Beazley profits up by 8.4% as demand for cyber cover grows

Beazley’s 2015 pre-tax profits grew 8.4% as a result of growth in its specialty lines operations.

The Lloyd’s insurer reported a profit before income tax of $284m in the year to December 2015, up from $261.9m in 2014.

Its combined operating ratio (COR) improved by 2 percentage points to 87% from 89% in the same period.

Gross written premium also grew, by 3% to £2.1bn from £2bn in 2014.

While the US produced the main growth for specialty lines in 2015, the insurer also saw modest growth in business written from its London hub.

Beazley said demand for data breach and cyber cover and responses had increased in Europe.

Chief executive Andrew Horton said: “Beazley increased both premiums and profits in 2015, delivering excellent returns for shareholders despite low investment returns and declining premium rates.

“We see the recent M&A (mergers and acquisitions) driven market consolidation as benefiting our business by increasing our attractiveness to the talented, entrepreneurial individuals on whom we rely for our success.”

In 2015, the market trends affecting Beazley’s six divisions continued, broadly, to follow the trajectories of recent years.

Rates on renewal business across Beazley’s whole portfolio fell by 2% in 2015.

In its largest division, however, specialty lines rates increased by 2% year-on-year, while in the life, accident and health division, rates fell by only 1%.

In other divisions, rates declined by varying degrees: 4% for property business; 8% for the marine division and 6% in the political risks and contingency division.

In the reinsurance division, renewal rates fell by 7%, slightly less than expected because of stronger than anticipated demand for US windstorm cover.

Prior year reserve releases totalled $176.3m, up 12% (2014: $158.1m) – reflecting the benign claims environment in its short-tail business.

The insurer said: “Our conservative approach to reserving normally permits us to make reserve releases as the ultimate level of claims becomes clear. In the case of our specialty lines business, which we categorise as ‘medium-tail’, reserve releases generally become available three to six years after the business was underwritten.”

Beazley plans to relocate its head office to London. Shareholders will be able to vote on the decision in March.