Specialty insurer and reinsurer, Brit, achieved overall risk-adjusted price increases of 3.5% during the first-half of the year as a result of 2017’s major losses. However, the Group’s Chief Executive Officer (CEO), Matthew Wilson, expects the remainder of the year to be challenging.
Wilson noted the improved rating environment in the first six months of the year, driven by 2017 being one of the costliest loss years on record for global insurers and reinsurers.
“While the rating environment in 2018 has been more positive, the outlook for the remainder of 2018 remains challenging,” said Wilson, in the firm’s H1 2018 results announcement.
Despite the re/insurer achieving risk-adjusted premium rate increases of 3.5% in the first-half of the year, primarily driven by loss-affected property, treaty, and marine classes of business, “they (rate increases) are lower than initially anticipated as capacity continues to exceed demand and brokers move business to new carriers at current or reduced rates,” said Wilson.
He continued to highlight the “challenging environment”, underlining Brit’s commitment to focus on underwriting discipline, risk selection and capital management.
At the same time, the firm continues to focus on advancing and resolving claims from 2017 catastrophe events, and notes that the net impact of the events has remained unchanged in the period.
While the events of last year are still impacting the sector, catastrophe losses so far in 2018 have been relatively benign. Brit notes this in its H1 2018 earnings release, which, combined with reserve releases of $8.9 million and an attritional ratio of 56.5%, resulted in underwriting contributing $32 million to the overall result, with a combined ratio of 95.9%.
However, this is a decline from the $44 million recorded in the same period last year, and, combined with a sharp drop in investment income, from $126.3 million in H1 2017 to $5.1 million this year, Brit’s after-tax H1 2018 profit declined to just $12.9 million, compared with $139.7 million in H1 2017.
The impacts of 2017 catastrophe events have clearly benefited Brit in the opening six months of the year, but the CEO’s comments again underline improved, but weaker-than-expected rate increases, which are likely to dwindle as supply continues to outweigh demand in what’s expected to be a challenging future for market players.
