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Premium growth and rate rises outweigh cat losses for Beazley at Q3

8th November 2018 - Author: Matt Sheehan

Strong premium growth across all divisions and an average 3% rate increase on renewal business have driven profits for specialist insurer Beazley at the third quarter of 2018 despite significant catastrophe losses.

beazley-logoGross premiums written by Beazley for the nine months ended 30 September 2018 increased by 11% year-on-year to $1.96 billion, up from $1.76 billion for the same period in 2017.

This jump outweighed losses from Hurricanes Florence and Michael, as well as Typhoons Jebi and Trami, which Beazley estimated at around $105 million net of reinsurance and reinstatement premiums.

Although still substantial, catastrophe losses were down from between $200 million and $300 million for the second half of 2017.

“Our business continues to deliver double digit premium growth and has been aided by higher rates in some classes following last year’s catastrophe losses,” said Andrew Horton, Chief Executive Officer (CEO) at Beazley.

Specialty lines, Beazley’s largest division, grew by 11% to $1.03 billion over the first nine months of 2018, driven by strong performance in the U.S.

The firm’s reinsurance division also achieved premium growth of 7% year-on-year, writing $188 million for the same period, up from $176 million in 2017.

Additionally, the political, accident and contingency division grew 5% to $183 million, with growth driven by the strong performance of Beazley’s accident & health portfolio in the U.S, which offset rate decreases in terrorism.

Premiums for the property team continued to benefit from the positive rate change following last year’s catastrophe events, increasing by 21% to $340 million.

“Geographically, the main engine of our premium growth continues to be the US market, where we saw premiums rise 18% relative to the first nine months of last year,” Horton continued. “We expect this positive momentum to continue and are aiming to deliver high single digit growth for the group again in 2019.”

Beazley also ceased underwriting construction and engineering business this year, which accounted for approximately 10% of its property division’s premiums in 2017.

In terms of investments, rising yields and volatile markets adversely impact the value of Beazley’s portfolio, which posted returns of $26.0 million (0.5% year-to-date), or 0.6% annualised, although the company sees higher yields as an encouraging sign for future returns.

The weighted average duration of Beazley’s fixed income portfolio was 1.8 years at 30 September 2018, compared with 2.0 years for the same period in 2017.

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