Lloyd’s of London insurer Beazley will expand its cyber and professional liability cover as it fights to avoid the downward pressure on premiums.
Beazley beat the 2 per cent fall in premiums for its business areas to produce pre-tax profit of $159 million in the six months to June 30, up 6 per cent. Beazley’s own premiums rose 2 per cent to $1.1 billion.
Expectations of a possible takeover offer swirl around Beazley as one of three remaining UK-listed Lloyd’s insurers, with Hiscox and Lancashire. Andrew Horton, Beazley’s chief executive, said: “If someone made a ridiculously high offer, we would have to consider it. But we are comfortable with our strategy and see no need for M&A.”
Eammon Flanagan, an analyst at Shore Capital, said: “We do not believe Beazley is particularly vulnerable. However, the group’s underwriting track record and capital discipline, together with the significant diversification benefits that Beazley’s speciality book would offer a potential predator, should not be overlooked.”
Beazley has focused on speciality lines such as cyber and professional liability since the financial crisis as a way to avoid being squeezed by margin pressure on more mainstream businesses. It has also expanded in the United States, offering lines to small and medium sized-businesses, where the market is less competitive and volatile than at Lloyd’s.
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Beazley is trying to expand in Europe, and last year brought in a team of underwriters to focus on writing speciality line insurance on the continent.
Speciality lines account for between 45 and 50 per cent Beazley’s revenue. Mr Horton believes the business could contribute 55 per cent over the next few years with cyber a particular driver as more — possibly all — companies take out cyber cover.
Beazley has received approval to convert its Dublin-based reinsurance company into an insurance company as part of its European expansion plan. Beazley made the decision before Brexit but, Mr Horton said, it was lucky it opted for Dublin as it would give the insurer a base inside the bloc.