LONDON (Reuters) - Lloyd’s of London insurer Beazley BEZG.L on Thursday increased the expected second-half pretax profit hit from natural catastrophes by $25 million (19 million pounds) to $175 million (133.10 million pounds)as a result of wildfires in California.
The increase took the shine off a 6 percent rise in gross written premiums in the first nine months of 2017 to $1.8 billion, boosted by the firm’s speciality lines division, which focuses on professional liability insurance.
Beazley said it faced $200-300 million in insured losses, net of reinsurance, from natural catastrophes in the second half of 2017, which at the mid-point would have a $175 million negative impact on pretax profit.
The insurer, which posted pretax profits of $293.2 million in 2016, said in Sept 2017 it estimated a hit of $150 million from hurricanes and earthquakes.
Hurricanes Harvey, Irma and Maria, which hit the United States and Caribbean in recent months, have caused more than $100 billion in insured losses, risk modelling agencies say.
In addition, earthquakes in Mexico and wildfires in California mean the second half of 2017 is expected to be one of the worst on record for insurance losses.
“The third quarter of 2017 was defined by the high frequency and severity of natural catastrophes,” Beazley Chief Executive Andrew Horton said in a trading statement.
“These events will naturally affect our full year results but our diverse underwriting portfolio continues to serve us well.”
Beazley said it expected its combined ratio, a measure of underwriting profitability, to be 100 percent for 2017. A level below 100 percent indicates a profit.
Horton said he expected rates to rise “across some lines of business”, without giving specific details.
Insurers and brokers are divided as to whether the size of recent losses will lead to rises in reinsurance rates across the board at key January 2018 renewals, or only in areas already hit by disasters.
Fellow Lloyd’s insurer Hiscox (HSX.L) said this week it expected double-digit rate rises in U.S. catastrophe-exposed reinsurance rates, but broker JLT (JLT.L) said it was premature to draw conclusions about rates.
Reporting by Carolyn Cohn; editing by Simon Jessop