Rating agency Fitch has upgraded Brit Insurance Ltd's insurer financial strength rating to A+ from A.
Fitch said: "The upgrade reflects Brit's strong capital base, good reported results and improving market position. Partly offsetting these points is some continued execution risk to the company's ongoing growth strategy.
In December 2002 Fitch assigned a positive outlook to Brit following the injection of a significant amount of capital in addition to measures taken to improve diversification and reduce the volatility of results.
Fitch said: "Since December 2002, Brit has secured further capital, substantially changed its business mix and taken steps to expand distribution to include regional business in the UK. These changes have been positive for Brit's rating.
"The additional capital enabled Brit to increase premiums by 180% to £385m in 2003. The number of underwriters also increased to 121 from eight.
"Premiums are expected to continue to grow rapidly during 2004 before slowing to around 20% growth in 2005. A portion of the new growth expected over the next two to three years is expected to be derived from new regional distribution outlets, with Brit having already made significant progress towards its target of seven."
Fitch's expectation is that Brit would maintain its very strong capital base during this continued growth phase.
"Brit's underwriting results in 2003 have been strong with a reported combined ratio of 81.6%, although results were aided by the benign loss environment on property catastrophe business and through the quota share arrangement that is in place with the Lloyd's operations of the Brit group.
"The return on equity (based on average capital employed including equalisation reserve) of 11.1% is expected to improve as Brit further increases written premium and fully utilises the capital that it has received.
"Brit's business mix has evolved substantially since 2002, when premiums largely related to property catastrophe reinsurance and financial risks.
"The diversification has been a deliberate attempt by Brit to reduce the volatility that had been seen in its historical results. In 2003, Brit's gross written premium was accounted for by reinsurance (40%), third party liability (23%), motor (21%), miscellaneous and pecuniary (11%), property (4%) and accident and health (1%)."
