Profit halves at insurer Beazley on natural disaster losses and a poor investment environment
Insurer Beazley today blamed natural disasters and a poor investment environment for its profit falling by more than 50 per cent in 2018.
Beazley’s 2018 profit before tax was $76.4m (£59.1m), down from $168m, while earnings per share fell from 19.5p in 2017 to 9.7p last year.
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The company said it estimated the combined costs of US hurricanes Florence and Michael, and two Japanese typhoons Jebu and Trami, at $105m net of reinsurance and reinstatement premiums.
It was also hit by $40m of claims net of reinsurance for the California wildfires which in 2018 were the worst in the state’s history.
A poor investment environment hit the insurer’s investment yield which fell from 2.8 per cent to 0.8 per cent.
The company said the 70 per cent decline in its investment return was “equivalent in effect to a large catastrophe loss on our underwriting portfolio”.
Speaking to City PM chief executive Andrew Horton said: “Twenty eighteen was a frustrating year, we had good topline growth…but it was more challenging from an investment perspective and claims perspective.”
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Gross written premiums grew 12 per cent to $2.615bn while its combined ratio was 98 per cent, a one percentage point improvement on 2017.
Looking forward, Beazley said in contrast to 2018 it entered 2019 with “some moderate tailwinds” citing “firmer pricing for some lines of business and higher interest rates to underpin our investment returns”.
“We are targeting high single digit growth in 2019 on the back of rate increases across the portfolio,” Horton said.
Beazley's share price rose 4.6 per cent to 517p.