Beazley wants ever more property, even after 56% GWP growth in Q1

Specialist re/insurer  Beazley has a continuing appetite to grow into the hard property market while shying away from soft spots it sees across select specialty lines.

It will be growth stacked upon growth after Beazley laid claim to an eye-opening 56% increase in gross written premiums in property in Q1 on a 29% increase in rates. CEO Adrian Cox (pictured) presented that to analysts during his company’s Q1 earnings call as business as usual, “in line with the plan when we raised capital.”

“We don’t see this as a bubble,” Cox said of conditions in the property markets. “We do see the momentum continuing to build and we do see this as an opportunity for us.” Changes witnessed in market pricing, terms and conditions looks “very exciting, and very needed.”

“Do we have the capacity? Yes we do,” Cox said in a string of affirmations. “If the risk-reward for property continues to improve would we take more at the tail? Yes we would.”

If Beazley dives further into property, it will most likely be to the benefit of the group’s primary insurance business, ahead of its reinsurance profile, he additionally indicated.

Specialty lines are suffering in comparison and Beazley is making select decisions to step back. Market volatility is subduing financial institution lines, leaving especially D&O coverage awash in excess capacity while social inflation is hampering liability lines, especially medical where pricing falls below the Beazley threshold, he said.

Pricing remains adequate in D&O on the whole, Cox claimed, but with rates heading down, Beazley starts to get increasingly picky policy by policy.

Talk that carriers might restrict supply to the softened D&O market “is just speculation” and Cox rather assumes his group will have to wait for financial markets to turn around “and put more demand back into the system.” He’s not placing bets on when that might happen.

The Beazley specialty profile will ebb and flow in turn, Cox said.

“There are lots of business lines within specialty,” Cox notes. “We are just focusing our efforts on growing exposures where we think it makes sense.” He cited environmental liability as “one of a dozen” lines with a more viable outlook. The mantra for D&O and other less viable lines: “be ready.”

Specialty will fall as a portion of the Beazley whole in 2023, but it remains “too early to say” if the segment will decline in absolute terms. “I hope not,” the CEO said.

As Beazley grows in 2023, its own exposure retentions may increase and net premium growth may outpace the gain in gross written premium, Cox acknowledged.

Beazley has been cutting down on its proportional reinsurance and cyber and specialty risk net to gross retentions “is going to increase, as we wanted it to.”

For its inwards property reinsurance, while retentions rose in property cat treaties, “we bought the reinsurance we wanted at 1/4 and we don’t expect the net to gross premium rate to change much in property,” Cox said.

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