Investment hit cuts Beazley H1 profit by 27%

Lloyd’s insurer Beazley made a profit before tax of $82.3m (£53.7m) in the first half of 2013, down 27% on the $112.9m profit it made in the same period last year.

The main reason for the drop was a sharp fall in investment returns to $300,000 (H12 2012: $36.1m). This was caused by rising interest rates lowering the market value of Beazley’s bond portfolio.

On a positive note, Beazley’s combined operating ratio improved by two percentage points to 89% (H1 2012: 91%), helped by a 28% rise in prior-year reserve releases to $60.8m (H1 2012: $47.6m).

Gross written premiums rose 5% to $1.1bn (H1 2012: $1bn).

Beazley chief executive Andrew Horton said: “Beazley delivered a strong underwriting result in the first half of the year.

“Gross written premiums grew by 5% and we achieved a combined ratio of 89%, despite increasing competition in a number of classes of business.

“Investment returns were down due to mark-to-market losses in our fixed income holdings caused by rising interest rates.”

However, Horton was sanguine about the prospect for future improvement in investment returns. He said: “Looking forward, higher interest rates promise enhanced investment returns.”