But higher brokerage and investment costs drove up Beazley combined operating ratio
Beazley’s 2016 pre-tax profits grew by 3.2% driven by higher investment returns and growth in its US Specialty lines business.
The Lloyd’s insurer reported a profit before income tax of $293.2m in the year to December 2016, up from $284m in 2015.
Gross written premiums (GWP) also grew by 6% to £2.2bn in the same period.
However its combined operating ratio (COR) deteriorated by two percentage points to 89% from 87% in 2015.
This was driven by a two percentage point increase in the insurer’s expense ratio, caused by higher commissions to brokers and investment in the business.
Challenging underwriting conditions for many lines of business and rate declines that averaged 2% across its portfolio also contributed to the increased COR.
Specialty lines growth
Specialty lines, the company’s largest division, grew its premiums by 14.2% to £1.15bn in 2016.
Beazley said: “This business was buoyed by the relatively attractive premium rates for small scale risks that our mature US operations are now well equipped to handle.
“We have been building a strong platform in the US for more than a decade now and it has served us well.”
Beazley chief executive Andrew Horton said: “Beazley’s performance in 2016 was good across the board.
“The bedrock of our success remains our underwriting performance, which generated a combined ratio of 89% in 2016 despite highly competitive conditions in many of our markets.
“Overall premium growth doubled to 6% and we were able to develop a number of growth opportunities, particularly in the US, that enabled us to offset areas where market conditions dictated that we cut back.”
The insurer said trying to achieve profitable growth in 2017 would be as challenging as it was in 2016.
But it remained confidence that there were significant opportunities to grow in the America, and on a smaller scale, in other markets outside London.
The insurer added that demand for its specialist products, particularly among small and mid-sized businesses, remained strong.
Chairman Dennis Holt said: “The London market faces a more challenging near term future. The influx of capital into this market in recent years, and the resulting rating pressure, has contributed to tighter margins across many lines of business.
“If the relatively benign claims environment we have grown used to in recent years were to deteriorate, the consequences of writing risk at these rates would become even clearer.”