Beazley to grow specialty lines as rating pressure continuesReprints
(Reuters) – Lloyd’s of London insurer Beazley P.L.C. will focus on growing its specialty insurance business as other lines of business face downward pricing pressure, the firm’s chief executive said on Friday.
Fierce competition has resulted in insurance rates either stagnating or falling over the past few years, leading Beazley to invest in growing its U.S. specialty lines business, which offers professional and management liability for mid-sized and small companies.
Beazley said on Friday that its first-half profit rose 6% to $158.7 million, driven by growth in its U.S. specialty business and investment gains.
Premium rates for all of its businesses fell by 2%.
“The reason we’re focusing on specialty lines above the others is generally the rating environment in specialty lines is better than in the property, reinsurance and marine lines,” Chief Executive Officer Andrew Horton told Reuters.
Mr. Horton said rates in specialty lines have held up over the past few years after claims following the financial crash of 2008.
Last year, Beazley brought on a team of underwriters to focus on writing specialty line insurance outside the United States, with a specific focus on Europe.
Specialty lines currently account for between 45%-50% of Beazley’s revenue and Mr. Horton sees the business’ contribution hitting 55% over the next few years.
The company recently received approval to convert its Dublin-based reinsurance company into an insurance company, as part of its European expansion plan and Mr. Horton said on Friday that the company hopes to start writing European business on both its insurance company and Lloyd's balance sheet.
Mr. Horton said the company had applied for branches in Spain, France, Germany and the United Kingdom and expected those to be set up in a couple of months.
“By the end of the third quarter, our aim is to be quoting business in the specialty lines arena across Europe,” he said, adding that the moves were not a result of Brexit, which has prompted many financial firms to set up European operations amid concern the U.K. exit could hamper trade.
“It was not a Brexit plan. Now of course with Brexit having happened, it’s much better having the insurance company in Ireland than it would be having it in the U.K.,” Mr. Horton said.