Beazley’s Smart Tracker seeks $1 billion within five years
Specialist Lloyd’s re/insurer Beazley’s innovative Smart Tracker facility, which it launched in 2018, is targeted to write $1 billion of business within five years, Patrick Hartigan, head of reinsurance at Beazley, told Monte Carlo Today.
The Beazley Smart Tracker is a type of sidecar that sits within its special purpose arrangement syndicate 5623. It has a quota share reinsurance facility with Beazley’s Syndicate 3623, which allows third party investors, of the type that would normally invest in pure insurance-linked securities (ILS), to access a diversified book of Lloyd’s business. It accesses all of Beazley’s book apart from treaty cat business.
The facility is also extremely efficient with a lower cost base and operating structure. “The idea is that it offers investors an alternative to the very volatile lines that ILS is associated with,” Hartigan said.
“It is very low touch and therefore low cost. We are getting a lot more support from brokers and we anticipate that in the medium term, within five years, the facility will be writing $1 billion of premium.”
The facility started with some $50 million of stamp capacity in 2018 and this increased to $133 million in 2019, something that illustrates the extent to which it has already gained traction in the market.
“A lot of people have expressed interest in the product. We expect it to continue to grow fast,” Hartigan said.
He noted that Beazley has benefited from the Lloyd’s performance review in 2018, aka the Decile 10 Review, which resulted in many syndicates adjusting their business models, withdrawing some lines of business or pushing for sharp rate increases on unprofitable lines.
The only big change for Beazley was closing its construction & engineering book; it benefited from the rest of the changes in the market because of the rates hikes that resulted in many lines of business.
“We think Lloyd’s is doing a great job overall in the sense that it improved the business but without applying too much unnecessary regulation in the process,” he said.
“Eighteen months on, the market is seeing the benefits of that strategy, with rate increases really coming through.”
