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Beazley sinks to $13.8mn H1 loss off COVID-19 claims

23rd July 2020 - Author: Charlie Wood

Specialist insurer Beazley has posted a $13.8 million pre-tax loss for the first half of 2020, against a profit of $166.4 million in the same period in 2019.

Beazley, insurance reinsuranceThe company attributes this loss to high volumes of claims arising from COVID-19 impacted lines, as well a lower investment return of $83.2 million, or 1.4%. The same period in 2019 yielded a $170.3 million, or 3.3%, investment return.

Beazley says this return is consistent with expectations at the beginning of the year and hides the dramatic financial market volatility seen in the interim.

Falling risk-free yields in the first quarter generated significant capital gains on the company’s fixed income exposures, but these were offset by the losses arising from risk assets.

The combined ratio for the first half of 2020 deteriorated to 107%, against 100% in 2019.

Beazley achieved strong growth of 12% with premiums increasing to $1,663.9 million, up from $1,483.6 million in the first half of 2019.

Growth in gross premiums written has been supported by rate increases across all of Beazley’s divisions. On average rates have increased by 11%.

Beazley notes that these increases are primarily due to the recalibration seen across the market to the heightened claims activity present since 2017.

Primarily led by catastrophe losses, the claims activity also includes the claims inflation experienced in several of the company’s liability lines which has been developing over the last few years.

COVID-19 has also had its part to play, with many affected lines seeing a spike in the rates on the renewals.

“Beazley achieved strong premium growth of 12% in the first half of 2020, with three of our seven divisions achieving double digit growth,” said Beazley Chief Executive Officer Andrew Horton

“The first half of 2020 was defined by COVID-19 and claims arising from the pandemic have driven the combined ratio to 107%, with Beazley recording a loss before tax of $13.8m.

“Despite this we expect a combined ratio of around 100% should be achievable for the full year.”

Bezley moves into the second half of the year with a strong balance sheet, bolstered by the capital raise in May of $292.6 million.

The company says this extra capital means it can continue to make the most of the many planned growth opportunities present in the market whilst ensuring a strong position to address any developments in liability claims arising from COVID-19 in the second half of the year.

Beazley adds that this additional capital, and rate momentum, should allow the company to maintain low double digit top line growth by 31 December 2020.

It also anticipates that a full year combined ratio around 100% will be achievable.

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