Beazley profit increases

IRELAND-domiciled Lloyd’s insurer Beazley has reported a pre-tax profit of £100.7m ($157.4m) for 2009, up from £87.2m the previous year, on gross written premiums of £1.116bn, up from £875.7m in 2008. First State, bought from Hartford for $34.0m and now part of Beazley’s US commercial property team, wrote $93.9m of business. The combined ratio remained at 90%.

Beazley reported an average rate in crease of 3% for 2009, compared with a decrease of 6% the previous year. Energy rates were up 27%, cat reinsurance up 8%, and commercial property up 9%. Specialty lines saw an overall fall of 1%.

Prior-year reserve releases were £67.2m, down from £72.8m. Satisfactory development in most lines was marred only by an adverse development on a large engineering claim, which hit the property sector.

CEO Andrew Horton said that “in 2010 insurers and reinsurers will be fortunate to experience a repeat of the past year’s low incidence of catastrophic losses”, although he noted that, despite a drop-off in rates for cat-exposed business, prices remained high.

Beazley increased its reinsurance spend in 2009 to £267.5m from £135.3m, partly because of the strengthening of the US dollar against sterling, partly because of the inclusion of the First State reinsurance programme, and partly because of additional reinsurance cover in its specialty lines surplus reinsurance programme.

Political risk losses reached £33m, after “an increased number of claims on the political risks portfolio, resulting from exposure to trade finance losses and failed financial institutions in developing economies”.

Reserve releases in political risk and contingency were cut from £11.6m in 2008 to £2.2m last year. The investment return for the year was 2.7%, compared with a loss of 1.5% the previous year. The company is paying a second interim dividend of 4.7p per share. Beazley’s share price was up 1.67% to 104.2p in early trade, in a flat market.