Mar
17
Munich Re Results Dip In 2010
Filed Under Insurance Company | 1 Comment
The major German reinsurer, Munich Reinsurance, announced a 3.9 percent fall in net profits for business in 2010 at US$3.36 billion, compared to US$3.5 billion in 2009. There was a big 39 percent decline in profits in the fourth quarter of 2010, reaching US$649.3 million; this was due to the payment of large claims for major floods in Australia and the September 2010 earthquake in New Zealand during this financial period.
Munich Re, one the world’s largest reinsurers, said profits also suffered from lower returns on investments during 2010, with year-on-year operating profit declining by 16 percent in 2010 to total US$5.53 billion – down from US$6.56 billion.
Munich Re stated that it was aiming to reach after tax profits of US$3.3 billion in 2011, but the reinsurer said that this target was already under threat from the extent of high catastrophe claim payouts from events which have already happened in the first three months of 2011.
Munich Re is believed to be one of the reinsurance companies hardest hit by the Japanese catastrophe on the 11th March 2011, with the devastating earthquake and tsunami, which struck the northeast coast of Japan, likely to cause the insurance industry to have to pay out multi-billion dollars worth of corporate and personal claims. The international financial markets fear that Munich Re – along with other major reinsurers – have extensive exposure to claims arising from this major natural disaster, but not from the emerging issues associated with the meltdown in the Fukushima nuclear plant.
Even before the catastrophic events in Japan, Munich Re had highlighted that claims likely to arise from major natural disasters in the first quarter of 2011 would exceed the group’s budgetary provision for claims for such events in 2011. This was mainly due to the Christchurch earthquake in New Zealand in February and the extensive flooding in the Australian state of Queensland following Cyclone Yasi.
The 6.3 magnitude earthquake in New Zealand, which destroyed large parts of Christchurch, is estimated to cost Munich Re roughly US$1 billion, with the damage caused by the floods in Australia at the beginning of 2011 expected to result in a claims bill of US$1.5 billion for the reinsurer.
Rival insurers have also estimated the level of costs expected to follow from the Christchurch earthquake, with Swiss Re predicting costs of US$800 million, Hannover Re US$200 million and the Ace group US$115 million.
Reinsurers have been quick to attempt to assure investors and global financial markets over the exposure to these catastrophes – particularly Japan – as billions have been wiped off the value of insurance companies worldwide.
The insurance industry was also heavily impacted in 2010 due to the high volume of claims payouts resulting from natural catastrophes, with last year being the one worst on record for these sorts of events. The total insurance bill for 2010 totalled approximately US$37 billion, with earthquakes in Chile, China, New Zealand and Haiti, floods in Pakistan and the prolonged heat wave and subsequent fires in Russia being the most expensive natural disasters in 2010.
Summarizing Munich Re’s 2010 results, Nikolaus von Bomhard Chairman of the Board of Management said: “It was not an easy year given the high burdens from major losses, but we were nevertheless able to bring it to a successful close. With a profit of €2.43 billion, we even slightly surpassed the target we had set ourselves. The year was good in particular because, despite very low interest rates, our 13.5% return on risk-adjusted capital came very close to our target of 15%.”
In 2010 losses incurred from natural catastrophes by Munich Re totaled US$2.1 billion with the largest pay out being US$1 billion for the Chilean earthquake which struck the South American country in February 2010.
Munich Re is not the only multinational reinsurer to feel the financial burden of large scale payouts in 2010. Companies across the reinsurance sector have reported mixed results arising from substantial payouts for catastrophic events in 2010. Members of the Lloyd’s of London syndicate, such as Beazley, Omega Insurance and Brit Insurance all had exposure to the high level of catastrophes in 2010, in addition to Swiss Re, Hannover Re and Scor.
As a result of the high number of major catastrophes in 2010, the reinsurance industry reviewed risk management techniques in an attempt to improve financial performance in 2011. However, the emerging scale of natural disasters so early in 2011 will undoubtedly place tremendous pressure on profitability this year and create more emphasis on achieving improvements in returns from investment portfolios.
In addition to Munich Re’s reinsurance business, its primary insurance brand, Ergo, performed strongly with operating profits totaling US$1.7 billion in 2010 the group’s net earnings after tax generating US$494 million. The Ergo brand has developed a strong reputation in the domestic insurance market in Germany and is rapidly expanding its international operations in the life, health, travel, property and casualty insurance together with its legal expenses insurance. There was robust growth in Ergo’s health insurance activities, with business jumping by 6.3 percent to reach US$7.6 billion, contributing to overall premium growth in all insurance sectors to reach US$26 billion.
Insurance Companies Mentioned:
Munich Re
Munich Re focuses on providing financial stability, and consistent risk management based on its extensive solution-based expertise. It operates in all lines of insurance, with around 47,000 employees throughout the world. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. The primary insurance operations are mainly concentrated in the ERGO Insurance Group. ERGO is one of the largest insurance groups in Europe and Germany and 40 million clients in over 30 countries place their trust in the services and security it provides. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand.
Ergo
Ergo is a subsidiary of Munich Re and offers a wide spectrum of insurance provision and services across 30 countries; it currently has more than 40 million customers. Ergo has a strategic focus in Central and Eastern Europe and certain Asian markets. The German insurer has become one of the leading health and legal expenses insurance companies within Europe. Additionally Ergo provides property and personal accident insurance in India.
Ace
The ACE Group was founded in Switzerland in 1985 and is a global leader in insurance and reinsurance serving a diverse group of clients. Headed by ACE Limited, a component of the S&P 500 stock index, the ACE Group conducts its business on a worldwide basis with operating subsidiaries in more than 50 countries and commercial and individual customers in more than 170 countries. The company operates through four segments: Insurance–North American, Insurance–Overseas General, Global Reinsurance, and Life.
Hannover Re
Hannover Re is the third-largest reinsurer in the world, with a gross premium of around EUR 10 billion. It transacts all lines of non-life and life and health reinsurance and maintains business relations with more than 5,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices on all five continents with a total staff of roughly 2,100.
Swiss Re
Swiss Reinsurance Company Ltd was established in 1863 and is present in more than 20 countries. Swiss Re provides reinsurance products and financial service solutions. It offers various reinsurance products covering property, casualty, life, health and special lines – such as agricultural, aviation, space, engineering, HMO reinsurance, marine, nuclear energy, and special risks.
Scor
Scor is currently organized around two main businesses – SCOR Global P&C and SCOR Global Life – which are leading underwriting and reinsurance providers. In addition, the Scor group as an asset management arm – SCOR Global Investment. The group writes business in Europe, Latin America, Asia, the Middle East and the USA.
Mar
11
Hannover Re Delivers Sound Results In 2010
Filed Under Insurance Company, Life Insurance | 2 Comments
Hannover Re, one of the world’s leading reinsurers, has announced stronger than expect financial results for 2010, with net income after tax totaling €748.9 million (US$1.05 billion); this beat the Company’s previous record level of profitability achieved in 2009 with €734 million (US$1.03 billion).
Hannover’s operational business was adversely affected by losses recorded during 2010 as a result of claims from natural disasters offset by strong investment returns and a one-off rebate of €112 million (US$157 million) relating to a tax issue.
The German reinsurer saw premiums grow by 11.2 percent during 2010 to reach €11.4 billion (US$15.7 billion), combined with investment income rising to €1.3 billion (US$1.8 billion). An improvement in the financial return from property and casualty reinsurance over-shadowed weaker results from Hannover’s life and health reinsurance operations.
The income generated from Hannover’s investments more than compensated for losses incurred from the payments arising from catastrophe claims during 2010; the expenditure on claims amounting to €661.9 million (US$913.4) for the year, compared to €239.7 million (US$330.7 million) in 2009.
The significant costs incurred by Frankfurt based Hannover Re in 2010 included the company’s share of claims arising from the impact of natural disasters; primarily the floods in Australia, and the damage caused by the earthquakes in Chile and New Zealand. There were also costs relating to the man-made disaster in the Gulf of Mexico, with the sinking of Deepwater Horizon.
Hannover is confidently forecasting net profits of at least €650 million (US$897 million) for 2011, despite the large scale catastrophes which have already struck early in 2011. It is estimated that the insurer could face a maximum payout claim of €150 million (US$205 million) as a result of the devastating earthquake which struck Christchurch, New Zealand in February plus a substantial payout as a result of the floods in Australia in early 2011.
Although 2011 has started precariously for reinsurers, Hannover is predicting that premium growth will be around 3 percent with strong profits created by concentration on business lines which represent the best opportunities for future growth. There is also scope for Hannover to benefit from the implementation of Solvency II requirements, whereby insurers will need to hold increased financial reserves while operating within the European Union; the potential opportunities for reinsurers being driven by insurers seeking to transfer some associated risks to reinsurance companies.
Regarding other lines of business, Ulrich Wallin Hanover’s Chief Executive Officer said “We again accomplished our growth targets in 2010.This was assisted by the very positive development of our business in the United Kingdom, most notably in the area of longevity risks. Particularly vigorous growth was also recorded in China, where Hannover Re was the first reinsurer to write liquidity-affecting financing contracts.”
Reinsurers have been counting the cost of over exposure to natural catastrophes in 2010, with the upshot being the attention to apply better risk management techniques for business being unwritten in 2011. Although Hannover Re was able to grow profits in 2010, when other reinsurer specialists have been hit by reductions in net income, the fine balance between achieving a satisfactory risk-reward ratio is clearly understood.
Hannover’s competitors – such as multinational rivals Munich Re, Swiss Re, General Re and members of the Lloyd’s of London syndicate such as Brit Insurance, Hardy, Omega Insurance and Beazley – have experienced mixed results in 2010. In recent years, reinsurers have been adversely affected by some strange and difficult to predict environmental events which have taken their toll on the reinsurers bottom line. However, reinsurer’s should be able to benefit from these events by factoring in the profile of the latest disasters in achieving an appropriate risk-reward business model.
Insurance Company Mentioned:
Hannover Re
Hannover Re is the third-largest reinsurer in the world, with a gross premium of around EUR 10 billion. It transacts all lines of non-life and life and health reinsurance and maintains business relations with more than 5,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices on all five continents with a total staff of roughly 2,100.
Mar
3
The Insurance Industry In 2010 and Beyond
Filed Under Uncategorized | 2 Comments
As global insurers report earnings for 2010, mixed trading positions are emerging. While some insurers have announced strong growth compared with 2009, other multinational insurers have struggled to create income growth in markets with an underlying position recognizing tough trading conditions.
In general terms, economic conditions in 2010 showed many signs of global recovery following the financial crisis of 2007-2008, which plunged some of the world’s leading economies into the worst recession in decades. However, the return to growth has been stimulated by ‘quantitative easing’ as government’s pumped money into the economy to generate improvements in productivity. Many companies in the financial sector – banks and major insurance companies – returned to profitability, enabling repayments of bailout loans provided by national governments to be repaid. The loans were given to prevent businesses collapsing following massive losses triggered by failures in the sub-prime mortgage sector; following the bailouts, shares in many financial sector companies trading on world stock exchanges were able improve substantially.
However, worrying signs started to emerge in late 2010 as the national economies in western hemisphere countries – particularly Greece, Ireland and Portugal – were forced to implement critical austerity measures to prevent financial meltdown. However, the position in the emerging markets of Asia and Latin America have been enjoying rapid growth with the economies in the powerhouse countries of the respective regions (China and India in Asia, Brazil in Latin America); in these areas growth has been reaching double digit levels.
In recent years, multinational insurance companies have been undertaking substantial restructuring, with mergers and acquisitions being progressed to optimize opportunities in the expanding markets in the Asia-Pacific and Latin American regions. This is in addition to the streamlining of organizational structures as part of cost cutting actions.
In terms of individual insurance company results, the following positions were reported:
Aegon, the Dutch life insurer which writes most of its business in the USA, UK and Netherlands, reported a fall of 19 percent in net earnings during the fourth-quarter of 2010; net earnings declined from US$541 million to US$438 million year-on-year. Aegon is working towards repaying the Dutch government for a bailout loan provided in 2008, but has struggled to increase written premiums due to being highly dependent on stagnant markets in the USA and Western Europe. However, the Dutch life insurer has undertaken major restructuring in order to cut costs and is planning to accelerate growth in Asia and Latin America markets and is confident that actions taken will achieve long-term benefits.
The American International Group (AIG) reported a jump in earnings in the fourth quarter of 2010 amounting to US$11.2 billion. This was boosted by the sale of assets, as part of a divestment process; without the capital benefit from one-off sales the New York based insurer had an operating loss of US$2.2 billion from global operations in the fourth quarter reporting period. AIG is also working towards paying back the US government for a bailout loan of US$182 billion.
AXA, one the largest insurers in the world, also recorded an income slide in 2010, with net profits falling 24 percent to US$3.7 billion compared to US$4.9 billion in 2009. The French insurer put the steep fall in profits levels down to the strategic restructuring of global operations, with 2010 being a year of transition for the multinational insurer.
Brit Insurance, a member of the Lloyds syndicate, recently reported that profits in 2010 were down to US$191.9 million from US$275.7 million reported in 2009. The London based insurer was hit by high claims resulting from natural catastrophes which happened during 2010 – most notably the earthquakes in Chile and New Zealand.
Australia’s QBE, an insurance and reinsurance specialist, also saw a 17 percent decline in profits due to high catastrophe claims, with net earnings down from US$1.70 billion in 2009 to US$1.60 in 2010.
Another global insurer reporting a profit slump in 2010 was Zurich Financial Services, with a 13 percent drop in net income to US$3.4 billion partly due to higher than expected claims for catastrophe cover.
Market leaders in the reinsurance sector – Munich Re and Swiss Re – felt the burdens of a high claims year and the downturn of the global economy. Munich’s fourth-quarter earnings for 2010 dropped 38 percent to US$ 663 million, down from US$1 billion in the same reporting period in 2009, mainly on the back of major losses from natural disaster claims in 2010. Meanwhile, Zurich’s Swiss based rival – Swiss Re – was hit by a loan repayment to billionaire entrepreneur Warren Buffet; and the substantial claims arising from earthquakes, storms and floods which occurred in 2010 resulting in net income falling by 74 percent compared with 2009 to US$863 million.
However, some insurers reported strong profit growth from operations in 2010, with Allianz – Europe’s largest insurer – reporting income totaling US$6.94 billion – a 22.4 percent year-on-year improvement.
Other insurers reporting improvements in earnings during 2010 include, Manulife, RGA, the Vienna based Insurance Group VIG and insurance specialist Beazley. These are among some of the global insurers able to report gains in revenue and profitability last year.
Major insurers Zurich, Sunlife and Ageas are among global players in 2011 which have announced expansion plans in their global networks by investing in insurance ventures in emerging growth markets. Swiss insurer Zurich has agreed to pay US$1.67 billion to Banco Santander for access to its Latin American distribution channels. While Ageas has entered the rapidly growing Turkish insurance sector through a partnership with locally based Hac? Ömer Sabanc? Holding A.?. (Sabanci). Sun Life has increased its presence in the Philippines by acquiring a stake in Grepalife Financial.
The expectation is that 2011 will see major insurers looking to bolster global presence in the world insurance markets in order to augment premium growth and the strengthening of market positions, either through takeovers or entering into partnership with local operators.
Despite the BRIC countries – Brazil, Russia, India and China – offering insurers new opportunities to increase customers through entry to markets with rapidly expanding economies, there are new worries surrounding action which may need to be implemented to control inflation creating a slowdown in economic activity. There are also concerns that insurers could be faced with the affects of protectionism from local insurance regulators which may hamper growth prospects.
In the mature insurance markets covering the USA, the UK and Western Europe, where recovery from the financial crisis of 2007-2009 is underway, opportunities for insurers to benefit from reforms being introduced in the state provided health services and the recovery from shortfalls in corporate pension contributions are expected to emerge.
In the medium to long-term, the impact of the new Solvency II requirement – which comes into effect in 2013 for financial institutions operating within the European Union – will mean insurers will be obligated to increase their financial reserves to guarantee solvency in times of distress. This new financial regulation means insurers may be wary about making large scale acquisitions or over exposure to financial risk until the full impact of the act is crystallised.
Despite growth among burgeoning insurance markets within Asia, Latin America, East Europe and the Middle East, multinational insurance companies remain vulnerable to emerging economic conditions such as rising inflation and the potential for an increase in interest rates. These factors could stifle growth and have a trickle-down effect on the insurance sector making premium growth difficult.
Many insurers still remain in transition restructuring to overcome the impact of the global financial crisis with some companies still over exposed in slow-moving sectors with little chance of new premium business. While some insurers will be sceptical about returns in 2011, with the devastating natural disasters in Australia and New Zealand and the political upheaval across the Middle East and North Africa likely to influence results.
Mar
2
Catastrophe Payouts Hit Brit Insurance Profits
Filed Under Insurance Company, Personal Accident, United Kingdom | 2 Comments
The Lloyds of London insurer Brit Insurance reported that profits in 2010 were hit by high payouts on catastrophe claims resulting in pre-tax profits of £119.2 million (US$191.9 million) reflecting a fall of 30 percent compared to the £171.3 million (US$275.7 million) achieved in 2009.
Brit Insurance, which was bought by private equity firms Apollo and CVC Capital last year, said that profits in 2010 were adversely affected by substantial claims paid out during the year; the most notably claims arising from the earthquakes in Chile – which cost the firm £29.9 million (US$48.1 million) – and the September quake which struck New Zealand resulting in a £27.9 million (US$44.9 million) outflow of funds. The two events alone costing Brit Insurance a combined total of £57.8 million (US$.93.0 million).
However, Brit’s profit after tax improved by 26.2 percent to total £110.5 million (US$179.9 million) in 2010 – up from £87.5 million (US$140.8) reported in the previous year. There was a slight increase in written premiums of 1 percent in 2010 compared to a 4.8 percent uplift in 2009.
The US-based investment companies Apollo Global Management and CVC Capital Partners were attracted by the future potential in Brit Insurance’s balance sheet and strong market position, which were considered to present huge opportunities for the insurer; these factors prompted the takeover bid. The new owners acquired Brit for £880 million (US$1.4 billion) after their bid was accepted by shareholders in October 2010; the transaction was one of the biggest takeover deals completed in 2010.
Apollo and CVC Capital, who will take full control of Brit Insurance in March 2011, said that the steep decline in the pre-tax profit margin was primarily due to Brit’s high exposure to catastrophe risk coupled with a high number of claims and the low level of new written premiums during 2010.
Brit Insurance’s position was not unique as rival insurers have seen profits dented by high payout claims for catastrophic events occurring in 2010 – insurers such as Hardy and Beazley – which specialize in insurance coverage for large scale events, have experienced difficult operating conditions over the last year.
Earlier this year, Brit Insurance’s Lloyds of London competitors – Beazley Insurance – reported that the cost of the Chilean earthquake in February 2010 resulted in a minimum payout for them of £34.1 million (US$55 million) in claim payments; Beazley also incurred a cost of £21.7 million (US$35 million) as a result of the devastating earthquake in New Zealand in September 2010.
Brit Insurance has a presence in Europe, North America, Asia and Australia and is an international expert in the reinsurance market. The London based insurer, specializes in risks in sectors such as marine, contingency, aerospace, liability, accident and health insurance. Within the reinsurance sector, Brit is recognized as a multi-class and multi-territory portfolio insurer.
The major German based re-insurance specialist – Munich Re – reported that 2010 was one the worst years on record for natural catastrophes, with the effects of earthquakes, heat waves and floods contributing towards the £23 billion (US$37 billion) paid out in claims for insured losses during the year.
Natural disasters which took place in 2010 included the earthquakes in Haiti, Chile and Central China, floods in Pakistan and a heat wave in Russia. These devastating natural events during the last year influenced insurance company profits, with many insurers and reinsurers having high levels of exposure to these events.
Despite being less than a third way through 2011, large scale natural disasters have already hit Australia and New Zealand. At the start of the year devastating floods struck Australia and, more recently, another earthquake hit Christchurch in New Zealand – this one being even more devastating than the similar event in 2010. With political and social unrest now spreading across North Africa and the Gulf region – resulting in damage to infrastructure – global insurers and reinsurers would appear to be heading for another year of major payouts. Nevertheless Brit Insurance is well placed to move forward in 2011 with the new ownership set to exploit its reputation and strength in the insurance industry.
Risk management is the essential role for insurance companies. Consequently getting the risk-reward ratio correct is the key to profitable trading. While international insurers have been adversely affected by natural disasters in 2010 – which have impacted on profits during the year – the most important factor for insurance companies is to ensure year-on-year trading and new written premiums deliver results to achieve long term profitability.
Companies Mentioned
Brit Insurance Holding
Brit Insurance Holdings is a general insurance and reinsurance group, provides commercial insurance products. The company offers accident and health, contingency, marine, aerospace, professional risks, trucking, commercial motor, liability, personal lines, property and packages, small business, war and terrorism, and horses insurance policies. It also provides agriculture, casualty, marine, aviation, and property reinsurance policies.
Apollo Global Management
Apollo Global Management (“Apollo”) is a contrarian, value-oriented investors in private equity, credit-oriented capital markets and real estate. Apollo raises, invest and manage funds on behalf of some of the world’s most prominent pension and endowment funds as well as other institutional and individual investors.
CVC Capital Partners Ltd
CVC Capital Partners (‘CVC’) was founded in 1981 and is a leading global private equity and investment advisory firm, with it’s headquarters in Luxembourg with a network of 20 offices across Europe, Asia and the USA.
Beazley
Beazley plc, was founded in 1986 and is a specialist insurance company, provides underwriting and claims services. Beazley operates in five insurance segments: Marine, Political Risks and Contingency, Property, Reinsurance, and Specialty lines. The company has operations in Europe, the United States, Asia, and Australia.
Munich Re
Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. It operates in all lines of insurance, with around 47,000 employees throughout the world. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. The primary insurance operations are mainly concentrated in the ERGO Insurance Group. ERGO is one of the largest insurance groups in Europe and Germany and 40 million clients in over 30 countries place their trust in the services and security it provides. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand.
Hardy
Hardy Underwriting is a specialist insurer and reinsurer underwriting in the Lloyds market and other worldwide locations. Through its subsidiaries, Hardy is in engages in underwriting insurance and reinsurance products internationally. Hardy is included in underwriting aviation, marine, and non-marine risks on reinsurance and direct basis.
Feb
9
Specialist Insurer Beazley Reports Profits
Filed Under Insurance Company, United Kingdom, USA Health Insurance | Leave a Comment
Beazley the Dublin based insurance specialist has posted a pre-tax profit of US$250.8 million (£155.6 million:€84.7 million) for 2010. This is up from US$158.1 million (£98 million:€116.4 million) recorded in 2009, representing an increase of 59 percent for year-on-year results.
A breakdown of Beazley’s operations in 2010 shows that the insurer generated a 21.4 percent return on equity reflecting an increase from 16 percent last year. There was a 1 percent decline in gross written premiums, which totalled US$1.74 billion (£1.08 million:€1.28 million).
Beazley, a member of the Lloyd’s syndicate, highlighted the competitive pressures across all segments of the insurance business during 2010, although the insurer was able to deliver an improvement in the combined ratio from 90 to 88 percent representing a profit of US$19.2 (£12:€14.4) for every US$160 (£100:€120) from premiums obtained.
The increase in profits was partly driven by favorable foreign exchange rates – contributing US$33.7 million (£20.9 million:€24.8 million) to overall results. However, this was offset by a 57 percent fall in returns from investments as Beazley adopted a lower risk strategy to speculative trading, coupled with the impact of exceptionally low interest rates. Premiums from business renewals declined by 2 percent, but these were more than offset by skilled underwriting practices balancing the insurer’s portfolio.
Beazley’s exposure to the Chilean earthquake in February 2010 is estimated to have cost the insurer approximately US$55 million (£34.1 million:€40.5 million) to US$75 million (£46.5 million:€ 55.2 million) in claims; a figure which has been taken into account in trading results for the year.
The specialist insurer also expected to incur a loss of up to US$35 million (£21.7 million:€25.7 million) from the New Zealand earthquake disaster. However, future claims resulting from the devastating Australian floods this year are unlikely to affect Beazley.
“Our 25th year in business was distinguished by excellent profits and an enhanced underwriting result in the teeth of worsening market conditions. The expertise of our underwriters helped us achieve a combined ratio of 88%, an improvement of two percentage points over 2009. Since we began underwriting in 1986, we have achieved an unbroken track record of profitability through often turbulent market conditions. Our underwriting teams have shown they possess the skills needed to perform strongly in the current challenging environment.” said Andrew Horton, Chief Executive Officer of Beazley, when details of 2010 profits were released.
Beazley, which operates in the UK, the US, Europe and Asia, said it was looking for possible deals to augment its business in 2011 and has not ruled out a future acquisition; Beazley failed in an attempt to take-over rival Hardy Underwriting in 2010 but stressed that any future bids will only be made at the right price. Beazley’s final bid of US$290 million (£181 million:€212 million) for Hardy Underwriting was made in mid-December 2010 but was turned down by the company.
Beazley acquired Momentum Underwriting Management Limited (MUM) in 2008, which helped the company to grow its life, accident and health business delivering revenue of US$78.1 million (£48.4 million:€57.5 million) in 2010 – a figure which was better than expected.
Beazley has established a reputation as a renowned specialist insurer operating on the global stage providing cover for activities such as employment practice liability, directors and officers liabilities and risks associated with mergers and acquisitions. In addition to providing specialty insurance lines, the company provides insurance cover for conventional risks involving property, marine, life, accident and health insurance together with reinsurance products.
The USA is a pivotal market for Beazley and is a sector in which the specialist insurer has grown its presence over the years – accounting for approximately 60 percent of its current business. Business activity in Europe is also an important market for the company, with expansion through an acquisition a possibility. Likewise, Beazley has not ruled an acquisition in the Asia-Pacific region where it currently operates through a small network of outlets.
Beazley highlights the difficult trading conditions in 2010 with limited opportunities for growth. However, the insurer experienced positive returns through organic trading and the acquisition of MUM. A significant part of Beazley’s organic growth came from reinsurance and from an increase in demand for date breach insurance in the USA.
During 2011, Beazley’s expects to strengthen its life, accident and health insurance business in the USA and to strengthen its presence in the specialist insurance accident and health risk segment with the development of a team in the USA to offer simple and streamlined corporate healthcare insurance products to US companies.
Over the last two decades Beazley has increased its market share and has become a renowned specialist insurer on the global stage. As Beazley’s product range expands and its portfolio increases, with the prospect for further acquisitions, the company is well placed to continue its successful results in 2011 when trading conditions are expected to be very competitive.
Insurance Company Mentioned:
Beazley
Beazley plc, was founded in 1986 and is a specialist insurance company, provides underwriting and claims services. Beazley operates in five insurance segments: Marine, Political Risks and Contingency, Property, Reinsurance, and Specialty lines. The company has operations in Europe, the United States, Asia, and Australia.
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