2022 saw the combining of our Property insurance and Reinsurance business. Non-catastrophe exposed business performed well contributing to an increase in gross premiums written to $859.8m (2021: $812.6m). Hurricane Ian has - in line with expectations for such a large event - dampened our overall result, which nevertheless saw the combined ratio improve to 98% (2021: 106%).
Bringing together our direct and reinsurance Property underwriting, the division gives strategic insight of both site level insights and high-level trends, delivering a bird’s eye view of property market dynamics. Business is underwritten around the globe with an emphasis on North American based property risks.
A successful year
The success of work painstakingly done in recent years to address the impact of climate events and refine our risk selection, has seen the book progressively improve. With market conditions reaching a pivot point during 2022, we are now in a great position to reap the rewards. While Hurricane Ian will see a claims burden in the range of a $120m net loss and has undoubtedly had an impact on the 2022 result, we comprehensively plan for events of this size, and it falls within our expectations for such an event.
Ready for the future
The combined expertise of our Property insurance and Reinsurance teams, is allowing us to look across our portfolio strategically and benefit from both detailed site level insights and high-level trends, giving us a bird’s eye view of market dynamics. Over time we believe this bottom up and top-down approach will deliver competitive advantages as we address the sector’s challenges of which climate change is perhaps the most urgent.
Throughout 2022 we continued to further our understanding of and implement enhancements to our underwriting approach and analysis around climate risk. We believe we are ahead of the curve, having actively invested in modelling tools and taking steps to embed the learnings into our underwriting processes. We are also making strides in regards to the impact of climate change on non-modelled perils such as wildfire, flood, and severe convective storm.
Our non-catastrophe business continues to benefit from the work we’ve done in the last few years to improve risk selection. A key driver of that has been the use of better, more insightful, modelling and tools. In particular, we released a new dynamic Property underwriting tool that provides the teams with the ability to analyse, model and rate all aspects of a risk at a location level with an informed view.
A significant opportunity
These focused efforts have put us firmly on the front foot to strongly build our Property premium base through 2023 - not just as we respond to an immediate and much needed improvement in the rating environment, but for the long term. As the rating environment remains favourable we will lean into the market opportunity; the equity raise of November 2022, has given further charge to this effort as we anticipate property treaty rate increases of up to 50% and over 15% in the direct Property book during 2023.
In contrast, as a buyer of reinsurance we are seeing an increase in costs; but balanced against the overall benefit of more effective market pricing and our dual role as a Property reinsurer, we believe this environment creates excellent opportunities for Beazley as a leading specialist Property insurer.