LONDON (Alliance News) - Beazley PLC Tuesday said its interim pretax profit increased by almost two-thirds, helped by a small improvement in underwriting profitability and a significant increase in its investment return, aided by a dearth of major catastrophe events.
Beazley increased its interim dividend per share to 3.1 pence from 2.9p. The specialist insurer said that its capital position is robust, and noted that it is yet to use its USD225.0 million banking facility. It said it will review the balance sheet capital position and "consider whether any capital action is appropriate at the end of the year when the 2015 capital requirements and the 2014 full-year result are certain."
In a statement, Beazley, which has operations in the US, Latin America, Asia and Australia, said that it made a USD132.9 million pretax profit in the six months ended June 30, compared with USD82.3 million in the corresponding period a year earlier. Beazley's gross premiums written increased by 1.0% to USD1.08 billion, boosted by growth in the US more than offsetting intense competition in its large risks business underwritten mainly in London.
Net investment income rose to USD46.8 million from USD300,000. Beazley said that there have been no major changes to its investment strategy. The insurer added that, with regards to its capital growth assets, it is in the process of reallocating about 5% of the portfolio away from hedge funds targeting uncorrelated returns into funds targeting illiquid investments. It said that Stuart Simpson will be joining as senior investment officer.
Net insurance claims increased to USD411.2 million from USD396.1 million. Operating expenses increased to USD309.5 million from USD289.0 million, mainly due to increases in expenses for the acquisition of insurance contracts and for general administration.
"We expect the trends that have emerged with increasing clarity in the first half of the year to carry through to the second half. Our view is that professional liability and management liability lines will be subject to less competition than short tail catastrophe-exposed lines of business," Chief Executive Andrew Horton said in a statement.
"Smaller scale risks will offer more attractive opportunities than large scale risks and, in line with this, our US platform should continue to grow while our London market book may contract," Horton added.
Beazley shares were Tuesday quoted up 3.1% at 256.60 pence.