20th Jul 2018 08:14
LONDON (Alliance News) - Beazley PLC on Friday reported a fall in profit in the first half of its current financial year, hit by a decline in investment performance.
The FTSE 250-listed insurer reported pretax profit of USD57.5 million for the six months to the end of June, down 64% from USD158.7 million for the same period in 2017.
The decline reflects a much lower investment return than the same period in 2017, down significantly to USD8.0 million from USD79.4 million. The drop in investment performance was caused by the recent rise in US interest rates, Beazley said.
Net premiums written for the period rose 18% to USD1.11 billion from USD936.4 million year-on-year. Growth in premiums was strongest in the company's property division, the company said, where rates have risen sharply following the heavy catastrophe losses incurred by insurers and reinsurers last year.
Beazley's Property division - one of the two insurance divisions most impacted by last year's natural catastrophe events - saw a 25% increase in premiums to USD243.4 million from USD194.1 million a year earlier.
The Specialty unit also continued to grow strongly in the first half, with premiums up 16% year-on-year to USD649.9 million USD560.4 million, benefiting from the company's brand and market position in the US.
Beazley said it achieved a combined ratio at 95%, up from 90% a year prior. The higher ratio represents a deterioration of underwriting profitability, as the further the ratio is below 100%, the more profitable the insurer's underwriting business.
For the period, prior year reserve releases amounted to USD48.1 million, down from USD83.4 million the year before.
The company increased an interim dividend to 3.90 pence per share from 3.70p paid the prior year.
"Beazley saw strong top line growth during the first half of the year," said Chief Executive Andrew Horton.
"Our investment return in the first half was depressed by the impact of rising US interest rates on our bond portfolio, but we expect the rate rises seen in the first half of the year will help us deliver stronger returns going forward," added Horton.
Beazley shares were down 11% at 495.60 pence early Friday.
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