"The key strengths that have led to this positive result are our expertise-led, specialty underwriting and our knowledge based, client focused claims service."
Adrian Cox
Chief Executive Officer
I am pleased to be reporting a record pre-tax profit of $1,254.4m (2022: $584.0m), a strong investment return of 4.9% (2022: (2.1)%) and an impressive combined ratio of 71% for 2023 (2022: 79%). Our results demonstrate that the clarity of our strategy across platforms, products and geographies not only gives good access to risk but when combined with disciplined underwriting and a responsive claims infrastructure, delivers sustainable profits for all our stakeholders.
A year of achievement
Beazley achieved its goals in 2023. We successfully deployed capital across the business to capture opportunities and our insurance written premiums (IWP) now stands at $5,601.4m (2022: $5,246.3m). Our net IWP growth of 24% gives a strong indication of the Company's trajectory during 2023 and I am pleased we've achieved this despite several headwinds. Property Risks has had a particularly successful year with premiums increasing by 64%, taking IWP to $1,351.9m (2022 $823.2m). The key strengths that have led to this positive result are our expertise-led, specialty underwriting and our knowledge based, client focused claims service. I would also like to thank our trading partners, our brokers and our clients across the world for their support of our business.
Access to high quality risk is delivered via our straightforward and clear three platform strategy which brings together Wholesale via Lloyd’s and insurance companies in North America and Europe. In 2023 this strategy was further enhanced with the establishment of our dedicated Excess and Surplus (E&S) carrier in the US, which will open up access to business that is currently often only available to onshore carriers.
The appointment in June 2023 of Fred Kleiterp as European General Manager has brought additional focus and energy to our underwriting in the region and we look forward to seeing the roll out of more of the products and services we are known for across our platform in Europe.
There can hardly have been a more important moment for Beazley to stand with our clients and deliver specialist insurance risk management and capital as they address the challenges of climate change, rapidly advancing digitisation and a sea change in geopolitics. On all these key issues, Beazley has made an important contribution during the last 12 months.
It was also great to see our investments team complement the underwriting result, delivering an investment return of 4.9% (2022: loss of 2.1%). While we are primarily an insurance company, with assets under management in excess of $10bn, generating returns from our portfolio is a key focus for us and it is pleasing to see the effort made in this area bearing fruits.
Underwriting for climate change
We moved at speed to be at the forefront of the market as property insurers adjusted to the impact that climate change is bringing and which we believe will create a long term opportunity for Beazley, particularly in North America. We were able to do this because of the hard work done on risk selection, property valuations and, importantly, in building a climate risk framework. This framework seeks to engage with clients to understand, not just the impact of climate risk today, but how it is evolving and changing.
This work is part of an ongoing journey to assess a risk that is not following a linear path of development and to also seek out the opportunities that the energy transition will bring.
As a specialty insurer we need to support businesses to move beyond fossil fuels and during 2023 this saw us ramp up our renewable energy underwriting capabilities and invest in understanding how we can add further value to the carbon capture and storage industry.
Leading on cyber
To meet growing demand from clients for cyber insurance we believe it is vital for the industry to have access to a deep pool of capital which will allow it to hedge accumulation risk. We were therefore pleased, in January 2023, to be the first insurance company to launch a cyber catastrophe bond and to go further as the year turned with the launch of our first publicly traded cyber catastrophe bond. We are also seeing that broad market consensus is being achieved around the complex subject of cyber war, bringing clarity of purpose to the cover which is to the benefit of all.
Uncertainty calls for specialty
It is clear to us all that the geopolitical certainties that persisted for much of the last 80 years have shifted and we are in a challenging phase while new structures and norms take hold. Our expertise in understanding global trade flows, transportation and political uncertainty is actively helping support clients as they navigate through.
Agile cycle management
We are able to deliver consistent profitability because we operate a robust and effective approach to managing the insurance cycle. In 2023 this was demonstrated by our strong commitment to the Property Risks segment, where a change in the rating environment offered significant opportunity. In contrast, the directors and officers (D&O) market is suffering from excessive competition and so we took the decision to stand back. This is never easy and I want to commend our Specialty Risks team for their professionalism and committed underwriting discipline, noting that this has allowed them space to creatively explore new and growing niches in the liability market.
A team that delivers
I want to thank our outstanding team across disciplines and geographies whose hard work and flexibility this year has helped deliver our record profit. Their commitment to living our values of Being Bold, Striving for Better and Doing the Right Thing, whilst working alongside our broker partners and supporting clients, is a key differentiator for Beazley and one that ensures strong retention across the business.
While the contribution of the entire team underpins our success, I would like to specifically mention some important changes that have happened in our senior team during the year. Brenna Westinghouse was promoted to Head of Strategy and, in January 2024, we welcomed Liz Ashford as Chief People Officer and Head of ESG.
Finally, I am looking forward to working with our new Chief Financial Officer (CFO) Barbara Plucnar Jensen, who will join Beazley on 1 May 2024. Barbara was, until late 2023, Group CFO at Tryg and she comes with over 25 years of experience in the financial services industry. Her depth and breadth of experience, together with her leadership style, will be both a great cultural fit and an asset to Beazley.
Responsibility
Being a Responsible Business is important to us and, in 2023, we reviewed our approach to further embedding ESG at Beazley. This work will inform our next round of three year target setting which is focused on maintaining the diversity of our workforce where we already see significant progress (45% senior women and 27% People of Colour) and in reducing our contribution to carbon emissions which today are 47% lower compared to 2019 levels when normalised per FTE.
I am pleased that our ESG Consortium, two years since founding, is building positive momentum and from 1 January 2024 has moved fully to syndicate 5623. It is also exploring how it can offer capacity via our North American and European insurance companies, as client demand for ESG solutions continues to develop.
Our Responsible Business efforts extend to our investment portfolio and our Impact Investment Fund made a positive contribution in 2023, by becoming a founding investor of the Big Issue Social Impact Debt Fund, which will contribute to housing, care and social infrastructure projects in the UK.
The work we have already concluded in the ESG space, together with the continuing effort to include climate change risk in our underwriting, will inform the development of our Net Zero Transition plan which we will deliver during 2024.
Harnessing AI
2023 saw a leap forward in the capability of Artificial Intelligence (AI) and in particular, Generative AI. We believe that this technology will enable the simplification of manual processes, improve decision making and ultimately improve product and service offerings to brokers and clients. We are continuing to expand our use of AI, including piloting Generative AI in several areas of our business, to help improve speed, accuracy and to reduce risk.
AI is opening up exciting new horizons where our expert teams will increasingly be able to make faster and more effective decisions that will enrich their work by reducing administrative burdens. It will also improve our ability to grow, as the technology takes up the operational strain that an expanding business has historically created.
Getting on with the job
Recent years have seen many external challenges from pandemic to war and the impact of climate change. At Beazley we have been adapting to change, ensuring our underwriting contemplates the evolving risk landscape, increasing our own resilience and responding to customer needs. As we look ahead, we continue to operate with one eye on emerging threats and opportunities, be that AI technology or changes in the legal environment, while the other is firmly set on ensuring access for clients and brokers to our specialty products and services. Our expectation for 2024 is for high single digit gross IWP growth and an undiscounted combined ratio in line with our initial guidance for 2023 of low 80s.
We believe that by continuing to focus on what we do best, underwriting and managing specialty insurance risk, we will fulfil our purpose of enabling our stakeholders to explore, create and build and that this approach will deliver the ongoing profitability that our investors rightly expect of us.