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Beazley sees 2017 pretax profit ahead of market expectations

Posted On: Jan. 17, 2018 9:27 AM CST

(Reuters) — Lloyd's of London insurer Beazley P.L.C. said it expected to report 2017 pretax profit ahead of current market expectations, despite the sector having faced hurricanes, earthquakes and wildfire bills of over $135 billion.

The insurer pointed to a reduction of about $5 million in the value of its U.S. deferred tax asset following the cut in the U.S. corporation tax rate to 21% from 35%.

Beazley said it expected its combined ratio, a measure of underwriting profitability, to be 99% for 2017. A level below 100% indicates a profit.

It also expects to report an investment return of 2.9% for the year on average invested assets of $4.8 billion.

Insurers will have to pay the highest ever claims in 2017, following a spate of hurricanes, earthquakes and fires in North America, according to a report published this month.

German reinsurer Munich Reinsurance Co., in its annual natural catastrophe review, also said last year's total losses, including those not insured, were $330 billion, the second-worst in history after 2011 when an earthquake and tsunami wreaked havoc in Japan.

Beazley said in November it faced $200 million-300 million in insured losses, net of reinsurance, from natural catastrophes in the second half of 2017, which at the midpoint would have a $175 million negative impact on pretax profit.