Beazley likes property & cyber, eyes 2023 premium growth in mid-20s

Beazley can hold a sub-90 combined ratio in 2023 while leaning into a hard property market and a well-priced cyber market for gross written premium growth in the mid-teens alongside reduced reinsurance spend, top officials have indicated.

After a reduction in reinsurance spend, Beazley expects percentage growth in net written premium in the mid-twenties.

“After raising equity in November, along with a solid January renewal season, we continue to lean into the opportunity we are seeing in the property market whilst executing on our cyber growth plans,” CEO Adrian Cox (pictured) wrote.

Property lines are the driver, following “a market turning point,” chief underwriting officer Bob Quane said. “We anticipate significant rate increases in treaty reinsurance and the direct property market in 2023.”

Beazley anticipates property treaty reinsurance rate increases of up to 50% and over 15% in the direct property book during 2023, management said in its combined statement.

Appetite in cyber has held. “Our appetite for cyber, both in the short-term and the long-term, is undiminished,” Cox added in an ensuing chat with analysts. Rate growth has tapered, but the trend is “logical” after several years of steep gains amid a recent tempering of loss trend, Cox said.

Specialty lines could lag, giving the type of geopolitical or macroeconomic headwinds generated by the war in Ukraine and more. “We are not expecting that to grow at the same rate going forward given some of the headwinds,” Cox told analysts.

Net premium growth will exceed the expected mid-teens pace for gross written premium on account of reduced reinsurance purchase for cyber and specialty and as syndicate 5623 has moved to stand-alone status, no longer dependent on the group to cede business.

The combined ratio should hold in the sub-90 range to match 2022 performance, officials indicated. “We expect to deliver a high-80s combined ratio for 2023 assuming average claims experience,” CEO Cox said in a letter to shareholders accompanying 2022 financial results.

“Although significant geopolitical headwinds remain, I believe we are in an excellent position to sustainably grow our company.”

2023 targets were largely hit already in the past year. For the FY2022, Beazley claims gross written premium growth at 14% to $5.27 billion and a combined ratio of 89%. Premium growth matched rate increase on the renewal portfolio at 14%.

Beazley's key segment of cyber continued to see strong rate increases of 40%, down from 88% growth in 2021. Gross premiums written rose 42% to $1.16 billion.

In property, non-catastrophe exposed business was said to have performed well, with gross premiums written up 5.8% to $859.8 million. Hurricane Ian “dampened our overall result” while still allowing the segment combined ratio to improve to 98% from 106% in 2021.

Towards the end of the P&L, Beazley could brag of a $191 million pre-tax profit, well below the prior year's $369 million on a mix of “strong underwriting performance” offset by investment losses.

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