Specialist and Lloyd’s focused re/insurer Beazley plc has said that it expects to record a pre-tax profit for the full-year 2017, in a trading update, despite the impacts of major catastrophe loss events.
Beazley had previously reported that there was a chance that it would record an underwriting loss for the year, with a full-year 2017 combined ratio of around 100%.
However, in the trading update the re/insurer said that it now anticipates reporting a combined ratio of 99%, so a profitable underwriting year, along with a positive investment return as well.
The company said that as well as the combined ratio of 99% for the year ended 31st December 2017, it expects to report an investment return of 2.9% for the year on average invested assets of $4.8 billion.
Beazley also revealed an expected reduction of around $5 million in the value of its U.S. deferred tax asset, due to the impact of the reduced U.S. corporation tax rate.
Given the better than expected results, Beazley said that it anticipates pre-tax profits for 2017 will be ahead of current market expectations.
Is this a sign that the losses from the major catastrophes have not been as severe as expected? Or simply that Beazley has generated enough of an investment return to drag itself into profit for the year?
Beazley had previously pegged its third-quarter catastrophe losses, so including the three major hurricanes and the north California wildfires, in a range between $200 million and $300 million. The firm hadn’t pre-announced catastrophe losses for the fourth-quarter.
However, Beazley’s previous forecast for a combined ratio of around 100% has proven accurate, 99% is extremely close. So shareholders should be pleased that the companies reporting has proven so close to the actual loss experience.
