Beazley prefers property cat in primary over reinsurance
Beazley will continue to bulk up on property and property cat exposure from the side of primary insurance where rate adequacy exceeds what can be found in reinsurance even after the heady gains to date in 2023, CEO Adrian Cox (pictured) has said.
“We think overall insurance remains the better trade and that is where we wanted to put the growth,” Cox told analysts. “Over the longer-term insurance will grow faster than reinsurance,” but Beazley will remain agile and “respond to the best risk-reward.”
Reinsurance may have taken the better headlines from the pace of rate growth in 2023, but primary rate growth comes atop a better base from 2022. Beazley will “continue to capitalise” on opportunity in property reinsurance, but focus its efforts on primary.
Primary market property growth for Beazley is a 100% North American phenomenon, increasingly in the E&S space where Beazley is pleased to take margin. Reinsurance tags along in part just to provide greater geographical diversification, Cox suggested.
Rate gains to date, at 22% across the full property division, look “slightly better” than Beazley had assumed going into the year for both insurance and reinsurance.
Property has led the charge for Beazley growth YTD in 2023, as promised following a capital increase late in 2022. Gross written premium in property is up 66% year on year in the first half on the 22% rate gain plus new exposures. Reduced reinsurance cession compounds that gain by the time the quarterly revenues are tallied.
That far outpaces 14% growth in cyber and fractional retreats across Beazley’s other business divisions. Reduced reinsurance cession compounds the gain in property by the time quarterly revenues are tallied.
Beazley officials declined to say how much of its new capital has been utilised in the process or how equipped it remains to hold the pace moving forward.
The rate gain in property, especially cat exposed property, reflects more than just a cyclical pricing upturn, and has signs of a lasting structural shift, Cox argued.
The industry and its clients are now admitting that the exposures are “more complicated and more changeful than previously given credit for,” Cox said. The upshot: “a real shift tin how that is written” and mounting evidence that the shift is underway.
“We see that property insurance opportunity as being a long-term one,” Cox said.
Headlines in the weather patterns and climate change area have yet to raise notable eyebrows at Beazley. Guidance and underwriting remain unchanged, Cox claimed.
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