Brit which announced last week that it had agreed a deal to be bought by Canada-based Fairfax, has reported a profit of £139.0m for 2014, up from £99.5m for 2013, on gross written premiums of £1.30bn, up from £1.18bn in 2013. Net earned premiums rose to £970.4m, from £947.7m.
The underwriting profit declined year on year, down to £102.0m, from £138.4m, with the combined ratio increasing to 89.5%, from 85.4% in 2013. Foreign exchange movements constituted a £21.6m addition to the bottom line, compared with a negative effect of £58.2m in 2013.
Reserve releases in 2014 were equal to 1.9% of opening net claims reserves, down from 2.7% in 2013.
Brit elected to shrink its reinsurance portfolio in 2014 "in response to difficult market conditions". The 8.1% decline in this sector – to £245.3m from £281.0m – was more than counterbalanced by a 22.4% growth in specialty insurance to £1.06bn, from £903.1m in 2013, generating 15.0% top line growth in GWP at constant foreign exchange rates.
There was limited natural catastrophe activity in 2014, with hurricane Odile being the only named event, causing losses for Brit of £8.8m. Brit said that it incurred a net loss of £12.9m from the Tripoli airport attack. The insurer had "immaterial" exposure to the Malaysian Airlines crashes, the Korean ferry disaster and the Air Asia crash.
Brit group chief executive Mark Cloutier said that Brit had experienced "another successful year delivering on our financial targets and moving towards our goal of being the leading global specialty insurer".
A 12.5p a share final dividend was declared, plus a special dividend of a further 12.5p a share, equal to a £50.1m return of capital to shareholders. Brit said that it sought to hold actual capital in a range of 120% to 140% of capital requirement. At excess capital above this level it looks for ways to deploy that excess capital through growth. However, if market conditions or a lack of good opportunities "suggest growth is not right for us", then the excess above the prudent range will be returned to shareholders. "This was the case in 2014, where our strong results have afforded us additional capital headroom".
Chairman Richard Ward said that "looking forward, the financial landscape in which the insurance industry operates continues to offer material challenges." He said that "exceptionally low interest rates, geopolitical uncertainty, global growth concerns and market volatility", all meant that the industry "continues to face a testing back drop".
The company said that "given current market conditions and the effect of rate movements, we expect the impact of the various initiatives to deliver a low to mid-single digit growth rate for Brit over the next few years".
Referring to the agreed Fairfax offer, Cloutier said that "our business is complementary to their group's current offering and the deal represents an exciting opportunity to continue our story on an even stronger footing".
Meanwhile, Brit has announced the appointment of Matthew Wilson as deputy group chief executive in addition to his current role as chief underwriting officer.