Specialty market finally moderating but property lines hardening: Beazley

A chink of light emerged from Beazley’s nine-month 2022 results as the London-based specialty insurance group reported that rate increases remain strong but are finally moderating.

Although the group expects property lines to harden further, it said the D&O market remains unexpectedly competitive. It added that the cyber market continues to harden but there are finally signs of moderation here too.

Beazley reported strong 22% growth in gross premiums written during the first nine months of this year to $3.98bn, from $3.27bn at this point in 2021.

The group said that overall premium rates on renewal business increased by 17% during the period, down from 23% at this stage last year.

The biggest growth was reported by Beazley’s cyber line, which was up 66% to reach $838m in gross written premiums, from $505m at the nine-month stage last year. The rate change was a massive 51%.

Property premium was up 9% to $700m, with a rate change of 10%. Specialty risks premium rose by 10% to reach $1.45bn, on the back of a rate change of just 3%.

Other leading specialty carriers such as SCOR have also recently reported a moderation in the specialty sector after a period of unprecedented growth.

Beazley reported an initial hurricane Ian loss estimate of $120m net of reinsurance. It posted mark-to-market investment losses of $289m, or 3.6%, in the year to date.

Beazley does not report profits at this stage of the year but said that its “high-80s” combined ratio guidance remains in place for the whole of this year.

CEO Adrian Cox said: “We have had a strong underwriting performance over the quarter, with all divisions continuing to grow. As expected, overall rates have moderated, however we are seeing increased demand across many lines of business, which supports our growth ambitions.

“While mark-to-market losses have occurred due to rising yields in our fixed income portfolio, rising yields also mean we anticipate significant future investment returns. We remain confident of our guidance of a high-80s combined ratio, assuming claims experience is as expected for the remainder of the year,” he added.

Beazley said nine-month cyber rate increases of 51% had “moderated somewhat” in Q3. “We have been taking advantage of new business opportunities and have put more exposure on the book this year, as planned, resulting in premium growth of 66%. We expect continued growth into 2023 and beyond,” said Cox.

Beazley saw a change in property market sentiment in Q3 and expects growth to accelerate. “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,” said Cox.

Beazley said the D&O market has been more competitive than it had originally thought at the start of 2022. “As a result, growth is slightly less than expected within Specialty Risks, however it is still strong at 10%,” said Cox.