Beazley plc has reported results for the year to 31 December 2020. The group is the first Lloyd’s insurer to issue results this year; Lancashire Holdings will report on 10 February, Hiscox Limited results are due on 3 March and Lloyd’s will announce consolidated results for the market on 31 March.

Please note that Beazley has not released results and forecasts for syndicates 623, 5623 and 6107 at this stage and these will follow in due course.

Headline figures are as follows

 

 

2020

2019

% change

Gross written premium

$3,563.8m

$3,003.9m

+19%

Net earned premium

$2,917.0m

$2,503.5m

+17%

Profit (loss) before tax

($50.4m)

$267.7m

n/a

Combined operating ratio

109%

100%

9 points worse

CEO Andrew Horton said “ Beazley's gross premiums written increased by 19% to $3,563.8m, supported by rate rises across most of our divisions.  We also achieved a strong investment income in the face of volatile conditions.” 

Argenta summary

The market is responding rapidly to increased claims activity, across a number of lines of business. The report highlighted recent developments in the cyber insurance market place, where Beazley is a leading insurer. Ransomeware attacks have become both more frequent and increasingly severe and sophisticated. Beazley has responded with an increased investment in data and analytics helping it and customers to make more informed decisions on vulnerabilities. Rate increases in the cyber market are the highest that the group is recording, although it emphasised that this is not sufficient in isolation, with insurers needing to set and enforce standards, much as they do in other classes, with inspection and risk engineering key.

Across the group rate increase on renewal business averaged 15% in 2020 (compared with 6% in 2019), with all business units showing an improvement and all bar the Political, Accident and Contingency division showing an improvement in excess of 10%. The Beazley rate index, showing rate movements by line of business since 2015, is available here

The group made a release from reserves of £93m, up from $9m in 2019 when reserves were impacted by movements in property and reinsurance catastrophe claims. The metric showing the level of surplus over actuarial reserves weakened slightly, although Beazley explained that this is a function of some net reserves being more certain as the volatility is contained by reinsurance programmes.

As the world economic outlook began to deteriorate as Covid-19 spread, the group took defensive action in lines of business (primarily in the specialty book) it considered susceptible to recessionary type claims. It says that there has not been any evidence of increasing social inflation in 2020, although it continues to monitor. Claims count for 2020 specialty classes are lower than for 2019 at the same stage.

The group increased over reserves for first party covid related claims in September last year, increasing total net group reserves to $350m. This ultimate net loss has not increased in the past quarter, although the group is holding an additional reserve of $50m for events scheduled for the second half of 2021. In the event the restrictions in place across many parts of the world are not lifted, these events could yet be cancelled.

The full set of results are here and the analyst slide pack here.

Argenta’s “Guess the combined ratio” competition

As the first major London market company to report year-end figures, the Beazley numbers give some small clues to the likely performance of the Lloyd’s market in 2020. We at Argenta Private Capital are running a competition to see how close market sentiment is to the actual result from the market, due to be declared on 31 March 2021. All are welcome to submit their estimate of the market’s combined ratio. There is a small prize for nearest the actual result. Please enter the competition here.