Beazley reports improved rating environment in marine; combined ratio improves

UK-based insurer and reinsurer Beazley has said that its marine division has started to benefit from an improved rating environment, most prominent in areas such as aviation and cargo, which allowed the division as a whole to achieve premium growth of 6% to $284.8m (2017: $267.6m) and an improved combined ratio for 2018 of 94% (2017: 98%).

Beazley expanded its presence in the US during 2018, with the division starting to write marine business out of the Beazley office in Houston, Texas.

The notable catastrophe loss activity in 2017 had a positive effect on the rating environment the following year, with rates increasing by 3% in 2018 across the portfolio (2017: decrease of 1%). Most lines of business saw increases in rates compared to 2017, with marine increasing by 3%. By way of comparison, property rose by 10%, reinsurance rates by 6% and specialty lines by 1%.

Beazley marine cumulative renewal rate changes since 2008:

20082009201020112012201320142015201620172018
100%106%104%103%103%98%92%85%79%77%79%

All divisions combined were

100%103%100%101%104%104%103%101%99%98%101%

Retention rates in marine were 89% in 2018 (82% overall) compared with 88% in 2017 (84% overall).

Prior year reserve adjustments over the past five years were ($m):

(Marine in row two, Beazley overall in row three)

201420152016201720185 year avge
40.231.215.910.712.522.1
158.1176.3180.7203.9115.0166.8

Marine GPW for 2018 was $284.8m (NEP $249.5m) for total revenue of $255.7m. This was up from $267.6m GPW in 2017, generating 2017 total revenue of $243.8m.

Net claims were $134.0m (2017: $124.7m), with acquisition costs of $74.5m, administrative expenses of $25.1m and an FX loss of $1.6m, giving total expenses of $235.2m (2017: $224.5m). The segment result was a gain of $20.5m, up from $19.3m the year before.

The combined ratio for marine was 94%, down from 98% in 2017. The 2018 percentage comprised a loss ratio of 54% (55% in 2017) and an expense ratio of 40% (43% in 2017). This compared with a company-wide combined ratio of 98%, consisting of a 59% claims ratio and a 39% expense ratio.

Beazley’s total GPW for 2018 were $2.615bn, with expenses of $2.053bn, leaving a total gain (after a $7m impairment of its investment in Capson Corp, an  associate in specialty lines) of $98.8m.

Meanwhile, Beazley announced that late last year Tim Turner had succeeded Clive Washbourn as head of Beazley’s marine division. Turner joined Beazley in 1998 when the marine division was established and has for several years headed the marine, hull and war risk account within the division. He has represented the marine division on Beazley’s underwriting committee since 2016. Washbourn took the decision to step down for personal reasons. Beazley said it was “delighted that he has expressed his willingness to continue to offer the team the benefit of his expertise in underwriting and business development”.

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