Beazley may restart cyber growth if positive trends continue

Specialist insurer Beazley PLC could start growing its cyber business again next year if market conditions allow, CEO Adrian Cox said.

The company has been reducing its overall cyber exposure following a re-underwriting exercise it started in October 2020 in response to growing ransomware claims. Cyber now makes up a smaller proportion of its overall business than it did a year ago, Cox said on an earnings call.

Beazley in its nine-month 2021 trading update said the frequency of ransomware claims it was receiving continued to fall in response to the remedial action.

Cox said Beazley was still finalizing its 2022 plans for cyber, but it could kick back into growth mode if "favorable loss trends persist and the demand/supply dynamics remain."

Cyber rates continue to rise sharply in response to loss trends and demand for cover outstripping supply. Beazley in its trading update said prices in its cyber and executive risk segment were up 48% in 2021 to date, as cyber rates "continue to exceed expectations."

At the half-year, Beazley's head of global cyber and technology Paul Bantick said cyber prices were doubling across its portfolio. Cox said on the Nov. 5 call that the rate increase in cyber continued at the levels the company had mentioned in the summer.

Overall, Beazley saw price increases of 23% on renewal business year to date, which it said was ahead of expectations. Cox said the pricing environment was "slightly firmer than we thought at the beginning of the summer," driven by property and reinsurance business. He added that while there were areas in the business where price increases had started to slow, these areas were fewer than in the second quarter.

Beazley incurred $125 million of natural catastrophe claims in the third quarter, with $85 million coming from Hurricane Ida and $40 million coming from the flooding in Europe. Actual losses have already exceeded the insurer's full-year catastrophe budget, Cox said, which was why the company increased its full-year 2021 combined ratio guidance to the mid 90s from the low 90s.