Beazley Plc · LSE:BEZ
Beazley — Corporate Update (October 2024)
30 slides from Beazley's corporate update, Oct 1, 2024
Slide 1: Cyber Risk Update
beazley Cyber Risk Update
Slide 2: Presenters
Barbara Plucnar Jensen Group Chief Financial Officer Paul Bantick Group Chief Underwriting Officer Aidan Flynn Head of Cyber Underwriting Strategy 2
Slide 3: Contents
Contents 01 The Opportunity P.5 02 Where are we today P.8 03 Our Expertise P.11 04 Managing Our Exposure P.14 05 Long Term Outperformance P.23 3
Slide 4: Disclaimer notice
Disclaimer notice Certain statements made in this presentation, both oral and written, are or may constitute “forward looking statements” with respect to the operation, performance and financial condition of the Company and/or the Group. These forward-looking statements are not based on historical f
Slide 5: The Opportunity
01 The Opportunity a, beazley
Slide 6: An era of accelerating cyber risk
An era of accelerating cyber risk $23.84 Trillion BUT… 25% The expected global cost of cyber-crime by 2027* of business leaders still feel unprepared to deal with the threat* *https://www.weforum.org/agenda/2024/01/cybersecurity-cybercrime-system-safety/ *Spotlight On Cyber and Technology Risks 2024
Slide 7: Demand led growth – Market to grow to $40bn by 2030
Demand led growth – Market to grow to $40bn by 2030 Global GWP forecast to 2030, $bn North America Forecast North America Europe CAGR Most mature region with relatively high penetration levels (24-30) 40 Global Wholesale 26% 6 34 +18% 5 23% 28 11 Europe 24 3 Major growth opportunity across regions a
Slide 8: Where we are today
02 Where we are today
Slide 9: Today’s cyber landscape
Today’s cyber landscape Loss trends Competition Pricing • Ransomware frequency • Market poised for growth and • Pricing environment adequate continues to be flat in our book innovation for Beazley and reflective of risk environment • Volatility in some accounts • Stable policy coverage with regards
Slide 10: Cyber pricing - rate adequacy
Cyber pricing - rate adequacy Cyber Risks cumulative rate change 300.0% 250.0% 200.0% 150.0% 100.0% 50.0% 0.0% 2018 2019 2020 2021 2022 2023 2024 HY Cumulative Cyber Rate 10
Slide 11: Our Expertise
03 Our Expertise
Slide 12: Beazley Cyber Risks Overview
Beazley Cyber Risks Overview 260 team members Leading cyber Controls based Average line size of globally insurance alongside approach to pricing $1.9m in-house pre & post and underwriting 136 in underwriting breach response 124 in cyber services services Predominantly Cyber business Business written
Slide 13: Full Spectrum Cyber - expertise that protects
Full Spectrum Cyber- expertise that protects PRE-EMPTIVE CYBER Stay ready for anything • Beazley Cyber Council • Vulnerability and action plans • Anti-phishing campaigns and training • M365 security assessments • Phishing-resistant MFA keys • Incident response, business continuity and PRE-EMPTIVE cy
Slide 14: Managing our exposure
04 Managing our exposure beazley
Slide 15: Attritional Risk
Attritional Risk Definition • Losses expected to be experienced in an underwriting year • Single loss event impacting one insured Examples of Loss • Incident response costs • Cyber extortion (ransomware) • Data recovery • Business Interruption due to Security Breach or System Failure • Third party d
Slide 16: Systemic Risk
Systemic Risk Definition • Cyber losses where there is a common cause. • Typically result from an aggregable event. • Can be malicious or non-malicious • Business interruption is a key driver of systemic risk Examples of Loss • Cloud outage, either prolonged or affecting a significant number of cust
Slide 17: Diverse and carefully managed underwriting
Diverse and carefully managed underwriting Diversity of sectors Active management of line size Retail • 99% of policies have a line size of Utilities & Energy All Others $10m or less Transportation & Logistics Business and • Average line size of $1.9m Professional Tourism & Hospitality Services Word
Slide 18: Aggregate Exposure
Premium grows but exposure remains managed 1,600 1,400 1,200 Aggregate Exposure GWP (USD $m) 1,000 800 600 400 200 0 2018 2019 2020 2021 2022 2023 Total managed GWP Total Aggregate Exposure 18
Slide 19: Cyber reinsurance – market leadership
Cyber reinsurance – market leadership Leading development of the cyber reinsurance market ➢ 2023 Market’s first cyber catastrophe bond programme ➢ 2024 Beazley’s first 144a bond Market’s largest Cyber Industry Loss Warranty 19
Slide 20: $1billion – Comprehensive protection
$1billion – Comprehensive protection $1,200m PoleStar 3 • In addition to $200m of traditional reinsurance cat bond Industry Loss Warranty $400m xs $800m $3bn xs $9bn • Polestar catastrophe bond - $510m Sept 24 – Dec 27 ($290m) ($210m) • Industry Loss Warranty (“ILW”) $290m - provides $800m cover whe
Slide 21: 1-in-250 impact significantly improves
1-in-250 impact significantly improves Continue to manage internal risk appetite based on • Internal probabilistic model • Cyber Threats Council • 3rd party models Beazley Internal Model Cybercube $m Net 31/12/2023 Current 10 50 100 250 500 Probabilistic 1-in-250 651 461 Return Period 21
Slide 22: Realistic Disaster Scenarios – less impactful than 1 in 250
Realistic Disaster Scenarios – less impactful than 1 in 250 • Severe and infrequent - but more frequent than 1 in 250 • Examples could include failures of: – A data aggregator or a shared hardware/software platform or a cloud provider or – physical damage scenarios 22
Slide 23: Long term Outperformance
05 Long term Outperformance
Slide 24: Consistently outperform the market
Consistently outperform the market Reported Loss Ratio 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2016 2017 2018 2019 2020 2021 2022 2023 2016-2021 2016-2023 Beazley Market Market data provided by a third-party business partner Data as at YE 2023 24
Slide 25: Cyber outlook
Cyber outlook Continuing era of Cyber will continue Integrated ‘always on’ Diverse and accelerating risk to see demand-led risk management via balanced book is calls for underwriting growth, particularly Full Spectrum and frontline of defence and claims expertise internationally Beazley Security pro
Slide 26: Q&A 1st October 2024
Q&A 1st October 2024 beazley
Slide 27: Q&A Further resources
Q&A Further resources Risk and Resilience: Spotlight on cyber and technology risks 2024 Podcast: The Voice of Insurance - Cyber Risk - Resilience in a game-changing environment 1st October 2024 Webinar: AI – Friend and Foe
Slide 28: Thank you
beazley Thank you
Slide 29: Appendix
Appendix 1st October 2024
Slide 30: Cyber risks – Insurance Linked Securities
Cyber risks – Insurance Linked Securities 2023: ‘Cairney’ series – the market’s first ever cyber catastrophe bonds • Fully collateralised XoL cover via private 4(a)(2) catastrophe bonds • $81.5m of total limit secured to provide indemnity against cyber catastrophe losses during the period 1st Januar