Beazley PLC's (LSE:BEZ) half-year profit slumped by almost a third as the Lloyd’s of London insurer battled slower premium growth, higher expenses and a more costly claims environment.
Pre-tax profit for the six months to 30 June fell to US$502.5 million from US$728.9 million a year earlier.
Premium growth slowed sharply, with gross written premiums rising just 2% to US$3.19 billion compared with almost 7% growth in the same period last year. Net premiums were up by only 1%.
Underwriting profitability also came under pressure. The undiscounted combined ratio, a key measure of claims and expenses as a proportion of premiums, worsened to 84.9% from 80.7%, reflecting a heavier claims burden.
Beazley pointed to an active loss environment, citing Californian wildfires, a spike in ransomware attacks on UK and European retailers, and rising litigation costs in North America.
Operating expenses climbed as the company paid out higher long-term incentives following strong recent performance and continued to invest in technology and data capabilities. The expense ratio rose to 33.6% from 31.6%.
Investment returns improved to US$308.5 million, or 2.7%, aided by higher yields, but were not enough to offset weaker underwriting results.
Management maintained full-year guidance for an undiscounted combined ratio in the mid-80% range, emphasising its focus on disciplined growth in a challenging market.