2013 Half Year Report

01-08-2013

STRONG OPERATING PERFORMANCE, TARGETED PREMIUM GROWTH AND CONTINUED IMPROVED UNDERWRITING PERFORMANCE

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Financial highlights

  • Operating profit of £85m (30 June 20121: £60m) and profit after tax of £70m (30 June 20121: £38m)
  • Return on net tangible assets2 (annualised) of 21.0% (30 June 2012: 15.1%).
  • Combined ratio3 improved to 86.0% (30 June 20121: 92.8%).
  • Attritional claims ratio improved to 51.5% (30 June 20121: 53.3%), a 12.7 percentage point improvement since 2009.
  • Investment and derivative return (non-annualised) of 0.8% (30 June 20121: 1.5%).
  • Gross written premiums of £671m (30 June 20121: £657m).
  • Closing net tangible assets (NTA) of £621m (31 December 2012: £649m), after distributions of £100m.
  • Total value created4 during period of £72m, equivalent to 11.5% of closing NTA (30 June 2012: £74m/8.3%). Total value created since 1 January 2010 of £390m.

Strategic highlights

  • Continued focus on global specialty underwriting as one of the largest syndicates at Lloyd’s.
  • Further improvement in quality of underwriting coupled with premium growth in targeted segments.
  • Entered Political and Credit Risk sector with new team hired.
  • Continued recruitment of top underwriting talent, both in the UK and internationally.
  • Expansion of US specialty operations, with over 50 employees across nine cities writing US$135m of run-rate premium.
    • Excess and Surplus (E&S) property business expanded with the acquisition of the renewal rights and the underwriting platform of Maiden Specialty.
    • Team hired to lead new Criminal Justice Services Operations (CJSO) programme.
  • Senior management team has been further strengthened and is now complete.
    • Appointment of Chief Financial Officer Andrew Baddeley, from Atrium Underwriting.
    • Appointment of Director of Strategy and Corporate Development Joy Ferneyhough, from Espirito Santo Investment Bank.
    • Appointment of Chief Operating Officer Nigel Meyer, formerly Interim Chief Financial Officer at Brit.

Mark Cloutier, Group CEO of Brit Insurance, said:

‘It has been a successful first half of 2013 for Brit, achieving £85m operating profit and an annualised 21% return on net tangible assets. This has been particularly pleasing given current trading conditions for both our underwriting and investment portfolios. While it has been a relatively benign period in terms of catastrophe losses, we see the continued reduction of our attritional loss ratio, down to 51.5% at HY13, as the best evidence of the material improvements which have been made to our core portfolio and as strong vindication of the strategic changes we have implemented over the course of the past three years.

Looking ahead, I am confident the strong platform we have now built as a global speciality underwriter and the momentum still to be captured by existing initiatives in 2013 and 2014, will see Brit continue to improve performance while at the same time exhibit the flexibility to take advantage of new opportunities, as we have successfully done throughout the first half of the year.’

Matthew Wilson, CEO of Brit Global Specialty commented:

‘This year, we have focused on building on the Global Specialty underwriting platform we spent the past three years developing. We have continued to grow our business successfully with the hiring of new teams in the United States, London and China. It is anticipated that these hires will generate, on an annual run-rate basis, circa US$135m of new profitable business for our Lloyd’s platform.’

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. The 30 June 2012 results have been restated to reclassify Brit’s non-core UK regional business as discontinued operations, following its disposal during 2012. These figures represent Brit’s continuing business only.
  2. 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 period ended 30 June 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. To derive an annualised figure for 2012, an annualisation factor has been applied to all the components of the H1 RoNTA with the exception of the £38.4m write back.
  3. Excluding the effect of foreign exchange on non-monetary items.
  4. Total value created represents the increase in net tangible assets during the period, before distributions.

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.

Disclaimer

This document 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.