Property insurance premiums are rising swiftly while cyber rates stagnated and the impact of “flailing insurtechs” in its digital business led Beazley plc to concentrate more deeply on property, said the Lloyd’s insurer’s chief executive officer.
The insurer seized an opportunity in property insurance and expects to see good prospects there for the next few years, said CEO Adrian Cox in a conference call.
Insurance written premiums for the first nine months rose 9% to $4.33 billion. Overall rates rose 5%, compared with a 17% hike a year ago.
Beazley’s combined ratio guidance is in the low 80s for the rest of the year.
The hardening market over the past five years has boosted Beazley’s confidence but the insurer sees softening in parts of its business, Cox said. It is accelerating its actions in some areas as the market is becoming increasingly competitive, he said.
Beazley anticipates lower premium growth in 2024 mainly due to lower U.S. cyber rates and a soft directors and officers insurance market, Cox said.
Over the first nine months, total natural catastrophes have been within the margins held in Beazley’s reserves.
Cox said a number of Beazley’s marine, aviation and political risk lines have exposure in the Middle East across political risk, political violence and marine. The insurer also writes cyber and D&O business in the region.
“We don’t have a huge amount of exposure with conditions as they are now,” he said.
For property risks, growth rose 63% year on year and rates rose 24%. Beazley anticipates favorable conditions to continue in 2024, Cox said. The insurer raised its property exposure in the third quarter due to its confidence in the market’s prospects, he said.
Cyber risk rates fell 4% in 2023 while cyber insurance written premiums rose 4%.
While Beazley is comfortable with its position, conditions are becoming more competitive in the U.S. cyber market where a number of insurtechs are “fighting hard for their future,” Cox said. U.S. growth is more difficult, particularly in the small to medium enterprise segment, and saturation in large risks has slowed U.S. growth.
The majority of Beazley’s cyber growth during the year has been outside North America, where the insurer is concentrating its investment, he said.
Cox said Beazley led the market to a more responsible and sustainable position in cyber war coverage and is leading the way in building out that business worldwide. In cyberrisks, despite an increase in ransomware attacks claims frequency remained stable, he said.
In Beazley’s digital risks division, a lack of disciple among “flailing insurtechs” is impacting the business, said Cox. Despite this, the insurer continues to build out its digital business and sees good medium-term prospects, he said.
In specialty risks, premiums and rates fell 2%. Demand is subdued while financial markets are depressed, and the directors and officers market remains competitive, Cox said. Beazley is shrinking the business at an accelerating rate, with an impact on fourth quarter and 2024 premiums, he said.
Specialty business will likely remain flat to slightly down for the rest of the year, he said.
The MAP division posted a 7% increase in rates year to date while premiums fell 10% as the portfolio underwriting business is now being written by Lloyd’s Syndicate 5623 backed mainly by third-party capital, which reduced year on year gross premium growth.
The MAP division is seeing demand growth, particularly in political risk and violence, war and cargo, Cox said.
Cox noted market conversation about the impact of social inflation on hardening in the casualty market but said Beazley doesn’t write much casualty business such as general and product liability, excess casualty, umbrella and commercial auto. He said the big driver of social inflation is bodily injury.
Beazley earlier announced Sally Lake, chief financial officer, has informed the board of her intention to leave Beazley in 2024. The board will now conduct an orderly process for an external successor, which will be completed during her 12-month notice period, Beazley said at the time.
Lloyd’ and underwriting entities of Beazley plc have current Best’s Financial Strength Ratings of A (Excellent).