Analysts give Beazley’s Q3 premium growth rave reviews, eye cyber opportunities

Beazley is taking rave reviews for its top line growth in the third quarter, with its 29 percent premium growth likely to force market analysts to upgrade their forecasts for the firm into 2022, a review of brokerage research shows.

Its gross premiums written increased by 29 percent to $3.27 billion in the YTD; with premium rates on renewal business up by 23 percent, ahead of management expectations, a 9M trading statement from the firm had indicated.

"The top line picture is very strong," Numis equity analyst Nick Johnson (pictured) said in a note to markets. "The uptick from H1 is fairly even across most segments."

Continued strength on rates is a key element. "Contrary to anecdotal reports, there is minimal evidence of rate increases beginning to taper," Numis' Johnson said of the 23 percent rate gain after 9M versus the 20 percent annual increase claimed after H1.

Much of the praise focused on its cyber business, where premiums growth was listed at some 48 percent year-on-year after 9M, up from a 44 percent annual gain noted at mid-year.

"Cyber trends continue to develop favourably, and Beazley remains well placed to capitalise on attractive 2022 opportunities," BofA ML's Freya Kong and Michael van Wegen said in their note to markets.

"Ransomware trends continue to develop favourably for Beazley's portfolio, and the company remains strongly capitalised to grow cautiously into 2022 opportunities," they said.

Growth in premium may be closing the gap to the pace of rate increases in the segment, Numis' Johnson wrote. That could indicate a shift from the de-risking dating back to late 2020 with an "emphasis now shifting towards real growth."

BofA ML analysts concurred with caution, suggesting Beazley "will begin growing exposure cautiously in 2022" following positive signs in ransomware frequency.

The upshot could yet be upgrades to consensus forecasts, both on the 9M outperformance now visible, but, as Numis claims "on signs the growth environment will endure into 2022."

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