* First-half profit increases 61 pct
* Investment income rises to $46.8 mln from $300,000 a year earlier
* Shares rise as much as 6.6 pct (Adds CEO, CFO comments, background, shares)
By Richa Naidu
July 22 (Reuters) - Lloyd’s of London insurer Beazley Plc reported a 61 percent rise in first-half profit, thanks to a surge in investment income and a drop in catastrophe payouts.
The company’s stock rose as much as 6.6 percent on Tuesday morning, making it among the top percentage gainers on the London Stock Exchange’s FTSE-250 midcap index.
Beazley, which writes marine, casualty and property cover, said its pretax profit rose to $132.9 million in the first-half ended June 30 from $82.3 million a year earlier.
Investment income jumped to $46.8 million from just $300,000 a year earlier.
“Last year we had U.S. interest rates rising in May and June and therefore had mark-to-market losses in our bond portfolio at the end of June, which meant no investment income,” Chief Executive Andrew Horton told Reuters.
About 90 percent of the company’s $4.38 billion portfolio is invested in sovereign and corporate bonds, which together contributed about $33 million to first-half investment earnings.
Nearly every asset class performed positively during the period, particularly commodity and equity funds, Finance Director Martin Bride told Reuters.
Beazley has been reallocating funds to “better value” emerging market corporate bonds from similar bonds in the United States, he added, although he said this had yet to have a big effect on overall returns.
“Over the last 12-18 months (the emerging corporate bond) market has corrected quite a lot, so we’ve moved some money out of the core U.S. corporates,” Bride said.
Numis analyst Nick Johnson said investment returns were likely to continue to benefit Beazley’s earnings in the medium term, adding that the latest earnings were a bit better than expected.
Net premiums rose about 17 percent to $889.2 million, while claims fell about 4.6 percent to $453.0 million.
Beazley raised its interim dividend to 3.1 pence from 2.9.
Beazley’s shares were up 6.1 percent at 264.2 pence at 1130 GMT. (Reporting by Richa Naidu in Bangalore; Editing by Ted Kerr)