23rd Jul 2024 11:09
(Alliance News) - Beazley PLC calmed some investors' nerves, after Friday's worldwide IT glitch prompted worries that the insurer could have been caught in the cross-hairs.
Beazley has not shifted its guidance as a result of the event, and analysts at Berenberg believe the firm - and the cyber insurance sector as a whole - could actually benefit from the mayhem further down the line.
Beazley shares rose 1.6% to 660.50 pence each in London late on Tuesday morning.
The stock had fallen 3.3% on Friday, and then 0.2% on Monday.
The FTSE 100 listing left its guidance for underwriting performance unchanged on Tuesday. This followed the global IT crash on Friday last week, caused by a faulty software update by cybersecurity firm CrowdStrike Holdings Inc.
Beazley noted that it is a leading cyber insurer but says that, "based on what is known at this point", the event will not change its guidance for an undiscounted combined ratio in the low-80s for 2024.
A combined ratio below 100 means a profit on underwriting, so the lower, the better. Beazley said it will profit an update with its first-half results on August 8.
Berenberg analysts commented: "We believe that is impressive that Beazley has managed to give an update to the market so quickly, and speaks volumes about its internal risk management practises including across its cyber division, as it managed to get on top of its exposures over the weekend and this should provide reassurance to investors."
Berenberg estimated Beazley's potential loss from the event could range from USD80 million to USD120 million, so landing within catastrophe budget/allowance.
"In addition, we believe the outage – the largest ever of its type – was a very good test of Beazley’s risk management ability," the German bank added. "Beazley's attritional loss ratio in cyber has been (and still is) strong; however, its book had never been tested against a big accumulation event.
"The same applies for the cyber insurance industry more broadly. In our view, the event will allow for further calibration of cyber cat models across the industry and we consider that as a positive since that a big concern of investors in the past has been that these models had not been tested in real life."
Berenberg continued: "Overall, we believe that the event is a net positive for the industry/Beazley, as not only it will allow the market to mature, it could result in firmer cyber insurance pricing (rates were down 15% from peak), while also boosting demand for cyber insurance."
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Beazley