Lloyd’s insurer to pursue ‘cautious growth’ after strong 2013
Rumours about Brit seeking a stock market flotation should come as no surprise to the market, says the Lloyd’s insurer’s chief executive Mark Cloutier.
Speaking to Insurance Times following the release of Brit’s 2013 results this morning, Cloutier declined to say whether his company is considering a £900m return to the stock market, as suggested in recent press reports.
However, he noted the “speculation and hype” surrounding the deal, and added: “That we might be thinking about it shouldn’t shock the world.”
Brit was taken private in 2011 when it was bought by private equity consortium Achilles, which formed of private equity houses Apollo and CVC.
Private equity firms often use an initial public offering (IPO) as a way to exit their investments, and Cloutier noted that a number of private equity backed companies had floated recently.
Firing on all cylinders
Brit boosted profits by 20% in 2013, shaved eight percentage points from its combined operating ratio and grew grow written premiums by 3.3%.
Cloutier said that the positive results were a culmination of Brit’s efforts to concentrate on speciality Lloyd’s business, which began shortly after the Achilles takeover.
As part of this process, the company sold the renewal rights to its UK regional business to QBE and the Brit Insurance Limited UK legal entity to Fairfax.
He said: “We have a real focus on underwriting performance, capital management, asset management and having an efficient, scalable platform and staying very focused on those core fundamentals.
“This is a year that we are really seeing it come together. It fired on all cylinders this year.”
Cloutier said Brit would focus on maintaining underwriting discipline and growth, though he stressed the company would not pursue growth for growth’s sake.
“We have a lot of scope for growth in the US specialty business and some of the larger emerging economies. But we are going to be careful. The business is big enough and is showing its earnings power so we want to grow sensibly.”
One example was Brit’s reinsurance business, where gross written premiums fell 6.4%.
Cloutier said: “We are not going to chase business that we don’t think is profitable business. Operating in Lloyd’s we have the right capital structure to be flexible and scale the business down if we don’t see the right opportunities.”
He added that the reinsurance cutback was down to “pricing and expansion of terms and conditions”.