15th May 2008 11:29
FOR IMMEDIATE RELEASE
15 May 2008
BRIT INSURANCE HOLDINGS PLC
INTERIM MANAGEMENT STATEMENT
Brit Insurance Holdings PLC ("Brit Insurance" or "the Group"), the UK-domiciled international general insurance and reinsurance group, releases the following first Interim Management Statement and trading update as required by the UK Listing Authority's Disclosure and Transparency rules, relating to the 19 week period from 1 January to 14 May 2008, in advance of its Annual General Meeting to be held later today.
Summary
Gross written premium up 5.8% to £528.2m for the 4 months to 30 April 2008 (2007: £499.1m), a 4.5% increase at constant exchange rates (the 'underlying growth').
2.2% overall premium rate decreases on Group renewal business to 30 April 2008 (2007: 1.2%).
Brit Insurance has maintained its highly disciplined underwriting.
Overall claims activity in line with plan.
Sub prime related claims are developing in-line with expectations and the ultimate claim projections are unchanged.
Investment return to 30 April 2008 of 0.38% (2007: 1.82%).
Financial performance
Business written and ratings
The Group's gross written premium (GWP) for the 4 months to 30 April 2008 totalled £528.2m (30 April 2007: £499.1m), an increase of 5.8% (underlying growth 4.5%).
Market premium rate development has been broadly in line with expectations, with actual premium rate decreases on renewal business across the Group to 30 April 2008 of 2.2%. Brit Insurance is managing the effect of market rating conditions by careful risk selection aided by its lead position on much of its business and strong broker relationships.
Brit Global Markets wrote £269.0m of gross premium income (30 April 2007: £252.6m), an increase of 6.5% (underlying growth 5.3%). It continues to see increased competition and some softening of premium rates, although off historical highs. Renewal and new business is being declined where rates and terms are insufficient to meet profitability targets.
Brit Reinsurance wrote £150.0m of gross premium income (30 April 2007: £140.5m), an increase of 6.8% (underlying growth 4.7%) and has continued to position its portfolio for the more challenging rating environment.
Brit UK wrote £109.3m of gross premium income (30 April 2007: £106.0m), an increase of 3.1% (underlying growth 2.2%). Whilst the UK market shows continued signs of improvement in the commercial motor account, other classes remain highly competitive.
|
Premium rate movements |
4 months ended |
4 months ended |
|
30 April 2008 |
30 April 2007 |
|
|
Brit Global Markets |
(1.9)% |
(0.5)% |
|
Brit Reinsurance |
(2.7)% |
2.1% |
|
Brit UK |
(2.6)% |
(4.5)% |
|
Brit Insurance Group |
(2.2)% |
(1.2)% |
These movements are to be read with caution. They are based on underwriters' estimates of rate changes, including adjustments to terms and conditions, and relate to renewal business only, since this represents the business with the best year-on-year data.
Claims
There were no major catastrophe events affecting Brit Insurance during the period and the Group does not expect to receive any material claims notifications arising from the Chinese earthquake on 12 May. However, the insurance market has experienced a marked increase in the frequency of large individual claims events. Whilst the Group's direct account has not been materially exposed to these large individual claims, reinsurance business will be affected in proportion to its modest market share. Overall claims activity has been in-line with expectations.
Sub-prime related claim notifications are developing in-line with expectations. The ultimate claim projections established by the Group at 31 December 2007 in respect of sub-prime exposures are unchanged.
Investments
Investment return for the 4 months to 30 April 2008 was £11.1m which represented a return of 0.38% (30 April 2007: £46.1m, 1.82%). During the period, total cash and investments increased by 3.6% to £2.83bn. The portfolio experienced losses on certain specialised investment funds mainly due to the widening of bid/offer spreads as a result of the credit crunch. However, Brit Insurance anticipates that these will recover over the passage of time. Overall the portfolio remains well diversified and within the value at risk limits disclosed at the year end.
|
Pre-tax return |
Asset values |
|||
|
4 months ended 30 April 2008 |
30 April 2008 £m |
31 December 2007 £m |
||
|
£m |
% |
|||
|
Equities |
(5.2) |
(2.32) |
173.7 |
218.7 |
|
Bonds |
18.4 |
1.03 |
1,926.6 |
1,493.6 |
|
Specialised investment funds |
(9.5) |
(3.27) |
207.1 |
281.0 |
|
Cash and cash equivalents |
7.4 |
1.41 |
518.7 |
735.3 |
|
Total |
11.1 |
0.38 |
2,826.1 |
2,728.6 |
Exposure to specialised investment funds was reduced during the period by 26.3%, largely due to the disposal of the Group's holding in the Goldman Sachs US Mortgage Backed Securities Fund. The proceeds arising from this disposal were £79.5m (carrying value at 31 December 2007: £78.9m).
Expenses
Group management expenses and finance costs (before bonus provisions) for the 4 months to 30 April 2008 totalled £46.9m (30 April 2007: £43.9m). This increase reflects continued investment in people, processes and infrastructure.
Financial position
Brit Insurance remains in a strong position with no significant changes to the balance sheet or equity structure since the publication of its results for the year ended 31 December 2007. The five year £150m revolving credit facility entered into on 21 December 2007 remains undrawn.
In the 2007 Annual Report it was stated that Brit Insurance would continue to buy back its ordinary shares during 2008 should conditions allow and should it be in the interests of the Group and its shareholders. During the period the Company purchased 520,000 shares for £1,128,000, representing 0.16% of the total issued share capital.
The Board is recommending a final dividend for 2007 of 7.5p per share, plus a special dividend of 7.0p per share. If approved at today's Annual General Meeting, it will be paid on 19 May 2008 and total £45.0m.
Domicile
Alongside many FTSE companies, Brit Insurance has been actively engaging with Government in an attempt to secure a more competitive tax regime for UK headquartered insurance businesses. Brit Insurance strongly believes that the UK tax system must become more accommodating to mitigate the relocation of companies, and related talent, to more favourable regimes. It remains Brit Insurance's preference to remain in the UK but the Group is actively evaluating its position.
Outlook
Dane Douetil, Chief Executive Officer of Brit Insurance Holdings PLC, said:
"As we envisaged in our 2007 Annual Report, 2008 has seen continued economic uncertainty. This has resulted in challenging investment market conditions in the first four months of the year.
"Brit Global Markets and Brit Reinsurance are experiencing a limited market downturn and increased competition. While the UK market remains highly competitive we have seen continued improvement in our motor classes and continue to believe that this year should see the bottom of the UK underwriting cycle.
"Our disciplined approach to underwriting and the diversity and quality of our portfolios will hold us in good stead. At this early stage of the year we are confident of meeting market expectations for 2008."
For further information, please contact
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Dane Douetil, Chief Executive Officer, Brit Insurance Holdings PLC
|
020 7984 8500
|
|
David Haggie/Peter Rigby/Juliet Tilley, Haggie Financial
|
020 7417 8989
|
Notes to Editors
Brit Insurance's operations comprise three strategic business units: Brit Global Markets, Brit Reinsurance and Brit UK. All three have access to the two regulatory vehicles through which Brit Insurance underwrites: Brit Insurance Limited which is a UK FSA regulated insurance company and Lloyd's syndicate 2987 which is managed by Brit Syndicates Limited. Brit Insurance has UK underwriting offices in London, Reading, Birmingham, Bristol, Glasgow, Leeds, Darlington, Ilford and Manchester.
www.britinsurance.com
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