TIDM32OW
RNS Number : 5240M
Brit Limited
15 September 2023
Brit Limited
PRESS RELEASE
15 SePTEMBER 2023
interim results for the six months ended 30 june 2023
A STRONG UNDerWRITING AND INVESTMENT performance
-- Group profit after tax (including discontinued operations) of $574.1m (2022 restated $32.1m).
-- Adjusted group operating profit(1) of $257.4m (2022 restated: loss of $154.1m).
-- Gross written premiums increased to $2,021.3m (2022 restated: $1,990.5m).
-- Underwriting profit (undiscounted) of $95.1m (2022 restated: $79.5m).
-- Combined ratio (undiscounted) of 93.3% (2022 restated: 93.6%).
-- Return on invested assets(2) of $147.0m or 2.4%(3) (2022
restated: $233.4m negative or -4.3%(2) ).
-- Ki continued its success, maintaining its growth trajectory
with $453.0m of GWP recognised in the first six months of 2023, an
increase of $110.1m or 32.1%.
-- Sale of Ambridge successfully completed, realising a gain on sale of $259.1m.
-- Balance sheet remains strong: Adjusted net tangible assets(4)
of $2,301.8m (31 December 2022 restated: $1,979.6m), after payment
of dividends of $303.6m.
-- Capital ratio(5) improved to 151.6% (31 December 2022
restated: 141.0%). Capital surplus increased by $234.0m to $943.8m
(31 December 2022 restated: $709.8m).
-- Adoption of IFRS 17, the new accounting standard for
insurance contracts, with 2022 figures restated on this basis.
Martin Thompson, Group Chief Executive Officer of Brit Limited,
commented:
'I am pleased to report that our strategy has delivered an
excellent overall performance for the first half of 2023,
underpinned by a strong underwriting result, with an undiscounted
combined ratio of 93.3% for the period. This primarily reflects the
combination of a healthy attritional ratio and the absence of any
major losses.
Market conditions remain broadly positive, and we achieved risk
adjusted rate increases of 7.7% in the first half, driven by the
rising cost of reinsurance and market pressure on liability lines,
primarily reflecting social inflation. In total, we have seen
compound increases since 1 January 2018 of 65.7%. However, while
rate increases continue to accelerate in a number of classes,
others have seen increased competition and a reduction in the level
of rate, putting pressure on premium income in some lines.
Against this backdrop we have remained highly disciplined and
focused on underwriting profitability. This is reflected in our
overall growth with the Group's gross premium written of $2,021.3m
(2022 restated: $1,990.5m) representing an increase of 2.5% at
constant rates of exchange, mainly driven by Ki, whose premium in
its third year of trading increased by $110.1m to $453.0m.
Going into the second half of 2023, the industry continues to
face a complex and constantly evolving landscape, including the
uncertain economic environment, ongoing inflationary pressures and
an elevated number of major loss events from primary and secondary
perils. While overall market conditions remain fundamentally
attractive, we are also starting to experience rating pressure in
certain classes, a reminder that, even in a hard market, risk
selection remains paramount.
Brit is well placed to navigate these challenges, while taking
advantage of the opportunities we are seeing. We have a clear
strategic focus on driving performance and profitability, and this
clarity will stand us in good stead. Our significant investments in
data and digital are enhancing the way in which we write business
and interact with our trading partners and will ensure Brit's
future success as a lead underwriter, while Ki continues to
revolutionise the follow market. Finally, our unique culture
underpins all of this, creating a positive environment that
empowers our people and makes Brit a home for talent. We remain
excited about what Brit can achieve and look forward with
confidence.'
Notes
1 This represents the groups operating result before the impact
of discounting, changes in risk adjustment and other IFRS17
adjustments, and before foreign exchange gains and losses.
2 Inclusive of interest revenue from financial assets not
measured at FVTPL, other investment return, return on investment
related derivatives, return on associates and after deducting
investment management expenses.
3 The figures are non-annualised.
4 Adjusted net tangible assets are defined as total equity, less
intangible assets net of the deferred tax liability on those
intangible assets, less non-controlling interest.
5 The capital ratio is calculated as total available resources
divided by management entity capital requirements. The management
entity capital requirement is the capital required for business
strategy and regulatory requirements.
Officer statements
I am pleased to report that our strategy has delivered an
excellent overall performance for the first half of 2023,
underpinned by a strong underwriting result, with an undiscounted
combined ratio of 93.3% for the period. This primarily reflects the
combination of a healthy attritional ratio and the absence of any
major losses.
Market conditions remain broadly positive, and we achieved risk
adjusted rate increases of 7.5% in the first half, driven by the
rising cost of reinsurance and market pressure on liability lines,
primarily reflecting social inflation. In total, we have seen
compound increases since 1 January 2018 of 65.7%. However, while
rate increases continue to accelerate in a number of classes others
have seen increased competition and a reduction in the level of
rate, putting pressure on premium income in some lines.
Against this backdrop we have remained highly disciplined and
focused on underwriting profitability. This is reflected in our
overall growth with the Group's gross premium written of $2,021.3m
(2022 restated: $1,990.5m) representing an increase of 2.5% at
constant rates of exchange, mainly driven by Ki, whose premium in
its third year of trading increased by $110.1m to $453.0m.
On 10 May 2023, Brit completed the sale of Ambridge, its US and
European based managing general underwriter (MGU) to Amynta Group,
recording a gain on sale of $259.1m. We believe it was the
appropriate time to realise the value of our investment in Ambridge
as we focus on our strategic priorities: our core underwriting
capabilities and our investment in building out our market leading
digital capabilities. In Amynta we were pleased to find the perfect
owners to take Ambridge forward. Importantly, Ambridge and Amynta
remain key partners for Brit, and we look forward to a long and
deep underwriting relationship with them as an independent MGU.
Our ability to deliver a best-in-class claims service is an
important differentiator for Brit. We continued to support our
clients when they need it most, with innovation at the heart of our
claims approach, as demonstrated with our response to the 2022
major loss events. We were delighted that the successful delivery
of this strategy resulted in our claims team winning the 'Claims
Product Solution' and the 'Commercial Lines Claims Excellence'
awards at the 2023 Insurance Times Claims Excellence Awards, and
'Best Use of Technology' award at the 2023 British Claims
Awards.
Going into the second half of 2023, the industry continues to
face a complex and constantly evolving landscape, including the
uncertain economic environment, ongoing inflationary pressures and
an elevated number of major loss events from primary and secondary
perils. While overall market conditions remain fundamentally
attractive, we are also starting to experience rating pressure in
certain classes, a reminder that, even in a hard market, risk
selection remains paramount.
Brit is well placed to navigate these challenges, while taking
advantage of the opportunities we are seeing. We have a clear
strategic focus on driving performance and profitability, and this
clarity will stand us in good stead. Our significant investments in
data and digital are enhancing the way in which we write business
and interact with our trading partners and will ensure Brit's
future success as a lead underwriter, while Ki continues to
revolutionise the follow market. Finally, our unique culture
underpins all of this, creating a positive environment that
empowers our people and makes Brit a home for talent. We remain
excited about what Brit can achieve and look forward with
confidence.
Martin Thompson
Group Chief Executive Officer
14 September 2023
This Interim Report is our first following the implementation of
IFRS 17 'Insurance Contracts' on 1 January 2023. This new
accounting standard has not changed the way we evaluate the
performance of our insurance and reinsurance operations. The
company remains focused on underwriting profit on an undiscounted
basis with strong reserving. We continue to use the traditional
volume measure of gross written premium, and the performance
measure of the combined ratio.
In the first half of 2023, Brit delivered both a strong
underwriting result and a strong investment performance. Brit's
profit after tax and including discontinued operations totalled
$574.1m (2022 restated: 32.1m).
Underwriting profit, excluding the impact of discounting, was
$95.1m (2022 restated: GBP79.5m), with a combined ratio of 93.3%
(2022 restated: 93.6%). This performance reflected good
underwriting discipline, rigorous risk selection, and healthy
compound rate increases.
The Group had no major losses in the period (2022 restated:
$39.6m/3.2pps impact on the combined ratio). While we have some
exposure to cat events in H1 2023, we anticipate claims arising to
be attritional in scale.
In the period, our overall prior year reserves were unchanged.
This comprised favourable ex-cat claims experience across
Programmes & Facilities, Property, Specialty and FinPro
portfolios, offset by strengthening in Casualty Treaty and an
overall increase in historical cat event losses.
Our return on invested assets net of fees was a strong $147.0m
or 2.4% (non-annualised), with all investment classes other than
derivatives contributing to this return. The result reflects market
conditions, with increasing yields and positive equity market
performance.
Our balance sheet remains strong, with adjusted net tangible
assets of $2,301.8m (31 December 2022 restated: $1,979.6m). Our
management capital surplus increased to $943.8m or 51.6% (31
December 2022 restated: $709.8m/41.0%) over our Group management
capital requirement of $1,829.6m (31 December 2022 restated:
$1,732.3m), reflecting the impact of the movement in interest rates
on our capital requirements, and our result for the period.
Our investment portfolio remains conservatively positioned, with
a large allocation to securities ($ 4,484.2m or 69.9%) and cash and
cash equivalents ($905.0m or 14.1%). Brit's equity allocation
stands at $901.9m, or 14.1 %. At 30 June 2023 , 79.5% of our
invested assets were investment grade quality (31 December 2022:
82.2%) and the duration of the portfolio has increased to 2.5 years
(31 December 2022: 1.7 years).
We continue to monitor the impact of inflation across our
underwriting portfolio and reserves, with work being undertaken
collaboratively across Underwriting, Actuarial, Risk and Claims. In
the 2023 half-year reserving exercise the actuarial team has
maintained its approach of explicitly considering the impact of our
forward-looking expectations for claims inflation on the
reserves.
We have continued to experience strong underwriting conditions
and favourable market developments in the first half of 2023,
though underwriting conditions in certain classes are becoming more
challenging. In H2 2023, the world faces ongoing volatility,
challenges arising from inflation, and uncertainty surrounding
events in Ukraine. The insurance market also continues to evolve.
However, we believe that our strategy, discipline and financial
strength position us well to take advantage of opportunities as
they arise.
Gavin Wilkinson
Group Chief Financial Officer
14 September 2023
Brit Limited 2023 Interim Report
Brit Limited's 2023 Interim Report is available at
www.britinsurance.com .
For further information, please contact:
+44 (0) 20 3857
Antony E Usher, Group Financial Controller, Brit Limited 0000
+44 (0) 20 3727
Edward Berry, FTI Consulting 1046
+44 (0) 20 3727
Tom Blackwell, FTI Consulting 1051
About Brit Limited
Brit is a market leader in global specialty insurance and
reinsurance, writing a broad range of commercial insurance. Brit is
a highly regarded and an influential name in the Lloyd's market and
we pride ourselves on our specialist underwriting and claims
expertise.
We operate globally via a combination of our own international
distribution network that benefits from Lloyd's global licences,
and through our broker partners. Our underwriting capabilities are
underpinned by a strong financial position, our underwriting
expertise and discipline and customer service, enhanced by a data
led approach and strong focus on innovation.
We have a strong track record and are passionate about our
business, our people and our clients and we have focused on
cultivating a franchise that is built on delivering exceptional
service. Our culture is centred on achievement and we have
established a framework that identifies and rewards strong
performance.
Brit is a member of the Fairfax Financial Holdings Limited group
of companies (Fairfax). The Fairfax financial result for the six
months ended 30 June 2023, published on 4 August 2023, includes the
Brit financial result.
www.britinsurance.com
Disclaimer
This press release does not constitute or form part of, and
should not be construed as, an offer for sale or subscription of,
or solicitation of any offer or invitation or advice or
recommendation to subscribe for, underwrite or otherwise acquire or
dispose of any securities (including share options and debt
instruments) of the Company nor any other body corporate nor should
it or any part of it form the basis of, or be relied on in
connection with, any contract or commitment whatsoever which may at
any time be entered into by the recipient or any other person, nor
does it constitute an invitation or inducement to engage in
investment activity under Section 21 of the Financial Services and
Markets Act 2000 (FSMA). This document does not constitute an
invitation to effect any transaction with the Company or to make
use of any services provided by the Company. Past performance
cannot be relied on as a guide to future performance.
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