Unaudited full year results for the year ended 31 December 2022

A strong and robust underwriting result and significant growth

Key points

• Combined ratio¹ of 96.6% (2021: 95.7%) and an underwriting profit of $95.4m (2021: $90.6m).
• GWP of $3,970.0m, an increase of 24.7% over 2021 ($3,238.3m) at constant rates of exchange.
• Risk adjusted premium rates increases on renewal business of 12.4% (2021: 12.9%), giving an compound increase since 1 January 2018 of 54.1%.
• A strong full year attritional ratio¹ of 51.0% (2021: 47.7%).
• Major losses of $338.5m, impacting the CoR by 12.0pps (2021: $324.4m / 15.5pps).
• Investment return² of -$132.1m or -2.3%, including $131.5m of unrealised losses, reflecting the market conditions (2021: gains of $171.9m or +3.3%).
• Result on ordinary activities before tax and FX of -$92.8m (2021: +$247.1m) and result after tax of -$96.3m (2021: +$236.9m).
• Return on net tangible assets of -3.6%³ (2021: +19.4%).
• Capital position remains strong, with our capital surplus increasing to $709.8m (2021: $617.9m). Strong capital ratio⁴ of 152.8% (2021: 139.1%).
• A highly successful second year of trading for Ki, recording GWP of $834.1m (2021: $395.6m), an increase at constant FX rates of 115.4%, and a combined ratio of 99.4%.
• Key developments include:
  
  • Agreed the sale of our Ambridge MGA companies to Amynta Group;
  • Executed our catastrophe strategy;
  • Relaunched our Data and Digital strategy, supported by our new CTO and CDO; and
  • Continued to focus on our customers through claims innovation, including deploying our algorithm to enable a faster claims response following Hurricane Ian, and by launching the Direct Pay payment solution in the US.

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Martin Thompson, Group Chief Executive Officer⁵, commented:

‘In late October, Matthew Wilson took the decision to step down from his roles of Group CEO and Executive Chairman of Ki to focus on his health and his family. Matthew leaves a business that is in good shape and I am excited about our potential and how much more we have to achieve.

I am pleased to report that our strategy has delivered a resilient underwriting performance for 2022 with a combined ratio of 96.6%. In a year that saw significant losses arising from natural catastrophes and the Ukraine crisis, this is a robust result and testament to our underwriting discipline, further evidenced by our healthy attritional ratio.  

Alongside delivering a profitable underwriting result, we were able to grow our premium written to $3,970.0m, an increase of 24.7% at constant rates of exchange. This growth reflects a combination of both new business and rate increases across our direct and reinsurance portfolios as well as Ki’s continued expansion. Ki continues to develop at pace and has already gained significant traction in the market, writing $834.1m of premium in 2022 and reporting a very creditable combined ratio of 99.4%. We are hugely optimistic about the prospects for Ki in 2023 and beyond as we continue to see growing demand for its capacity and consistently high broker engagement with its digital business model.

Brit’s result for all operations before FX and tax was a loss of $92.8m and our return on net tangible assets was -3.6%. This reflected our underwriting profit offset by negative investment return, corporate expenses and finance costs.   

During the year we also made progress with our technology and data strategy. This will be a priority in the coming year and will help shape Brit as a lead underwriter of the future. This strategy will see us deliver an innovative, data-driven and technology enabled platform that empowers our underwriting and claims teams to thrive. 

The major loss events of 2022 bought into sharp focus the crucial role insurance plays in times of crisis, and our ability to deliver a best-in-class claims service continues to be a core focus. We have supported our clients when they need it most, with innovation at the heart of our claims approach. In the immediate aftermath of Hurricane Ian, using our proprietary machine learning algorithm in tandem with ultra-high-resolution aerial imagery, we were able to make our first claim payments one week after the event.

Going into 2023, the industry faces a number of challenges and uncertainties, driven by the volatile geopolitical and economic landscapes, including ongoing inflationary pressures. Wider challenges also continue to exist such as the potential for increased frequency and magnitude of major loss events, excess capacity, the cost of doing business in the London Market, and increased competition. However, against this backdrop we believe Brit is uniquely placed. We have enviable scale and reputation as a lead market, a clear digital and data strategy that will make us more efficient and easier to do business with, and a proven commitment to investing in innovative solutions that improve outcomes for our customers. Underpinning this is a differentiated culture and some of the industry’s best talent, taken together we are excited about how Brit is positioned to respond to the opportunities and challenges ahead.’

Notes

1. The calculation of the 2021 underwriting ratios contains an adjustment whereby the premium paid for the loss portfolio reinsurance ($344.1m) is added back to premium earned net of reinsurance, with an equal and opposite adjustment to net claims incurred. The benefit of a $35.0m reserve release resulting from the additional protection afforded by the contract is included in the calculation. This contract was endorsed in 2022, which is reflected in the 2022 ratio calculations, with a return premium ($37.2m) deducted from premium earned net of reinsurance, with an equal and opposite adjustment to net claims incurred, and with the resulting reserve strengthening of $0.7m included in the calculation. The Directors believe that the ratios when calculated after these adjustments present a more consistent and understandable view of the Group’s performance.
2. Inclusive of return on investment related derivatives, return on associates and after deducting investment management expenses.
3. Return on net tangible assets (RoNTA) shows the return generated by our operations for the owners of Brit Limited before foreign exchange movements, compared to the adjusted net tangible assets deployed in our business attributable to them. The impact of the Group’s defined benefit pension schemes are excluded from the calculation. 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.
4. 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.
5. Mr Thompson was appointed as Group Chief Executive Officer on 31 October 2022. His appointment is subject to regulatory approval.