Shares in Beazley (BEZ) fell over 5 per cent on the morning the Lloyd’s of London underwriter reported a significant fall in profits for the six months to June. The principle contributor to the decline was a slump in investment income, while strengthening reserves in the property division cut prior year reserve releases by over 40 per cent.
The combined ratio (of claims as a percentage of premium income) deteriorated from 90 per cent to 95 per cent mainly because of higher catastrophe losses affecting the property division, where the combined ratio moved from 93 per cent to a loss-making 116 per cent.
However, the longer-term picture looks brighter. Gross written premiums rose by 15 per cent, and after a sustained period of softening premiums, rates rose by 3 per cent against a 2 per cent decline a year earlier. And while the investment return was affected by higher US interest rates, depressing the value of the bond portfolio and equating to an investment return of just 0.2 per cent, it does mean that future investment returns will be greater because of higher bond yields, which in recent months rose to 2.9 per cent. Trading was especially strong in the US, where written premiums grew by nearly a quarter.
Analysts at Numis are forecasting net tangible assets for the year to December 2018 of 213.1p, from 192.7p a year earlier.
| BEAZLEY (BEZ) | ||||
| ORD PRICE: | 526p | MARKET VALUE: | £2.77bn | |
| TOUCH: | 525-526p | 12-MONTH HIGH: | 622p | LOW: 441p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 89 | |
| NET ASSET VALUE: | 279p | COMBINED RATIO: | 95% | |
| Half-year to 30 Jun | Net premiums ($bn) | Pre-tax profit ($m) | Investment income ($m) | Dividend per share (p) |
| 2017 | 0.94 | 159 | 79.4 | 3.7 |
| 2018 | 1.11 | 58 | 8.0 | 3.9 |
| % change | +18 | -64 | -90 | +5 |
| Ex-div: | 02 Aug | |||
| Payment: | 30 Aug | |||
| Capacity owned: 82 per cent | ||||
