Profits more than halve with hurricane costs still rising

Brit Insurance announced its pre-tax profits more than halved to £89.2m and that it would quit the UK and move to the Netherlands.

The company said: "We have identified the Netherlands as the preferred location for the domicile of the Group's holding company in order to enhance prospects for shareholder value. With its many positive attributes including membership of the EU, strong financial services sector, stable fiscal strategy and excellent communications we anticipate the Netherlands will provide a good springboard for future growth."

Highlights (2007 in brackets)

  • Gross Written premiums £1,394.6m (£1,264.9m)
  • Net written premiums £1,163.3m (£1,119.4m)
  • Profit before tax £89.2m (£191.2m)
  • Earnings per share 21.5p (43.2p)
  • Net tangible assets per share 248.2p (248.0p)
  • Gross written premiums £1,394.6m (£1,264.9m)
  • Combined ratio 99.4% (92.7%)
  • Investment return 0.16%
  • Return on equity 9.2% (22.1%)
  • Gustav and Ike costs estimates increased from $98m to $112m

The company announced :

  • Netherlands identified as the preferred domicile of the Group’s holding company, subject to requisite clearances and approvals
  • Acquisition of 38.8% stake in Xbridge, an online insurance and finance technology company, through a £7.2m investment
  • Five year £150m revolving credit facility, entered into on 21 December 2007, undrawn throughout 2008 and at 8 March 2009

It said: “Capacity concerns will shape the global insurance market during 2009. Insurance capital has been eroded by the combined elements of significant catastrophe related claims during 2008 and by the varied and significant effects of economic turbulence. As a result, prospects for continued rating improvements are good across most classes and within all three of our underwriting businesses.

Dane Douetil, chief executive officer, said: “In a difficult year for insurance, our adherence to the principles of our strategy has led us to a strong result. Market conditions are improving further in most areas, our strong balance sheet and the subscription nature of much of our business are attractive to risk buyers and stand us in good stead for 2009.”

In the UK the company said: “As expected, 2008 saw rate increases in the Brit UK commercial motor book and personal lines accounts, with rates stabilising or rates of fall slowing in other UK classes. Overall Brit UK rates fell by 0.8% during 2008 (2007: -4.5%). Brit Reinsurance and Global Markets saw annualised rate softening during 2008 of -2.0% and -3.3% respectively (2007: -0.8% and +1.5%).