Beazley achieved gross premiums written growth of 14% and a strong combined ratio of 89% (2021: 93%). We delivered this impressive underwriting result by executing against our underwriting strategy of deploying specialist products in markets that value expertise and are demand driven, combined with an agility to pivot in new directions as opportunities from changing market conditions emerge.
Balanced underwriting combined with agility
2022 was a year of global dislocation and complexity, but throughout we remained true to our core values, executing our ambitious strategy to deliver profitable growth across all lines. We achieved this by underwriting a balanced book of business across multiple platforms, with the agility to respond to changing market conditions. Innovation also remained at our core with the development of new insurance solutions such as CryptoGuard and Carbon Offset Invalidation. We also continue to evaluate and support various parametric Property products to provide the market with solutions beyond traditional insurance.
Market conditions moved markedly during 2022. The Directors and Officers (D&O) market saw competition emerge and a slow down in IPOs and SPACs, resulting in an over supply of capacity and lack of demand driving rates down. Cyber rates continued an upward path, albeit at a more conservative pace following the much-needed price correction of the previous two years. In Property Risks we have reached a market turning point, and we anticipate significant rate increases in treaty reinsurance and the direct Property market in 2023. However the market changes, our approach to underwriting remains consistent – our focus is on underlying pricing and risk dynamics, market knowledge and experience and standing by our clients.
New structure – more specialism
In March 2022 we restructured our underwriting teams to improve interconnectivity and achieve synergies. We now have an underwriting structure of four more equally sized divisions, which ensures a balanced book of business and is better able to manage short and long tail drivers of risk and reward.
Bringing together the Property insurance and reinsurance teams to form Property Risks and the Executive Risk and Speciality Lines teams to create Specialty Risks, has given us access to deep and broad insights into market dynamics, allowing us to better anticipate trends, identify opportunities or raise the alarm if risks are rising.
MAP Risks underwriters are experts in their specialist products and segments and while the specifics of risk differ between classes, their clients are sometimes the same and often face similar challenges, making for an ideal environment for cross fertilisation of ideas and growth of our underwriting via our international platforms.
Cyber Risks has exciting growth opportunities ahead as digitisation sees demand for cyber insurance protection grow exponentially. As a Cyber market leader, we have the experts in-house that continue to build our comprehensive Cyber ecosystem and in 2022 led the market wide debate on catastrophic Cyber, to protect our clients, the market and shareholders from the growing threat of a Cyber catastrophe.
Small business underwriting
Alongside these four divisions, Beazley Digital offers cross class specialist digital underwriting capabilities to the SME market. Our SME brokers and clients can now access our expert underwriting team via multiple channels, ensuring ease of doing business. In its first full year of trading the new division has experienced significant increased demand.
Data driven specialists
To ensure we continue to add greater insight and build knowledge and expertise in exposure management and the use of data, we are actively investing further and adding specialists to our team. Beazley hired its first Chief Data Officer in 2022, appointed a Senior Financial Climate Risk Specialist, and we are focused on building our pricing and exposure management team. As we make a concurrent investment into modelling tools, we will continue to need highly skilled specialists who can turn data into useful tools and benchmarks for underwriting action.
Agility in action
New structures, platform strength and a high-quality team are the firm foundations from which we can respond and change as market conditions move. In the second half of 2022 we saw movement in Property markets and as rates began to harden, we were able to optimise our Property portfolio as both a seller and buyer of reinsurance. Our Property Risks division will take advantage of this excellent opportunity for growth as the market is rapidly hardening into 2023. However, it will do so in the certain knowledge that the ongoing work we are doing to manage climate risk will mean we are not just here for short term gain but to sustainably underwrite this core class of business.
D&O, long one of our key areas of specialism has seen competition come into the market, at a point where our assessment is that the risk landscape remains extremely high. As a result, when we do not believe the rate justifies the risk we have pulled back, reduced our appetite as we continue our disciplined approach to underwriting D&O. A caution we will maintain in 2023, although we believe the market will likely stabilise with supply and demand coming more in line.
Our US business continues to grow, and we have hit our goal of $2bn gross premiums written through the platform in December 2022. Beazley’s ‘Insurance. Just different.’ message resonates strongly in the thoughtful way we underwrite and the client centric approach we take to claims in the world’s largest insurance market. Growth also continues at pace in Europe, where we see significant opportunities and where we are investing in underwriting expertise. Our Lloyd’s wholesale platform sees our underwriters leading global thinking on the challenges our client and brokers face. In particular, we can be proud of innovations that come from our specialist teams in this market, such as underwriting the first commercial insurance policy for projects on the moon.
We underpin our strategy by flexing our reinsurance purchasing and choosing to retain risk or share it based on the pricing dynamic. This thinking came to the fore in the second half of 2022 as we anticipated dramatic changes to Property Treaty reinsurance rates and with our November capital raise, we are well placed to retain more risk and profits on our own balance sheet rather than extend our use of outwards reinsurance.
I joined Beazley just over a year ago because I was impressed by the quality of the underwriting team and the effective and considered way in which they execute our underwriting strategy. In 2022, it was testament to this approach that we have delivered a 89% combined ratio and seen growth of 14% despite perhaps the most challenging geopolitical situation in a generation.
Underwriting focused on rigorous attention to detail and delivered by a team of experts that question decision making and actively values challenge and follow up have been key to this result.
This is combined with an agile approach to seizing opportunities as they emerge, whilst always keeping the interests of our shareholders and clients at the forefront of our minds. These will remain our defining principles throughout 2023.