Exiting certain lines does not save Brit from 2018 loss

Insurer Brit, a subsidiary of Canada-based Fairfax Holdings, reported a loss of $166.5m in 2018, but Brit Ltd group CEO Matthew Wilson said that “in this challenging market, we have continued to take action to protect our balance sheet, with the application of rigorous risk selection criteria in marginal lines of business and the decision to withdraw from certain classes such as International Professional Indemnity, Yacht, Contractors Plant & Equipment and Aviation”.

The global specialty re/insurer had booked a gain of $21.5m in 2017. The 2018 result was driven by an underwriting loss of $56.9m, following nearly $200m of catastrophe losses, and an investment loss of $82.1m after a year of equity market volatility and rising bond yields.

The combined ratio for the year was 103.3%. GWP grew 8% to $2.2bn, helped by rate increases and expansion in the US. Risk-adjusted premium rates on renewal business increased by 3.7%, compared to a decline of 1.3% in 2017.

Brit said that it expected continued growth in the US in marine, as well as in professional lines, cyber and technology, and casualty.

The GWP increase was driven mainly by growth from BGSU’s underwriting initiatives in programs, professional liability, cyber and excess casualty, as well as an increase in prior year premium development in marine and property facilities. There was also growth in the core classes of property treaty, long tail direct and property, political risks and violence.

Last February, BGSU expanded its Marine offering with two new hires, an AVP based in the Hartford, Connecticut office, responsible for the underwriting of BGSU’s growing Yacht portfolio, and a VP for cargo based in the Newport Beach, California office to focus on developing BGSU’s Cargo book on the West Coast. These appointments were described as “part of Brit’s strategy to expand its regional footprint in the Americas with a focus on specialty products that deliver sustainable and profitable growth”.

Growth from the core book was driven by the Reinsurance, Long Tail Direct, and Property, Political Risks and Violence portfolios, offset by reductions in the Short Tail Direct portfolio, mainly from the Marine and Aviation classes.

Wilson said that 2018 saw “some movement” back towards a more profitable underlying underwriting environment, although both the underwriting and investment markets remained challenging.

He noted that a combination of continued catastrophe events, market conditions and the strict Lloyd’s planning process for 2019 resulted in “significant withdrawals from a number of classes of business and some reductions in appetite”.

However, the January 1st 2019 renewal season saw only modest rate increases.