Beazley plc is targeting 5 percent growth for 2015 as the insurer looks to its U.S. unit to help offset falling prices for coverage at its Lloyd’s of London business.
Beazley, the first of its peers to report results, forecasts U.S. gross written premiums will rise by 15 percent to 20 percent this year, according to Chief Executive Officer Andrew Horton. The shares fell as the insurer reported 3 percent increase in total premiums for 2014 and profit declined.
“Our Lloyd’s business will be quite a challenge to grow this year,” the CEO said in a telephone interview. “The outlook is more challenging in that margins will come down to rates, which will continue to edge lower in 2015.”
Beazley has been expanding its U.S. operations to diversify as the Lloyd’s market suffers from falling rates amid an influx of alternative capital. The insurer opened an office in Dallas last year and is planning one in Los Angeles in 2015, Horton said. Its U.S. business reported a 19 percent increase in premiums underwritten for 2014 to $537 million.
The shares still fell 1.9 percent to 295.4 pence at 9:49 a.m. in London trading even as the Dublin-based group declared a second interim dividend of 6.2 pence a share and a special dividend of 11.8 pence.
Full year pretax profit fell 16 percent to $261.9 million amid a lower release of reserves set aside to pay out claims from the previous year, according to a statement. Investment income almost doubled to $83 million, boosted by falling yields in its fixed-income assets and a jump in performance for its hedge-fund holdings.
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