Rates force Beazley to shrink reinsurance unit in first nine months
Beazley enjoyed strong growth overall in the first nine months of 2017 but its reinsurance division shrank as the company reduced it because of continued rate decreases – a trend it expects to reverse on cat business, at least, because of the recent heavy losses in North America.
The re/insurer’s gross written premiums increased by six percent compared with the same period the year earlier to reach to $1.76 billion. But it was a mixed bag of growth and retraction within this as it stressed its diverse portfolio allows it to grow where it sees opportunities and pull back in areas where profitable underwriting is becoming harder to achieve.
In specialty lines, its largest division, it achieved strong premium growth of 12 percent year on year, writing $925 million in the first nine months of 2017.
In its political, accident and contingency division, it said the non-renewal of a large client reduced premium income from its US admitted gap medical product by $15m. Its decision to cease writing business in Australia also had a negative impact on premium of approximately $10 million during the period.
Its reinsurance division experienced a decrease in premium of 11 percent year on year as it actively reduced the business written by this division in light of continued rate decreases.
Despite what it called challenging market conditions faced by many areas of the marine division, growth of 11 percent was been achieved. This is largely a result of increased business volume within the US marine liability account.
Rates on renewal business overall, decreased by one percent across the portfolio. It said this was reflective of the rating environment for the first nine months of 2017, where rates continued to be challenged in areas such as terrorism, energy and war.
But with the high claim activity in the last three months we expect to benefit from positive rate momentum on catastrophe exposed business going into the fourth quarter.
Andrew Horton, chief executive, said: "The third quarter of 2017 was defined by the high frequency and severity of natural catastrophes. Beazley is in the catastrophe insurance business and paying natural catastrophe claims is part of what we do.
Our focus is currently on providing the support and resources necessary to help our policyholders recover as quickly as possible.
"These events will naturally affect our full year results but our diverse underwriting portfolio continues to serve us well. We also expect to see rate increases across some lines of business in the coming months."
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