Brit Insurance has "solid" 2010

Lloyd's insurer Brit Insurance this morning posted a fall in 2010 pre-tax profit excluding the effect of foreign exchange on non-monetary items of £119.2m (2009: £171.3m)

Brit's profit after tax for the year ended 31 December 2010 was up 26.2% to £110.5m (2009: £87.5m). Earnings per share increased 25.8% to 142.4p (2009: 113.2p).

Gross written premiums were £1.5bn, a reduction of 9.8% or 10.4% at constant currency reflecting "active management of the underwriting portfolio" in line with its plans, Brit said.

Achilles, which sealed a takover of Brit last year, has agreed that year-end net tangible assets stood at 1,121p per share, meaning that shareholders will receive a 25p contingent value payment on top of the basic offer.

The insurer released £72.4m of claims reserves from prior years (2009: £81.2m) equivalent to 5.5 percentage points of net earned premium (2009: 5.4 percentage points of net earned premium).

In the UK, Brit released £39m of reserves (2009: £41.2m).

It experienced reserve releases in the majority of classes of business, particularly in property (Global Markets and Reinsurance), casualty treaty reinsurance and UK liability.

The group combined ratio - excluding the effect of foreign exchange on non-monetary items – increased to 97.1% (2009: 94%) with a 1.5 percentage point reduction in the claims ratio offset by a 4.6 percentage point increase in the expense ratio.

The combined ratios for Global Markets and UK remained broadly stable at 97.7% and 99.8% respectively, whereas the combined ratio for reinsurance increased by 8.3 percentage points to 88.2%.

UK GWP fell 3.2% to £441.2m. The UK business saw premium rating increases on renewal business of 3% in 2010, compared to 4.3% and 3.7% in 2009.

The UK business posted an underwriting profit of £300,000 (2009: £900 000) and profit before tax was £14.3m (2009: £14.2m).

Brit's motor insurance portfolio accounted for 18.5% of the UK portfolio in 2010, down from 25.3% in 2009 as Brit reduced its exposure to private motor.

Brit Insurance chief executive Dane Douetil said: "2010 was a year of solid and consistent progress for Brit insurance returning 14.4% on equity, with EPS up 25% to 142.4p and NTA growth of 8.5% to £11.41 a share.

"Much of the year was dominated by takeover discussions, finally culminating in October with a recommended offer for the group by Achilles, a company majority-owned by Apollo and CVC. It is pleasing that strong year end NTA (£11.21 on an adjusted basis for the purpose of the CVP) will mean that the full 25 pence per share CVP, in addition to the £10.45 per share offered, will be paid by Achilles to accepting shareholders following successful completion of its acquisition of Brit Insurance.

“It is a testament to the dedication and hard work of everyone at Brit Insurance that in a year defined by stodgy pricing conditions and higher than average catastrophes that the groups claims ratio improved by 1.5 percentage points to 60.7% and that the underlying attritional loss ratio improved by five percentage points.

"The group was able to keep its costs broadly flat despite a more intrusive and costly regulatory environment and the significant costs for the implementation of Solvency II. The UK needs to guard carefully against becoming uncompetitive as the cocktail effect of costly regulation and the potential over-engineering of Solvency II relative to the rest of Europe pushes even more business overseas.

“Brit Insurance is in good shape with its strong franchise, recognisable brand and well diversified customer base to take advantage of the opportunities that will arise from its move to private ownership.”