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Lloyd's insurer Beazley points to underwriting loss after steep claims

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By Reuters

(Reuters) – Beazley <BEZG.L> said on Friday its main measure of insurance profitability was now pointing losses for 2019 as it set aside $80 million to cover hurricane and other claims at the end of an expensive quarter for listed Lloyd’s insurers.

Beazley said it expects its full-year combined ratio – normally the main gauge of profitability for insurers – to be between 100% and 102%. Readings over 100% indicate claims exceeded premiums earned.

It added, however, that year-to-date returns on investment had surged to $215 million from $26 million, as falling U.S. yields boosted gains in the company’s fixed income portfolio.

The company, which provides casualty and property, cyber and political risk insurance, said gross written premiums jumped 12% to $2.19 billion for the nine months ended Sept. 30 from a year earlier.

The $80 million reserved by Beazley for payouts on natural catastrophes compares to the $33.2 million set aside by rival Lancashire <LRE.L>.

Larger player Hiscox <HSX.L> earmarked $165 million to cover claims earlier this month while also increasing combined ratio targets for its retail business.

The Bank of England earlier this week warned it will scrutinise insurers that are overly optimistic about how much capital they require to cover growing risks from the United States and elsewhere.

The Hiscox update sparked a 15% plunge in its share price earlier this week as at least four brokerages cut their price targets on the stock.

In Friday’s statement, Beazley Chief Executive Officer Andrew Horton said the company continued to experience heightened claims activity due to its exposure to catastrophes in the third quarter.

UBS analysts last month estimated natural catastrophe losses for 2019 would reach about $70 billion, adding that could eat into insurers’ reserves and lead to higher prices.

(Reporting by Muvija M in Bengaluru; editing by Patrick Graham)