Lloyd's of London insurer Beazley reported a 64 per cent fall in its first-half profit as its bond portfolio took a hit from higher US interest rates, while the company also warned a "hard" Brexit could prove very expensive for Britain's insurance sector.

Beazley’s shares fell as much as 13 per cent after its results on Friday, before paring some losses to trade 6.1 per cent lower at 523 pence on the London Stock Exchange. The stock was at the bottom of the Ftse Midcap Index. The insurer said its net investment income slid to $8 million (€6.8 million) for the six months to the end of June, from $79.4 million a year earlier, while pretax profit fell 64 per cent to $57.5 million.

Beazley’s bond portfolio is worth $3.5 billion, finance director Martin Bride said. “If interest rates stay where they are, then all the pain is behind us and we will now enjoy quite high investment yields. If rates go even higher, then there will be another period of not very good returns,” Bride said. The slump in profit took the shine off a 15 per cent jump in gross premiums written to $1.32 billion, helped by Beazley’s property division, where rates have risen sharply after the heavy catastrophe losses suffered by insurers and reinsurers last year.

– Reuters