It was results day for specialist insurer and underwriter, Beazley – and one that it has been able to celebrate with a “good performance across the board.”
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The company, which has an arm in Australia but undertakes the majority of its underwriting in London, reported profits before tax of US$293.2 million in 2016. This represented an increase from $284.0 million during the previous year. Its gross written premiums also climbed – reaching $2,195.6 million, up from $2,080.9 million.
“Our strong broker relationships and established position in a diverse range of business lines and geographies enable us to pivot toward more profitable opportunities as margins come under pressure in certain areas,” explained chief executive Andrew Horton.
“The pattern we have seen in recent years continued in 2016: large risk, catastrophe exposed business, which we mainly underwrite out of London, saw further rate declines, whereas rates for smaller liability business held firm. Our locally underwritten US business - mainly comprising small professional liability, management liability and cyber risks - accordingly grew strongly, by 20% to $695.7 million.”
Its combined ratio did slip from 87% to 89%, but chairman Dennis Holt was pleased to remain below 90% given the market turmoil of the last year.
“Beazley has weathered multiple underwriting cycles in three decades and, at this juncture, our focus is on maintaining underwriting discipline across the business classes that have seen rates continue to fall,” he said in a statement. “We have accordingly further trimmed our exposures to energy risks, large scale commercial property, and reinsurance.”
Going forward, Holt believes there are many opportunities for Beazley amid the challenges, highlighting that the company’s specialty lines has grown strongly with gross premiums $1,159.8m in 2016 (2015: $1,015.2m), 14% up on the previous year. This business, he said, “was buoyed by the relatively attractive premium rates for small scale risks that our mature US operations are now well equipped to handle.”
In addition, he pointed to a “willingness to partner with other insurers or reinsurers to exploit attractive growth opportunities” as an area of potential growth, pointing to the partnership forged in 2016 with Munich Re to underwrite large scale cyber risks. Indeed the cyber market itself is also seen as an opportunity.