Beazley swings to first-half loss due to Covid claims
Insurer Beazley said on Thursday that it swung to a loss in the first half due to coronavirus-related claims.
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In the six months to the end of June, it swung to a pre-tax loss of $13.8m from a profit of $166.4m in the first half of last year, pointing to "high volumes of claims arising from Covid-19 impacted lines".
Beazley said its political, accident and contingency division was hit hardest due to the mass cancellation of events caused by Covid-19.
Net investment income fell to $83.2m from $170.3m and the company’s combined ratio - which measures whether it is earning more revenues from its collected premiums relative to the claims it pays out - deteriorated to 107% from 100%. Still, the insurer said it expects to achieve a full-year combined ratio of around 100%.
Beazley said it had decided not to declare a dividend for the first half of 2020, having paid out 4.1p a share in the same period a year ago.
The company noted that total claims arising from the pandemic are predicted by some to be the largest insurance market losses of all time. Its share of this remains at $170m net of reinsurance, split between Beazley’s political, accident and contingency book ($70m) and its marine, property and reinsurance books ($100m).
"We continue to be mindful of the potential claims on our liability business arising from the likely economic recession caused by Covid-19," it said. "While it is too early to provide guidance on the value of claims arising from business written pre-Covid-19, we have been actively adjusting our underwriting strategy on business written post the Covid-19 outbreak."
At 0845 BST, the shares were up 3.4% at 445.60p.
Broker Shore Capital said: "Beazley reported what we view as a resilient set of first half 2020 earnings, with losses lower than estimates, no movement in the initial loss estimate for Covid-19 of $170m net of reinsurance and the expectation of a full year COR of 100%, in line with 2019.
"We believe this will allow the company to fully benefit of the wide spread hardening insurance pricing the market is seeing post the Covid-19 insurance losses."