Rate hikes drive solid growth at Beazley in first nine months
Beazley enjoyed strong growth in the first nine months of the year driven by rate increases across all its lines of business, its chief executive said.
The company’s gross written premiums increased by 16 percent to reach $2.5 billion in the nine months ended 30 September 2020. The company said this was largely driven by a 14 percent increase in rates on renewal business.
The company also said its COVID-19 first party loss estimate remains unchanged at $340m net of reinsurance. Its Q3 catastrophe estimate is approximately $80m net of reinsurance.
Andrew Horton, the chief executive of Beazley, said: “We have seen strong, double-digit premium growth across our business as a whole so far this year, driven primarily by rate rises across all divisions. I am extremely proud of all Beazley employees who have shown commitment and resilience throughout this time whilst continuing to support our customers and deliver the excellent claims service we pride ourselves on.
“Pricing conditions are positive and we have the expertise and the capital in place to take advantage of these market conditions. We have great confidence in our ability to deliver mid-teens growth next year and strong shareholder returns in 2021 and beyond.”
The company noted that its cyber & executive risk division achieved the highest premium growth of 21 percent with particularly strong rate rises driving the executive risk side as the market continues to respond to the claims environment in directors’ & officers’ and employment practice liability.
Following a rebalancing of the account, its marine division took advantage of improved market conditions particularly in war, cargo and aviation, growing overall by 11 percent.
Its market facilities division grew 182 percent year on year from a small base. At the start of 2020, it split out this business from specialty lines into its own division.
The political, accident & contingency division remained steady year on year, with growth dampened by significant market contractions particularly in political and contingency due to COVID-19, Beazley said.
In the property division it saw an increase in premiums of 5 percent being the net result of continued portfolio optimisation and growth supported by market wide rate increases. The hardening of the global property market continues to be bolstered by a variety of events including the effects of COVID-19, Australian and US wildfires and the active 2020 hurricane season, the company said.
It added that whilst benefiting strongly from rate rises, reinsurance was also steady year on year driven by more selective underwriting.
Finally, its specialty lines division saw premium growth of 19 percent when excluding the prior year inclusion of market facilities business which at the start of this year was established as a standalone division. It said it has seen rate rises across the division combined with strong volume growth particularly outside of the US.
The company commented: “We continue to actively engage in cycle management, ensuring we maintain a balanced portfolio whilst fully capitalising on the opportunities. Rates are increasing in most of our classes and in many areas are now at levels where the risk reward ratio warrants writing materially more business.
“This is particularly true in directors’ and officers’ liability, despite the heightened risk environment, and most marine classes of business where the teams are significantly growing market share. Off-setting this, we continue to restrict appetite where there is particular exposure to the impacts of social inflation, pandemic claims or a recession. The main areas impacted by this are employment practices liability and some professional and healthcare liability classes.
“Ransomware attacks have continued to rise in 2020 and are now the dominant cyber exposure faced by our clients. Malicious attacks are, unfortunately, not new but have been increasingly prevalent in the last 18 months and we have been adjusting our underwriting and risk management services accordingly. The investments we made in using technology for threat detection are now being implemented and this enables us, amongst other things, to scan our clients for vulnerabilities and actively underwrite and help our clients remediate them. “The market is currently repricing and restricting coverage in response to these issues.
Our 2021 business plan for our syndicates has been approved by Lloyd’s, together with the accompanying capital requirements. We are planning for mid-teens percentage growth in 2021. We also plan to use reinsurance to manage growth in some of the more volatile lines, and so expect growth of around 10% net of reinsurance next year.”