Beazley plc trading statement for the nine months ended 30 September 2020

Beazley reported to the LSE this morning its Q3 Trading Statement

Extracts as below. The full statement is available here

Highlights

· Gross premiums written increased by 16% to $2,534m (Q3 2019: $2,192m), ahead of our expectations

· Premium rates on renewal business increased by 14%

· Covid-19 first party loss estimate remain unchanged at $340m net of reinsurance

· Q3 catastrophe estimate of approximately $80m net of reinsurance

· Investment return of $124m as at 30 September 2020 (Q3 2019: $215m)"

Property

"In the property division we saw an increase in premiums of 5% being the net result of continued portfolio optimisation and growth supported by market wide rate increases. The hardening of the global property market continues to be bolstered by a variety of events including the effects of COVID-19, Australian and US wildfires and the active 2020 hurricane season."

Reinsurance

"Whilst benefiting strongly from rate rises, reinsurance was also steady year on year driven by more selective underwriting.

Cyber

"Our cyber & executive risk division achieved premium growth of 21% with particularly strong rate rises driving the executive risk side as the market continues to respond to the claims environment in directors' & officers' and employment practice liability.

"Ransomware attacks have continued to rise in 2020 and are now the dominant cyber exposure faced by our clients. Malicious attacks are, unfortunately, not new but have been increasingly prevalent in the last 18 months and we have been adjusting our underwriting and risk management services accordingly. The investments we made in using technology for threat detection are now being implemented and this enables us, amongst other things, to scan our clients for vulnerabilities and actively underwrite and help our clients remediate them. The market is currently repricing and restricting coverage in response to these issues.

Claims update

"We announced in September that our first party COVID-19 claims estimate was $340m net of reinsurance, with almost all of the increase compared to our previous expectations being caused by further event cancellation losses. This figure assumes a resumption to some form of normality in the second half of 2021. Were this not to be the case, we estimate that there is potential for a further $50m of claims net of reinsurance to the end of 2021.

"We have also considered the recent FCA judgement on business interruption wording and do not expect this outcome to have a material impact on Beazley's insurance business.

"Our initial estimate of the costs of the third quarter catastrophe events including hurricanes Laura and Sally and the wildfires in California is approximately $80m net of reinsurance and reinstatement premiums.

Other

"We continue to restrict appetite where there is particular exposure to the impacts of social inflation, pandemic claims or a recession. The main areas impacted by this are employment practices liability and some professional and healthcare liability classes.

Andrew Horton, Beazley's CEO commented: " We have seen strong, double-digit premium growth across our business as a whole so far this year, driven primarily by rate rises across all divisions. ....Pricing conditions are positive and we have the expertise and the capital in place to take advantage of these market conditions. We have great confidence in our ability to deliver mid-teens growth next year and strong shareholder returns in 2021 and beyond."