Combined operating ratio improves to 89% as GWP rises 5%
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.”
Beazley H1 2013 results in $m (compared with H1 2012)
- Gross written premium: 1,066.7 (1,013.2)
- Net written premium: 758 (650.8)
- Profit before tax: 82.3 (112.9)
- Prior-year reserve releases: 60.8 (47.6)
- Investment return: 0.3 (36.1)
- Combined operating ratio (%): 89 (91)
- Return on equity (%): 12 (18)
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