Beazley H1 results hit by property reserves

Specialist insurer Beazley’s first half 2018 profits were dampened by reserve strengthening in the property division as well as a “much lower” investment return than the same period in 2017, according to CEO Andrew Horton.

The group’s pre-tax profit dropped to $57. 5 million in the first six months of 2018 from $158.7 million in the same period of 2017.

“In our property portfolio, we have seen an increase in attritional losses, unrelated to last year’s catastrophe events, on business written in 2016 and 2017, which required us to strengthen reserves by $33.7 million,” Horton said.

Operating activity in property recorded a loss of $23.7 million in the first six months of 2018 compared to a profit of $18.4 million in the same period of 2017.

“Reserving is not an exact science and from time to time losses in individual lines of business will exceed expectations. We have taken remedial action, where required, to tighten pricing and the terms of the book and have also decided not to renew some loss-making business,” Horton explained.

The combined ratio in the property division deteriorated to 116 percent in the first half from 93 percent in 2017. At the same time, the claims ratio in the property division increased to 76 percent from 51 percent over the period.

Overall, the group combined ratio deteriorated to 95 percent from 90 percent.

At the same time, net investment income fell to $8.0 million in the first half of 2016 from $79.4 million in the same period of 2017.

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The drop in investment performance was caused by a “marked rise” in US interest rates, which Horton expects to benefit investment returns for the remainder of the year and beyond.

At the same time, Beazley grew gross premiums written to $1.32 billion from $1.15 billion over the period.

“We saw top-line growth across all five of our underwriting divisions, with property – one of the two divisions most impacted by last year’s natural catastrophe events – growing fastest with a 25 percent increase to $243.4 million,” Horton said.

Beazley noted that the company remains on target to achieve double-digit premium growth in 2018, led by the specialty lines and catastrophe-related business.

“Following the catastrophes of 2017, we will experience below average reserve releases from prior years during 2018. Provided that the claims environment is reasonably in line with our expectations, a combined ratio in the low to mid-nineties should be achievable for the full year,” Horton said.

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More of today's news

Everest Re warns over $250m Q2 reserve charge

Beazley seeks CFO as Bride leaves

Allianz unit AGCS hires RSA exec as regional market head

Drought in Europe hits agricultural production

Beazley records 3% rate increase in H1

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