Beazley raises profit forecast despite market volatility as Lloyd’s of London insurer’s cyber business booms
- Beazley specialises in marine, property, data breach and life insurance
- It now expects its combined ratio – a measure of an insurer’s profitability – to be between 85 per cent and 90 per cent for 2022
- Shares in the firm were up more than 8.9 per cent early Friday
Lloyd’s of London insurer Beazley has raised its full year outlook thanks to an increase in cyber risk premiums.
The revised forecast comes despite a fall in first-half profits, as the result of market volatility impacting its investment portfolio.
Beazley, which specialises in marine, property, data breach and life insurance, said it now expects its combined ratio – a measure of an insurer’s profitability – to be between 85 per cent and 90 per cent for 2022, surpassing analysts’ forecasts.
Lloyd’s of London insurer Beazley has raised its full year outlook thanks to an increase in cyber risk premiums
A level below 100 per cent indicates an underwriting profit and a lower percentage indicates higher earnings.
Beazley shares were up more than 8.9 per cent early Friday off the back of the news.
Beazley reported a first-half pretax profit of £18.4 million, down from £139.7 million the year before, due to hefty losses on its investment portfolio.
The specialist insurer’s performance was boosted by cyber premiums, which almost doubled to £395million from £230 million in the first half of 2021.
‘Cyber premiums have increased so much because exposures have increased due to the rise of cyber criminality in the last four or five years,’ Chief Executive Adrian Cox told Reuters in an interview.
Demand has also risen as more companies see the need for protection from cyber attack, he said, while improvements to Beazley’s ability to assess risk means its frequency of losses has reduced.
While the insurer’s capital levels have grown as income improved, Cox said Beazley was unlikely to pay special dividends in the near term, believing there would be opportunities to write new business instead.
Beazley separately said on Thursday that Chairman David Roberts will step down from the board in the autumn of 2022 to become chair of the Court of the Bank of England.
Looking ahead, Cox concluded in the firm’s half-year report: ‘As we reflect on the first half of 2022, no one can be in any doubt that we are in the middle of an uncertain and complex risk environment, where unpredictability is a dominant feature.
‘In these circumstances it is our responsibility to do the right thing, supporting our clients to navigate through, offering them relevant insurance protection and capacity, matched by first-rate risk management and loss prevention strategies.
‘Beazley will continue to deliver in line with our vision for the remainder of 2022 and beyond and I look forward to reporting a successful set of full year results to you in February 2023 where our current expectation is a combined ratio in the high 80s assuming an average claims experience for the second half of the year.’