Beazley Rallies on Higher Premiums, Underwriting Forecast

Beazley Plc climbed to the highest in more than three months after the Lloyd’s of London insurer increased premiums and forecast an improvement in underwriting for the full year.

Gross written premiums increased 5 percent to $1.5 billion in the nine months to Sept 30, as the company wrote more business in reinsurance and political risk, the company said in a statement today. Beazley said it expects its combined ratio will improve to the “mid-eighties” by year-end.

“With such strong operational performance, the prospects for a special dividend are high,” wrote Mark Williamson, a London-based analyst at Peel Hunt LLP who upgraded the shares to buy in a note to clients today. “We believe that today will act as the catalyst for an upward re-rating.”

The shares gained 5.2 percent to 239.9 pence at the close in London, the highest level since the insurer reported a slump in first-half profit in July. The company at the time reported a combined ratio, or claims and expenses as a percentage of premiums, of 89 percent.

“Overall claims have developed favorably during 2013, and we have only moderate exposure” to floods and hail storms, Chief Executive Officer Andrew Horton said in the statement. “Provided that this experience continues until the year-end, we expect to achieve a strong combined ratio.”

Investment income for the nine-month period was $25.1 million, with an annualized return of 0.8 percent. That compares to a return of 2.1 percent last year.

The stock is up 36 percent this year, the best-performing member on the FTSE 350 Nonlife Insurance Index.

Before it's here, it's on the Bloomberg Terminal.