Fundamental difference in today’s softening market versus 2010-2018: Beazley CEO

Insurance (and likely reinsurance) is considered to be a softening market by specialty player Beazley, but CEO Adrian Cox wrote today in his interim results statement that there is a fundamental difference between now and the prolonged soft market of 2010 to 2018.

“During the prolonged soft market between 2010 and 2018, rate momentum was limited and market-wide growth opportunities were scarce,” Cox wrote.

During that period, Beazley elected not to pursue unprofitable growth and instead invested in developing the cyber class of insurance business, an investment that has paid off by making the firm one of the most notable in the class.

“That foresight reflects the same judgement we continue to apply today,” Cox added.

He went on, “In contrast to the previous softer cycle, there is a fundamental difference in today’s environment; the claims environment is active in respect to both frequency and severity, and uncertainty is elevated.

“We have seen climate related natural catastrophes such as the wildfires in California, alongside heightened cyber threats including a wave of ransomware attacks which particularly impacted retailers in the UK and Europe in the first half of 2025.

“This has been further compounded by the continued rise of social inflation in North America, which is driving greater complexity and cost across multiple lines in the specialty insurance sector.

“In this context, rate discipline is essential.”

In this environment there continues to be a strong demand for insurance and reinsurance protection, with the world increasingly unpredictable, volatility high in markets and geopolitics and the climate threat always there, Cox explained.

“However, current insurance conditions with strong supply and elevated competition means we are in a softening market,” he wrote. “Nevertheless, long-term demand for insurance continues to grow as businesses seek protection in an ever more complex and fast-paced risk environment.”

With this sentiment, Cox is signalling cycle management once again and the results speak for themselves, as Beazley grew premiums just 2% in the first-half of 2025, down on 6.9% growth in the prior year.

Cox explained, “Whilst below prior guidance, this is reflective of our deliberate prioritisation of rate adequacy and disciplined underwriting and this evolution is entirely consistent with the nature of the insurance cycle. It is both familiar and something we know how to manage well. Our product selection strategy and prudence in reserves allows us to maintain the consistency of our financial performance, irrespective of where we are in the cycle.”

However, the company still delivered $502.5 million of profit and an annualised return on equity of 18.2%, which while both down considerably on the prior year is seemingly larger due to the California wildfires and still beat analyst consensus.

Despite the wildfires though, Beazley reported an undiscounted combined ratio of 76.1% for its property risks division, which was an improvement on the prior year.

On the property risks outlook in the current market environment, Cox highlights the class remains attractive to Beazley and also sees a clear parametric growth opportunity.

“January’s wildfires in California or the flooding in Texas in July exemplify the impact of natural catastrophes. We believe that most risks are insurable in the commercial market at a sustainable price and with clear terms and conditions, Cox wrote.

On parametric insurance he further explained, “The addition of parametric expertise offers the potential of new solutions to underwriting complex property risks.

“Parametric insurance is an important tool utilised by Humanity Insured, of which we are a founding partner. Its role is to help communities in the developing world that are on the frontline of climate change to access insurance cover to protect their livelihoods. It is a strong example of how innovation in insurance can deliver social good.

“Innovation is always at the heart of what we do and by building out specialist products that offer a protective barrier for gaps in insurance cover, we are bringing new cover to the market and offering solutions to an increasingly complex risk landscape.”

Highlighting the response to the volatility he sees, Cox explained that Beazley also bolstered its protection in the first-half.

“As part of our commitment to managing tail risk and safeguarding the balance sheet, we secured additional property excess of loss reinsurance during the first half of the year. This reflects the fact that our exposure is becoming increasingly complex and volatile, and as it grows, so too does the need for robust reinsurance protection,” he explained.

The operating environment that insurance and reinsurance players like Beazley find themselves in today is very different to the prolonged soft market of the early 2010’s, a far more volatile, unpredictable and uncertain world.

Other things that are different include the terms, conditions and all-important attachment points that capital is being put at risk to.

But some things remain the same in insurance and reinsurance.

Capital build-up has been most pronounced in the traditional marketplace, given strong retained earnings. ILS capital is once again looking to exert the efficiency of its capital-base, at a time of rising interest in the asset class.

The two tensions, of awareness of the uncertainty and risks faced, versus the appetite to deploy capital while rates and contract features remain attractive, are set to play off against each other through the coming reinsurance conference season and renewal negotiations.

We can expect to hear a lot about why this time it is different.

But, as ever, it may all come down to discipline and whether it is maintained across the market, which truly makes this softening period different to the last.