Lloyd’s insurer Beazley has seen profits sink by 64 percent in the first half of the year as a reserve charge in its property division took a toll on the group’s bottom line.

The carrier reported pre-tax profits of $57.5mn, a marked reduction on the $158.7mn it reported this time last year.

Shares in London-listed (re)insurer fell by more than 12 percent when markets opened as investors expressed their disappointment at the results.

Shares were changing hands for as little as 485.8 pence when trading began in London, a dramatic fall since yesterday’s 557.5 pence closing price. But the price subsequently recovered to around 521 pence half an hour after markets opened.

Profitability was dampened by a $33.7mn reserve strengthening in Beazley’s property book. But the firm’s CEO Andrew Horton stressed that charge had nothing to do with the hurricanes and fires that plagued parts the Caribbean and the US in the second half of last year which led to Everest Re’s $250mn after tax charge yesterday.

“We have to date disbursed $238mn to help businesses and communities rebuild in the wake of last year’s natural catastrophes in the US and Mexico, in line with our expectations and the reserves we had set aside,” said Horton.

“In our property portfolio, we have seen an increase in attritional losses, unrelated to last year’s catastrophe events, on business written in 2016 and 2017,” the executive continued.

“Our consistent approach is to reserve prudently, but reserving is not an exact science and from time to time losses in individual lines of business will exceed expectations.”

The executive said the group had taken remedial action by tightening pricing and refusing to renew some loss-making business.

However he noted that overall prior year reserve releases from other lines had helped the bottom line by $48.1mn, well below the $83.4mn it released this time last year.

But, while Beazley’s bottom line contracted, its top line surged by $174.5mn to $1.32bn.

“Beazley saw strong top line growth during the first half of the year, with premiums up 15 percent,” Horton said.

“Growth in premiums was strongest in our property division, where rates have risen sharply following the heavy catastrophe losses incurred by insurers and reinsurers last year.”

The carrier said it had secured average rate hikes of 3 percent across its renewal portfolio, compared to the 2 percent reduction it reported across its book this time last year.

The group’s $243.4mn property book provided the rocketfuel behind those increases with rates climbing 10 percent in the first half of the year. It said reinsurance prices climbed by 7 percent while rates for marine business edged up by 2 percent.

“The extent of price firming for catastrophe exposed lines of business was in line with our expectations,” said Horton.

“Our market was awash with capital prior to the onslaught of last year’s hurricanes, earthquakes and wildfires and we did not expect to see the dramatic reduction in capacity that some had predicted,” he went on.

“By and large, the non-traditional capital providers, who shouldered some of the largest reinsurance losses last year, have maintained their commitment to the market.”

The group’s combined ratio deteriorated by 5 points to 95 percent in the first six months of the year.

Meanwhile bottom line profitability was hampered further by a drastic reduction in investment income which fell to just $8mn from the $79.4mn it reported this time last year.

“Our investment return in the first half was depressed by the impact of rising US interest rates on our bond portfolio, but we expect the rate rises seen in the first half of the year will help us deliver stronger returns going forward,” said Horton.