The political risks & contingency division at Beazley, led by Adrian Lewers, brings together a number of lines of business that were either invented at Lloyd’s or substantially developed there. The team writes three types of insurance risks: political risks, terrorism, and event cancellation – the last of which forms the largest part of our contingency book. In 2010 the team delivered an excellent result, achieving a combined ratio of 65% (2009: 112%) on gross premiums of $100.9m, and representing an impressive return to profit compared to 2009. Our business is predominantly written in Lloyd’s and we lead 67% of risks underwritten.
After a difficult year for the political risks market in 2009 caused by a number of large trade credit losses in emerging markets following the global financial crisis, claims fell in 2010 to more normal levels. Rates on our political risks business rose 6% and we underwrote $34.0m in gross premiums. Our highly regarded claims team also progressed towards some significant recoveries albeit that we continue to take a cautious view in our reserves of the quantum and timeframe for future recoveries.
We reaffirmed in 2010 our appetite for trade credit risks that meet our exacting underwriting criteria, including a focus on experience and positive track record on the part of our clients and significant coinsurance requirements to align our clients’ interests more closely with ours. Our main focus continues to be on trade credit risk in developing markets but we are also seeing an increasing volume of business in the developed world.
Our preference whenever possible is to underwrite political risks business from London, where we have a strong concentration of underwriting, claims and analytical skills, but we are willing to locate underwriters overseas in markets that either have a critical mass of their own or attract business that is not seen in London. This was the approach that we took in 2008 with the appointment of Crispin Hodges to spearhead the growth of our business in Singapore. And from the beginning of this year, we are doing the same in the US, where we have appointed Lila Rymer to underwrite political risks and trade credit business from our New York office.
Terrorism rates continued to decline in 2010 as we had expected, falling by 5% in line with the long-term trend since 2002, when commercial property insurers began to exclude coverage for terrorism risks. Profitable opportunities continue to exist in this market, in which we underwrote $44.4m. The terrorism team has specific expertise in ‘hard to place’ countries like Afghanistan, Iraq and Pakistan but has little exposure in India and Thailand which have seen the major loss activity in recent years. In January this year, Chris Parker joined us from Marsh to lead the team.
Our contingency team, led by Chris Rackliffe, had an excellent year, writing total premium of $24.5m, including leading the event cancellation cover for the World Cup in South Africa. We underwrite event cancellation risks of widely varying sizes, from major international sporting events to small trade shows and exhibitions. The small risks part of our business was boosted in 2010 by the launch of Beazley Access, our web-based broker trading system, designed to help brokers place small scale risks more effectively and efficiently. The initial focus for Beazley Access has been the UK and to this end we appointed Michael Price to implement our UK growth strategy.