Brit’s pre-tax profit nose-dived 87.5% in the first six months of 2018 on the back of poor investment returns.
The insurer saw pre-tax profit drop to $17.9m in the six months ended 30 June compared to a profit of $143.8m reported at the same period last year. Profit after tax was $12.9m, down from $139.7m in 2017.
The insurer reported gross written premium of $1,150.8m for the first half of 2018, a 5.3% increase from the $1,092.5m posted last year. Net earned premium was up 3.4% at constant FX rates to $783.5m, a climb from the $740.7m reported at the same point last year.
Brit’s combined operating ratio slipped back to 95.9% from last year’s 94.0%.
Brit’s investment return after fees was $5.1m, representing a non-annualised return of 0.1%. In 2017, the insurer saw investment return of $126.3m, representing a 3.2% return.
The insurer’s non-annualised return on net trade assets decreased from 12.6% last year to 2.3% in 2018 representing total value created of $2.0m compared to $142.2m in the prior year.
Matthew Wilson, group CEO of Brit, said: “Following the major losses of 2017, we have achieved overall risk adjusted premium rate increases of 3.5% in the period, primarily driven by the loss affected property, treaty and marine classes, in both our London and US portfolios.
“While these rate increases are welcomed, they are lower than initially anticipated as capacity continues to exceed demand and brokers move business to new carriers at current or reduced rates. In this challenging environment, we have continued to take action to protect our balance sheet, with the application of rigorous risk selection criteria in marginal classes and the decision to withdraw from certain classes such as international professional indemnity and general aviation.”
Wilson added: “Against this backdrop, it was encouraging that our strategy delivered a combined ratio for the period of 95.9%. This reflected the combination of a healthy attritional ratio, continued back year reserve releases and an absence of major losses. The net impact of the 2017 major losses has remained unchanged in the period.”
The CEO also drew attention to Brit’s newly launched Bermuda-domiciled reinsurance platform, Sussex Capital and said the insurer would be boosting its claims and underwriting facilities in the US.
Wilson added: “While the rating environment in 2018 has been more positive, the outlook for the remainder of 2018 remains challenging. However, we continue to focus on our core fundamentals of underwriting discipline, risk selection and capital management.”
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