)	(27.1)	(88.9)	(179.7)
Other income	7.9	2.3	1.0	7.4	13.5	32.1
Revenue	757.3	157.0	707.0	643.7	1,201.6	3,466.6
Net insurance claims	432.1	74.4	312.1	403.2	734.6	1,956.4
Expenses for the acquisition of insurance contracts	155.7	47.8	232.2	170.9	345.5	952.1
Administrative expenses	34.5	19.3	66.3	74.4	109.2	303.7
Foreign exchange loss	5.2	1.1	4.8	4.4	8.5	24.0
Expenses	627.5	142.6	615.4	652.9	1,197.8	3,236.2
Segment result	129.8	14.4	91.6	(9.2)	3.8	230.4
Finance costs						(39.4)
Profit before income tax						191.0
Income tax expense						(30.2)
Profit after income tax						160.8
Claims ratio	55%	46%	43%	61%	57%	54%
Expense ratio	24%	41%	41%	37%	36%	35%
Combined ratio	79%	87%	84%	98%	93%	89%
Segment assets and liabilities
Segment assets	2,964.1	461.5	2,258.4	2,370.8	7,044.2	15,099.0
Segment liabilities	(2,244.6)	(359.3)	(1,980.6)	(1,920.3)	(6,020.7)	(12,525.5)
Net assets	719.5	102.2	277.8	450.5	1,023.5	2,573.5

www.beazley.com Beazley | Annual report 2022 189

3 Segmental analysis continued

	12 months ended 31 December 2021 (re-presented)
	Cyber Risks	Digital	MAP Risks	Property Risks	Specialty Risks	Total
2021	$m	$m	$m	$m	$m	$m
Gross premiums written	814.3	190.8	897.5	812.6	1,903.7	4,618.9
Net premiums written	624.8	166.2	671.5	573.1	1,476.8	3,512.4
Net earned premiums	499.7	149.3	613.3	521.7	1,363.3	3,147.3
Net investment income	14.5	3.6	17.0	22.6	58.7	116.4
Other income	4.6	1.9	2.7	7.5	11.5	28.2
Gain from sale of business1	–	–	54.4	–	–	54.4
Revenue	518.8	154.8	687.4	551.8	1,433.5	3,346.3
Net insurance claims	326.9	56.1	252.5	335.4	855.3	1,826.2
Expenses for the acquisition of insurance contracts	100.7	42.2	206.8	149.4	322.7	821.8
Administrative expenses	29.0	15.6	59.2	66.9	112.3	283.0
Foreign exchange gain	1.2	0.3	1.4	1.3	3.0	7.2
Expenses	457.8	114.2	519.9	553.0	1,293.3	2,938.2
Segment result	61.0	40.6	167.5	(1.2)	140.2	408.1
Finance costs						(38.9)
Profit before income tax						369.2
Income tax expense						(60.5)
Profit for the year attributable to equity shareholders						308.7
Claims ratio	65%	37%	41%	64%	63%	58%
Expense ratio	26%	39%	44%	42%	32%	35%
Combined ratio	91%	76%	85%	106%	95%	93%
Segment assets and liabilities
Segment assets	2,289.7	432.1	1,844.6	2,244.5	5,996.5	12,807.4
Segment liabilities	(1,737.8)	(322.7)	(1,599.6)	(1,809.8)	(5,206.7)	(10,676.6)
Net assets	551.9	109.4	245.0	434.7	789.8	2,130.8

1The gain from sale of business relates to the sale of the Beazley Benefits business in the second half of 2021. A net gain of $54.4m was recognised, following

the receipt of gross proceeds of $56.7m and recognised closing costs of $2.3m. Further details can be found in note 5b of Beazley’s 2021 Annual report and

accounts.

Notes to the financial statements continued

190 Beazley | Annual report 2022 www.beazley.com

3 Segmental analysis continued

c) Information about geographical areas

The Group’s generates revenue in multiple geographies, an overview of which is set out below. UK earned premium in the

analysis below represents all risks placed at Lloyd’s; US earned premium represents all risks placed at the Group’s US

insurance companies, Beazley Insurance Company, Inc. and Beazley America Insurance Company, Inc; and Europe earned

premium represents all risks placed at the Group’s European insurance company, Beazley Insurance dac. An analysis of gross

premiums written split geographically by placement of risk and by reportable segment is provided in note 2 on page 179.

	2022	2021
	$m	$m
Net earned premiums
UK (Lloyd’s)	3,008.7	2,550.6
US (Non-Lloyd’s)	437.6	477.1
Europe (Non-Lloyd’s)	167.9	119.6
	3,614.2	3,147.3

	2022	2021
	$m	$m
Assets by Geography
UK (Lloyd's)	13,256.7	11,267.5
US (Non-Lloyd’s)	1,281.5	1,164.9
Europe (Non-Lloyd’s)	560.8	375.0
	15,099.0	12,807.4

Segment assets are allocated based on where the assets are located.

4 Net investment income

	2022	2021
	$m	$m
Interest and dividends on financial investments at fair value through profit or loss	101.1	76.5
Interest on cash and cash equivalents	0.5	–
Net realised (losses)/gains on financial investments at fair value through profit or loss	(7.6)	79.8
Net unrealised fair value (losses) on financial investments at fair value through profit or loss	(266.8)	(34.0)
Investment income from financial investments	(172.8)	122.3
Investment management expenses	(6.9)	(5.9)
	(179.7)	116.4

www.beazley.com Beazley | Annual report 2022 191

5 Other Income

	2022	2021
	$m	$m
Commissions received by Beazley service companies	20.0	19.4
Profit commissions from syndicates	7.2	3.8
Agency fees from syndicate 623	4.0	3.9
Other income	0.9	1.1
	32.1	28.2

Profit commissions

There is an agreement between syndicate 623 and Beazley Furlonge Limited (the managing agent) where the syndicate

remunerates Beazley for writing business in parallel with syndicate 2623. As such, profitability of 623 is a performance criterion

for this contract. The transaction price represents a fixed percentage on profit by YOA. No other variable considerations (for

example: discounts, rebates, refunds, incentives) are attached. The value of a transaction price is derived at each reporting

period from the actual profit syndicate 623 has made to date and therefore represents the most likely amount of consideration

at the reporting date.

Commissions received from service companies

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. The performance criterion is deemed to be the realisation of

expenses.

6 Auditor's Remuneration

	2022	2021
	$m	$m
Operating expenses include amounts receivable by the Group’s auditors in:
– audit of the Group’s annual report & accounts	1.7	0.8
– audit of subsidiaries pursuant to legislation	3.1	1.9
– audit-related assurance services	1.4	1.1
– other non-audit services	0.7	0.6
	6.9	4.4

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.

7 Employee benefit expenses

	2022	2021
	$m	$m
Wages and salaries	215.8	199.1
Short term incentive payments	78.1	82.5
Social security	30.0	26.6
Share based remuneration	14.7	11.6
Pension costs1	17.0	15.7
	355.6	335.5
Recharged to syndicate 623	(53.1)	(48.5)
	302.5	287.0

1Pension costs primarily include contributions made under the defined contribution scheme. Further information on the defined benefit pension scheme can be

found in note 27.

The average number of employees for 2022 was 1,808 (2021: 1,617). An overview of employees by type is included on page

25.

Notes to the financial statements continued

192 Beazley | Annual report 2022 www.beazley.com

8 Finance costs

	2022	2021
	$m	$m
Interest expense on financial liabilities	35.6	35.2
Interest expense on lease liabilities	3.1	3.7
Equity raise costs not charged to share premium	0.7	–
	39.4	38.9

9 Income tax expense

	2022	2021
	$m	$m
Current tax expense
Current tax expense	53.2	64.0
Prior year adjustment	(9.9)	(7.5)
	43.3	56.5
Deferred tax expense
Origination and reversal of temporary differences	(12.0)	4.4
Impact of change in UK/US tax rates	(1.0)	(0.6)
Prior year adjustments	(0.1)	0.2
	(13.1)	4.0
Income tax charge	30.2	60.5

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 applied to

the profits earned in each country in which the Group operates is 21.2% (2021: 17.2%), whereas the tax charged for the year

ending 31 December 2022 as a percentage of profit before tax is 15.8% (2021: 16.4%). The reasons for the difference are

explained below:

	2022	2022	2021	2021
	$m	%	$m	%
Profit before tax	191.0		369.2	–
Tax calculated at the weighted average of statutory tax rate	40.6	21.2	63.3	17.2
Effects of:
– non-deductible expenses	1.8	1.0	3.5	1.0
– tax relief on remuneration	(1.2)	(0.6)	1.6	0.4
– over provided in prior years	(10.0)	(5.2)	(7.3)	(2.0)
– change in UK/US tax rates1	(1.0)	(0.5)	(0.6)	(0.2)
Tax charge for the period	30.2	15.8	60.5	16.4

1The Finance Act 2021, which provides for an increase in the UK corporation tax rate from 19% to 25% effective from 1 April 2023 received Royal Assent on 10

June 2021. This tax rate change to 25% will increase the Group’s future current tax charge. It was reflected in the calculation of the deferred tax balances as at

31 December 2021 for relevant temporary differences expected to reverse on or after 1 April 2023.

The Tax Act (the Tax Cuts and Jobs Act) was signed into law in the US in December 2017. The Tax Act includes base erosion

anti-avoidance tax provisions (the ‘BEAT’). We have performed an assessment for our intra-group transactions potentially in

scope of BEAT. The application of this new BEAT legislation is still uncertain for some types of transaction and we are keeping

developments under review. With support from external advisors, we believe that the BEAT impact on the Group is not

significant. No amount has been provided for BEAT liabilities in these financial statements (2021: nil). The ultimate outcome

may differ and if any additional amounts did fall within the scope of the BEAT, incremental tax at 10% might arise on some or all

of those amounts.

www.beazley.com Beazley | Annual report 2022 193

9 Income tax expense continued

The Group is monitoring the impact of the implementation of a Global Minimum Tax Rate of 15%, expected to apply in some

countries from 2024. Our initial assessment is that the impact will not be significant as the Group mainly operates in

jurisdictions with a statutory tax rate above 15%. We anticipate some additional tax arising in Ireland if profits are taxed at 15%

rather than 12.5%.

Amounts recognised directly in equity

Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss or other

comprehensive income but directly debited or credited to equity:

	2022	2021
	$m	$m
Current tax: share based payments	(0.6)	–
Deferred tax: share based payments	(3.1)	3.9
	(3.7)	3.9

10 Earnings per share

	2022	2021
Basic (cents)	26.3c	50.9c
Diluted (cents)	25.9c	50.3c
Basic (pence)	21.1p	37.0p
Diluted (pence)	20.8p	36.5p

Basic

Basic earnings per share are calculated by dividing profit after tax of $160.8m (2021: $308.7m) by the weighted average

number of shares in issue during the year of 611.7m (2021: 606.0m). The shares held in the Beazley plc Employee Benefit

Trust of 5.7m (2021: 3.1m) have been excluded from the calculation, until such time as they vest unconditionally with the

employee.

Diluted

Diluted earnings per share are calculated by dividing profit after tax of $160.8m (2021: $308.7m) by the adjusted weighted

average number of shares of 619.7m (2021: 614.3m). The adjusted weighted average number of shares assumes conversion

of dilutive potential ordinary shares, being shares from the equity settled compensation schemes. The shares held in the

Employee Benefit Trust of 5.7m (2021: 3.1m) have been excluded from the calculation, until such time as they vest

unconditionally with the employees. Further details of equity compensation plans can be found in note 23 as well as in the

Directors’ remuneration report on pages 112 to 139.

11 Dividends per share

An interim dividend of 13.5p covering the whole of 2022 (2021: 12.9p) will be payable on 28 April 2023 to Beazley plc

shareholders registered on 10 March 2023. The company expects the total amount to be paid in respect of the interim dividend

to be approximately £91m (2021: £78m). These financial statements do not provide for the interim dividend as a liability.

Notes to the financial statements continued

194 Beazley | Annual report 2022 www.beazley.com

12 Intangible assets

	Goodwill	Syndicate capacity	Licences	IT development costs	Renewal rights	Total
	$m	$m	$m	$m	$m	$m
Cost
Balance at 1 January 2021	72.0	10.7	9.3	109.2	61.3	262.5
Disposal	–	–	–	(10.4)	–	(10.4)
Other additions	–	–	–	17.7	–	17.7
Foreign exchange (loss) / gain	–	–	–	(1.1)	0.1	(1.0)
Balance at 31 December 2021	72.0	10.7	9.3	115.4	61.4	268.8
Balance at 1 January 2022	72.0	10.7	9.3	115.4	61.4	268.8
Disposal	–	–	–	–	–	–
Additions	–	3.0	–	19.7	–	22.7
Foreign exchange (loss)	–	–	–	(9.8)	(2.5)	(12.3)
Balance at 31 December 2022	72.0	13.7	9.3	125.3	58.9	279.2
Amortisation and impairment
Balance at 1 January 2021	(10.0)	–	–	(73.6)	(52.6)	(136.2)
Disposal	–	–	–	10.4	–	10.4
Amortisation for the year	–	–	–	(12.4)	(8.1)	(20.5)
Foreign exchange gain / (loss)	–	–	–	1.3	(0.3)	1.0
Balance at 31 December 2021	(10.0)	–	–	(74.3)	(61.0)	(145.3)
Balance at 1 January 2022	(10.0)	–	–	(74.3)	(60.8)	(145.1)
Disposal	–	–	–	–	–	–
Amortisation for the year	–	–	–	(13.6)	(0.7)	(14.3)
Foreign exchange gain	–	–	–	6.4	2.6	9.0
Balance at 31 December 2022	(10.0)	–	–	(81.5)	(58.9)	(150.4)
Carrying amount
31 December 2022	62.0	13.7	9.3	43.8	–	128.8
31 December 2021	62.0	10.7	9.3	41.1	0.4	123.5

www.beazley.com Beazley | Annual report 2022 195

12 Intangible assets continued

Impairment tests

Goodwill, syndicate capacity and US insurance authorisation licences are deemed to have indefinite life as they are expected to

have value in use that does not erode or become obsolete over the course of time. Consequently, they are not amortised but

annually tested for impairment. For the purpose of impairment testing, they are allocated to the Group’s cash-generating units

(CGUs) as follows:

	Cyber Risks	Digital	MAP Risks	Property Risks	Specialty Risks	Total
2022	$m	$m	$m	$m	$m	$m
Goodwill	1.7	0.3	31.9	25.7	2.4	62.0
Capacity	3.1	0.6	3.0	3.7	3.3	13.7
Licences	2.8	0.6	–	1.9	4.0	9.3
Total	7.6	1.5	34.9	31.3	9.7	85.0

	Cyber Risks	Digital	MAP Risks	Property Risks	Specialty Risks	Total
2021	$m	$m	$m	$m	$m	$m
Goodwill	1.7	0.3	31.9	25.7	2.4	62.0
Capacity	1.8	0.4	2.6	3.3	2.6	10.7
Licences	2.8	0.6	–	1.9	4.0	9.3
Total	6.3	1.3	34.5	30.9	9.0	82.0

Value in use is defined as the present value of the future cash flows expected to be derived from the CGU and represents

recoverable amount for goodwill. It is estimated by discounting future cash flows sourced from financial budgets approved by

management which cover specific estimates for a five year period. The key assumptions used in the preparation of future cash

flows are: premium growth rates,combined ratios, retention rates and expected future market conditions.

A discount rate, based on weighted average cost of capital (WACC) of 10.9% (2021: 9%) has been applied to 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 impairment test for goodwill confirms that no impairment is required.

The Group has taken the following measures to ensure that the key assumptions used in deriving value in use for each CGU

considers the potential adverse effects of these potential changes in economic and regulatory environments:

•Projected combined ratio – The Group has used projected combined ratios consistent with its five year financial budgets.

Sensitivity testing (a 5% increase in combined ratio for all classes and all years) has been performed to model the impact of

reasonably possible changes in combined ratio to our base case impairment analysis and headroom. Within these ranges,

the recoverable amounts remain supportable.

•Future market conditions – to test the segment’s sensitivity to variances (including those caused by the factors listed above)

from 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 value in use of all the Group’s other intangible assets.

•Premium growth rates/Retention rates – The Group has used a terminal growth rate of 0% (2021: 0%) to extrapolate

projections beyond the covered five year period.

The Group’s intangible assets relating to syndicate capacity is allocated across all CGUs. The fair value of syndicate capacity

can be determined from the latest Lloyd's of London capacity auctions. Based upon the latest market prices, management

concludes that the fair value exceeds the carrying amount and as such no impairment is necessary.

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 deemed to be the

fair value. As described above, a WACC discount rate applied to projected future cash flows sourced from management

approved budgets. Key assumptions are the same as those outlined above. Based upon all available evidence the results of

the testing indicate that no impairment is required.

Notes to the financial statements continued

196 Beazley | Annual report 2022 www.beazley.com

13 Plant and equipment

	Fixtures & fittings	Computer equipment	Total
	$m	$m	$m
Cost
Balance at 1 January 2021	37.8	14.3	52.1
Additions	3.8	0.7	4.5
Disposals	(9.7)	–	(9.7)
Foreign exchange gain / (loss)	0.7	(0.1)	0.6
Balance at 31 December 2021	32.6	14.9	47.5
Balance at 1 January 2022	32.6	14.9	47.5
Additions	0.8	0.2	1.0
Foreign exchange (loss)	(1.3)	(0.5)	(1.8)
Balance at 31 December 2022	32.1	14.6	46.7
Accumulated Depreciation
Balance at 1 January 2021	(22.9)	(9.5)	(32.4)
Depreciation charge for the year	(2.3)	(2.6)	(4.9)
Disposals	9.7	–	9.7
Foreign exchange (loss)	(0.5)	(0.2)	(0.7)
Balance at 31 December 2021	(16.0)	(12.3)	(28.3)
Balance at 1 January 2022	(16.0)	(12.3)	(28.3)
Depreciation charge for the year	(2.8)	(0.5)	(3.3)
Foreign exchange gain / (loss)	0.3	(0.5)	(0.2)
Balance at 31 December 2022	(18.5)	(13.3)	(31.8)
Carrying amounts
31 December 2022	13.6	1.3	14.9
31 December 2021	16.6	2.6	19.2

www.beazley.com Beazley | Annual report 2022 197

14 Investment in associates

Associates are those entities over which the Group has power to exert significant influence but which it does not control.

Significant influence is generally presumed if the Group has between 20% and 50% of voting rights.

	2022	2021
Group	$m	$m
As at 1 January	0.6	0.3
Investment in CyberAcuView LLC	–	0.3
Share of loss	(0.2)	–
As at 31 December	0.4	0.6

The Group’s investment in associates consists of:

	Country/region of incorporation	% interest held	Carrying value $m
2022
Falcon Money Management Holdings Limited (and subsidiaries)	Malta1	25%	—
Pegasus Underwriting Limited	Hong Kong2	33%	—
CyberAcu View	USA3	13%	0.4
			0.4

1259 St Paul Street, Valletta, Malta.

2Suite 126, 12/F Somptuex Central, 52-54 Wellington Street, Hong Kong

38130 Lakewood Main Street, Suite 103 #329. Lakewood Ranch, FL 34202

The CyberAcuView LLC board is charged with governance over its affairs. The board is composed of individuals who are selected

by the investors. The Group has the ability to appoint a member to the board of CyberAcuView LLC to represent the Group’s

interest. As a result, the Group is deemed to have significant influence over CyberAcuView LLC and therefore this investment is

recognised as an associate.

Notes to the financial statements continued

198 Beazley | Annual report 2022 www.beazley.com

15 Deferred acquisition costs

	2022	2021
	$m	$m
Balance at 1 January	477.8	384.9
Additions	1,024.4	914.7
Amortisation charge	(952.1)	(821.8)
Balance at 31 December	550.1	477.8

16 Financial assets and liabilities

Set out below is a comparison of the carrying amounts and fair values of financial assets and liabilities.

	2022	2021
	$m	$m
Financial assets at fair value
Debt securities:
– Government issued	5,006.3	4,008.1
Corporate bonds
– Investment grade	2,050.5	1,861.9
– High yield	308.7	402.3
Syndicate loans	32.5	37.9
Total debt securities and syndicate loans	7,398.0	6,310.2
Equity funds	159.4	209.6
Hedge funds	530.6	478.2
Illiquid credit assets	222.9	277.9
Total capital growth assets	912.9	965.7
Total financial investments at fair value through statement of profit or loss	8,310.9	7,275.9
Derivative financial assets	34.7	7.6
Total financial assets at fair value	8,345.6	7,283.5

www.beazley.com Beazley | Annual report 2022 199

16 Financial assets and liabilities continued

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 credit assets are investment vehicles that predominantly target

private lending opportunities, often with longer investment horizons. The fair value of these assets at 31 December 2022

excludes an unfunded commitment of $30.5m (2021: $40.5m).

The amounts expected to mature within and after one year are:

	2022	2021
	$m	$m
Assets
Within one year	1,673.5	1,409.4
After one year	5,759.2	4,908.4
Total	7,432.7	6,317.8
Liabilities
Within one year	14.5	7.1
After one year	548.0	547.6
Total	562.5	554.7

Our capital growth assets have no defined maturity dates and have thus been excluded from the above maturity table. However,

all $159.4m (2021: $209.6m) of equity funds could be liquidated within two weeks, $416.8m (2021: $378.1m) of hedge fund

assets within six months and the remaining $113.8m (2021: $100.0m) of hedge fund assets within 18 months, in normal

market conditions. Illiquid credit assets are not readily realisable and principal will be returned over the life of these assets,

which may be up to 12 years.

	2022	2021
Financial liabilities	$m	$m
Tier 2 subordinated debt (2026)	249.4	249.2
Tier 2 subordinated debt (2029)	298.6	298.4
Derivative financial liabilities	14.5	7.1
Total financial liabilities	562.5	554.7

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 32.

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, based on the lowest level input that is significant to the fair value measurement as a

whole. 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.

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.

Notes to the financial statements continued

200 Beazley | Annual report 2022 www.beazley.com

16 Financial assets and liabilities continued

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.

Our valuation approach for fair value assets and liabilities classified as level 2:

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.

c) Subordinated debt and tier 2 subordinated debt fair value are based on quoted market prices.

Our valuation approach for fair value assets and liabilities classified as level 3:

a) Our illiquid credit fund investments are managed by third party managers (generally closed ended limited partnerships or

open ended funds). While the funds provide 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

value of the underlying private/unquoted investments 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) The syndicate loans are loans provided by our Group syndicates to the Central Fund at Lloyd’s in respect of the 2019 and

2020 underwriting years. These instruments are not tradeable and are valued using discounted cash flow models, designed to

appropriately reflect the credit and illiquidity risk of the instruments.

There were no changes in the valuation techniques during the year compared to those described in the Group's 2021 Annual

Report and Accounts.

www.beazley.com Beazley | Annual report 2022 201

16 Financial assets and liabilities continued

The following table shows the fair values of financial assets and financial liabilities, including their levels in the fair value

hierarchy.

	Level 1	Level 2	Level 3	Total
2022	$m	$m	$m	$m
Financial assets carried at fair value
Fixed and floating rate debt securities
– Government issued	4,022.5	983.8	–	5,006.3
– Corporate bonds
– Investment grade	893.8	1,156.7	–	2,050.5
– High yield	34.2	274.5	–	308.7
Syndicate loans	–	–	32.5	32.5
Equity funds	159.4	–	–	159.4
Hedge funds	–	530.6	–	530.6
Illiquid credit assets	–	–	222.9	222.9
Derivative financial assets	34.7	–	–	34.7
Total financial assets carried at fair value	5,144.6	2,945.6	255.4	8,345.6
Financial liabilities carried at fair value
Derivative financial liabilities	14.5	–	–	14.5
Financial liabilities not measured at fair value
Tier 2 subordinated debt (2029)	–	265.9	–	265.9
Tier 2 subordinated debt (2026)	–	240.3	–	240.3
Total financial liabilities measured at fair value	14.5	506.2	–	520.7

	Level 1	Level 2	Level 3	Total
2021	$m	$m	$m	$m
Financial assets carried at fair value
Fixed and floating rate debt securities
– Government issued	3,513.2	494.9	–	4,008.1
– Corporate bonds
– Investment grade	802.8	1,059.1	–	1,861.9
– High yield	82.1	320.2	–	402.3
Syndicate loans	–	–	37.9	37.9
Equity funds	209.6	–	–	209.6
Hedge funds	–	478.2	–	478.2
Illiquid credit assets	–	–	277.9	277.9
Derivative financial assets	7.6	–	–	7.6
Total financial assets carried at fair value	4,615.3	2,352.5	315.8	7,283.5
Financial liabilities carried at fair value
Derivative financial liabilities	7.1	–	–	7.1
Financial liabilities not measured at fair value
Tier 2 subordinated debt (2029)	–	334.6	–	334.6
Tier 2 subordinated debt (2026)	–	279.0	–	279.0
Total financial liabilities measured at fair value	7.1	613.6	–	620.7

Notes to the financial statements continued

202 Beazley | Annual report 2022 www.beazley.com

16 Financial assets and liabilities continued

The table above does not include financial assets and liabilities that are, in accordance with the Group’s accounting policies,

recorded at amortised cost, if the carrying amount of these financial assets and liabilities approximates their fair values at the

reporting date. Cash and cash equivalents have not been included in the table above; however, the full amount of cash and

cash equivalents would be classified under level 1 in both the current and prior year.

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 2022 reflect the level of trading activities

including frequency and volume derived from market data obtained from an independent external valuation tool.

	Level 1	Level 2
31 December 2022 vs 31 December 2021 transfer from level 2 to level 1	$m	$m
– Corporate Bonds – Investment grade	187.7	(187.7)

	Level 1	Level 2
31 December 2022 vs 31 December 2021 transfer from level  1 to level 2	$m	$m
– Corporate Bonds – Investment grade	(307.2)	307.2
– Government issued	(213.7)	213.7

The values shown in the transfer tables above are translated at foreign exchange rate as at 31 December 2022.

Level 3 investment reconciliations

The table below shows a reconciliation from the opening balances to the closing balances of level 3 fair values.

	2022	2021
	$m	$m
As at 1 January	315.8	268.5
Purchases	13.0	87.1
Sales	(81.4)	(60.2)
Realised gain	13.2	12.1
Unrealised (loss) / gain	(5.2)	8.3
As at 31 December	255.4	315.8

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 credit 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.

www.beazley.com Beazley | Annual report 2022 203

16 Financial assets and liabilities continued

As at 31 December the investments comprising the Group’s unconsolidated structured entities are as follows:

	2022	2021
	$m	$m
High yield bond funds	308.7	402.3
Equity funds	159.4	209.6
Hedge funds	530.6	478.2
Illiquid credit assets	222.9	277.9
Investments through unconsolidated structured entities	1,221.6	1,368.0

Apart from a relatively small exposure to high yield bond funds, 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.

Currency exposures

The currency exposures of our financial assets held at fair value are detailed below:

	UK £	CAD $	EUR €	Sub Total	US $	Total
2022	$m	$m	$m	$m	$m	$m
Financial assets at fair value
Fixed and floating rate debt securities	636.1	365.9	–	1,002.0	6,363.5	7,365.5
Syndicate loans	32.5	–	–	32.5	–	32.5
Equity Linked Funds	–	–	–	–	159.4	159.4
Hedge funds	–	–	–	–	530.6	530.6
Illiquid credit assets	0.1	–	46.2	46.3	176.6	222.9
Derivative financial assets	–	–	–	–	34.7	34.7
Total	668.7	365.9	46.2	1,080.8	7,264.8	8,345.6

	UK £	CAD $	EUR €	Sub Total	US $	Total
2021	$m	$m	$m	$m	$m	$m
Financial assets at fair value
Fixed and floating rate debt securities	465.0	341.4	–	806.4	5,465.9	6,272.3
Syndicate loans	37.9	–	–	37.9	–	37.9
Equity funds	–	–	–	–	209.6	209.6
Hedge funds	–	–	–	–	478.2	478.2
Illiquid credit assets	0.5	–	39.8	40.3	237.6	277.9
Derivative financial assets	–	–	–	–	7.6	7.6
Total	503.4	341.4	39.8	884.6	6,398.9	7,283.5

Notes to the financial statements continued

204 Beazley | Annual report 2022 www.beazley.com

17 Derivative financial instruments

The Group uses a variety of derivative financial instruments, including both over-the-counter and exchange traded contracts.

These derivatives help the Group to manage exposure to market and foreign currency and/or interest rate risk on existing

assets or liabilities. The Group had the right and the intention to settle each contract on a net basis.

The assets and liabilities of these contracts at 31 December are detailed below:

	2022		2021
	Gross contract amount	Market value of derivative position	Gross contract amount	Market value of derivative position
Derivative financial instrument assets	$m	$m	$m	$m
Foreign exchange forward contracts	560.1	34.7	317.8	7.3
Bond futures contract	–	–	522.7	0.3
	560.1	34.7	840.5	7.6

	2022		2021
	Gross contract amount	Market value of derivative position	Gross contract amount	Market value of derivative position
Derivative financial instrument liabilities	$m	$m	$m	$m
Foreign exchange forward contracts	549.7	(14.5)	351.4	(7.1)
Bond futures contract	–	–	141.2	–
	549.7	(14.5)	492.6	(7.1)

Foreign exchange forward contracts

The Group utilises over-the-counter foreign exchange forward agreements to economically hedge the foreign currency risk

resulting from transactions and balances held in currencies that are different to the functional currency of the Group.

Bond futures positions

The Group utilises bond futures transactions for the purpose of efficiently managing the term structure of its interest rate

exposures. A negative gross contract amount represents a notional short position that generates positive fair value as interest

rates rise.

18 Insurance receivables

	2022	2021
	$m	$m
Insurance receivables	1,811.7	1,696.1
	1,811.7	1,696.1

These are receivables due within one year and relate to business transacted with brokers and intermediaries. All insurance

receivables are classified as loans and receivables and their carrying values approximate fair value at the reporting date.

www.beazley.com Beazley | Annual report 2022 205

19 Reinsurance assets

	2022	2021
	$m	$m
Reinsurers’ share of claims	2,516.7	1,840.9
Impairment provision	(29.3)	(11.5)
	2,487.4	1,829.4
Reinsurers’ share of unearned premium reserve	799.2	557.0
	3,286.6	2,386.4

The total impairment provision in the statement of financial position in respect of reinsurance assets past due by more than 30

days at 31 December was $17.3m (2021: $2.1m). This provision in respect of overdue reinsurance recoverables is included

within the total provision of $29.3m.

Operating expenses include an impairment loss / (write back) on reinsurance assets of $17.8m (2021: $(3.3)m).

20 Cash and cash equivalents

	2022	2021
Group	$m	$m
Cash at bank and in hand	652.5	591.8

	2022	2021
Company	$m	$m
Cash at bank and in hand	3.4	0.3

21 Share capital

	2022		2021
	No. of shares (m)	$m	No. of shares (m)	$m
Ordinary shares of 5p each
Issued and fully paid	671.2	46.6	609.2	42.9
Balance at 1 January	609.2	42.9	608.9	42.9
Issue of shares to satisfy employee share schemes	1.0	0.1	0.3	–
Equity raise	61.0	3.6	–	–
Balance at 31 December	671.2	46.6	609.2	42.9

There are no limits to the authorised share capital of the company.

On 16 November 2022, the company issued 60,959,017 new ordinary shares of 5 pence each, comprising the ‘Placing

Shares’, the ‘Retail Offer Shares’ and the ‘Subscription Shares’ (together, the ‘equity raise’). The shares issued represented

approximately 9.99% of the company's issued ordinary share capital on the day to prior to the equity raise. 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. In aggregate, the equity raise represented gross proceeds of £350.5m ($415.8m) and net proceeds of

£340.8m ($404.4m). The company incurred other transaction costs of $0.7m which were recognised in the consolidated

statement of profit or loss.

Notes to the financial statements continued

206 Beazley | Annual report 2022 www.beazley.com

21 Share capital continued

The 60,403,895 Placing Shares were issued for non-cash consideration by way of a 'cash box' structure structure. involving a

newly incorporated subsidiary of the company (‘Cash Box’). This structure involved the issue of ordinary and preference shares

by Cash Box to one of the investment banks advising the company in respect of the equity raise. These preference and ordinary

shares were subsequently acquired by the company and the preference shares were redeemed by Cash Box. The acquisition by

the company of the ordinary shares in Cash Box held by the investment bank resulted in the company securing over 90% of the

equity share capital of Cash Box. The company was therefore able to rely on Section 612 of the Companies Act 2006, which

provides relief from the requirements under Section 610 of the Companies Act 2006 to create a share premium account.

Therefore, no share premium was recorded in relation to the Placing shares.

The premium over the nominal value of the Placing shares was credited to a merger reserve and subsequently recognised in

retained earnings. The merger reserve created was determined to be distributable for the purposes of the Companies Act 2006.

Certain Directors of the company participated in the equity raise via the Placing Shares and the 26,086 Subscription Shares.

Retail investors were able to participate in the equity raise on the same terms as institutional investors via the retail offer,

which was hosted on the PrimaryBid platform. A total of 529,036 Retail Offer Shares were issued, and Share Premium of

$3.6m was recognised.

www.beazley.com Beazley | Annual report 2022 207

22 Other reserves

	Employee share options reserve	Employee share trust reserve	Total
	$m	$m	$m
Group
Balance at 1 January 2021	16.0	(25.4)	(9.4)
Share based payments	11.0	–	11.0
Tax on share option vestings	(3.9)	–	(3.9)
Transfer of shares to employees	(6.1)	4.4	(1.7)
Balance at 31 December 2021	17.0	(21.0)	(4.0)
Share based payments	15.7	–	15.7
Tax on share option vestings	3.1	–	3.1
Acquisition of own shares held in trust	–	(17.8)	(17.8)
Transfer of shares to employees	(7.2)	2.6	(4.6)
Balance at 31 December 2022	28.6	(36.2)	(7.6)

	Employee share options reserve	Employee share trust reserve	Total
	$m	$m	$m
Company
Balance at 1 January 2021	(13.2)	(3.7)	(16.9)
Share based payments	11.0	–	11.0
Transfer of shares to employees	(6.1)	4.4	(1.7)
Balance at 31 December 2021	(8.3)	0.7	(7.6)
Share based payments	15.7	–	15.7
Acquisition of own shares held in trust	–	(17.8)	(17.8)
Transfer of shares to employees	(7.2)	2.6	(4.6)
Balance at 31 December 2022	0.2	(14.5)	(14.3)

The merger reserve is shown within the statement of changes in equity as a separate category and as such has been excluded

from the other reserves note.

The employee share options reserve is held in accordance with IFRS 2: Share-based payment. For more information refer to

note 23.2.

More information on the employee share trust reserve is included in note 23.

Notes to the financial statements continued

208 Beazley | Annual report 2022 www.beazley.com

23 Equity compensation plans

23.1 Employee share trust

	2022		2021
	Number (m)	$m	Number (m)	$m
Movements in employee share trust reserve
Balance at 1 January	3.1	21.0	3.7	25.4
Additions	3.0	17.6	–	–
Transfer of shares to employees	(0.4)	(2.5)	(0.6)	(4.4)
Balance at 31 December	5.7	36.1	3.1	21.0

The shares are owned by the employee share trust to satisfy awards under the Group’s deferred share plan, retention plan, one-

off share incentive plan and long term incentive plan (LTIP). These shares are purchased on the market and carried at cost.

On the third anniversary of an award the shares under the deferred share plan are transferred from the trust to the employee.

Under the retention plan, on the third anniversary, and each year after that up to the sixth anniversary, 25.0% of the shares

awarded are transferred to the employee.

The deferred share plan is recognised in the statement of profit or loss on a straight-line basis over a period of three years,

while the retention share plan is recognised in the statement of profit or loss on a straight-line basis over a period of six years.

23.2 Employee share option plans

The Group has a long term incentive plan (LTIP), one-off share incentive plan, deferred share plan, retention plan and save-as-

you-earn (SAYE) plan that entitle employees to purchase shares in the Group.

The terms and conditions of the grants are as follows:

Share option plan	Grant date	No. of options (m)	Vesting conditions	Contractual life of options
LTIP	20/10/2022	0.3	Five year’s service + NAV + minimum shareholding requirement	10 years
	15/02/2022	1.9
	10/02/2021	2.1
	11/02/2020	1.2
	12/02/2019	1.1
	13/02/2018	0.9
LTIP	20/10/2022	0.3	Three year’s service + NAV + minimum shareholding requirement	10 years
	15/02/2022	1.9
	10/02/2021	2.1
	11/02/2020	1.2
SAYE (UK)	28/03/2022	0.6	Three years’ service	N/A
	30/03/2021	1.7
	30/03/2020	0.2
SAYE (US)	30/05/2022	0.1	Two years’ service	N/A
	02/06/2021	0.1
SAYE (Others)	28/03/2022	0.2	Two years’ service	N/A
Total share options outstanding		15.9

Vesting conditions

In summary the vesting conditions are defined as:

•two years’ service – an employee has to remain in employment until the second anniversary from the grant date;

•three years’ service – an employee has to remain in employment until the third anniversary from the grant date; and

•NAV – the NAV growth, after adjusting for the effect of dividends, is greater than the risk-free rate of return plus a premium

per year.

www.beazley.com Beazley | Annual report 2022 209

23 Equity compensation plans continued

Further details of equity compensation plans can be found in the Directors’ remuneration report on pages 112 to 139. The total

gain on Directors’ exercises of share option plans during the period was £0.2m (2021: £nil).

The number and weighted average exercise prices of share options are as follows:

	2022		2021
	Weighted average exercise price (pence per share)	No. of  options (m)	Weighted average exercise price (pence per share)	No. of options (m)
Outstanding at 1 January	80.7	14.9	63.5	13.6
Forfeited during the year	74.5	(3.2)	58.0	(5.8)
Exercised during the year	124.3¹	(1.1)	25.0²	(0.3)
Granted during the year	54.5	5.3	80.9	7.4
Outstanding at 31 December	56.5	15.9	80.7	14.9
Exercisable at 31 December	–	–	–	–

1The weighted average share price at the point of exercise of these options was 498.7p.

2The weighted average share price at the point of exercise of these options was 366.2p.

The range of exercise prices for options outstanding at the end of the year was £0 to £4.56 (2021: £0 to £4.56). The weighted

average remaining contractual life for the outstanding options at end of the year was 1.89 years (2021: 1.87 years).

The share option programmes allow Group employees to acquire shares of the company. The fair value of options granted is

recognised as an employee expense with a corresponding increase in the employee share options reserve. The fair value of the

options granted is measured at grant date and spread over the period in which the employees become unconditionally entitled

to the options. The fair value of the options granted is measured using the Black Scholes model, taking into account the terms

and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual

number of share options that vest.

The following is a summary of the assumptions used to calculate the fair value of share options awarded during the period:

	2022	2021
	$m	$m
Share options charge to employee share options reserve	14.7	11.6
LTIP
Weighted average share price (pence per option)	509.9	366.6
Weighted average fair value (pence per option)	509.8	367.0
Weighted average exercise price (pence per option)	–	–
Average expected life of options	4.3yrs	4.3yrs
Expected volatility	38.9%	36.4%
Expected dividend yield	–	–
Average risk-free interest rate	3.0%	0.4%
SAYE
Weighted average share price (pence per option)	435.7	348.7
Weighted average fair value (pence per option)	143.4	95.0
Weighted average exercise price (pence per option)	350.6	287.8
Average expected life of options	3.3yrs	3.3yrs
Expected volatility	39.3%	36.6%
Expected dividend yield	2.6%	3.2%
Average risk-free interest rate	2.6%	0.4%

The expected volatility is based on historic volatility over a period of at least two years.

Notes to the financial statements continued

210 Beazley | Annual report 2022 www.beazley.com

24 Insurance liabilities and reinsurance assets

	2022	2021
	$m	$m
Gross
Claims reported and loss adjustment expenses	1,758.4	1,627.4
Claims incurred but not reported	5,624.1	4,771.7
Gross claims liabilities	7,382.5	6,399.1
Unearned premiums	2,971.7	2,472.7
Total insurance liabilities, gross	10,354.2	8,871.8

Recoverable from reinsurers
Claims reported and loss adjustment expenses	420.6	371.4
Claims incurred but not reported	2,066.8	1,458.0
Reinsurers' share of claims liabilities	2,487.4	1,829.4
Unearned premiums	799.2	557.0
Total reinsurers' share of insurance liabilities	3,286.6	2,386.4

	2022	2021
	$m	$m
Net
Claims reported and loss adjustment expenses	1,337.8	1,256.0
Claims incurred but not reported	3,557.3	3,313.7
Net claims liabilities	4,895.1	4,569.7
Unearned premiums	2,172.5	1,915.7
Total insurance liabilities, net	7,067.6	6,485.4

The gross claims reported, the loss adjustment liabilities and the liabilities for claims incurred but not reported are net of

recoveries from salvage and subrogation.

www.beazley.com Beazley | Annual report 2022 211

24 Insurance liabilities and reinsurance assets continued

24.1 Movements in insurance liabilities and reinsurance assets

a)Claims and loss adjustment expenses`

		2022			2021
	Gross $m	Reinsurance $m	Net $m	Gross $m	Reinsurance $m	Net $m
Claims reported and loss adjustment expenses	1,627.4	(371.4)	1,256.0	1,507.3	(262.2)	1,245.1
Claims incurred but not reported	4,771.7	(1,458.0)	3,313.7	3,855.3	(1,034.4)	2,820.9
Unexpired risk reserve	–	–	–	91.5	(9.0)	82.5
Balance at 1 January	6,399.1	(1,829.4)	4,569.7	5,454.1	(1,305.6)	4,148.5
Claims paid	(1,936.7)	371.7	(1,565.0)	(1,718.5)	378.9	(1,339.6)
Increase in claims
Arising from current year claims	3,093.0	(1,003.9)	2,089.1	2,911.5	(875.5)	2,036.0
Arising from prior year claims	(46.8)	(85.9)	(132.7)	(177.2)	(32.6)	(209.8)
Net exchange differences	(126.1)	60.1	(66.0)	(70.8)	5.4	(65.4)
Balance at 31 December	7,382.5	(2,487.4)	4,895.1	6,399.1	1,829.4	4,569.7
Claims reported and loss adjustment expenses	1,758.4	(420.6)	1,337.8	1,627.4	(371.4)	1,256.0
Claims incurred but not reported	5,624.1	(2,066.8)	3,557.3	4,771.7	(1,458.0)	3,313.7
Unexpired risk reserve	–	–	–	–	–	–
Balance at 31 December	7,382.5	(2,487.4)	4,895.1	6,399.1	(1,829.4)	4,569.7

Notes to the financial statements continued

212 Beazley | Annual report 2022 www.beazley.com

24 Insurance liabilities and reinsurance assets continued

b)Unearned premiums reserve

		2022			2021
	Gross	Reinsurance	Net	Gross	Reinsurance	Net
	$m	$m	$m	$m	$m	$m
Balance at 1 January	2,472.7	(557.0)	1,915.7	1,924.3	(379.1)	1,545.2
Increase in the year	5,268.7	(1,392.5)	3,876.2	4,618.9	(1,122.8)	3,496.1
Release in the year	(4,769.7)	1,150.3	(3,619.4)	(4,070.5)	944.9	(3,125.6)
Balance at 31 December	2,971.7	(799.2)	2,172.5	2,472.7	(557.0)	1,915.7

24.2 Assumptions, changes in assumptions and claims reserve strength analysis

a)Process used to decide on assumptions

The peer review reserving process

Beazley uses a quarterly dual track process to set its reserves:

•the actuarial team uses several actuarial and statistical methods to estimate the ultimate premium and claims costs, with

the most appropriate methods selected depending on the nature of each class of business; and

•the underwriting teams concurrently review the development of the incurred loss ratio over time, work with our claims

managers to set reserve estimates for identified claims and utilise their detailed understanding of both risks underwritten

and the nature of the claims to establish an alternative estimate of ultimate claims cost, which is compared to the actuarially

established figures.

A formal internal peer review process is then undertaken to determine the reserves held for accounting purposes which, in

totality, are not lower than the actuarially established figure.

The Group has a consistent reserving philosophy, with initial reserves being set to include risk margins which may be released

over time as uncertainty reduces.

Actuarial assumptions

Chain-ladder techniques are applied to premiums, paid claims and incurred claims (i.e. paid claims plus case estimates). The

basic technique involves the analysis of historical claims development factors and the selection of estimated development

factors based on historical patterns. The selected development factors are then applied to cumulative claims data for each

underwriting year that is not yet fully developed to produce an estimated ultimate claims cost for each underwriting year.

Chain-ladder techniques are most appropriate for classes of business that have a relatively stable development pattern. Chain-

ladder techniques are less suitable in cases in which the insurer does not have a developed claims history for a particular class

of business, or for underwriting years that are still at immature stages of development where there is a higher level of

assumption volatility.

The Bornhuetter-Ferguson method uses a combination of a benchmark/market-based estimate and an estimate based on

claims experience. The former is based on a measure of exposure such as premiums; the latter is based on the paid or

incurred claims observed to date. The two estimates are combined using a formula that gives more weight to the experience-

based estimate as time passes. This technique has been used in situations where developed claims experience was not

available for the projection (e.g. recent underwriting years or new classes of business).

The expected loss ratio method uses a benchmark/market-based estimate applied to the expected premium and is used for

classes with little or no relevant historical data.

The choice of selected results for each underwriting year of each class of business depends on an assessment of the

technique that has been most appropriate to observed historical developments. In certain instances, this has meant that

different techniques or combinations of techniques have been selected for individual underwriting years or groups of

underwriting years within the same class of business. As such, there are many assumptions used to estimate general

insurance liabilities.

www.beazley.com Beazley | Annual report 2022 213

24 Insurance liabilities and reinsurance assets continued

We also review triangulations of the paid/outstanding claim ratios as a way of monitoring any changes in the strength of the

outstanding claim estimates between underwriting years so that adjustments can be made to mitigate any subsequent over/

(under) reserving. To date, this analysis indicates no systematic change to the outstanding claim strength across underwriting

years.

Where significant large losses impact an underwriting year (e.g. first-party COVID-19 losses, the events of 11 September 2001,

the hurricanes in 2004, 2005, 2008, 2012, 2017, 2018 and 2019, the typhoons in 2018 and 2019, or the earthquakes in

2010, 2011 and 2017), the development is usually very different from the attritional losses. In these situations, the large loss

total is extracted from the remainder of the data and analysed separately by the respective claims managers using exposure

analysis of the policies in force in the areas affected.

Further assumptions are required to convert gross of reinsurance estimates of ultimate claims cost to a net of reinsurance level

and to establish reserves for unallocated claims handling expenses and reinsurance bad debt.

b)Major assumptions

The main assumption underlying these techniques is that the Group’s past claims development experience (with appropriate

adjustments for known changes) can be used to project future claims development and hence ultimate claims costs. As such

these methods extrapolate the development of premiums, paid and incurred losses, average costs per claim and claim

numbers for each underwriting year based on the observed development of earlier years.

Another assumption used within insurance liabilities is the estimation of an unexpired risk reserve (URR) for the expected value

of net claims and expenses attributable to the unexpired periods of policies in force at the balance sheet date which exceeds

the unearned premium reserve.

Throughout, judgement is used to assess the extent to which past trends may or may not apply in the future; for example, to

reflect changes in external or market factors such as economic conditions, public attitudes to claiming, levels of claims

inflation, premium rate changes, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy

conditions and claims handling procedures.

c)Changes in assumptions

As already discussed, general insurance business requires many different assumptions. The diagram below illustrates the main

categories of assumptions used for each underwriting year and class combination.

Further information on the calculation of loss reserves and the risks associated with them is provided in the risk disclosures

section in note 2. The risks associated with general insurance contracts are complex and do not readily lend themselves to

meaningful sensitivity analysis. Given the range of assumptions used, the Group’s profit or loss is relatively insensitive to

changes to an individual assumption used for an underwriting year/class combination.

The Group’s profit or loss is potentially more sensitive to a systematic change in assumptions that affect many classes, such

as judicial changes or when catastrophes produce more claims than expected. The impact of an unreported event could lead to

a significant increase in the Group’s loss reserves. The Group believes that the loss reserves established are adequate,

however a 20% increase in estimated losses would lead to a $1,476.5m (2021: $1,279.8m) increase in gross loss reserves

and a $979.0m (2021: $913.9m) increase in net loss reserves. The Group uses a range of risk mitigation strategies to reduce

such volatility including the purchase of reinsurance. In addition, the Group holds capital to absorb volatility.

Notes to the financial statements continued

214 Beazley | Annual report 2022 www.beazley.com

24 Insurance liabilities and reinsurance assets continued

d)Claims reserve strength analysis

The estimation of IBNR reserves for future claim notifications is subject to a greater degree of uncertainty than the estimation

of the outstanding claims already notified. This is particularly true for the Specialty Risk business, which will typically display

greater variations between initial estimates and final outcomes as a result of the greater degree of difficulty in estimating these

reserves. The estimation of IBNR reserves for other business written is generally subject to less variability as claims are

generally reported and settled relatively quickly.

As such, our reserving assumptions contain a reasonable margin for prudence given the uncertainties inherent in the insurance

business underwritten, particularly on the longer tailed Specialty Risk classes.

Since year end 2004, we have identified a range of possible outcomes for each class and underwriting year combination directly

from our internal model (previously our individual capital assessment (ICA)) process. Comparing these with our pricing

assumptions and reserving estimates gives our management team increased insight into our perceived reserving strength and

the relative uncertainties of the business written.

To illustrate the robustness of our reserves, the loss development tables below provide information about historical claims

development by the five segments – Cyber Risks, Digital, MAP Risks, Property Risks and Specialty Risks. The tables are by

underwriting year which in our view provides the most transparent reserving basis. We have supplied tables for both ultimate

gross claims and ultimate net claims.

The top part of the table illustrates how the Group’s estimate of the claims ratio for each underwriting year has changed at

successive year ends. The bottom half of the table reconciles the gross and net claims to the amount appearing in the

statement of financial position.

While the information in the table provides a historical perspective on the adequacy of the claims liabilities established in

previous years, users of these financial statements are cautioned against extrapolating past redundancies or deficiencies on

current claims liabilities. The Group believes that the estimate of total claims liabilities as at 31 December 2022 is adequate.

However, due to inherent uncertainties in the reserving process, it cannot be assured that such balances will ultimately prove to

be adequate.

www.beazley.com Beazley | Annual report 2022 215

24 Insurance liabilities and reinsurance assets continued

Gross ultimate claims	2012 ae	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
	%	%	%	%	%	%	%	%	%	%	%
Cyber Risks
12 months		67.8	62.9	60.7	57.5	55.1	56.7	57.6	79.9	65.6	56.0
24 months		68.3	61.9	60.8	58.0	55.2	57.7	74.6	91.1	58.1
36 months		69.5	55.6	52.8	52.8	45.8	53.0	79.1	110.9
48 months		74.3	60.3	44.4	48.3	42.0	54.8	81.4
60 months		74.1	68.4	42.4	47.8	42.5	50.5
72 months		71.7	64.9	41.2	45.7	41.1
84 months		69.0	65.3	41.0	43.2
96 months		71.5	64.9	38.7
108 months		71.8	69.3
120 months		66.5
Digital
12 months		71.5	64.9	64.1	60.1	55.2	62.0	61.6	65.9	64.6	55.3
24 months		72.2	59.4	64.2	59.8	56.3	60.8	70.4	70.6	65.3
36 months		48.8	36.7	26.9	32.5	41.5	50.5	50.6	63.4
48 months		24.7	28.7	24.2	21.5	31.2	40.6	42.9
60 months		23.2	25.4	22.3	20.9	27.1	43.6
72 months		20.3	25.4	21.8	19.8	27.9
84 months		18.0	23.1	21.6	19.7
96 months		17.5	23.2	21.5
108 months		17.5	23.2
120 months		17.5
MAP Risks
12 months		57.7	58.5	58.5	60.7	63.9	61.0	60.0	81.0	58.9	61.9
24 months		51.5	49.1	56.8	63.5	56.9	62.7	93.0	80.2	71.2
36 months		44.8	47.6	52.7	58.3	55.1	76.1	87.8	80.9
48 months		43.3	48.4	52.0	56.8	54.3	76.7	89.7
60 months		43.6	54.0	49.1	55.2	51.5	77.6
72 months		43.0	52.5	48.3	53.7	51.9
84 months		42.1	52.3	48.0	53.5
96 months		41.4	52.7	47.9
108 months		41.2	52.2
120 months		40.6

Notes to the financial statements continued

216 Beazley | Annual report 2022 www.beazley.com

24 Insurance liabilities and reinsurance assets continued

	2012 ae	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
Gross ultimate claims	%	%	%	%	%	%	%	%	%	%	%	Total
Property Risks
12 months		55.9	56.0	58.5	61.7	92.5	75.4	70.4	72.0	72.8	69.8
24 months		47.1	42.7	43.4	58.5	100.1	84.3	64.7	75.7	74.5
36 months		44.0	37.5	38.6	60.1	106.0	84.6	58.4	73.9
48 months		43.5	35.9	37.8	60.8	106.7	82.0	54.9
60 months		42.4	35.2	37.0	60.6	106.2	81.7
72 months		43.4	35.4	38.4	60.2	105.4
84 months		42.7	35.1	38.0	60.1
96 months		43.0	35.3	37.8
108 months		43.0	34.9
120 months		42.9
Specialty Risks
12 months		74.7	70.0	69.6	68.7	67.3	69.4	68.2	68.0	66.8	65.5
24 months		74.4	70.6	70.1	68.5	69.1	70.3	69.1	68.6	65.2
36 months		74.8	69.7	71.1	69.6	71.6	70.3	64.3	62.3
48 months		70.1	66.5	70.9	71.6	71.1	69.1	64.4
60 months		64.9	64.5	74.7	70.1	73.9	75.6
72 months		62.0	63.0	83.0	70.7	79.4
84 months		62.5	62.2	87.5	72.7
96 months		61.0	63.3	89.6
108 months		59.6	63.4
120 months		59.5
Total
12 months		63.6	62.1	62.6	63.2	70.4	66.8	65.1	73.2	66.1	62.9
24 months		59.2	55.9	58.5	62.9	71.5	69.7	74.1	75.7	66.7
36 months		56.4	52.7	54.5	60.7	71.4	71.2	69.8	75.4
48 months		54.4	51.7	52.7	60.2	70.2	70.1	69.6
60 months		52.4	53.2	52.8	59.2	70.4	72.1
72 months		51.4	52.0	55.6	58.5	71.9
84 months		50.8	51.6	56.8	58.7
96 months		50.5	52.1	57.2
108 months		50.0	52.3
120 months		49.3
Estimated total ultimate losses ($m)	8,586.5	886.4	985.6	1,135.5	1,242.1	1,731.5	1,892.2	2,117.4	2,711.2	3,033.0	3,286.9	27,608.3
Less paid claims ($m)	(8,415.5)	(831.2)	(932.8)	(991.1)	(1,055.7)	(1,379.1)	(1,377.6)	(1,252.3)	(1,168.4)	(566.0)	(72.6)	(18,042.3)
Less unearned portion of ultimate losses ($m)	–	–	–	–	–	–	–	–	(43.9)	(288.8)	(1,850.8)	(2,183.5)
Gross claims liabilities ($m)	171.0	55.2	52.8	144.4	186.4	352.4	514.6	865.1	1,498.9	2,178.2	1,363.5	7,382.5

www.beazley.com Beazley | Annual report 2022 217

24 Insurance liabilities and reinsurance assets continued

	2012 ae	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
Net ultimate claims	%	%	%	%	%	%	%	%	%	%	%
Cyber Risks
12 months		63.6	60.4	56.9	54.8	53.7	53.5	55.6	80.2	64.6	53.9
24 months		64.1	59.4	57.1	55.5	53.1	55.6	71.2	79.0	56.1
36 months		61.7	53.6	50.3	51.0	44.0	54.0	72.7	86.9
48 months		65.8	56.0	41.7	46.6	41.1	53.3	73.5
60 months		64.5	62.4	38.7	42.9	40.1	45.1
72 months		62.6	58.5	34.2	41.2	36.6
84 months		59.7	59.3	33.6	39.1
96 months		61.6	58.3	31.3
108 months		61.8	63.2
120 months		56.2
Digital
12 months		65.7	62.9	60.5	57.8	54.0	59.7	60.8	65.2	63.0	52.2
24 months		66.8	56.9	60.9	57.7	54.9	59.9	68.8	69.0	61.9
36 months		47.2	36.8	25.0	31.7	40.8	49.6	49.1	60.9
48 months		22.8	28.9	22.4	21.6	30.9	38.7	41.0
60 months		21.4	25.0	20.5	20.7	27.0	40.4
72 months		18.9	24.9	20.0	19.6	27.7
84 months		16.6	22.6	19.9	19.4
96 months		16.1	22.7	19.1
108 months		16.0	22.8
120 months		16.0
MAP Risks
12 months		57.3	56.9	57.5	58.8	57.5	58.2	55.3	67.5	51.5	51.2
24 months		52.8	49.5	54.7	59.1	56.2	60.8	78.2	63.8	53.0
36 months		47.7	46.5	51.6	56.5	54.6	72.6	73.1	59.4
48 months		45.7	47.6	51.0	55.5	53.5	73.8	72.3
60 months		45.4	48.5	49.0	54.0	51.4	72.6
72 months		45.0	47.7	48.4	52.7	50.7
84 months		43.6	47.5	47.5	51.9
96 months		43.5	47.2	47.8
108 months		43.3	46.7
120 months		42.8
Property Risks
12 months		56.0	56.0	57.0	58.5	86.5	71.1	65.6	73.1	64.3	65.6
24 months		54.4	47.5	45.7	60.4	94.8	76.3	67.1	79.9	69.7
36 months		50.6	41.4	40.4	61.7	99.5	76.4	61.5	77.1
48 months		48.9	39.5	38.9	62.0	98.9	73.7	57.2
60 months		47.5	38.8	38.7	61.6	99.7	73.4
72 months		48.5	39.4	40.0	61.4	98.7
84 months		48.3	39.0	38.7	61.3
96 months		48.5	38.8	38.4
108 months		48.2	38.4
120 months		48.1

Notes to the financial statements continued

218 Beazley | Annual report 2022 www.beazley.com

24 Insurance liabilities and reinsurance assets continued

	2012 ae	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
Net ultimate claims	%	%	%	%	%	%	%	%	%	%	%
Specialty Risks
12 months		70.8	67.4	65.7	66.4	65.3	67.2	66.3	65.0	64.9	61.9
24 months		70.3	68.2	66.2	66.3	66.7	68.9	65.3	63.4	62.9
36 months		71.1	68.4	67.0	66.0	69.8	69.5	60.9	55.6
48 months		65.3	63.9	63.1	65.7	68.2	67.8	59.7
60 months		60.5	62.5	65.6	62.7	69.2	69.4
72 months		58.5	62.1	69.2	62.6	71.8
84 months		59.0	61.1	73.7	63.7
96 months		57.6	62.6	75.5
108 months		56.3	62.6
120 months		56.2
Total
12 months		62.0	60.7	60.1	60.7	66.2	63.7	62.1	69.5	62.1	58.1
24 months		60.2	56.4	56.9	61.2	68.1	66.4	69.3	69.1	60.9
36 months		57.4	53.1	53.0	59.0	68.1	68.2	64.7	65.1
48 months		54.4	51.4	50.0	57.7	66.2	66.6	63.1
60 months		52.2	51.6	49.9	55.7	65.7	65.6
72 months		51.5	51.0	50.7	55.0	65.8
84 months		50.9	50.5	51.7	54.8
96 months		50.6	50.8	51.9
108 months		50.1	51.1
120 months		49.4
Estimated total ultimate losses ($m)	6,395.5	756.4	825.7	868.3	975.6	1,335.0	1,453.5	1,638.9	1,871.2	2,163.3	2,150.9	20,434.3
Less paid claims ($m)	(6,230.6)	(710.5)	(783.3)	(803.7)	(870.1)	(1,106.6)	(1,102.9)	(1,003.5)	(891.4)	(459.2)	(47.7)	(14,009.5)
Less unearned portion of ultimate losses ($m)	–	–	–	–	–	–	–	–	(30.3)	(217.1)	(1,282.3)	(1,529.7)
Net claims liabilities ($m)	164.9	45.9	42.4	64.6	105.5	228.4	350.6	635.4	949.5	1,487.0	820.9	4,895.1

Analysis of movements in loss development tables

We have updated our loss development tables to show the ultimate loss ratios as at 31 December 2022 for each underwriting

year. The impact of amounts reported in respect of the unexpired risk reserve are embedded within the loss ratios presented.

Cyber Risks

The 2021 underwriting year has released following favourable experience. The 2019 and 2020 underwriting years have

strengthened in response to adverse claims development on existing claims. However, as these years are recovering under

aggregate excess of loss reinsurance programmes, the impact is reduced net of reinsurance.

Digital

The deterioration on the 2018 underwriting year arises from adverse claims experience on the tech & media private enterprise

class. The recent underwriting years have released following the expiry of risk.

MAP Risks

The 2019 to 2021 underwriting years have been impacted by the Russian invasion of Ukraine. The impact is lower net of

reinsurance as a result of the excess of loss reinsurance programmes in place.

www.beazley.com Beazley | Annual report 2022 219

24 Insurance liabilities and reinsurance assets continued

Property Risks

Favourable developments on attritional claims and established catastrophe events have led to releases on the 2019 and 2020

underwriting years. The 2021 underwriting year has been impacted by weather related events in the US during 2022. The

impact is less gross of reinsurance due to favourable developments on established catastrophe events.

Specialty Risks

The 2017 and 2018 underwriting years have seen adverse claims development gross of reinsurance predominantly driven by

the healthcare book. Both these years are recovering under aggregate excess of loss reinsurance programmes, so the impact is

lower net of reinsurance. Recent underwriting years continue to improve as the risk expires.

Claim releases

The below table analyses our net claims between current year claims and adjustments to prior year net claims reserves. These

have been broken down by segment and underwriting year. Beazley’s reserving policy is to maintain catastrophe reserve

margins either until the end of the exposure period or until catastrophe events occur. Therefore margins have been released

from prior year reserves where risks have expired during 2022.

The below table has been prepared on an underwriting year of account basis, whereas the net loss development tables on

pages 219 to 220 have been prepared on an accident year basis in relation to our US admitted business. However, in

aggregate the net release or strengthening is consistent.

Reserve releases during the year totalled $132.6m (2021: $209.8m). The net of reinsurance estimates of ultimate claims

costs have improved on the 2021, 2020 and 2019 and earlier underwriting years, with releases of $13.3m, $96.6m and

$22.7m respectively. Our MAP Risks division saw strong releases across all years of account, while the other four divisions

each saw a strengthening on one of the years of account. Our Cyber Risks division saw a large strengthening on the 2020 year

of account, while Specialty Risks saw a strengthening on 2019 year and earlier.

The movements shown on 2019 and earlier are absolute claim movements and are not impacted by any current year

movements in premium on those underwriting years.

	Cyber Risks	Digital	MAP Risks	Property Risks	Specialty Risks	Total
2022	$m	$m	$m	$m	$m	$m
Current year	440.1	89.9	378.3	417.8	762.9	2,089.0
Prior year
– 2019 underwriting year and earlier	(31.2)	(6.5)	(13.5)	(19.1)	47.6	(22.7)
– 2020 underwriting year	33.2	(9.8)	(32.0)	(16.8)	(71.2)	(96.6)
– 2021 underwriting year	(10.0)	0.8	(20.7)	21.2	(4.6)	(13.3)
	(8.0)	(15.5)	(66.2)	(14.7)	(28.2)	(132.6)
Net insurance claims	432.1	74.4	312.1	403.1	734.7	1,956.4

	Cyber Risks	Digital	MAP Risks	Property Risks	Specialty Risks	Total
2021	$m	$m	$m	$m	$m	$m
Current year	353.1	95.8	315.4	394.6	877.1	2,036.0
Prior year
– 2018 underwriting year and earlier	(38.3)	(21.2)	(15.6)	(19.5)	11.0	(83.6)
– 2019 underwriting year	20.2	(19.5)	(36.6)	(31.1)	(30.6)	(97.6)
– 2020 underwriting year	(8.2)	1.0	(10.8)	(8.5)	(2.1)	(28.6)
	(26.3)	(39.7)	(63.0)	(59.1)	(21.7)	(209.8)
Net insurance claims	326.8	56.1	252.4	335.5	855.4	1,826.2

Notes to the financial statements continued

220 Beazley | Annual report 2022 www.beazley.com

25 Borrowings

The carrying amount and fair values of the non-current borrowings are as follows:

	Tier 2 subordinated debt (2029)	Tier 2 subordinated debt (2026)	Total
Carrying Value	$m	$m	$m
Balance at 1 January 2021	298.1	249.0	547.1
Amortisation of capitalised borrowing costs	0.3	0.2	0.5
Balance at 31 December 2021	298.4	249.2	547.6
Amortisation of capitalised borrowing costs	0.2	0.2	0.4
Balance at 31 December 2022	298.6	249.4	548.0

The total fair value of borrowings is $506.2m (2021: $613.6m). Interest accrued of $7.4m (2021: $7.4m) is included within

Other Payables.

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.

Under the facility $450m may be drawn as letters of credit to support underwriting at Lloyd’s, and up to $225m 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 23 July 2023,

whilst letters of credit issued under the facility can be used to provide support for the 2021, 2022 and 2023 underwriting

years. As at 31 December 2022 $225m has been drawn down under the facility and placed as a letter of credit as Funds at

Lloyd’s (FAL). No liability is recognised in these financial statements for the letter of credit (2021: nil) All of the above

borrowings are subject to covenants, with which the Group has complied with throughout the year. The Group considers the risk

of covenants being breached to be remote.

26 Other payables

	2022	2021
Group	$m	$m
Reinsurance premiums payable	894.3	660.2
Accrued expenses including staff bonuses	276.9	229.8
Other payables	48.3	47.2
Due to syndicate 623	21.8	–
Due to syndicate 6107	77.8	81.2
Due to syndicate 5623	208.4	122.9
	1,527.5	1,141.3

	2022	2021
Company	$m	$m
Other payables	4.2	0.7
	4.2	0.7

All other payables are payable within one year of the reporting date. The carrying value approximates fair value.

www.beazley.com Beazley | Annual report 2022 221

27 Retirement benefit obligations

	2022	2021
	$m	$m
Present value of funded obligations	(31.1)	(56.9)
Fair value of plan assets	35.7	75.0
Retirement benefit asset in the statement of financial position	4.6	18.1
Amounts recognised in the statement of profit or loss
Interest cost	(1.1)	(0.9)
Expected return on plan assets	1.4	0.9
Retirement benefit return recognised in the statement of profit or loss	0.3	–

Beazley Furlonge Limited operates a defined benefit pension scheme (‘the Beazley Furlonge Limited Pension Scheme’), which

closed to new entrants in 2002. The scheme provides the following benefits:

•an annual pension payable to the member from his or her normal pension age (60th birthday) of generally 1/60th of final

pensionable salary for each year of pensionable service up to 31 March 2006;

•a spouse’s pension of 2/3rds of the member’s pension payable on the member’s death after retirement;

•a lump sum of four times current pensionable salary for death in service at the date of death; and

•a pension of 2/3rds of the member’s prospective pension at the date of death, payable to the spouse until their death. This

pension is related to salary at the date of death.

The scheme is administered by a trust that is legally separated from the Group. The trustees consist of both employee and

employer representatives and an independent chair, all of whom are governed by the scheme rules.

During 2022, 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. The buy-in covers all members of the scheme and preserves their

existing pension entitlements. 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.

The pension scheme trustees and the company will consider in due course whether to move to a full buy-out of the plan,

whereby the buy-in policies held by the plan will be converted to individual annuity policies which will be issued to scheme

members. This is a separate decision for the trustees and the company and whilst the buy-in policy allows for such a buy-out to

happen, this is not a requirement. At the reporting date, the trustees and the company retain all obligations to ensure benefits

due to scheme members are paid.

The purchase of these annuities has not been treated as a settlement, and the difference between the purchase price of the

annuities and their carrying value has been recognised in Other comprehensive income on the revaluation of plan assets, which

also includes any valuation movements during the year before the buy-in transaction completed.

Historically the scheme exposed the Group to additional actuarial, interest rate and market risk. However as a result of the buy-

in transaction in December 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.

Contributions to the scheme are determined by a qualified actuary using the projected unit credit method as set out in the

scheme rules and the most recent valuation was at 31 December 2022. Following the buy-in transaction the Group expects to

make no further contributions to the scheme.

Notes to the financial statements continued

222 Beazley | Annual report 2022 www.beazley.com

27 Retirement benefit obligations continued

Trustees obligations

Under section 222 of the Pension Act 2004, every scheme is subject to the Statutory Funding Objective (SFO), which is to have

sufficient and appropriate assets to cover its technical provisions, which represent the present value of benefits to which

members are entitled based on pensionable service to the valuation date. This is assessed at least every three years using

assumptions agreed between the Trustees and the employer as set out in the Statement of Funding Principles produced in

accordance with the Occupational Pensions (Scheme Funding) Regulations 2005 (OP(SF)R 2005) Regulation 6.

The Trustees written Statement of Funding Principles is dated 29 January 2021 and it sets out their policy for securing that the

SFO is met (that the scheme will have sufficient assets to cover its technical provisions). In accordance with the OP(SF)R 2005

Regulation 5(2) trustees have chosen the Defined Accrued Benefit Method, a variant of the projected unit credit method where

accrual has ceased.

The most recently completed Actuarial Valuation of the Scheme was carried out at 1 January 2020 including a valuation carried

out in accordance with the Pensions Protection Fund (Valuation) Regulations 2005 and with appropriate section 179 guidance

and assumptions issued by The Board of the Pension Protection Fund.

During 2021 a decision was made to move the plan assets out of equities and to reinvest in quoted corporate bonds and index

linked securities. The rationale for this was to protect the scheme’s funding position and provide protection against movements

in interest rates and expected inflation. Following the buy-in transaction, the main class of plan assets is the purchased annuity

contracts. During the year, the scheme had no exposure to liability driven investment products (2021: nil).

The Trust Deed provides Beazley with an unconditional right to a refund of surplus assets assuming the full settlement of plan

liabilities in the event of a plan wind-up. Furthermore, in the ordinary course of business the Trustee has no rights to unilaterally

wind up, or otherwise augment the benefits due to members of, the scheme. Based on these rights, any net surplus in the UK

scheme is recognised in full.

	2022	2021
	$m	$m
Movement in present value of funded obligations recognised in the statement of financial position
Balance at 1 January	56.9	64.8
Interest cost	1.0	0.8
Actuarial (gain) due to changes in financial assumptions	(22.1)	(4.0)
Benefits paid	(0.5)	(2.8)
Foreign exchange (gain)	(4.2)	(1.9)
Balance at 31 December	31.1	56.9

	2022	2021
	$m	$m
Movement in fair value of plan assets recognised in the statement of financial position
Balance at 1 January	75.0	69.6
Expected return on plan assets	1.3	0.9
(Loss)/gain on asset return	(34.6)	8.1
Employer contributions	–	1.3
Benefits paid	(0.5)	(2.8)
Foreign exchange (loss)	(5.5)	(2.1)
Balance at 31 December	35.7	75.0

Plan assets are comprised as follows:
Purchased annuities	31.1	–
Corporate bonds	–	3.4
Index linked securities	–	70.0
Cash	4.6	1.6
Total	35.7	75.0

www.beazley.com Beazley | Annual report 2022 223

27 Retirement benefit obligations continued

The actual gain on plan assets was $33.3m (2021: gain of $9.0m).

	2022	2021
	$m	$m
Principal actuarial assumptions
Discount rate	4.8%	1.9%
Inflation rate	3.5%	3.8%
Expected return on plan assets	4.8%	1.9%
Future salary increases	3.5%	3.8%
Future pension increases	3.0%	1.9%
Life expectancy for members aged 60 at 31 December	90years	90years
Life expectancy for members aged 40 at 31 December	91years	91years

At 31 December 2022, the weighted-average duration of the defined benefit obligation was 23.7 years (2021: 22.6 years).

Sensitivity analysis

Changes in the relevant actuarial assumptions would result in a change in the value of the funded obligation as shown below.

For 2022 any change in the obligation would be matched by a change in the carrying value of the annuity contracts purchased in

the period.

	Increase	Decrease
31 December 2022	$m	$m
Discount rate (0.5% decrease)	2.7	–
Inflation rate (0.3%)	–	(1.2)
Future salary changes (0.5% decrease)	–	(0.2)
Life expectancy (1 year increase)	0.9	–

	Increase	Decrease
December 31 2021	$m	$m
Discount rate (0.5% decrease)	7.4	–
Inflation rate (0.3%)	–	(3.7)
Future salary changes (0.5% decrease)	–	(0.5)
Life expectancy (1 year increase)	2.8	–

The sensitivity analyses above have been determined based on a method that extrapolates the impact on the defined benefit

obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity

analyses are based on a change in a significant assumption, keeping all other assumptions constant. The sensitivity analyses

may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions

would occur in isolation from one another.

Notes to the financial statements continued

224 Beazley | Annual report 2022 www.beazley.com

28 Deferred Tax

	2022	2021
	$m	$m
Deferred tax asset	35.2	16.3
	35.2	16.3
The movement in the net deferred income tax is as follows:
Balance at 1 January	16.3	26.2
Income tax charge / (credit)	13.1	(4.0)
Amounts recorded through equity/OCI	6.2	(5.7)
Foreign exchange translation differences	(0.4)	(0.2)
Balance at 31 December	35.2	16.3

Deferred tax assets and deferred tax liabilities relating to the same tax authority are presented net in the Group’s balance

sheet.

	Balance 1 Jan 22	Recognised in income	Recognised in equity/OCI	FX translation differences	Balance 31 Dec 22
	$m	$m	$m	$m	$m
Plant and equipment	(1.2)	0.4	–	–	(0.8)
Intangible assets	(0.5)	(1.3)	–	–	(1.8)
Underwriting profits	14.2	(6.8)	–	–	7.4
Deferred acquisition costs	(7.8)	9.5	–	–	1.7
Tax losses carried forward	9.6	(5.6)	–	–	4.0
Share based payments	2.6	3.1	3.1	(0.4)	8.4
Unrealised gains on investments	(1.7)	11.6	–	–	9.9
Other	1.2	2.2	3.1	–	6.5
Net deferred income tax account	16.3	13.1	6.2	(0.4)	35.2

	Balance 1 Jan 21	Recognised in income	Recognised in equity/OCI	FX translation differences	Balance 31 Dec 21
	$m	$m	$m	$m	$m
Plant and equipment	0.1	(1.3)	–	–	(1.2)
Intangible assets	(1.5)	1.0	–	–	(0.5)
Underwriting profits	25.3	(11.1)	–	–	14.2
Deferred acquisition costs	(7.5)	(0.3)	–	–	(7.8)
Tax losses carried forward	6.3	3.3	–	–	9.6
Share based payments	7.0	(0.4)	(3.9)	(0.1)	2.6
Other	(3.5)	4.7	(1.8)	–	(0.6)
Net deferred income tax account	26.2	(4.1)	(5.7)	(0.1)	16.3

Deferred tax assets of $4.0m (2021: $9.6m) relating to tax losses, which depend on the availability of future taxable profits,

have been recognised. The Group has concluded that, it is probable that the deferred tax assets will be recovered using the

estimated future taxable profits based on the approved business plans. The losses can be carried forward indefinitely.

The Group has unrecognised realised and unrealised capital losses of $2.2m (2021: nil) that will expire in five years.

www.beazley.com Beazley | Annual report 2022 225

29 Leases

Leases as lessee (IFRS 16)

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 is presented below.

Right of use assets

Right of use assets related to leased properties that do not meet the definition of investment property are presented as

property, plant and equipment.

	Offices	IT equipment	Motor vehicle	Total
	$m	$m	$m	$m
Balance at 1 January 2022	63.4	12.0	0.1	75.5
Depreciation charge for the year	(8.0)	(4.2)	(0.1)	(12.3)
Additions of right of use assets	0.9	–	–	0.9
Foreign exchange translation differences	(3.0)	(0.6)	–	(3.6)
Balance at 31 December 2022	53.3	7.2	–	60.5

Lease liabilities

	Offices	IT equipment	Motor vehicle	Total
	$m	$m	$m	$m
Balance at 1 January 2022	72.1	12.1	0.1	84.3
Lease payments	(6.9)	(4.5)	(0.2)	(11.6)
Interest on lease liabilities and dilapidation provision	2.8	0.4	–	3.2
Additions to lease portfolio	0.9	–	–	0.9
Foreign exchange translation differences	(3.5)	(0.7)	0.1	(4.1)
Balance at 31 December 2022	65.4	7.3	–	72.7

Right of use assets

	Offices	IT equipment	Motor vehicle	Total
	$m	$m	$m	$m
Balance at 1 January 2021	69.5	16.8	0.1	86.4
Depreciation charge for the year	(10.6)	(4.3)	(0.1)	(15.0)
Additions of right of use assets	3.0	–	0.1	3.1
Disposals of right of use assets	3.1	–	–	3.1
Foreign exchange translation differences	(1.6)	(0.5)	–	(2.1)
Balance at 31 December 2021	63.4	12.0	0.1	75.5

Notes to the financial statements continued

226 Beazley | Annual report 2022 www.beazley.com

29 Leases continued

Lease liabilities

	Offices	IT equipment	Motor vehicle	Total
	$m	$m	$m	$m
Balance at 1 January 2021	73.3	16.7	0.1	90.1
Lease payments	(8.0)	(4.7)	(0.1)	(12.8)
Interest on lease liabilities	7.5	0.5	–	8.0
Additions to lease portfolio	1.0	–	0.1	1.1
Foreign exchange translation differences	(1.7)	(0.4)	–	(2.1)
Balance at 31 December 2021	72.1	12.1	0.1	84.3

Amounts recognised in profit or loss

	2022	2021
	$m	$m
Leases under IFRS 16
Interest on lease liabilities	(3.1)	(3.7)
Depreciation	(12.3)	(15.0)
Income from sub-leasing right of use assets	–	0.1
Expenses relating to low value leases	(4.2)	(5.1)
Expenses relating to short-term leases	(0.1)	(0.1)
Total recognised in profit or loss	(19.7)	(23.8)

Extension options

Some property leases contain extension options exercisable by the Group before the end of the non-cancellable contract period

or the option to continue with the lease on a monthly rolling basis. The Group reassess whether it is reasonably certain to

exercise the options if there is a significant event or changes in circumstances within its control.

www.beazley.com Beazley | Annual report 2022 227

30 Related party transactions

The Group and company have related party relationships with syndicates 623, 4321, 5623, 6107, its subsidiaries, associates

and its Directors.

30.1 Syndicates 623, 4321, 5623 and 6107

The Group received management fees and profit commissions for providing a range of management services to syndicates 623

and 6107 which are all managed by the Group. In addition, the Group ceded portions or all of a group of insurance policies to

syndicates 6107 and 5623. The participants on syndicates 623, 6107 and 5623 are solely third party capital while the Group

provides 10% of the capital for syndicate 4321.

Details of transactions entered into and the balances with these syndicates are as follows:

	2022	2021
	$m	$m
Written premium ceded to syndicates	318.7	257.3
Other income received from syndicates	20.7	28.6
Services provided	58.9	45.8
Balances due:
Due (to) / from syndicate 623	(7.2)	1.8
Due to syndicate 5623	(208.4)	(122.9)
Due to syndicate 6107	(77.8)	(81.2)

30.2 Key management compensation

	2022	2021
	$m	$m
Salaries and other short term benefits	18.9	25.6
Pension costs	0.5	0.6
Share based remuneration	8.0	2.7
	27.4	28.9

Key management include Executive and Non-Executive Directors and other senior management.

The total number of Beazley plc ordinary shares held by key management was 2.8m. 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 112

to 139.

30.3 Other related party transactions

At 31 December 2022, the Group had purchased services from Falcon Money Management Holdings Limited of $2.9m (2021:

$2.7m) throughout the year. All transactions with the associate and subsidiaries are priced on an arm’s length basis.

30.4 Company 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:

	2022	2021
Company	$m	$m
Balances due:
Due from Beazley Furlonge Holdings Limited	192.7	194.5
Due from Beazley Management Limited	39.0	35.8
Due from Beazley Underwriting Limited	667.2	84.7
Due from other Group companies	20.2	–
	919.1	315.0

Notes to the financial statements continued

228 Beazley | Annual report 2022 www.beazley.com

30 Related party transactions continued

The key management of Beazley plc as a standalone entity is deemed to be the same as that of the wider Beazley Group. The

majority of costs are incurred by other Group companies and are not recharged to the Company. Amounts paid to key

management by Beazley plc were $1.1m (2021: $1.1m).

31 Parent company and 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 2022:

	Country/region of incorporation	Ownership interest	Beazley plc direct investment in subsidiary ($m)
Beazley Ireland Holdings plc	Jersey	100%	724.6
Beazley Underwriting Pty Ltd	Australia	100%
Beazley Canada Limited	Canada	100%
Beazley Corporate Member (No.2) Limited	England	100%
Beazley Corporate Member (No.3) Limited	England	100%
Beazley Corporate Member (No.6) Limited	England	100%
Beazley Furlonge Holdings Limited	England	100%
Beazley Furlonge Limited	England	100%
Beazley Group Limited	England	100%
Beazley Investments Limited	England	100%
Beazley Leviathan Limited ~	England	100%
Beazley Management Limited	England	100%
Beazley Staff Underwriting Limited	England	100%
Beazley Solutions Limited	England	100%
Beazley Underwriting Limited	England	100%
Beazley Underwriting Services Limited	England	100%
Lodestone Security Limited	England	100%
Beazley Insurance dac	Ireland	100%
Beazley Solutions International Limited	Ireland	100%
Beazley Labuan Limited	Malaysia	100%
Beazley America Insurance Company, Inc.***	USA	100%
Beazley Group (USA) General Partnership**	USA	100%
Beazley Holdings, Inc.*	USA	100%
Beazley Holdings, Inc. Digital LLC*	USA	100%
Beazley Insurance Company, Inc.***	USA	100%
Beazley Newco Captive Company, Inc.***	USA	100%
Beazley USA Services, Inc.*	USA	100%
Lodestone Securities LLC****	USA	100%
Beazley Pte. Limited	Singapore	100%
			724.6

Please see page 232 for registered addresses.

www.beazley.com Beazley | Annual report 2022 229

31 Parent company and subsidiary undertakings continued

The following is a list of Group registered office locations:

Address	City	Postcode	Country/region
United Kingdom and Continental Europe
22 Bishopsgate	London	EC2N 4AJ	England
C/O RSM UK Restructuring Advisory LLP, 25 Farringdon Street ~	London	EC4A 4AB	England
2 Northwood Avenue	Dublin	D09 X5N9	Ireland
22 Grenville Street	Saint Helier	JE4 8PX	Jersey
North America
1209 Orange Street*	Wilmington, Delaware	19801	USA
2711 Centerville Road Suite 400**	Wilmington, Delaware	19808	USA
30 Batterson Park Road***	Farmington, Connecticut	06032	USA
160 Greentree Drive, Suite 101****	Dover, Delaware	19904	USA
55 University Avenue, Suite 550	Toronto, Ontario	M5J 2HJ	Canada
Asia
138 Market Street, 03-04 Capita Green	Singapore	048946	Singapore
Kensington Gardens, No. I1317, Lot 7616, Jalan Jumidar Buyong	Labuan	87000	Malaysia
Australia
Level 15, 1 O’Connell Street	Sydney	NSW 2000	Australia

32 Contingencies

Funds at Lloyd’s

The following amounts are held in trust by Lloyd’s to secure underwriting commitments:

	As at	As at
	31 December	31 December
	2022	2021
	$m	$m
Financial assets at fair value and cash	1,307.6	1,603.5
Letters of credit (‘LOC’)	225.0	225.0
Total Funds at Lloyd’s	1,532.6	1,828.5

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.

Since 2020, $225m under the Group’s syndicated short term banking facility has been utilised as letters of credit placed as

Funds at Lloyd’s (FAL) to provide capital support for the Group’s underwriting at Lloyd’s. Letters of credit issued under the

facility are uncollateralised. No liability was recognised for these letters of credit in the current or prior period, amounts would

only become due if the letters of credit were called upon to fund liabilities.

Other than the letters of credit these balances are included within financial assets at fair value and cash and cash equivalents

on the statement of financial position.

Other letters of credit

As of December 31, 2022, the Group has placed letters of credit totalling $35.0m (2021: $25.0m) 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 $5.3m (2021: $2.9m) in place to secure certain reinsurance transactions settled

through Lloyd’s.  No amounts relating to these letters of credit are recognised in the Group or Company Statement of Financial

Position.

Notes to the financial statements continued

230 Beazley | Annual report 2022 www.beazley.com

33 Foreign exchange rates

The Group used the following exchange rates to translate foreign currency assets, liabilities, income and expenses into US

dollars, being the Group’s presentational currency:

	2022		2021
	Average	Year end spot	Average	Year end spot
Pound sterling	0.80	0.82	0.73	0.76
Canadian dollar	1.29	1.37	1.25	1.27
Euro	0.94	0.95	0.84	0.88

34 Subsequent events

There are no events that are material to the operations of the Group that have occurred since the reporting date.

www.beazley.com Beazley | Annual report 2022 231

Alternative performance

measures

The Group 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 which the Group uses are set out below.

Where relevant, percentages have been annualised to allow

for comparison with the full year result.

Claims ratio

Ratio, in percentage terms, of net insurance claims to net

earned premiums. The calculation is performed excluding the

impact of foreign exchange.

	2022	2021
Net insurance claims	1,956.4	1,826.2
Divided by net earned premiums	3,614.2	3,147.3
Claims ratio	54%	58%

Expense ratio

Ratio, in percentage terms, of the sum of expenses for

acquisition of insurance contracts and administrative

expenses to net earned premiums. The calculation is

performed excluding the impact of foreign exchange.

	2022	2021
Expenses for the acquisition of insurance contracts	952.1	821.8
Administrative expenses	303.7	283.0
Subtotal	1,255.8	1,104.8
Divided by net premiums earned	3,614.2	3,147.3
Expense ratio	35%	35%

Combined ratio

Ratio, in percentage terms, of the sum of net insurance

claims, expenses for acquisition of insurance contracts and

administrative expenses to net earned premiums. This is also

the sum of the expense ratio and the claims ratio. The

calculation is performed excluding the impact of foreign

exchange.

	2022	2021
Claims ratio	54%	58%
Expense ratio	35%	35%
Combined ratio	89%	93%

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 (total equity) 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.

	2022	2021
Net assets	2,573.5	2,130.8
Less intangible assets & goodwill	128.8	123.5
Net tangible assets	2,444.7	2,007.3
Divided by the shares in issue at the period end:	665.4	606.0
Net assets per share (cents)	386.7	351.6
Net tangible assets per share (cents)	367.4	331.2
Converted at spot rate:
Net assets per share (pence)	315.6	265.8
Net tangible assets per share (pence)	299.8	250.4

Return on equity

Ratio, in percentage terms, calculated by dividing the

consolidated profit after tax by the average equity for the

period. Average equity for the period is calculated as the

average of the opening and closing equity position adjusted

for share issuance, dividend payments and share based

payment transactions.

	2022	2021
Profit after tax	160.8	308.7
Divided by average total equity	2,224.3	1,970.2
Annualised return on equity	7%	16%

Investment return

Ratio, in percentage terms, calculated by dividing the net

investment income by the average financial assets at fair

value for the period, including cash.

	2022	2021
Net investment (loss)/income	(179.7)	116.4
Financial assets at fair value	7,283.5	6,362.0
Cash and cash equivalents	591.8	309.5
Invested assets at the beginning of the period:	7,875.3	6,671.5
Financial assets at fair value	8,345.6	7,283.5
Cash and cash equivalents	652.5	591.8
Invested assets at the end of the period:	8,998.1	7,875.3
Divided by average invested assets	8,436.7	7,273.4
Annualised investment return	(2.1)%	1.6%

232 Beazley | Annual report 2022 www.beazley.com

Beazley plc

22 Bishopsgate

London

EC2N 4BQ

T +44 (0)20 7667 0623

info@beazley.com

www.beazley.com

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