Beazley’s reinsurance division underwrote 9% less premium last year as it responded to overcapacity in the market.

“We will prune the book further [this year],” Chairman Dennis Holt said last week as the company announced a 16% drop in annual profit to $US217.8 million ($279.61 million).

Beazley’s reinsurance recoveries fell and expenses grew last year.

The Dublin-based reinsurer and insurer’s gross written premium gained 3% to $US2.02 billion ($2.59 billion) and its combined operating ratio deteriorated to 89% from 84% in 2013.

Mr Holt says challenging underwriting decisions may be required in the current market, and the company will act rather than wait for the underwriting cycle to turn.

“We are at a juncture that requires tight underwriting and expense discipline,” he said.

He says the most successful insurers will have the confidence and capacity to invest in growth opportunities when competitors may be holding back.

CEO Andrew Horton says Beazley’s profit reflects a benign claims environment, particularly for catastrophes, plus falling rates across many lines.