Price firming has been in line with the expectations of specialist insurer Beazley, and the firm sees an opportunity to take advantage of an improved rating environment, where it can ultimately look for growth across a broader range of business lines.
The London-based insurer reported a decline in profit before tax for the first-half of 2018, of $57.5 million, compared with $158.7 million for the same period in 2017. At the same time, net investment income fell to $8 million, while the firm’s combined ratio weakened from 90% to 95%, year-on-year.
However, the firm achieved top line growth during the first six months of the year, with premiums increasing by 15% to more than $1.32 billion, with the steepest growth occurring in its property unit.
And, the firm’s Chief Executive Officer (CEO), Andrew Horton, expects growth to continue in 2018, driven by an improved rating landscape.
“Our investment return in the first half was depressed by the impact of rising US interest rates on our bond portfolio, but we expect the rate rises seen in the first half of the year will help us deliver stronger returns going forward.
“We now see a better rating environment in which we can seek growth across a broader range of business lines,” added Horton.
The CEO explained in the firm’s H1 2018 earnings release, that the extent of price firming for cat exposed lines was in line with its expectations, noting that it didn’t expect to see the dramatic reductions in capacity that some had anticipated following the impact of 2017 catastrophe events.
Noting that by and large, alternative reinsurance capital providers have maintained market share, despite experiencing losses.
Despite the fact rates haven’t improved by as much as many expected, it appears that Beazley feels that conditions are good enough for future growth, and not just across loss-impacted lines, but across a broader range of business lines.
During the first half of 2018, Beazley reports rate increases on renewal portfolio of 3%, compared with a 2% reduction in the first half of last year.
“We remain on target to achieve double digit premium growth this year, led by our specialty lines and catastrophe related business. Following the catastrophes of 2017, we will experience below average reserve releases from prior years during 2018.
“Provided that the claims environment is reasonably in line with our expectations, a combined ratio in the low to mid nineties should be achievable for the full year,” said Horton.
