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UPDATE 2-Low rates, expansion plans hurt insurer Beazley's special dividend
February 5, 2015 / 1:32 PM / 3 years ago

UPDATE 2-Low rates, expansion plans hurt insurer Beazley's special dividend

(Adds CEO, analyst comments; updates shares)

By Richa Naidu

Feb 5 (Reuters) - Lloyd’s of London insurer Beazley Plc cut its special dividend to prepare for a further decline in global insurance rates and to fund its expansion this year, Chief Executive Andrew Horton said.

Over the past two years, insurance rates have either stagnated or fallen due to fierce competition.

Beazley’s margins are expected to be “a bit lower” in 2015 as rates are likely to fall further, Horton told Reuters.

“We’re going to continue to invest despite the environment becoming tougher from a margin point of view,” Horton said, speculating that some of Beazley’s competitors with more challenging pricing environments would not be able to do so.

Beazley provides a range of insurance, mainly on the Lloyd’s market, from property and casualty to trade credit policies.

Horton said Beazley wanted a larger footprint in the United States, where it would open more offices and hire more underwriters. Beazley is also planning to recruit more in Britain “wherever (it) can”.

Horton said a sharp fall in the company’s pretax profit also hurt its special dividend payout.

Beazley’s pretax profit declined 16 percent to $261.9 million in the year ended Dec. 31.

Beazley said it would pay a special dividend of 11.8 pence per share for 2014, below analysts’ average estimate of 12.7 pence.

“A 12.7 pence return was perhaps a bit too optimistic given the trading outlook and the need to retain a decent capital buffer,” Joanna Parsons, head of insurance and research at Westhouse Securities, wrote in a note.


Beazley’s pretax profit took a hit as its reserve releases plunged to $158.1 million last year from a record high of $218 million in 2013.

The company recovered substantially more reserve money in 2013 that it had set aside to pay off claims from pre-2010 catastrophes and the credit crunch in 2008, which cost less than anticipated.

Claims in 2014 - including the destruction of aircraft in Tripoli, downing of the Malaysia Airlines plane in Ukraine, Hurricane Odine and U.S. data breaches - were flat.

Beazley’s net written premiums rose 3 percent to $1.73 billion last year.

The company’s shares were down about 1 percent at 298.4 pence on the London Stock Exchange at 1318 GMT. (Editing by Gopakumar Warrier and Kirti Pandey)

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