Brit grows in H1 despite rates softening by 2.2% across portfolio

Speciality re/insurer Brit posted solid growth in the first six months of 2017 but its profits dipped on lower investment returns and a continued softening of rates, which were 2.2 percent down overall during the period.

The company’s gross written premiums reached $1.09 billion in the first half an increase of 6 percent compared with the same period a year earlier. This growth was driven by a mixture of growth in new lines of business, its US operation, BGSU, reaching the milestone of writing over $1 billion of premium, and the launch of Syndicate 2988, supported by third party capital, at Lloyd’s.

Brit made a net profit of $139.7 million in the first half, a decrease on the $197.6 million the company made a year earlier. This was partly driven by lower investment results; it made an investment return after fees of $126.3 million in the period, compared with $182 million a year earlier.

Its combined ratio was 95.1 percent, a small improvement on the 96.5 percent it posted in the same period in 2016. It noted that excluding the impact of changes to the Ogden rate in the UK, its combined ratio would have been 93.3 percent.

Matthew Wilson, group chief executive of Brit, said: “Market conditions have, as expected, remained difficult during the first half of 2017, with Brit experiencing an overall rate reduction of 2.2 percent, albeit lower than the 3.7 percent reduction experienced in H1 2016.

“Against this backdrop, we have maintained our rigorous risk selection in the classes experiencing pressure and continue to focus growth efforts in classes experiencing more favourable rating conditions. This strategy, coupled with a relatively benign period in terms of major losses, resulted in a highly respectable combined ratio of 95.1 percent, after incorporating the effect of Ogden rate changes. Our underlying CoR, excluding the impact of Ogden, was 93.3 percent.

“This was driven by positive back year premium development and our initiatives to broaden our distribution base. We continue to add specialty underwriting talent in targeted areas and in 2017 have strengthened our US program capability and launched a new US cyber and technology team.

“In the period, it was particularly pleasing to see our US operation, BGSU, reach the milestone of writing over $1 billion of premium since its formation in 2009. BGSU has reached this milestone by delivering strong, profitable organic growth with a focus on niche areas where it has significant expertise and experience. Its average combined ratio since 2014 has been a highly credible 93 percent.

“The successful launch of Brit Syndicate 2988 reinforces our long-term commitment to the Lloyd’s market and ambition to use its infrastructure to expand our current position as the largest Lloyd’s only insurer. It will also help us further position Brit as the specialist underwriter of choice, building on our existing strength across underwriting, claims and capital management and track record of delivering attractive returns for capital providers.

“In the current environment, we believe our proactive approach and our emphasis on leadership, innovation and distribution is an important complement to our highly disciplined underwriting. We will continue to look at new opportunities as they arise and we believe our strategy will hold us in good stead during these challenging conditions and beyond.”

Mark Cloutier, group executive chairman of Brit, said: “Brit has delivered a strong performance in the first half of 2017. Our non-annualised return on adjusted net tangible assets before FX, which we see as a key indicator of our performance, was 12.6 percent. This was driven by the combination of a healthy contribution from underwriting results, notwithstanding very challenging market conditions, and an excellent performance from our investment portfolio. It is very pleasing to see the continued profitable growth of the new underwriting initiatives launched in recent years.

“Producing strong results in the current environment demands a great deal of concentration and discipline and, in that regard, we have continued to focus on our core fundamentals of leadership, innovation and distribution and have maintained our strategy of remaining well diversified while adopting a defensive stance to protect our business and preserve capital.

“We believe that our performance shows that we have the right operating model, underwriting approach and corporate culture, to not only operate successfully through the current difficult market conditions but to also be ready to take full advantage of emerging opportunities when trading conditions begin to improve, as the results of the current lack of market discipline starts to bite hard on sector results.”

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