Beazley Plc rose in London trading after 2012 profit beat analysts’ estimates and the Lloyd’s of London insurer said it plans to pay investors a special dividend that matches its usual payout for the year.
Beazley climbed 4.5 percent to 199 pence a share in London trading, making it the third-best performing member of the FTSE 250 Index. The insurer’s pretax profit rose after the firm boosted premiums, introduced new products and doubled investment returns. The shares are up 36 percent in the past year.
“Beazley reported 2012 results which were comfortably ahead of our forecasts, complemented by powerful evidence of capital management,” Eamonn Flanagan, a Liverpool, England-based analyst at Shore Capital Group Ltd. with a buy rating on the stock, wrote in a note to clients today. “We believe that a further re-rating of the stock is warranted.”
Beazley, which insures property against natural catastrophes and companies against lawsuits, increased premium rates 3 percent last year following the most costly disaster year on record in 2011. The firm boosted investment returns by taking more credit risk and sold new policies that protect companies against cyber-crime.
The insurer’s pretax profit rose fourfold to $251.2 million in 2012, beating the $201 million median estimate of nine analysts surveyed by Bloomberg. That allowed the firm to pay a special dividend of 8.4 pence a share in addition to an annual payout of 8.3 pence.
“We had a combination of smaller share buybacks and special dividends in 2010, but this year with the share price being more buoyant we decided to distribute capital through a special dividend only,” Chief Executive Officer Andrew Horton said in a telephone interview today.
The insurer is considering selling a 75 million-pound ($118 million) bond to retail investors that would help replace some of its subordinated debt, he said. The firm raised the same amount last year, paying 5.375 percent interest.