2012 Full Year Report

27-02-2013

Strong operating performance and focus on Global Specialty Underwriting as one of the largest Syndicates at Lloyd's

Financial highlights

  • Operating profit1 of £113.6m (2011 restated2: £68.4m).
  • Profit on ordinary activities1 before tax of £99.8m (2011 restated: £52.9m).
  • Profit from continuing operations after tax1 of £93.0m (2011 restated: £56.3m).
  • Total profit after tax of £84.7m (2011: 76.0m), including the result from discontinued operations.
  • Return on net tangible assets3 of £136.4m or 16.8% (2011: £73.3m or 8.6%).
  • Return on net tangible assets, excluding the effect of all FX movements, of £148.4m or 18.2% (2011: £77.8m or 9.1%).
  • Combined ratio4 improved to 93.2% (2011 restated: 99.6%).
  • Attritional claims ratio improved to 51.9% (2011 restated: 56.4%), a 12.3 percentage point improvement since 2009.
  • Underlying management expenses reduced by a further 10.6% to £121.2m (2011 restated: £135.5m).
  • Investment return of 3.1% (2011: 2.8%).
  • Gross written premiums of £1,147.9m (2011 restated: £1,179.9m).
  • Total value created5 during 2012 of £121.9m (2011: £79.4m) with closing net tangible assets (NTA) of £649.1m (2011: £897.2m). Total value created4 since 1 January 2010 of £318.8m.

Strategic highlights

  • Brit is now a dedicated Lloyd’s global specialty (re)insurer, having successfully completed a strategic transformation with the sale of non-core regional UK business to QBE and the sale of historic UK liabilities within Brit Insurance Limited to RiverStone.
  • Across our Lloyd’s franchise, we achieved average rate increases of 3.4% in attractive lines, developed new products and continue to attract top underwriting talent.
  • U.S. specialty operations have grown. Underwriting commenced in the Richmond, Virginia office and a property direct and facultative team was established in the Chicago office.
  • Our senior management team has been further strengthened by the appointments of Chief Financial Officer Andrew Baddeley (from Atrium Underwriting), Chief Investment Officer John Stratton (from IAG) and Head of Claims Steven Robson (from Alterra at Lloyd’s).
  • We have developed prudent options to assess growth potential in China, where we could further grow our specialty underwriting business cautiously and profitably.

Mark Cloutier, Group CEO of Brit Insurance, said:

‘2012 was a transformational and successful year for Brit. Against a backdrop of significant internal change and a very challenging business environment, including Hurricane Sandy, I am very pleased we have achieved a 16.8% return on average NTA and total value creation of £122m, both substantial improvements over 2011. Moreover, the continuing positive trends in the operating results of our core Lloyd’s specialty business have set the stage for continued profitable growth for our Group in the future.’

Matthew Wilson, CEO of Brit Global Specialty commented

‘With the formation of Brit Global Specialty (BGS) in January 2012, the Group created a single Lloyd's underwriting unit with shorter reporting lines and faster, more dynamic, decision making. I strongly believe that the changes in the underwriting businesses have firmly positioned the Group for stable, long-term profitable growth.

We have recruited over 20 high-calibre lead underwriters in our key growth markets, whilst focussing our attention on reducing the combined ratio of each class, by a clear strategy of portfolio management to improve performance. This has led to a much more dynamic business, taking advantage of market trends and opportunities, whilst ruthlessly exiting unprofitable lines. As a result, our attritional loss ratio has fallen for the third consecutive year to 51.9%. Despite Hurricane Sandy, we have achieved a robust combined ratio of 93.2% with only 1.7% contribution from prior year releases, which demonstrates the resilience and profitability of the ongoing business.’ 

Read the full report

For further information, please contact

Mark Cloutier, Group CEO, Brit Insurance +44 (0) 20 7984 8500
Tom Burns / James Olley, Brunswick +44 (0) 20 7404 5959

Notes

  1. Before the result of discontinued operations.
  2. The 2011 results have been restated to reclassify Brit’s non-core UK regional business as discontinued operations, following its disposal during 2012.
  3. Return on net tangible assets (RoNTA) is calculated as: Profit after tax before the effects of FX on non-monetary items and before any charges in respect of intangible assets, divided by the weighted average NTA during period. In arriving at this adjusted profit after tax figure for the year ended 31 December 2012, a £38.4m intangible asset impairment charge made on the sale of the non-core regional UK business has been written back. This is consistent with the Group’s RoE calculations as presented in previous reporting periods.
  4. Excluding the effect of foreign exchange on non-monetary items.
  5. Total value created represents the increase in net tangible assets during the year, before capital distributions and dividends.



    About Brit

    Brit is a market leader in global specialty insurance and reinsurance. We underwrite across all major classes of commercial insurance with a strong focus on property, casualty and energy business. Brit is a reputable and influential name in the Lloyd’s market and we pride ourselves on our specialist underwriting and claims expertise.