Beazley slips to £45m as the going gets tough

Lloyd's of London insurer Beazley is negotiating the choppiest waters in its history, and an investment climate that is the most volatile it has seen.

Profits for the six months to the end of June fell 25% to £45 million - a worrying sign for the rest of the Lloyd's market. Andrew Beazley, the chief executive who founded the business in 1986, says investment performance has been devastated by a climate that has seen even supposedly safe-as-houses bonds tumble.

Beazley takes a risk-averse stance to investing premiums, with 90% in bonds. Even these have suffered from unusual volatility, taking investment returns down to just 1.7% this year.

"We'd hope not to repeat those low returns in the second half. It is unusual to see everything across the board going down together," he said.

The insurer, which specialises in property and marine reinsurance, has enjoyed a benign climate for the last two years. That could be about to change, perhaps pushing weaker players out of business. Beazley took in premiums of £407 million in the six months, a fall of 6%. The interim dividend is 2.2p, up from 2p.

Andrew Beazley added: "The first half of 2008 has been a challenging period for underwriters and investment managers. Despite this we have still achieved a highly creditable result."