Ireland-based insurer Beazley says profits fell almost 28% in the six months to June 30 as its investment portfolio failed to deliver.

It recorded after-tax profit of $US72.1 million ($78.11 million), down from $US100.1 million ($108.46 million) in the corresponding period last year.

Gross written premium was $US1.07 billion ($1.16 billion), up from $US1.01 billion ($1.09 billion), and revenue grew 3.06% to $US773.5 million ($838.06 million).

The company’s $US4.2 billion ($4.55 billion) of investments earned just $US300,000 ($325,041), compared with $US36.1 million ($39.11 million) in the first half of last year.

“Beazley delivered a strong underwriting result in the first half of the year,” CEO Andrew Horton said. “Gross premiums written grew by 5% and we achieved a combined ratio of 89%, despite increasing competition in a number of classes of business.

“Investment returns were down due to mark-to-market losses in our fixed-income holdings caused by rising interest rates. Looking forward, however, higher interest rates promise enhanced investment returns.”

The company says its outlook is positive, with “profitable growth opportunities for our underwriters”.

Capacity is likely to be abundant for catastrophe reinsurance and other short-tail risks, it says.

Distribution changes are taking place, with “a number of major brokers creating facilities that will also add to competition. But this is not an unfamiliar pattern and the spread and balance of our portfolio continue to insulate us to some extent from such pressures.”

Beazley operates specialist insurance businesses in Australia, Asia, Europe and the US and manages five Lloyd’s syndicates.