Specialist and Lloyd’s focused re/insurer Beazley plc has completed a split of its specialty underwriting unit into two separate divisions, which places the cyber risk practice at the firm outside of specialty risks and into a new unit aligned on technology, media, business and management liabilities.
Beazley has been reorganising its underwriting operations in recent weeks and analysts have speculated that the move to take cyber underwriting outside of the specialty lines bucket is due to cyber being a shorter-tailed business line than other classes underwritten there.
However cyber risk underwriting can be far from short-tailed, especially as so-called silent cyber exposures, where cyber risks permeate through non-cyber business lines, can take a significant amount of time to develop.
So, reasons for the split aside, Beazley now has cyber classed along with other technology risks at the firm.
The Specialty division at Beazley (excluding cyber) will now be led by James Eaton, who was previously the re/insurers head of the team focused on small business specialty risk underwriting.
A TMB & Management Liability division (which now includes cyber) will be led by Mike Donovan who was previously the head of Beazley’s technology, media and business services team.
Analysts at Jeffries said that they “emphatically” agree with the splitting of the Specialty business, particularly shifting the cyber risk portfolio away from the rest of the longer-tailed casualty lines, adding that “we consider this a clear incremental positive.”
The analysts in particular cited the fact that this takes more short-tail risk from cyber away from the longer tailed Specialty underwriting, which is largely casualty type and longer-tailed in nature.
However, the analysts might have preferred cyber to be split out entirely on its own, saying, “Though we would have preferred a clean split of Cyber from Specialty, we accept that as Cyber cover is increasingly sold to Board level management, it makes sense to manage Cyber alongside other Board level covers such as D&O and Management Liability – both of which are already traditional strengths of Beazley.”
Beazley is a leading cyber risk market and it is expected that this are of the business could outpace other specialty line classes for growth over the coming years.
