“The COVID-19 pandemic is a global crisis, the likes of which has not been seen for generations.”
Those were the words of Brit Limited group chief executive officer Matthew Wilson as he talked through the company’s financial results, released today. It’s fair to say that the impact of the coronavirus pandemic was there for all to see with the company’s combined ratio leaping to 106.7% at the end of the first half of 2020, compared to 94.4% in the same period last year – 15.7pps were attributed to COVID-19 losses. The company also suffered an operating loss before the impact of FX and tax of $193.6 million – that compares to a profit of $139.6 million in the first half of 2019.
It was, by no means, an entirely bleak picture, however. The company actually enjoyed a 5.9% increase in gross written premiums year-on-year at $1.282.5 million, and with the company also announcing plans to launch Ki – the first algorithmically driven Lloyd’s of London syndicate – during the period, as well as kicking off a private client offering, Wilson remained optimistic overall.
“Despite the backdrop of COVID-19, there were a number of positives in the period,” he said. “We achieved risk adjusted rate increases of 8.2%, with almost all classes contributing to the increase. This gives a total overall increase since January 01, 2018, of 17.8%. In this positive rate environment, we continued to grow our written premium to $1,282.5 million, an increase of 6.5% at constant exchange rates.
“During the period we delivered an attritional claims ratio of 52.0%, an improvement of 4.0pps, reflecting underwriting discipline, rigorous risk selection, and rate increases. We have also maintained our long-standing track record of prior year reserve releases, improving the combined ratio by 4.2pps ($34.9 million).”
Looking ahead, Wilson highlighted “significant uncertainty” for the industry but said that there are still a host of optimistic indicators including “rate increases, the withdrawal of capacity in the market from certain classes and our improving attritional claims ratio.”
“In this environment, our clear strategy of embracing data driven underwriting discipline, and rigorous risk selection, coupled with innovative capital management solutions and continued investment in distribution, positions us well to respond to the opportunities and challenges ahead,” he said.