Beazley Trading Statement - 22.4.08

Beazley released a trading update yesterday, which is available here

Trading Update

"The group continues to deliver competitive results and performance is within
expected business plans.

Premiums written
During the three month period to 31 March 2008, premiums were consistent with
last year at £201.2m, and in line with expectations. Gross premiums written by
our underwriters at Lloyd's decreased from £192.7m to £171.0m, while our locally
underwritten US business increased from $28.6m to $71.4m. (An element of the US
premium is underwritten for the account of third party capital providers at
Lloyd's and therefore is excluded from the group's figures in the table above.)

Claims management
Claims activity has been in line with expectation. Against the backdrop of
increased market commentary about sub-prime mortgages and related issues, we set
up an internal working party during 2007 tasked with monitoring the risks to and
opportunities for Beazley.  As was demonstrated in the late 1990s, Beazley has
limited appetite for professional liability risks within the financial institution sector. 
     This has remained the case. Whilst the number of sub-prime related lawsuits (as reported recently by Advisen) has now exceeded 250, we provide D&O coverage for four of these entities and other types of coverage for a further seven. We currently expect that our exposure will remain within our reserves and we do not anticipate a change to our reserving philosophy.

US operations
Our US based operations generated $71.4m of gross premiums written during the
first quarter, of which $32.0m was written for the account of our Lloyd's
syndicates and $39.4m was admitted business written for the account of our
insurance company. We continue to target $250m of premium from our US operations for the whole of 2008, compared to $175.2m written for the year ended 31 December 2007.

Market conditions and events
The premiums charged for business we renewed fell by 6% across all lines in the
first quarter of 2008. As stated in our annual report, these reductions should
be noted in the context of the previous years' cyclical highs. We are seeing the
most severe rate decreases in our commercial property business where rate
decreases on renewal business were 15%. Our largest business, specialty lines,
has experienced decreases of only 7%. We remain positive about the quality of
the business we are seeing and at this stage have no reason to believe the
market decreases will affect our ability to deliver solid results.

Investment performance
Asset growth remains on track, with group cash and investments having increased
from £1,490.6m at the end of 2007 to £1,544.6m at the end of March 2008.
Investment income during the first quarter of 2008 was impacted by the mark to
market effects of the continued stress in credit markets, resulting in sharp
declines in bid prices for both corporate and asset-backed securities; and by
weak equity markets.  Although we do not believe the prices of these bonds
reflect their ultimate ability to pay off, short term the effect of these price
declines has been to almost completely offset coupon and other investment
income.  The strategy in terms of asset mix and duration is unchanged since the
end of December.  With our managers, we continue to closely monitor events in
the credit markets and maintain a short duration, mainly fixed income,
investment portfolio, while looking for opportunities to enhance returns over
the medium term.

Capital and dividends
The group's capital position remains strong. We are keen to release any excess
capital from the group to shareholders - the final dividend of 4.0p together
with the special dividend of 4.0p per share will be paid on 9 May 2008. This will result in a total payment of £27.9m. The share buyback programme that commenced in November 2007 has continued. To date 10.5m shares representing 2.85% of our share capital have been repurchased for £16.5m, at an average price of 156.8p per share.

Outlook
Beazley Group Chief Executive Andrew Beazley said: "Challenging investment market conditions in the first quarter underline the need for focused and profitable underwriting. From an underwriting perspective
the first quarter has developed as we expected. Our Lloyd's business has become more competitive and has contracted to a limited extent while the business of our US operations continues to grow. In this softening market, the diversity of our business and the experience of our underwriters should continue to serve us well."