Specialty insurer and reinsurer Brit has reported strong rate increases and premium growth for 2020, while the significant impacts of the COVID-19 pandemic pushed the firm to a $215 million underwriting loss with a combined ratio of 112.6%.
The firm has reported risk-adjusted premium rate increases on renewal business of 10.6%, taking the total increase since Jan 1st, 2018 to 20.2%.
At the same time, gross written premiums jumped by 5.7% to $2.42 billion, while net earned premiums increased by 4.5% to $1.7 billion.
Despite the growth, Brits operations suffered from the impacts of the ongoing coronavirus pandemic, with the speciality re/insurer reporting a combined ratio of 112.6% for 2020, against 95.8% a year earlier.
The underwriting loss included major losses of $403.2 million, comprised of COVID-19 claims of $270.7 million, Hurricane Laura losses of $65.4 million, Hurricane Sally losses of $27.1 million, Hurricane Zeta losses of $15.5 million, losses from the Nashville Tornadoes of almost $14 million, and $11.7 million of losses from U.S. civil unrest.
Excluding the impacts of COVID-19-related losses, and Brit’s combined ratio would have amounted to 96.7%.
Return on invested assets after fees declined to $45.5 million in 2020 from the $148.1 million recorded in 2019.
Overall, Brit has reported a loss after-tax of $232 million for 2020, compared with profit of $179.9 million for the prior year.
“At a time when the global pandemic is still ravaging communities, we spare a thought for our colleagues, brokers and clients who have had to deal with the ultimate tragedy of losing a loved one through COVID-19. The human cost, the economic impact and the toll on mental welfare has been at a level no one could have foreseen as we began the year. I am proud of the way in which everyone in Brit has responded to the challenge and not only managed to service our clients, but to excel in doing so.
“Our products are designed to support businesses and individuals in such difficult times and we have focussed on responding to claims as they have been notified. We have stood tall with respect to valid COVID-19 claims and the financial impact on Brit has been significant. Furthermore, 2020 was also a very active year for catastrophe events, being the fifth-costliest on record.
“Despite the backdrop of COVID-19, there were a number of positives in the period. We achieved risk adjusted rate increases of 10.6%, with almost all classes contributing to the increase. This gives a total overall increase since 1 January 2018 of 20.2%. In this positive rate environment, we continued to grow our written premium to US$2,424.4m. During the period we also delivered an attritional claims ratio of 52.6%, an improvement of 2.4pps, reflecting underwriting discipline, rigorous risk selection, and rate increases,” Matthew Wilson, Group Chief Executive Officer (CEO) of Brit.
Within the results announcement of Brit’s parent, Fairfax, it’s been revealed that on February 10th, 2021 it entered into an agreement pursuant to which OMERS will acquire a 14% interest in Brit, for cash proceeds of approximately $375 million.
“Looking ahead to 2021, against the challenging backdrop there are a number of indicators to give us cause for optimism, including rate increases, the withdrawal of capacity in the market from certain classes and our improving attritional claims ratio. In this environment, our clear strategy of embracing data driven underwriting discipline, rigorous risk selection and planned targeted growth for 2021, coupled with innovative capital management solutions and continued investment in distribution, positions us well to respond to the opportunities and challenges ahead,” he concluded.