Beazley forecasts “outsized returns” & growth in property re/insurance

In announcing a trading update this morning, London headquartered insurance and reinsurance firm Beazley has implied that it will double-down on property risk underwriting in the hardening market, given the “outsized returns” it anticipates will be available.

Beazley has revealed an expectation of suffering $120 million of losses from hurricane Ian, net of reinsurance recoveries.

We understand from sources that a share of the hurricane Ian loss is likely to flow to some of the third-party capital partners backing its range of syndicates and the market tracker product, but we’re also told Beazley’s robust reinsurance mitigates the impacts of a major catastrophe like Ian.

Of course, a major catastrophe can also harden the insurance and reinsurance market and Beazley is clearly anticipating being able to capitalise on the hardening trend.

Adrian Cox, CEO, said this morning, “We are seeing increased demand across many lines of business which supports our growth ambitions.”

Beazley grew its overall gross premiums written by 22% in the third-quarter, to $3.98 billion. The average rate increase across that was 17%, down on the prior year’s 23%.

Within its property risks business, Beazley grew by 9% at a 10% average rate increase, but the company clearly sees prospects for these rates to accelerate after Ian.

“Given the change in market sentiment in Q3 we expect growth to accelerate,” the company explained.

Adding that, “We are now beginning to see positive movement on rates and as material hardening occurs with outsized returns available, we would expect to deploy more capital across our primary property and reinsurance books.”

Which is a particularly positive outlook from Beazley and one that bodes well for the third-party capital providers backing its Smart Tracker, which is transitioning to become full Syndicate 5623 as from January 2023.

Beazley also has its ESG focused syndicate-in-a-box arrangement, that is also third-party capitalised and sits alongside the Smart Tracker in the type of strategy it is following. Hard market opportunities may also allow that ESG scored underwriting strategy to increase as well.

The opportunity to expand that strategy and attract new third-party investor capital may help Beazley as it pursues property insurance and reinsurance growth in a hard market environment, so it will be interesting to see how expansive the company is at 1/1 renewals.