Lloyd's of London insurer Beazley (BEZ) delivered a mixed performance in the six months to June, with strong activity in the US helping to offset weakness elsewhere. A generally subdued claims environment meant that premium rates fell by an average of 2 per cent, with declines of 15 per cent in energy business, 4 per cent in reinsurance and 7 per cent in large-scale commercial property business. However, speciality lines, which is the largest division, saw premium rates up by 1 per cent.
Lower claims remove upward pressure on rates, and there is always a temptation to chase business at lower rates, which inevitably erodes margins. However, given the strong competition for large, catastroph-exposed classes of business, Beazley has been rebalancing its portfolio towards smaller business, and the results have been impressive, with locally underwritten US business growing by 20 per cent year on year.