Beazley positive about marine division merger with PAC

UK-listed re/insurer Beazley has said that “bringing together Beazley’s Marine division with the Political, Accident and Contingency division and Portfolio Underwriting has brought synergies and opportunities for cross selling”.

In March 2022 the Group updated its underwriting team structure with the creation of four underwriting divisions: Cyber Risks, Marine, Accident and Political (MAP) Risks, Property Risks and Specialty Risks

In its annual report CUO Bob Quane said that MAP Risks underwriters were “experts in their specialist products and segments and while the specifics of risk differ between classes, their clients are sometimes the same and often face similar challenges, making for an ideal environment for cross-fertilization of ideas and growth of our underwriting via our international platforms”.

MAP Risks in 2022 reported GWP of $1,107.8m (2021: $897.5m), and a combined ratio of 84% (2021: 85%). Beazley noted that the division was exposed to the war in Ukraine in its Marine, Aviation, Political Risk and Terrorism lines of business, “yet, despite the claims arising from the conflict, delivered a profit of $91.6m (2021: $167.5m)”.

Beazley’s MAP portfolio mainly underwrites on a wholesale basis via Beazley’s Lloyd’s platform (Syndicates 5623, 6107, 623, Swift o.3 Ltd). Head of MAP Risks is Tim Turner.

MAP Division

Year $m 2022 2021
GPW 1,107.8 1897.5
NPW 777.0 671.5
Operating gain 91.6 167.5
Claims ratio 43% 41%
Espense Ratio 41% 44%
CR 84% 85%
Rate change 4% 9%

MAP makes up 21% of the company’s group premiums, which are now divided 93% insurance / 7% reinsurance. 52% of Beazley group business is short-tail, 48% long-tail. The geographical distribution of group premiums (where the insured resides) is 55% USA, 21% Europe, 24% ROW.

The amount the Group spent on reinsurance in 2022 was $1,392.5m (2021: $1,106.5m). As a percentage of gross premiums written it increased to 26%, from 24% in 2021.

Expectation of losses as a result of Hurricane Ian remained at $120m net of reinsurance.

Group prior year reserve releases in 2022 totalled $132.6m (2021: $209.8m) which represented 3.7% of earned premium. The reduction in reserve releases was driven primarily by a reduction in releases from Cyber Risks and Property Risks.

MAP Risks saw strong releases across all years of account, totalling $66.2m. The other divisions released off two of the prior years.

Numbers for the group as a whole:

Year $m 2022 2021 Change (%)
GPW 5,268.7 4,618.9 14
NPW 3,876.2 3,512.4 10
MEP 3,614.2 3,147.3 15
Net investment (loss)/income (179.7) 116.4 (254)
Other income 32.1 28.2 14
Gain from sale of business 54.4 (100)
Revenue 3,466.6 3,346.3 4
Net insurance claims 1,956.4 1,826.2 7
Acq & admin exp 1,255.8 1,104.8 14
FX loss 24.0 7.2 233
Expenses 3,236.2 2,938.2 10
Finance costs (39.4) (38.9) 1
Pre-tax gain 191.0 369.2 (48)
Inc tax (30.2) (60.5) (50)
Post-tax gain 160.8 308.7 (48)
Claims ratio 54% 58%  
Expense ratio 35% 35%  
Combined ratio 89% 93%  
Rate increase 14% 24%  
Investment return (2)% 2%  

The 2022 result was impacted by the war in Ukraine. While it represented a potentially material loss to the MAP book, it remained unchanged since the 2022 interim report.

At the beginning of 2022, Beazley had adopted a policy of not underwriting any new thermal coal, oil tar sands, or arctic energy exploration projects, or businesses which generated more than 5% revenues from these areas.

In November, due to the ongoing war in Ukraine, it was decided that the exclusion for thermal coal would be revised.

This revision applies only to the Marine and Political Risk underwriting classes, where Beazley said that until June 2024 it remained prepared to insure new clients who were transporting thermal coal from existing coal mines. “This approach was adopted in order to support the need for energy security, and the fact that a number of global countries are having to increase their use of thermal coal plants to provide electricity”, said Beazley.