Specialty insurer and reinsurer Brit has reported its results for the first six months of 2019, with profits recovering close to 2017 levels thanks to a strong underwriting result and an absence of loss creep.
H1 profit was recorded at $120.3 million, after-tax, compared with $139.7 million for the same period in 2017, and just $12.9 million in 2018.
Catastrophe events weighed heavily on Brit’s performance last year, in combination with weaker than anticipated rate increases.
This year, underwriting contributed $43.5 million to the re/insurer’s result, with gross written premiums increasing 5.2% to $1.21 billion, versus $1.15 billion last year.
The company saw an increased contribution from its US platform, as well as an expansion in its core book, reflecting improved market conditions and targeted growth across its treaty portfolio and some direct classes.
Premium rate increases also improved to 4.3%, although Brit noted that increases have been primarily focused on areas impacted by the major losses in 2017 and 2018, with the market in other areas remaining challenging.
Brit’s combined ratio shrank 1.5 percentage points to 94.4% in H1, reflecting an attritional ratio of 56.0% an absence of major loss activity, and increased income from its third party capital management and MGA businesses.
“2017 and 2018 have proved to be challenging years, with a number of early large and attritional losses occurring in addition to the catastrophes in those years,” said Mark Allan, Group Chief Financial Officer at Brit.
“However, we have seen more benign claims activity on older years continue with 2016 and prior showing releases, to result in an overall US$1.9m reserve release.”
Additionally, the company disclosed that it had grown its reinsurance book, and purchased additional catastrophe protection to provide further protection for the remainder of 2019.
Investment return over the first half of the year was $94.7 million, representing a non-annualised return of 2.4%. Allan explained that the result was driven by the strong performance of Brit’s equity portfolio, as well as positive income and capital returns from its cash and fixed income portfolio.
Matthew Wilson, Group Chief Executive Officer at Brit, also commented on the results: ‘I am pleased to report a positive first half of 2019 for Brit, with underwriting performance and investment return delivering a strong result.”
“We also continued to successfully execute against our clear, progressive, strategy further building on our underwriting discipline, leadership positions and international distribution footprint,” he added.
Looking ahead, Wilson said that a number of indicators were providing cause for optimism at Brit, including rate increases, the withdrawal of some capacity and the measures taken by Lloyd’s to improve market performance.
However, he added that conditions remain challenging in a number of areas, with lower than anticipated rate increases in many sectors and some heightened claims activity on more recent years.
“In this environment, our clear strategy of embracing data driven underwriting discipline, and rigorous risk selection; coupled with innovative capital management solutions and continued investment in distribution, uniquely positions us to respond to the opportunities and challenges of today’s market,” Wilson concluded.
