23rd Jul 2019 08:53
(Alliance News) - Insurer Beazley PLC on Tuesday reported a surge in interim profit, though underwriting has continued to be held back.
Shares were 3.5% higher on Tuesday morning at a price of 555.00 pence each, making Beazley the best performer in the FTSE 250.
Beazley's pretax profit came in at USD166.4 million for the six months to June, almost triple the USD57.5 million recorded a year prior, "buoyed by a strong investment return".
Gross written premiums increased by 12% to USD1.48 billion, with net written premiums rising 11% to USD1.23 billion.
Beazley's return on equity was 19%, from 6% the year before, with the combined ratio at 100% from 95%. The combined ratio is a measure of an insurer's operating performance, and is a ratio of total costs to total net earned premium, with a ratio of under 100% indicating an underwriting profit.
Underwriting was hurt by reserve strengthening in short-tail classes of insurance as well as a continuation in the opening of medium-tail classes at a higher loss ratio.
Beazley has declared an interim dividend of 4.1p per share for the half, up from 3.9p the year before.
Chief Executive Andrew Horton commented: "Beazley achieved strong premium growth of 12% in the first half of the year. Claims concentrated largely in our marine and reinsurance divisions drove our combined ratio to 100%, but premium rates have adjusted accordingly and margins in many lines of business now look healthier than they have in some years.
"We expect to achieve double digit growth over the full year, while continuing to reserve prudently."
"The past nine months have seen a material change in sentiment in our market as heavy claims in numerous lines of business have driven prices higher," said Beazley.
"In September last year, our 2019 business plan envisaged rate rises well below what we have actually seen in the first half of the year. We accordingly see opportunities for growth in lines of business such as marine and aviation, as well as property, where margins now look healthier than they have been for some years."
"Within the Lloyd's market, upward pressure on rates has been boosted by the market-wide initiative to remediate lines of business that had underperformed for several years," the FTSE 250 firm continued.
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