The first quarter of 2011 reminded the insurance industry of just how unpredictable natural catastrophes can be. Beazley plc, which is headquartered in Dublin, but whose main activities, are in the Lloyd’s market, and increasingly in the U.S., saw Q1 premiums fall by 3 percent, when compared with the equivalent period of 2010 – to $426 million from $438 million.
The decrease has been “driven by reductions across all our divisions with the exception of specialty lines,” said a company bulletin. “Premium rates are down by 1 percent on average across the portfolio which is in line with our expectations.”
Beazley noted that the “net cost of catastrophes in Australia, New Zealand and Japan is estimated to be $154 million.” The bulletin broke down the loss estimates from the heavy rains and flooding in Queensland, Australia at approximately US$23 million; the cost of the February New Zealand earthquake at approximately $64 million net of reinsurance, based on market losses of between $10 and $12 billion.
Beazley remains cautious in stating loss estimates for the Japanese earthquake and tsunami, which caused widespread property damage and destruction with a death toll of around 13,000 and 15,000 people still unaccounted for. The company said that the majority of its “exposure is in our reinsurance account; however we also expect some claims to arise in marine, property, and event cancellation in the contingency book. We currently estimate the cost to be in the region of $67 million, net of reinsurance, based on market losses of between US$20 and $30b billion.”
CEO Andrew Horton commented: “The first quarter of 2011 has seen catastrophe losses in Australia, New Zealand and Japan. As a result of Beazley’s diversified portfolio we nevertheless anticipate achieving a combined ratio for 2011 in the mid ninety percent range, provided we experience no further significant catastrophe events during the remainder of 2011.
“We had good support from our reinsurers for the annual renewal of our catastrophe reinsurance programs and on 1 April they were successfully renewed for our property and reinsurance businesses.”
Beazley also pointed out that following the recent catastrophes, “we are seeing some hardening of premium rates in the affected classes. In general, trading conditions remain challenging and we do not believe these events alone will be sufficient to turn the overall market.”
In addition the company said that its acquisition, which is still subject to regulatory approvals, of “two Australian disability insurance Managing General Agents: Australian Income Protection and Blue-GUM Special Risks,” are “making an immediate contribution to our premium written via our Lloyd’s platform and will significantly add to our already growing Australian business and presence. This will help us take advantage of opportunities there.”
Beazley’s said its U.S. operations were marked by its “withdrawal from admitted commercial property business in the US to focus on surplus lines commercial property business, which accounted for more than 80 percent of the premiums underwritten by our property division’s US underwriters in 2010.”
Source: Beazley plc
Topics Catastrophe USA Reinsurance Property Australia Japan
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