Beazley reports “higher than expected rate changes” in Q1

Beazley, the Lloyd’s market focused specialist insurance and reinsurance underwriter, has continued to expand its underwriting within its market facilities unit, where the largely third-party capital backed Smart Tracker facility sits, growing that segment 35% during the first-quarter of this year.

Beazley has reported overall growth of 16% in gross premiums written, with the market facilities unit the area expanding fastest within its business.

At the same time, the company has benefited from the increasing premium rates across its business, reporting an average rate rise of 16% for Q1 2021.

Adrian Cox, Chief Executive Officer, commented, “We have had a positive start to the year with good rate momentum that is well ahead of our expectations as well as continued strong targeted growth. We expect favourable market conditions to continue and are well positioned to take advantage of them given our capital surplus remains within our preferred range.”

Beazley grew its property premiums by 24% and its reinsurance premiums by 10% as well during the quarter, while premium rate increases year-on-year were 9% for the market facilities and property divisions, and 14% for its reinsurance portfolio.

These rate increases have been “higher than expected” Beazley explained this morning, while the growth remains in line with the companies expectations.

Beazley’s Smart Tracker facility acts as a following market and deploys capacity from institutional investors into the Lloyd’s marketplace.

For 2021, the company said its offering of Smart Tracker capacity to investors saw strong demand and was oversubscribed, but that Lloyd’s gave the facility an upsized $200 million of premium target for 2021.

For Q1, the market facilities unit, which houses the Smart Tracker, underwrote $42 million of premium, up 35% on the prior year’s $31 million.

That’s a strong start towards making use of the Lloyd’s premium allowance for the year and at 9% rate increases the facility should have a higher return-potential, depending on loss activity this year.

On the claims side, Beazley reported $70 million of catastrophe losses, net of reinsurance, which were largely from the US winter storms in February, winter storm Uri and the freezing weather in Texas.

Analysts said that the cat load at Beazley was higher than they had anticipated and said this may put Beazley’s low-90’s combined ratio target under some pressure.

Beazley has been targeting bringing more third-party capital into its business using the Smart Tracker and other initiatives.