Beazley profit falls as claims rise and investment returns shrink

Beazley’s first-half profit fell as the insurer paid out more for claims and investment returns fell heavily but top-line growth was strong as rates firmed.

Pre-tax profit for the six months to 30 June fell 64% to $57.5m (£44m) from a year earlier. Gross written premiums rose 15% to $1.32bn.

Net insurance claims rose to $549.5m from $438.9m. The Lloyd’s of London insurer has paid out a total of $238m for hurricanes, earthquakes and fires that hit the US and Mexico in 2017, in line with its expectations.

Increased losses at the property portfolio not related to the 2017 disasters prompted Beazley to strengthen its reserves by $33.7m. Rising US interest rates pushed returns from Beazley’s investments down to $8m from $79.4m.

Premiums rose across Beazley’s five businesses and growth was strongest for property, one of the divisions hardest-hit by the 2017 disasters. Rates rose 3% overall in the first half, reversing a trend for falling rates a year earlier when a lack of catastrophes attracted more capital into the market.

Andrew Horton, Beazley’s chief executive, said: “Beazley saw strong top line growth during the first half of the year, with premiums up 15%. Growth in premiums was strongest in our property division, where rates have risen sharply following the heavy catastrophe losses incurred by insurers and reinsurers last year. We now see a better rating environment in which we can seek growth across a broader range of business lines.”

Beazley’s combined ratio, which measures profitability, rose to 95% from 90%. A figure below 100 means underwriting was profitable. If claims are in line with expectations Horton said the full-year combined ratio should be in the low to mid 90s.

The FTSE 250 company increased its half-year dividend to 3.9p a share from 3.7p.