(Reuters) — Lloyd’s of London insurer Beazley on Friday reported a drop in first-half profit as its investment portfolio was hit by market volatility, but raised its full-year profitability guidance on a rise in cyber risk premiums.
Beazley, a major cyber insurer, said it now expects its combined ratio – a measure of an insurer’s profitability – to be between 85% and 90% by 2022, much better than analysts’ forecasts of around 90%.
A level below 100% indicates an insurance profit and a lower percentage indicates higher profit.
Beazley reported a first-half pre-tax profit of $22 million, down from $167 million in the same period last year, due to hefty losses on its investment portfolio.
The specialty insurer said cyber premiums almost doubled to $473 million from $267 million in the first half of 2021.
“Cyber premiums have increased so much because the exposures have increased because of the increase in cybercrime over the last four or five years,” CEO Adrian Cox told Reuters in an interview.
Demand has also increased as more companies see the need for protection against cyber attacks, he said, while improvements in Beazley’s ability to assess risk mean the frequency of losses has decreased.
While the insurer’s capital levels have grown as earnings have improved, Mr. Cox that Beazley was unlikely to pay special dividends in the near term, as he believed there would be opportunities to write new deals instead.
Beazley said separately on Thursday that chairman David Roberts will leave the board in autumn 2022 to become chairman of the Bank of England’s court.