Beazley PLC (LON:BEZ) profits more than halved in 2018 after a series of natural disasters led to higher claims for the insurer.
But shares jumped 4.9% to 518p in morning trading as chief executive Andrew Horton said the company has entered the new year with “positive premium rate momentum and higher interest rates that should deliver stronger returns going forward”.
READ: Beazley sees California wildfires claims coming in at US$40mln
In the year ended 31 December 2018, pre-tax profit fell to US$76.4mln from US$168.0mln a year ago.
The estimated cost of US hurricanes Florence and Michael, and two Japanese typhoons Jebu and Trami, was $105mln, net of reinsurance and reinstatement premiums. The group took a further US$40mln hit related to claims, net of reinsurance, for the California wildfires in 2018.
The insurer blamed a weak investment environment for a drop in the investment yield to 0.8% from 2.8%. The company said the 70% decline in its investment return was “equivalent in effect to a large catastrophe loss on our underwriting portfolio”.
Gross written premiums increased 12% to US$2.6bn while the combined ratio was 98%, up one percentage point on a year ago.
On the outlook for 2019, Beazley said it has started the year with some “moderate tailwinds” including firmer pricing for some lines of business and higher interest rates that should improve investment returns. The firm is targeting “high single digit” premium growth in 2019.
However, the group added that the “world remains a very uncertain place, with political risk - the kind that none of us can insure against - threatening global growth through trade wars and protectionism”.
“In this environment our focus will continue to be on the determinants of growth that we can control, investing in our people, our systems, and in our offices around the world,” it said.