Beazley shares have regained ground after the insurer said last week’s global tech meltdown ‘will not change’ its full-year performance expectations.
The Lloyd’s of London firm’s shares slipped on Friday when a faulty systems update from cyber security firm CrowdStrike caused a widespread outage that affected an estimated 8.5 million Windows devices worldwide.
As a top insurer of cyber security risk, investors were concerned about how this may impact Beazley.
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But the FTSE 100 firm said on Tuesday that ‘the event will not change the undiscounted combined ratio guidance’ – a measure of profitability – of low-80s for the full year.
‘Beazley will update the market on its first half performance on 8 August and will provide any further relevant updates in relation to this event at that time,’ it added.
Beazley shares were up by around 2 per cent to 662p approaching midday.
Peel Hunt analyst Andreas van Embden noted that Beazley did not detail the size of any potential loss it may face, adding that the Crowdstrike-sparked outage at Microsoft ‘is likely to generate insurance claims under cyber policies covering this specific type of event’.
He added: ‘Although it was not a cyber-attack (ie non malicious), many cyber insurers include a ‘cloud (system) outage’ as part their cover.
‘Therefore, insurers are likely to pay out for business interruption claims and contingent (dependent) business interruption claims linked to the direct disruption inflicted on Microsoft software users.’
Beazley currently estimates that its largest ‘cyber peak risk scanario’ suggests it would face $205million in losses, which it thinks would be linked to a ‘major cloud outage’, according to van Embden.
He added: ‘We believe $205million is a more relevant maximum risk exposure figure for the Crowdstrike outage.
‘We have included a large loss budget of $175million in our 2024 estimates, which includes a significant weighting for cyber risk.’
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