Beazley has noted that despite its position as a leading cyber insurer, the recent global IT outage event will not change its current undiscounted combined ratio guidance of low-80s for its full year 2024 results.
For those unaware, the outage was caused by a security company called CrowdStrike, which sent out a corrupted software update to its huge number of customers. As per Microsoft, CrowdStrike’s update reportedly affected 8.5 million Windows devices.
While it’s still early, there has been a lot of discussion in the risk transfer industry about the potential fallout, with most analysts currently expecting business interruption claims to drive the bulk of insurance industry losses.
At the same time, Howden Re has suggested that the outage will accelerate interest in cat-focused reinsurance, and Aon said it is an opportunity for the re/insurance market to react and improve.
“Given the unprecedented nature of this event and Beazley’s position as a leading cyber insurer, the Company has elected to provide an update on its position in relation to the outage,” Beazley said in a recent statement.
The firm continued, “Based on what is known at this point, the event will not change the current undiscounted combined ratio guidance of low-80s for the full year.”
Beazley also revealed that it will update the market on its H1 2024 performance on 8 August and that it will provide any further relevant updates about this event at that time.
In response to this update from Beazley, analysts at JP Morgan said, “We view this statement as reassuring given the fears around potential claims on 19th July as 1) it shows that claims are manageable in the context of the annual guidance, 2) the company was able to deliver an update so quickly following the event. For context, based on our forecasts a 1ppt change in the combined ratio is equivalent to ~$50m pre-tax.”
Meanwhile, analysts at Deutsche Bank said that they felt the loss from the CrowdStrike IT outage would be manageable for Beazley, but also said it could drive some medium-term positives for the cyber insurance market in general, in terms of higher demand for protection, which should benefit Beazley over the medium-term.
