"This strong result is based on long-term investment into understanding how risk is evolving so we can seize underwriting opportunities as they develop."
Bob Quane
Chief Underwriting Officer
I am proud of our underwriting teams and their success in 2023. They have shown agility and insight in the delivery of risk management expertise to our clients, whilst retaining a laser like focus on underwriting profitability. As a result, we have delivered an excellent Insurance Service Result of $1,251.0m, an increase of 52% on the previous year (2022: $822.9m) and a combined ratio of 71% (2022: 79%).
This positive result is based on long-term investment into understanding how risk is evolving so we can seize underwriting opportunities as they develop and protect our clients from emerging threats. These strong results are also testament to the hand in glove partnership our underwriters have with our award winning claims team, ensuring we have some of the best underwriting intelligence available in the market.
2023 saw us continue our work to get under the skin of climate change risk as our five-pillar climate risk framework began to be embedded into underwriting. Meanwhile in our Cyber Risks business we presented our probabilistic modelling framework externally.
Our underwriting
Our Property Risks team has had a standout year. The investment they made during the soft cycle of the market paid off as the rating environment improved, leading to a 64% increase in IWP to $1,351.9m (2022: $823.2m). We expect this growth to continue as we head into 2024, although not at the same pace as we saw in 2023.
Innovation underwriting moved into the business as usual phase as it became formally embedded within the wider underwriting function and produced two new parametric property underwriting products, focused on the risks associated with severe convective storms in the US.
Generative AI may have hit the headlines this year, but for some time we have been actively looking across our business to better understand how AI impacts the risk environment and where the potential for loss might be. In this effort the work of our claims team has proved invaluable in identifying how the risk is emerging and how it is impacting the claims and litigation environment, ensuring we are able to effectively respond as the adoption of the technology evolves.
In our Cyber Risks division, our focus is always on understanding risk to improve our underwriting and protect against emerging threats. The substantial rate increases of 2021 and early 2022 moderated during 2023 and we expect this trend to be maintained.
We are confident that with our cyber ecosystem in place, which provides comprehensive support to clients before, during and after a cyber attack, the environment remains attractive and demand-led growth will continue, notably across our international business and particularly in Europe where we see strong growth opportunities.
Active cycle management is at the heart of our underwriting and while the current conditions mean we are leaning into property, in contrast we remain cautious in the D&O market. Here rates remain very competitive and instead we are rebalancing our Specialty Risk business by focusing on niche classes.
Geopolitical uncertainty looks here to stay at least looking ahead for the medium term and this is where our MAP Risks division has a key role to play in helping to keep businesses investing and trade moving. The work of our Marine team in ensuring grain corridors in Ukraine remain open, or our Political Risks underwriters’ support for clients’ overseas operations in unstable parts of the world, is critical to this effort.
We continue to refine and improve our product sets across the globe. Through a focused roll out this year we have expanded existing products such as virtual care, product recall and media liability to new geographies, with Europe as a region where we saw a step change in our underwriting and which I expect to see develop further into 2024.
Our goal is to support business so that they can thrive and to achieve this we seek to stay ahead of where risk is moving and invest in developing our capabilities to help clients, whilst retaining our focus on delivering positive returns for our investors. I believe we lived up to this promise during 2023 and I look forward to continuing on this path in 2024.