Lloyd’s of London member Beazley’s profits plummet 48 per cent as interest rate hikes dent portfolio
Shares in specialist insurer Beazley today fell almost nine per cent after the firm told investors its profits had plummeted in 2022 due to a sharp drop in income from its investment portfolio.
The insurer said its overall pre-tax profits fell 48 per cent in the year ending in December 2022 to $191m, as rising interest rates saw its $9bn investment portfolio deliver a loss of $179.7m.
Company chief executive Adrian Cox blamed the investment losses on last year’s “challenging geopolitical environment,” after it set aside $50m in 2022 to pay for claims related to the war in Ukraine.
Beazley’s finances were hit by a wave of claims related to the Ukraine war in 2022, and also suffered losses related to the wider impacts of Russia’s invasion on the global economy, the insurer said.
The specialist insurer, however, grew its underwriting portfolio, while also improving its combined ratio – the ratio of income from premiums to outgoings – as it hiked its payouts to investors.
Cox in turn praised the firm’s “very strong” underwriting performance as he noted the insurer grew its underwriting portfolio by 14 per cent to $5.27bn.
The insurer also improved its overall income/outflow ‘combined ratio’ from 93 per cent in 2021 to 89 per cent in 2022.
The specialist insurer’s underwriting premiums growth came as its cyber insurance business grew 40 per cent to $1.16bn.
The firm also grew its property underwriting business by 5.8 per cent, to $859.8m, while at the same achieving a 98 per cent combined ratio on its property underwriting – an improvement on its 106 per cent ratio in 2021.
The improved ratio came despite the fact Beazley expects to take a $120m hit from Hurricane Ian, the third costliest natural catastrophe on record.
Beazley also upped its dividend from 12.9p in 2021 to 13.5p in 2022.
Shares in Beazley were trading 8.79 per cent lower at the time of reporting.