Specialist insurer Beazley has announced record pre-tax profit of $1.25 billion and a combined ratio of 71% for the year ended December 31st, 2023, with strong growth in the insurance service result of 52% and an investment return of 4.9%.
Group profit after-tax rose 112% from 2022’s $483 million to $1.026 billion in 2023, driven by a substantial insurance service result of $1.25 billion compared with $823 million in 2022, following a year-on-year combined ratio improvement from 79% to 71%.
Insurance revenue increased 12% to $5.44 billion on the back of growth of the business in 2023, while the insurance service expense fell year-on-year by $421 million to $153 million.
Beazley notes that 2023 was a benign year for insured catastrophe losses for the firm, which resulted in an improved claims experience and lower claims ratio of 39% compared with 47% in 2022. At the same time, directly attributable expenses rose 12% year-on-year in line with business growth.
In terms of growth, Beazley has reported insurance written premiums expansion of 7% to $5.6 billion, with strong growth in property of 64% to $1.4 billion and slight growth in cyber to $1.2 billion, which more than offset slight declines in digital to $228 million, MAP risks to $964 million, and specialty to $1.9 billion.
On property, Beazley states that it leant into the opportunity that the turn in the market rating environment offered in 2023, with the business also achieving a rate increase of 22%.
“This success resulted from hard work over the prior two years, as we stepped back from growth during a period where market conditions were unfavourable. This meant that throughout 2023 we have been able to take up the opportunity in the property market and were rewarded with strong growth in both insurance and reinsurance (treaty) with the property market in the US the significant driver.
“Beyond substantial rate increases, we have tightened terms and conditions and raised attachment points. Importantly, we have ensured that property values have increased to reflect higher inflation,” said Bob Quane, Chief Underwriting Officer.
The company’s reinsurance business also had a successful 2023 with significant rate increases achieved at higher attachment points, with the US segment of the business experiencing the strongest market rating environment.
Group-wide, rates on renewal business on average increased by 4% across the portfolio in 2023.
Beazley has also revealed its past service development experience in 2023, announcing a net release of $109.8 million, with property showing the largest release of $78 million due to favourable attritional claims experience on the older underwriting years, improvement in past catastrophe estimates along with the expiry of risk across the more recent underwriting years.
On the asset side of the balance sheet, investments generated a return of $480 million in 2023, which is actually the highest contribution from investments in the insurer’s history.
“I am delighted with our record $1.25 billion profit which enables us to launch a share buyback programme of up to $325m. The strength of Beazley’s expertise-led underwriting and claims management was the driver of the excellent combined ratio we achieved in 2023. We believe that with increased demand for insurance that the accelerating risk environment is creating, as well as an adequate rating environment, we are well positioned to continue successfully growing our business and I remain confident that Beazley will see strong, long-term performance.
“I am pleased that Barbara Plucnar Jensen will become our CFO on 1 May 2024, the depth and breadth of her experience, together with her leadership style, will be both a great cultural fit and an asset to Beazley,” said Adrian Cox, Chief Executive Officer.
