January saw premium hikes add to accounting improvements
Brit Insurance has said it expects pre-tax profit to be significantly higher than the current market consensus of £32m because of the way in which foreign currency liabilities are accounted.
But the company also said it writes 50% of its business at 1st January and achieved rate increases across the portfolio averaging just over 8% with a retention ratio of 85%.
Rate increases were:
- 4% in casualty treaty
- 9% in property treaty (comprising 13% in North America and 4% in International)
- 17% in marine.
Brit predicted this trend would accelerate through 2009.
Brit Global Markets achieved an average rate increase across the portfolio of 2%, reversing recent downward trends, with rises from 1.5% in financial and professional, 3% in property and 5% in marine, to 16% in the energy account.
It said it had been reducing its exposure to financial institutions business because of concerns over the economic environment and this has continued in 2009 where rate increases of over 8% were not sufficient to attract the insurer to that market.
Total financial and professional gross written premium for the 2008 underwriting year was £320m. Of this, financial institutions business was £74m, of which £26m was US based, down from £87m and £37m respectively in the 2007 underwriting year.
For the 2009 underwriting year budgeted gross written premium for financial institutions is £61m, with only £8m from US-based business. “This defensive stance will be maintained until such time as we judge that the financial environment has improved,” Brit said.
Brit UK was said to be “encouraged by the continuous pricing improvement in motor classes, averaging over 6% throughout 2008.” All other classes showed significant slowing of rate reductions. “We have a positive outlook for this business in 2009,” Brit said
Brit’s estimates for the total claims from Hurricanes Gustav and Ike have increased to US$112m net of reinsurance recoveries and reinstatement premium from the initial estimate of US$98m.
Commenting on the outlook, Dane Douetil, chief executive officer "Widespread improved pricing for 1st January renewals signals an upturn in the market. This is driven by 2008 hurricane losses, a very poor investment environment, increased use of syndication by insurance buyers and specific issues experienced by some of the larger participants in the industry.
"Constraints on industry capacity are set to continue throughout 2009 despite modest new capital entering the market. As a result we believe the positive pricing momentum will continue. We are therefore confident of good prospects for growth in all three of our underwriting businesses in 2009."
