U.K's Brit Posts Interim Loss on Higher Expenses, Foreign Exchange

LONDON, Jul 30, 2009 (A. M. Best via COMTEX) -- BTIHF | Quote | Chart | News | PowerRating -- U.K.-based insurer and reinsurer Brit Insurance Holdings plc reported an after-tax loss of 6.3 million pounds (euros) on higher expenses and unfavorable foreign exchange movements.

The after-tax loss rose to 6.3 million pounds from a 37.6 million pound profit for the same period a year ago. The group's pretax profit rose 24.1% to 64.9 million pounds (76.1 million euros), excluding 73.6 million pounds in foreign exchange movements and non-monetary items. With foreign exchange effects included, Brit had a pretax interim loss of 8.7 million pounds, down from a profit of 49.9 million pounds in the first half of 2008.

Gross written premiums rose 30.2% to 983. Brit said the increase was the result of "further success in the group?s focused distribution strategy in the U.K."

Total expenses rose more than 53% as net claims incurred rose 56.3%.

The combined ratio rose to 93.8 from 88.8. The higher ratio, Brit said, "reflects a more normal claims environment."

Investments produced a return of 59.2 million pounds, or 1.8%. For the first half of 2008, investment return was 0.1%, or 2.1 million pounds. The interim dividend was unchanged at 7.5 pence (8.8 euro cents).

As part of what it called a "strategy to build a local presence in major world markets," Brit launched its Chicago-based service operation for the U.S. market and opened an office in Japan during the first half.

Dane Douetil, group chief executive officer, said Brit had "made excellent progress" in all three of its businesses -- global markets, reinsurance and the United Kingdom. ?Underwriting margins are improving across most of the business," Douetil said in a statement.

He added that Brit continued focus on portfolio management, and saw "significant growth in the reinsurance and U.K. strategic business units (SBUs) as a result of improved rating conditions and distribution successes." The global markets SBU saw a 5% decline in premium on a constant currency basis, reflecting the non-renewal of business, such as U.S. medical expenses and extended warranty, that did not meet the long-term required return on capital.

Brit said this was partly offset by growth in marine and property.

Douetil added that Brit's investment in the micro-end of the U.K. commercial market through online ventures "continued to deliver with year on year growth of 103%."

?Underwriting margins are improving across most of the business, although some casualty classes, particularly U.S. commercial PI and U.K. specialist liability, are not seeing the price rises we believe are required in the face of low interest rates," said Douetil. "We expect, however, the situation in these classes to improve in the next 12 months. We continue to invest in our future and the quality of our underwriting capability with eight new senior underwriters joining us during the last six months in a variety of disciplines."

Douetil added that Brit is pleased with its investment performance "in what were tricky conditions, but frustrated with the unintended volatility" caused by the International Financial Reporting Standard?s approach to certain insurance assets and liabilities, "which has a significant distorting impact on our reported result in a given period."

Brit Insurance Ltd. has a current Best?s Financial Strength Rating of A (Excellent).

(By Robert O'Connor, London editor: Robert.OConnor@ambest.com)

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index