Beazley shares dive as lower investments cause profits to plummet 64%

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Beazley shares dive as lower investments cause profits to plummet 64%

The insurer said pre-tax profits for the half-year plunged by nearly two-thirds to £44m.


Beazley said lower returns on investments hit profits (Dominic Lipinski/PA)
Beazley said lower returns on investments hit profits (Dominic Lipinski/PA)

Shares in Beazley fell more than 11% after the insurer blamed lower investment returns for sending profits down 64% in the first half of the year

The firm said it suffered a significant drop in pre-tax profits, which tumbled from 158.7 million US dollars (£122 million) to 57.5 million US dollars (£44 million) in the six months to June 30.

That was despite a 15% rise in premium income to 1.3 billion US dollars (£1 billion).

The firm said that was due in part to “a much lower investment return” caused by the “marked rise” in US interest rates in the first half of the year, but added that high yields would be to its benefit “for the remainder of the year and beyond”.

The news caused shares to fall more than 11% in morning trading.

Chief executive Andrew Horton 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.

“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.”

The company said it experienced top-line growth across all of its underwriting divisions including property, which was one of the two businesses most affected by last year’s natural disasters – namely a recent string of Atlantic hurricanes and earthquakes in Mexico.

Its property division income grew 25% to 243.4 million US dollars (£187 million), up from 194.1 million US dollars (£149 million) a year earlier.

Beazley said it has paid out 238 million US dollars (£183 million) to date to “help businesses and communities rebuild in the wake of last year’s natural catastrophes in the US and Mexico”.

It said that figure was in line with expectations and the reserves it had set aside.

The company also announced on Friday that its finance chief, Martin Bride, will step down in the second quarter of 2019.

It is now launching a search for his replacement.

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