21 October 2015 Insurance

Beazley enjoys rapid growth in cyber lines

Specialty risk insurance and reinsurance business Beazley is set to continue its focus on US insurance, after the segment helped the firm post a strong set of results for the first half of 2015.

The company made a pre-tax profit of $154.5 million, compared with $133 million in the first half of 2014. This was aided a 25 percent increase in the premiums generated by its US underwriters, counterbalancing the highly competitive conditions elsewhere, the company said.

Patrick Hartigan, team leader of the firm’s treaty team in London, told Baden-Baden Today that the firm will particularly focus on its cyber liability insurance product which, he said, is now Beazley’s largest line of business.

“We are able to grow cyber liability insurance largely through our Beazley Breach Response product, which is now our largest focus group, replacing property cat. Growing our bespoke insurance products means we can be more disciplined about our reinsurance, which actually we are going to reduce,” said Hartigan.

Last month, Beazley joined forces with Lloyd’s syndicates managed by Aspen and Brit Global Specialty to launch the International Cyber Consortium, which will focus on providing data breach cover to businesses domiciled outside the US with revenues in excess of $5 billion.

He said that Beazley currently has no plans for mergers and acquisitions (M&A).

“For us at Beazley, we feel that we have a sustainable business we can grow, particularly with some of our new and innovative insurance products. If we want to, we can hire individuals or teams who operate in specialist lines of business,” he said.

“M&A is very challenging. Integrating complex systems and large teams can be very difficult to do and firms have to be aware of the consequences.”

Talking about rates, Hartigan said he expects them to stabilise after a softening over the last few years. He claimed underwriting returns are key in this low interest rate, low investment return environment, and that Beazley is focusing on quality rather than quantity and is distinguishing between good clients and not-so-good ones.

“At the moment it’s about being selective. When we talk about rates, we should be more concerned with rate adequacy than broad rate change. That might mean some people have to increase their rates and some people can reduce them because portfolio quality and good risk management should be a differentiator and have a direct effect on rates,” he said.

Hartigan added that he thought the introduction of Solvency II will create increased demand, which should create opportunities for the industry.

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