Profit ratio

Beazley’s first-half profit tumbles on investment losses as underwriting performance improves

Specialty re/insurer Beazley reported a combined ratio of 87% for the first half of 2022, the best half-year since 2015, although investment losses suffered during the period lowered its profit before 87% taxes.

Beazley’s profit fell from $167.3 million in the first half of 2021 to $22.3 million in the first half of 2022, due to an investment loss of $193 million, compared to a gain of almost $84 million last year.

The insurer attributes the large investment loss to Russia’s continued invasion of Ukraine, which it says fueled “an unusual combination of excess demand and supply constraints”, which ultimately led to an unusual business environment.

On the liability side of the business, the company reported an underwriting profit of $232.4 million in the first half of 2022, compared with a profit of $84.2 million a year earlier.

Gross premiums written increased, year over year, by 26% to $2.6 billion, while net premiums written (NPW) climbed 25% to $1.8 billion.

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The growth seen in the first half of 2022 was supported by “a buoyant pricing environment,” Beazley notes, with an 18% premium rate change seen on average across the business.

By segment, Beazley reports that its Cyber ​​Risks division benefited from the favorable pricing environment in the first half of 2022, nearly doubling its premium to $472.7 million, which helped deliver pre-tax profit. of nearly $65 million, with a combined ratio of 74%.

In Property Risks, Beazley notes that a relatively low frequency of natural disasters so far in 2022 in this segment led to a combined ratio of 77%, compared to 101% in the first half of 2021, which helped the unit to generate a profit of $44.1 million, compared to $20.8 million last year.

Within special risks, the carrier recorded premium growth of 19%, supported by a change in rates of 4%. However, the unit recorded a pre-tax loss of $53.6 million due to investment losses, despite recording a combined ratio of 94%.

Digital also had a strong start to the year, Beazley says, producing a GPW of $98 million and a combined ratio of 85%, with pre-tax profit of $3.6 million.

Adrian Cox, Chief Executive Officer (CEO) of Beazley, commented: “We maintained the momentum of the second half of 2021 with gross premiums up 26% and better than expected claims. A difficult investment environment impacted earnings; however, I am delighted that we achieved our best half-year combined ratio since 2015.

We continue to actively manage inflation and recession and our estimate of the war in Ukraine remains unchanged. Given the positive experience of the first half of this year, we are able to update our combined ratio forecast to a high level of 80 for 2022 assuming an average loss experience for the second half of the year.

“As we reflect on the first half of 2022, no one can doubt that we find ourselves in the midst of an uncertain and complex risk environment, where unpredictability is a dominant feature. Under these circumstances, it is our responsibility to do what it takes, helping our customers navigate, providing them with relevant insurance protection and capacity, backed by best-in-class risk management and loss prevention strategies. Beazley will continue to deliver on our vision for the rest of 2022 and beyond and I look forward to presenting you with a series of successful annual results in February 2023, where our current expectation is a combined ratio in the 80s assuming an average claims experience for the second half of the year,” he added.

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