By Muvija M and Carolyn Cohn
(Reuters) -Shares in Lloyd's of London insurer Beazley leapt to a 10-month high on Friday after it swung to first-half profit and said it was investing heavily in its cyber insurance business to meet rising demand in the face of ransomware attacks.
Cyber insurance has become a growing focus for specialist insurers such as those operating in the Lloyd's of London market, though a spate of recent attacks has also made some more cautious about the cover they offer.
"We continue to invest strongly in our cyber infrastructure because that is probably the most significant opportunity we have ahead of us," Beazley Chief Executive Adrian Cox told Reuters.
Beazley reported a pretax profit of $167.3 million for the six months ended June 30 after a loss of $13.8 million a year ago, but said it would only consider a dividend at year-end. It released $95.7 million it had previously reserved for claims.
Beazley's shares soared 6.7% to 384.5 pence by 0838 GMT, their highest since Sept. 21 last year and one of the best performers in the FTSE mid-cap index.
Jefferies analysts described the results as "surprisingly comfortable reading" and reiterated their "buy" rating.
Cox, who became CEO in April, said cyber insurance currently made up about 15% of Beazley's business and was a major contributor to a 20% overall increase in its premium rates.
The average ransom payment made by a business to restore data following a cyber attack was $220,000 in the first quarter this year, up 43% from the last quarter of 2020, according to cyber security firm Coveware.
Beazley, which had estimated pandemic-linked claims, including event cancellations, of $340 million in 2020, warned in May it could face another $50 million in claims in 2021 if there wasn't a return to some normality in the second half.
On Friday, the company said it was comfortable with its estimates on claims linked to the health crisis.
Beazley, which provides casualty and property, cyber and political risk insurance, had a combined ratio - a key measure of an insurer's profitability - of 94% compared to 107% a year earlier. A level below 100% indicates an underwriting profit.