15 February 2019ILS

Brit commits to AltCap-backed business against challenging market

Brit has increased its commitment to the capital markets through growing various third party capital-backed initiatives in 2018, however the specialty re/insurer had a challenging year from natural catastrophes which ultimately led to a net loss.

Brit posted a loss of $166.5 million for the 12-month period ending December 31st, compared with a profit of $21.5 million in 2017.

Group CEO Matthew Wilson suggested that against this challenging backdrop, Brit has been selectively expanding in lines and initiatives where it sees sustainable, profitable growth.

One such example is its Bermuda operations, which has selectively written reinsurance business in lines and markets it believes remain well rated, particularly casualty treaty. Gross premiums written by Brit's Bermuda office hit $91.5 million in 2018, an increase of 9.84 percent from 2017.

Brit also increased its total managed capacity across its third party capital-backed businesses - which includes Versutus, Sussex Capital and Syndicate 2988 - to $400 million.

The Bermuda-domiciled collateralised reinsurance platform Sussex Capital was launched in January 2018, with initial funding of $102.5 million. Wilson said Brit has a clear ambition to develop Sussex Capital  into a leading ILS manager, with both top quartile performance and relevant scale.

In February, Brit expanded Versutus, which now has invested capital of $187 million. Versutus offers access to Brit’s underwriting franchise through two sub series, one covering worldwide property catastrophe reinsurance business and the other covering North American property binders.

Syndicate 2988, which launched in 2017, was also expanded by 79 percent to a stamp capacity of £98.5m ($130m) for 2018.

“These initiatives represent excellent progress as we continue to develop and enhance our capital markets participation,” said Wilson. “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.”

Brit's overall gross written premiums were $2.24 billion in 2018, up from $2.06 billion in 2017.

The group's combined ratio was 103.3 percent, an improvement from 112.4 percent in 2017.

Mark Allan, group chief financial officer of Brit, added: “Syndicate 2988, Versutus and Sussex are key to Brit’s strategy of building long term relationships with the capital markets, and through these platforms we now have access to over $400m of capacity. The support they provide enables us to strengthen our market position and provide Brit capacity to support our clients whilst offering capital market investors attractive, non-correlating returns.”