Brit boss Cloutier stresses the insurer’s underwriting remains on track
Brit’s profits after tax plunged to $6.4m in the first six months of this year, compared to $94.5m in the same period last year.
The decreased profit was driven by a fall in investment returns to $7.6m (H1:2015) compared to $94m (H1:2014).
The Lloyd’s insurer, which has re-jigged its investment portfolio to reduce credit exposure and take on more government debt, blamed the lower returns on market-to-market losses on its longer dated bonds as investors took fright on those types of assets, fearing an anticipated increase in US interest rates.
Brit is placing big bets that government debt securities are a better investment than corporate bonds.
Since last year Brit has ramped up goverment debt securities to $1.69bn from $864m, meaning it now accounts for just under half of its $3.67bn asset allocation mix.
Meanwhile, corporate debt securities dwindled to $417.8m from $1.33bn.
Elsewhere in the business gross written premiums shrank 6% to $1.1bn and combined operating ratio worsened to 90.6% from 88.3%.
Chief executive Mark Cloutier remained upbeat despite the deteriorating performance, stressing that Brit’s disciplined underwriting was the right strategy.
He said: “First-half trading conditions have been challenging as we faced continued pressure on pricing and an increasingly complex marketplace in terms of capacity, distribution and regulation.
“Against this backdrop we believe our strategy to focus on underwriting discipline has again proven its value as we delivered a 90.6% combined ratio for the period.
“While gross written premium was slightly lower (3.2% on a constant currency basis), we continue to build out our platform with the addition of new specialty underwriting talent and have seen the benefit in terms of profitable premium flow arising from growth initiatives implemented over the past few years.”