Beazley has ramped up its cost estimate following the recent string of US natural disasters from US$175-275 million to US$200-300 million, net of reinsurance. The insurer announced this re-estimate in the third quarter to take account of the devastating wildfires in California.
A difficult few months have resulted in Beazley forecasting a break-even underwriting performance for 2017 with an expected combined ratio of 100%, compared to 2016’s profitable 89% combined ratio.
Beazley has seen success in specialty lines in Q3, where its premium income rose by 6% to US$1.76 billion. But overall, rates have fallen by 1% in the first nine months of the year, according to a company trading statement.
“The third quarter of 2017 was defined by the high frequency and severity of natural catastrophes,” said Andrew Horton, CEO, Beazley. “[We are] in the catastrophe insurance business and paying natural catastrophe claims is part of what we do.
“Our focus is currently on providing the support and resources necessary to help our policyholders recover as quickly as possible.”
Despite pressure on costs due to the natural catastrophes, the Beazley statement said the insurer expected “positive rate momentum on catastrophe exposed business going into the fourth quarter.”
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