Beazley underwriting turns agile as rate slows and traction varies

Specialty line rates may have beat expectations in the first quarter, but have moderated and varied enough across lines to force flexibility and agility in underwriting, top officials at  Beazley have suggested.

Growth and rate changes in the first quarter proved “better than expected,” as did the claims experience, a one-two punch that protected  Beazley’s standing forecasts for 2022 from war losses, but didn’t leave  Beazley ready to attack on all fronts.

“We are fine with rate adequacy across the book pretty much,” CEO Adrian Cox (pictured) told his company’s Q1 investor call. “Overall, we are ahead of our expectations for premium.”

But comments are not a blanket declaration covering all lines. Cox puts some above expectation for adequacy, some below, a distinction bearing a visible correlation to latest pricing trends.

“Rate change in specialty lines is down,” Cox told analysts. Variation in rate trends is visible among lines, largely following “where the claims environment is going.”

International directors and officer (D&O) insurance is a very clear example of a line where 2021 rate gains drew competition and  Beazley may move more cautious in turn.

The  Beazley strategy: to largely focus on segments with the better longer-term outlook while maintaining the agility to “make sure we manage market cycle discipline” to capture opportunity or eschew low-price risk as need be.

“We will be very fast to react when the risk-reward changes,” Cox said.

The longer-term opportunity might currently be most visible in environmental lines, tech and health care, Cox indicated. “Those are areas with long-term demand growth.”

Appetite for nat cat remains muted, but management keeps an eye on retrocession conditions for possible re-entry signals.

“We continue to have quite constrained nat cat appetite – that hasn’t changed,” Cox said, citing disappointment with property reinsurance conditions at the January renewals.

“The Property reinsurance market continues to evolve quite quickly, so there may be a bit more opportunity for us in the year-end,” Cox said, “but we have not increased our risk appetite.”

In the first quarter just reported,  Beazley increased gross written premium by 27% year on year to $1.2 billion, including 47% growth in cyber (below 49% rate gain), 26% in Political, Accident & Contingency (3% rate gain) and 15% in property (6% rate gain).

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