Beazley shares rally as Lloyd’s of London insurer shrugs off global tech chaos

Beazley shares recovered ground after the insurer said last week’s global technology crisis “will not change” its full-year performance expectations.

Shares in Lloyd’s of London fell on Friday after a faulty update to cybersecurity firm CrowdStrike’s systems caused a widespread outage affecting an estimated 8.5 million Windows devices worldwide.

As a leading insurer of cybersecurity risks, investors were concerned about the potential impact this could have on Beazley.

But the FTSE 100 index said on Tuesday that “the event will not change guidance for the undiscounted combined ratio” – a measure of profitability – of around 80 points for the full year.

“Beazley will update the market on its first half performance on 8 August and will provide any other relevant updates in relation to this event at that time,” it added.

Beazley shares rose around 2 per cent to 662p as midday approached.

Peel Hunt analyst Andreas van Embden said Beazley did not detail the size of any potential losses it may face, adding that the Crowdstrike-caused outage at Microsoft “is likely to trigger insurance claims under cyber policies covering this specific type of event.”

He added: ‘Even though it was not a cyber attack (i.e. not malicious), many cyber insurers include ‘system (cloud) disruption’ as part of their coverage.

‘Therefore, insurers are likely to pay business interruption claims and contingent (dependent) business interruption claims linked to direct disruption inflicted on users of Microsoft software.’

Beazley currently estimates that its highest “cyber risk scan” suggests it would face losses of $205 million, which it believes would be linked to a “major cloud outage,” according to van Embden.

He added: “We believe $205 million is a more relevant maximum risk exposure figure for the Crowdstrike service disruption.

“We have included a large loss budget of $175 million in our 2024 estimates, which includes a significant weighting of cyber risk.”