Beazley reports 8% reinsurance price rise in US at January renewals
A record-breaking catastrophe year 2017 has allowed Beazley to increase reinsurance prices by 3 percent in non-US business and 8 percent in US business at January 2018 renewals.
The price increases follow a record year in catastrophe events for the industry which saw insured losses of around $130 billion globally, according to some estimates. The losses were driven particularly by hurricanes Harvey, Irma and Maria (HIM) in North America.
Beazley’s property division, which derives 71 percent of its business from the US, saw prices overall rise by 6 percent with the biggest increases focused on the large risk business that is predominantly underwritten in London. In the marine market, premium rates for cargo business - the class most affected by the Atlantic storms rose by between 2.5 percent and 5.0 percent in the last quarter of 2017, the specialty insurer noted.
Commenting on the price development, Beazley CEO Andrew Horton, commented: “It is too early to say how sustainable these price increases will prove to be. Much will depend on the continuing appetite of non-traditional capital providers, who shouldered some of the largest reinsurance losses.”
The specialty lines division, which focuses on professional liability, management liability and cyber risks, has accounted for much of Beazley's growth in recent years as margins on small and mid-sized risks - much of it accessed by our underwriters in the US - have remained attractive, Horton noted.
However, aggressive competition from new entrants in areas such as large risk architects' and engineers' professional liability and medical malpractice for large US hospitals have held back Beazley’s growth in these segments.
Despite the major natural catastrophes of 2017 Beazley managed to achieve an underwriting profit in the year with a combined ratio of 99 percent compared to 89 percent in 2016.
Gross premiums written increased by 7 percent year on year to $2.34 billion from $2.20 billion in 2016.
Profit before tax fell to $168.0 million in 2017 compared to $293.2 million in 2016.
Horton said: "Beazley achieved an underwriting profit in 2017, a year in which hurricanes, earthquakes and wildfires generated heavy claims for the insurance industry. More importantly, we delivered on our commitments to our policyholders, already paying out more than $110 million in claims following the year's natural catastrophes. Premiums grew 7 percent in 2017 - a strong performance given market conditions. Looking ahead, we see potential for double-digit growth in 2018."
Beazley wants to mostly grow organically going forward, but small-scale acquisitions may be an option, too. “Our acquisition of Creechurch Underwriters, a managing general agency in Canada that we have supported for many years, fell into this category,” said Beazley chairman Dennis Holt.
“Beazley now has an underwriting platform for growth in Canada which would have taken far longer to establish organically,” Holt said.
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