Brit LIMITED
PRESS RELEASE
27 MARCH 2024
results for the Year ended 31 December 2023
A
record result
Key points
· Group profit after tax (including discontinued operations) of
$895.4m (2022: $308.9m).
· Profit on ordinary activities before tax, FX and discontinued
operations of $720.3m (2022: $281.3m).
· Return on net tangible assets on all operations of 51.9%
(2022: 12.6%) and return on net tangible assets on continuing
operations of 41.7% (2022: 12.9%).
· Combined ratio for continuing business after discounting of
76.2% (2022: 88.5%) and an undiscounted combined ratio for continuing
business of 85.3% (2022:
96.2%).
· Insurance operating result, excluding the impact of
discounting, was a profit of $405.7m (2022: $93.9m), and the result
including the impact of discounting was a profit of $423.7m (2022:
$492.5m).
· Insurance premium written for 2023 of $3,753.5m, a reduction
of 5.5% over 2022 ($3,970.0m) at constant rates of exchange,
reflecting market conditions in certain classes, the implementation
of our catastrophe strategy, and our continued focus on improving
our performance by exiting underperforming
business.
· Investment return was a strong $394.4m or 6.2% (2022: loss of
$132.1m or -2.3%).
· Result from discontinued operations after tax totalled
$266.2m (2022: $21.7m), including the gain on sale of Ambridge of
$259.1m.
· Capital position remains strong, with a surplus over
management entity capital requirements of $1,050.5m or 54.5% (2022:
$709.8m or 39.9%), after dividend payments in the year of $413.6m.
A significant proportion of our investment portfolio remains
invested in cash and fixed income securities (2023: 85.8%; 2022:
85.1%).
· Highly successful third year of trading for Ki3,
recording insurance premiums written of $877.0m (2022: $834.1m), a combined ratio
after discounting of 83.2% (2022: 91.1%)
and an undiscounted combined ratio of 89.4% (2022:
95.0%).
· Overall market conditions continued to harden, albeit at a
reducing rate, and we achieved risk-adjusted rate increases of
7.1%, bringing
the compound increase since 1 January 2018 to 65.1%.
· Key
developments include:
o Completion of the sale of
the Ambridge MGA companies;
o Agreement to sell our
holding in Canadian MGA Sutton, which completed post year end on 8
March 2024;
o Execution of our catastrophe
strategy, reducing our Property portfolio's gross exposure to such
events;
o Launch of Ki's enhanced
offering allowing brokers to access third-party digital capacity
from multiple syndicates directly through the Ki
platform;
o Continued focus on our
customers through claims innovation;
o Continued focus on our
digital, data and AI strategy; and
o Adoption of IFRS 17
'Insurance Contracts'.
Martin Thompson, Group Chief
Executive Officer, commented:
'Brit has delivered an excellent
result for 2023, with a strong underwriting and investment
performance.
Our undiscounted combined ratio of
85.3%, a 10.9 percentage point improvement from 2022, reflects the
strength of Brit's underwriting teams and the successful execution
of our catastrophe strategy, as well as a year of more benign major
loss activity. Our discounted combined ratio reduced to
76.2% (2022: 88.5%).
Overall, market conditions have
remained broadly positive, and we achieved
risk adjusted rate increases of 7.1%. In
total, we have seen compound increases since 1 January 2018 of
65.1%. While we have continued to achieve rate increases in
most of our underwriting portfolios, in some lines we are seeing increased
competition and rate reductions, putting pressure on premium
income. We remain vigilant to this and continue to closely monitor
our underwriting approach as we maintain our focus on cycle
management.
Against this backdrop we have
remained highly disciplined and focused on underwriting
profitability. This is reflected in a slight reduction in the
Group's overall insurance premium written to $3,753.5m (2022:
$3,970.0m), mainly driven by market conditions in certain classes,
the implementation of our catastrophe strategy, and our continued
focus on improving our performance by exiting underperforming
business.
In its third year of trading, Ki's
insurance premium written increased by $42.9m to $877.0m and
continued to make a positive contribution to the Group. Ki
has further driven change in the Lloyd's market including the
evolution of Ki's business model, allowing brokers to access
digital capacity from multiple Lloyd's syndicates directly through
the Ki platform, made possible through multi-year partnerships with
capacity partners.
On 10 May 2023, Brit completed the
sale of Ambridge, its US and European based managing general
underwriter (MGU) to Amynta Group, recording a gain on sale of
$259.1m. In November 2023 we also entered into an agreement
with Amynta to sell Sutton, the Canadian MGU in which we have a 49%
interest, which closed on 8 March 2024. We believe it was the
appropriate time to realise the value of our investments in
Ambridge and Sutton as we focus on our strategic priorities: our
core underwriting capabilities and our investment in building out
our market leading digital capabilities. Importantly,
Ambridge, Sutton and Amynta remain key partners for Brit, and we
look forward to a long and deep underwriting relationship with them
as an independent MGUs.
Our ability to deliver a
best-in-class claims service is an important differentiator for
Brit. We continued to support our clients when they need it
most, with innovation at the heart of our claims approach, as
demonstrated with our response to the 2023 Hawaiian wildfires and
other major loss events. We were delighted that this resulted
in our claims team being recognised in winning a number of
prestigious industry awards.
Looking ahead, our aspiration for
the Group is to be a long-term winner in the Lloyd's market,
supported by our clear strategic focus on driving performance and
profitability. Our 2023 results show we have the foundations from
which to achieve this: through Syndicate 2987 we are a highly
relevant lead market, while Ki is demonstrating the future of
follow. In 2024 we will continue to invest in our technology
strategy, broker relationships and underwriting capabilities to
build on the established leadership positions of these respective
parts of the Group, while retaining our long-term focus on careful
management of the insurance cycle.
While we remain mindful of
shifting market dynamics, this positioning gives me great
confidence in the outlook for Brit. Underpinning this confidence is
our special and unique culture and I am proud of Brit's reputation
for fostering diverse talent. I would like to thank all my
colleagues at Brit for their contributions over the last year, as
well as our brokers and partners in the market for their ongoing
support.'
Notes
|
1
|
The calculations of the key
performance indicators and alternative performance measures are set
out in the 'key performance indicators and alternative performance
measures' section at the end of this document.
|
|
2
|
2022 figures have been restated
where applicable following the adoption of IFRS 17 'Insurance
Contracts' from 1 January 2023.
|
|
3
|
The Ki segment result has been
prepared for the purposes of Brit Limited segmental reporting and
does not constitute stand-alone financials for Ki Syndicate 1618 or
the Ki Financial Limited sub-group in whole or part.
|
|
4
|
Brit Limited's 2023 audited Annual
Report is available at www.britinsurance.com.
|
For further information, please
contact:
|
Antony E Usher, Group Financial
Controller, Brit Limited
|
+44 (0)
20 3857 0000
|
|
Edward Berry, FTI
Consulting
|
+44 (0)
20 3727 1046
|
|
Tom Blackwell, FTI
Consulting
|
+44 (0)
20 3727 1051
|
Disclaimer
This press release does not
constitute or form part of, and should not be construed as, an
offer for sale or subscription of, or solicitation of any offer or
invitation or advice or recommendation to subscribe for, underwrite
or otherwise acquire or dispose of any securities (including share
options and debt instruments) of the Company nor any other body
corporate nor should it or any part of it form the basis of, or be
relied on in connection with, any contract or commitment whatsoever
which may at any time be entered into by the recipient or any other
person, nor does it constitute an invitation or inducement to
engage in investment activity under Section 21 of the Financial
Services and Markets Act 2000 (FSMA). This document does not
constitute an invitation to effect any transaction with the Company
or to make use of any services provided by the Company. Past
performance cannot be relied on as a guide to future
performance.
Brit at a Glance
Brit is a market leader in global
specialty insurance and reinsurance, writing a broad range of
commercial insurance. Brit is a highly regarded and an
influential name in the Lloyd's market and we pride ourselves on
our specialist underwriting and claims expertise.
We operate globally via a
combination of our own international distribution network that
benefits from Lloyd's global licences, and through our broker
partners. Our underwriting capabilities are underpinned by a
strong financial position, our underwriting expertise and
discipline and customer service, enhanced by a data led approach
and strong focus on innovation.
We have a strong track record and
are passionate about our business, our people and our clients and
we have focused on cultivating a franchise that is built on
delivering exceptional service. Our culture is centred on
achievement, and we have established a framework that identifies
and rewards strong performance.
Brit is a member of the Fairfax
Financial Holdings Limited group of companies (Fairfax). The
Fairfax financial result for the year ended 31 December 2023,
published on 15 February 2024, includes the Brit financial
result.
www.britinsurance.com
The Fairfax Group
Since June 2015, Brit has been a
member of the Fairfax Financial Holdings
Limited group (Fairfax), a Canadian company whose shares are listed
on the Toronto Stock Exchange (www.fairfax.ca).
At 31 December 2023, Fairfax owned
86.2% of Brit Limited while the remaining 13.8% was owned by
OMERS Administration Corporation (OMERS), the
defined benefit pension plan for municipal sector employees in the
Province of Ontario, Canada. Fairfax has
the option to purchase OMERS' interest in Brit at certain dates
from October 2023.
We believe that Fairfax is an
excellent parent for Brit, enabling us to
enhance our global product offering. It provides us with
a strong and stable base for long-term
growth and affords us with opportunities
to expand our underwriting and distribution channels,
combined with the freedom to pursue our own
identity, philosophy and ambitions.
Business Review
Overview
For the twelve months to 31
December 2023, Brit returned a combined ratio (CoR) before
discounting for continuing operations of 85.3% (2022: 96.2%) and an
insurance operating result before discounting of $405.7m (2022:
$93.9m).
Insurance premium written
decreased by 5.5% to $3,753.5m (2022: $3,970.0m).
This reflected an overall decrease in current year insurance
premium reflecting market conditions in certain classes, the
implementation of our catastrophe strategy, and our continued focus
on improving our performance by exiting underperforming
business. Prior year premium
development continued to be favourable, but at lower levels than in
2022. This resulted in a year-on-year decrease of
$102.7m.
Ki has continued to deliver its
growth plans and has had a successful third year of
trading.
The calculations of key
performance indicators and other performance measures are set out
in the 'key performance indicators and alternative performance
measures' section at the end of this document.
Market
conditions
The market has continued to
benefit from premium rates during 2023. Brit achieved an overall
risk adjusted rate increase of 7.1% (2022: 12.4%).
Direct business premium rates increased by
5.3% (2022: 14.4%), while reinsurance business increased by 12.1%
(2022: 7.1%). All Divisions, with the
exceptions of Financial and Professional and Ambridge
Transactional, achieved rate increases, with the largest increases
achieved in Property Treaty, Property and Programmes and
Facilities.
The compound risk adjusted rate
increase since 1 January 2018 now totals a
very strong +65.1%.
The economic environment and
the impact of inflation
Brit has carefully considered the
impact of the higher levels of inflation. Increased focus has been
placed on ensuring Brit's pricing models adequately address current
inflationary trends. Feeding into these models is an enhanced
framework assessing the key drivers of claim settlement costs for
each class of business.
Our reserves are set on a best
estimate basis together with a risk adjustment. For
2023, this risk adjustment has been set at the 77th
percentile (2022: 75th percentile) on a net basis.
As part of the year-end reserving exercise, the impact of
inflation was considered in detail by the Actuarial team to ensure
that assumptions are consistent with our forward-looking
expectations for claims inflation. Various techniques have been
considered in line with guidance from Lloyd's and
regulators.
2023 Major loss
activity
Worldwide natural disasters in
2023 resulted in economic losses of around $250.0bn (2022:
$250.0bn), in line with the five-year average, while insured losses
were in the region $95.0bn (2022: $125.0bn), below the five-year
average of $105.0bn (Source: Munich Re).
The year's most costliest events
included the tragic earthquakes in southeast Turkey and Syria
(economic losses of c.$50.0bn, with insured losses of c.$5.5bn),
Typhoon Doksuri (Philippines / China) (economic losses of
c.$25.0bn, with insured losses of c.$2.0bn), Hurricane Otis (the
most severe storm ever to hit Mexico's Pacific coast) (economic
losses of c.$12.0bn, with insured losses of c.$4.0bn). There were
also a significant number of regional weather events, such as
thunderstorms in the US and Europe, and wildfires in
Canada.
Brit's undiscounted best estimate
reserves established for major natural
catastrophe losses in 2023, net of amounts
recoverable from reinsurers, amounted to
$69.6m (2022: $306.6m), driven by the Hawaiian wildfires ($51.7m)
and Hurricane Idalia ($17.9m). Brit does not have material
exposure to other catastrophe events which occurred during the
year. While we anticipate that some claims will emerge, we
expect these to be attritional in scale.
2022 and prior major loss
activity
Net reserves held for 2022 and
prior major losses were broadly unchanged, with increases in
estimates in respect of claims arising from Winter Storm Elliott
offset by reductions in estimates in respect of Hurricane
Ian.
Russian invasion of
Ukraine
During 2023, net loss estimates
arising from the Russian invasion of Ukraine increased by $2.7m to
$34.6m. This small net increase was primarily driven by the
earning through of exposures on the Terrorism and Political Risk
classes, partly offset by a reduction of specific loss estimates in
the Political and Credit risks following better than expected
experience.
COVID-19
The Group continues to monitor its
exposure to losses arising from the COVID-19 pandemic. During 2023,
there has been no material movement in overall net reserves held
for COVID-19 related claims, as claims continue to close in line
with expectations.
Supporting our
customers
Our customers are our priority.
When a customer has a claim, we understand they are likely to be
facing difficult and unexpected challenges. We believe they expect
the insurance they have purchased to respond and deliver when they
need it most. We see each claim as an opportunity to deliver the
claims service our customers need to move forward with their
lives.
The Brit claims team have
maintained a focus on responding to our customers and by pursuing
opportunities to reduce claims lifecycle and bring claims to
resolution at every opportunity through a high level of technical
expertise supported by innovation and technology:
· Claims response to Hawaiian
Wildfires
Brit continues to lead the London
Market in its use of geospatial technology to advance property
claims adjusting capabilities, often after catastrophe events but
also and in normal course claims response. In the immediate
aftermath of the Hawaiian Wildfires, the Brit Claims team used our
proprietary machine learning algorithm in tandem with our access to
ultra-high-resolution aerial imagery to accelerate the
accurate identification of US property damage. By doing so,
the team was able to virtually adjust and approve claims payments
directly from our offices in London. This enabled us to fast-track
payments to over 75% of the impacted customers, in most cases
before the general population was even permitted back into the
devastated areas in Maui. This represents a lifecycle of
natural catastrophe impact to payment that we believe is
significantly quicker than the rest of the Lloyd's
market.
Direct Pay solution
In March 2022, we launched the
Direct Pay payment solution in the US, with very favourable
feedback from customers, coverholders and brokers. In partnership with Visa, Mastercard and Vitesse,
Direct Pay offers our customers the ability to receive claims
payments securely and instantly to their bank cards. This follows
the successful 2021 release of Direct Pay solution in the
UK.
Brit has co-developed several
funding and payment innovations that aim to enhance customer
experience and drive value for the business. Furthermore, the
successful re-application of direct pay was initiated by Lloyd's
for wider use by the Lloyd's market under the Future at Lloyd's
initiative FCP, or Faster Claims Payments. FCP enables third
party adjusters working on behalf of Lloyd's to expedite claims
payments through direct access to Insurer's funds via Vitesse and
their Payment Platform, eliminating the need for a traditional Loss
Fund.
· Market
recognition
In May 2023, the Brit Claims Team
won two prestigious Insurance Times Claims Excellence Awards, and
in June 2023 the Team won the 'Best Use of Technology' award at the
British Claims Awards. These awards recognised our
outstanding work utilising Machine Learning, Aerial Imagery, and a
faster claims payments service to deliver an unprecedented claims
solution following Hurricane Ian.
Other underwriting
developments
· Execution of catastrophe
strategy
In recent years the market has
experienced a level of catastrophe activity significantly in excess
of historical levels. In 2022, we reviewed the catastrophe strategy
of our US Property portfolio, focusing on Property Treaty, Property
Facilities and Property Open Market. As a result, we focused on
achieving minimum rate requirements, have successfully increased
inflationary guards and minimum valuations, and redistributed
capacity away from catastrophe intensive regions. The changes were
also expected to reduce reliance on reinsurance which is
increasingly expensive given the scarcity of capacity in the
current market.
During 2023, we have continued to
focus on the execution of this strategy. The actions have
resulted in a gross exposure reduction for Property Treaty,
Property Facilities and Property Open Market across our
portfolio. The strategy continues to be
reviewed on a quarterly basis.
· Focus on underwriting
capability development
In 2023, Brit made good progress
with its investment in digital and data-enabled capabilities.
North America Open Market (NAOM) Property was launched as the first
product using Brit's new strategic pricing and rating engine,
marking an important step in our strategy to use technology to
facilitate greater underwriting capability. With the new
platform NAOM underwriting team have been able to:
o Increase efficiency, removing friction in the underwriting
process
o Move towards a model which surfaces capability 'all in one
place', within a streamlined, reimagined workflow that matches what
we do and how we think as underwriters.
o Ensure better service to our Brokers (e.g. same-day
quoting)
o Increase collaboration across underwriters, pricing
actuaries, technology, operations and data.
Following this successful
roll-out, we will expand the platform in 2024 to other classes as
well as explore additional capabilities that can benefit multiple
classes.
· Senior
underwriting and claims
appointments
Group Chief Underwriting Officer
(GCUO): On the 31 October
2023, we announced that after 17 years of service, Christiern Dart
had decided to step down from his position as GCUO. We thank him
for his contribution to Brit. Jon Sullivan has been appointed
Christiern's successor. Jon has been with Brit for over 12
years, being Deputy GCUO for the last five years and Active
Underwriter of Syndicate 2987 since 2018.
Head of
Claims: On 4 April
2023, we announced that Marie Hill has been promoted to Group Head
of Claims (formerly Deputy Head of Claims).
· Continued portfolio
management
Where classes remain challenging,
we have continued to take action to improve our performance and
maintained our rigorous risk selection criteria. For 2024, we have
ceased writing Space and Nuclear, and refocused
the Marine Liability account to concentrate on Energy Liability
business.
· 2024 business
planning
Brit is one of the largest
managing agents in the market and, in 2024, Syndicate 2987 is the
second largest Lloyd's syndicate by underwriting capacity,
demonstrating the value and strength of Brit to the Lloyd's
Market.
Syndicate 2987's capacity is
planned to grow by c.2% (at comparable FX rates) over the 2023 year
of account. As in previous years, we continue to actively manage
the portfolios, growing where the market is strongest and where we
see the best opportunities to deliver profit for our shareholders,
and taking action on the weaker segments of the
portfolio.
Syndicate 2988's capacity is
planned to reduce by c.18% (at comparable FX rates) over the 2023
year of account. For 2024 the Syndicate's portfolio will not
include US Property business and so the stamp has been reduced
accordingly. Whilst we continue to see this as an attractive
segment, the strategy for 2024 is to reduce natural capacity
volatility within the Syndicate's portfolio, offering a more stable
return for investors.
Syndicate 1618 has been on a high
growth trajectory since its launch in 2021. Expectations for 2024
are for the rate of growth to slow as the portfolio stabilises and
the Ki model expands to include partner lines being deployed
through the platform.
Brit's non-catastrophe reinsurance
renewals at 1 January 2024 have been
successfully completed, achieved within budget and with some
improvements in coverage, and placed with a largely unchanged
panel. Following the execution of new Property catastrophe
strategy during 2023, Brit's focus was on reducing overall spend
and reducing ceded profit.
Brit's main catastrophe
protections renew at 1 April and discussions are currently underway
with our reinsurance partners. Currently, we do not foresee any
material challenges in placing the required protections.
· Launch of Ki's multiple
capacity partner platform
In October 2023, Ki evolved its
market first algorithmic underwriting platform and announced
partnership agreements with two Lloyd's syndicates to offer brokers
access to algorithmically driven digital follow capacity from those
third-party syndicates. From November 2023, this capacity was
available on the Ki platform, for risks
incepting from 1 January 2024. This is not
only a step change for Ki's business, with the additional capacity
driving significant efficiency benefits for brokers and clients,
but also for the Lloyd's follow market.
· Renewal and planned
expansion of our leading cyber consortium
In February 2023, we announced the
renewal and planned expansion of our leading cyber consortium, Brit
Cyber Attack Plus (BCAP), a cyber product designed to protect
clients from the impact of physical damage arising from
cyber-attacks. BCAP also offers a broad spectrum of cyber
coverage including, business interruption, data privacy, breach
response, cyber extortion, reputational harm and cyber liability
coverage.
Launched in 2014, the BCAP
consortium offers limits of up to $140.0m and wrote in excess of
$100.0m in premium in 2023, making it one of the largest cyber
consortiums in the market by both premium and capacity.
· Brit insurance named a
winner of the Insurance Business UK five star Cyber
award
In February 2023, Brit's Cyber
product offering was selected once again by brokers, to receive
five stars by Insurance Business UK. Our cyber team has been
delivering for clients and customers for over 18 years now, and
we're proud to provide cyber cover for 40% of the Fortune
500.
· Closure
of Sussex
Diversified Fund
In October 2023, given the current
challenges in the ILS market, Brit took the decision to close the
Sussex Diversified Fund. The Diversified Fund was established
for the 2018 underwriting year to encourage external investors to
invest in a surplus of Property catastrophe risk. This
decision will allow Brit to focus on its corporate strategy, to
meet its combined ratio target under the four pillars of focus,
simplification, capability and culture, and to focus its growth
ambitions in Bermuda on its two well-established entities, Brit
Global Specialty Bermuda Limited (which produces business for
Syndicate 2987) and Brit Re (A rated by AM Best).
Review of other key
business developments during
2023
Other key strategic developments
during 2023 have included:
· Ambridge sale
completion
On 7 January 2023, Brit entered
into an agreement to sell Ambridge Group to Amynta Group. This
transaction closed on 10 May 2023. The Company received
$379.0m on closing, comprising of cash of $265.8m and a promissory
note with a fair value of $113.2m, resulting in a gain on disposal
of $259.1m.
Under the terms of the sale
agreement, an additional $100.0m was receivable, subject to a
clawback based on 2023 performance targets of Ambridge. The
Directors believe that the 2023 performance targets will not be met
and therefore have not recognised any of this additional
amount.
Ambridge is a leading global
Managing General Underwriter, offering a broad range of
transactional, specialty casualty, cyber, professional liability,
and reinsurance coverages. Ambridge places over $600m of gross
premium written on behalf of Brit and a number of highly rated
global insurers.
Ambridge continues to be a
strategic business partner of Brit.
·
Sutton sale
agreement
On 17 November 2023, Brit entered
into an agreement with Amynta Group and the other shareholders of
Sutton, under which Amynta Group would acquire 100% of
Sutton. Following the receipt of UK regulatory approval, this
transaction closed on 8 March 2024. The sale proceeds for
Brit's 49% holding were $31.0m.
Sutton is a Canadian managing
general underwriter of a range of specialised insurance products,
including Accident and Health. Sutton will continue to be a
strategic business partner of Brit after the sale
completes.
· Senior Corporate
appointments
o Brit Limited Board
appointment
Simon Lee was appointed to the
Board of Brit Limited on 8 May 2023. Simon remains Chairman
of Brit Syndicates Limited, the board of which he was appointed to
on 16 January 2016.
o Actuarial and
Risk
In October, we announced the
following changes:
· Shane Kingston moved to a new position of Group Chief
Risk Officer & Chief Actuary.
· David Grant promoted to the role of Chief Risk Officer for
Brit Syndicates Limited (BSL).
· Richard Weston promoted to the role of Chief Actuary for Brit
Syndicates Limited (BSL).
These changes will facilitate
stronger alignment between Underwriting and Actuarial, as we
continue to improve our underwriting and portfolio management
capabilities. They will also support delivery of our
ever-increasing regulatory requirements.
o Senior Ki
appointments
·
Ki
CFO: On 1 December 2023 Jan Christiansen joined Ki as CFO. Jan
has two decades of leadership experience at Fairfax portfolio
companies, and was most recently at Odyssey Group, where he was
Group CFO after joining in 2010.
· Ki Commercial
Director: In June, Ki appointed
Catherine Barton as Commercial Director. Catherine was most
recently Chief Insurance Officer at Zego and prior to this Chief
Financial Officer at Talbot Underwriting Limited. She has also held
senior executive management roles at Bupa UK and been a Partner at
both EY and Deloitte.
· Ki Director of Product: In September, Anita Woods joined as
Ki Director of Product. Anita was most recently Vice
President of Product at fintech firm Cleo. She previously
worked at Google, Amazon, and Bain & Company.
· Digital, data and artificial
intelligence (AI) strategy
We continue to advance our
strategy to deliver a digital, data and AI driven platform that
improves our underwriting performance and capabilities. We have
made good progress in developing foundational data and technology
capabilities and internal skills. Our primary area of focus and
investment in 2023 has been the continued build out of our new
cloud-native modern data platform and planned sunset of our legacy
data warehouse. This will greatly improve the stability of
our reporting foundation, provide a scalable platform for future
value investments in data and analytics and help manage cloud
computing costs in the long-term.
The next phase of our strategy is
focusing on leveraging acceleration brought by GenAI, large
language models, no code/low-code platforms and related digital
architecture. The strategy includes embedding modern ways of
working to enable strong partnership across business functions to
drive accelerated business adoption. Furthermore, we continue to
mature our cyber security, privacy and ethics, and data quality
strategies as key enablers of our technology and data
strategies.
· RiverStone Management
Pension and Life Assurance Plan - bulk annuity
contract
In October 2023, the Trustees of
the Plan purchased a bulk annuity ('buy-in') policy with a
specialist insurer for a premium of £94.9m
($121.0m). This policy, which replaces the
majority of the Schemes investments, matches the benefits due to
all scheme members and provides the income to the Plan to fund
payments as they fall due. Following this transaction, the Plan
retains a surplus of $10.7m ($7.0m net of deferred tax). This
contract provides added security to members, while reducing the
risk of Brit being required to provide further funding to support
member benefits. No decision has been made as to whether the scheme
will proceed to a full buy-out at some point in the
future.
Ki continues to drive innovation
in the Lloyd's market
2023 saw another successful year
for Ki, delivering a strong financial performance while
simultaneously evolving its business model and offering to London
brokers.
Having additional capacity from
other syndicates on the Ki platform is a transformational change
for the Lloyd's market. From 1 January 2024 brokers are now able to
access this third-party digital capacity, directly through the Ki
platform, made possible through multi-year partnerships with
trusted Lloyd's syndicates. As a result, Ki has become the first
algorithmic underwriting business in the market to be able to
underwrite and bind follow capacity on behalf of syndicates across
Property, Specialty, and Casualty classes. This is a major step
towards a fully digital follow market in Lloyd's and provides a
compelling proposition to Lloyd's brokers and clients.
In 2023, Ki1 generated
an undiscounted CoR of 89.4% (2022: 95.0%). 2023 saw steady growth
in income, with insurance premium written increasing to $877.0m,
(+5.1%), despite heightened competition in Financial and
Professional and Cyber, as well as reduced appetite for Property
Facilities following Hurricane Ian in 2022'. This reflects
continued support from the Lloyd's broking community for the Ki's
unique offering, and the favourable trading conditions.
Underwriting profitability has
increased during 2023. Ki's1 undiscounted claims ratio
decreased to 56.3% (2022: 61.2%). Ki benefitted from the relatively
benign catastrophe year and recognised major losses in relation to
the Hawaiian wildfires and Hurricane Idalia with net reserves
established on an actuarial best estimate basis of $20.0m (2022
events: $48.9m). The net impact of these events was managed through
the successful renewal of a catastrophe reinsurance programme and a
whole account quota share. The combination of continued growth and
profitability is an endorsement of Ki's digital, data driven model
and validates our unique approach to
underwriting and digital fast-follow.
Ki has built a platform that is
unique in the Lloyd's market. In 2023, technology development
focused on the readiness of the platform to launch Ki's ability to
underwrite and bind risks on behalf of multiple syndicates,
including Ki 1618 for risks incepting on 1 January 2024. Other
initiatives included an increased focus on property, energy, and
cyber class capabilities within the algorithm as well as building
back-office supporting technology as the business has scaled. Our
team of leading data scientists and engineers continues to
prioritise developing new capabilities at pace with a spirit of
continuous improvement that defines our business model.
Our technology is partnered with a
strong underwriting culture, with a focus on sustainable
profitability and discipline embedded in the business. The
Portfolio Underwriting function at Ki is focused on managing our
portfolio as well as servicing our brokers and clients to ensure we
remain focused on the fundamentals of specialty insurance. Going
forward our underwriting teams will act on behalf of Ki 1618 as
well as the partner syndicates that provide capacity to the Ki
platform.
Ki Financial Limited (KFL) has a
sustainability linked 'Funds at Lloyd's' letter of credit
agreement. The facility, which is structured to support the
Syndicate as it grows, is linked to the ESG rating of Ki's 'Funds
at Lloyd's' investment portfolios and Syndicate assets, with its
pricing dependent on the compliance of the Syndicate's investment
portfolios with ESG targets. We recognise that to fully integrate
ESG into the investment strategy, it is important to understand the
portfolio exposures. We have incorporated ESG into our regular
monitoring, annual due diligence reviews of the investment managers
and hold regular discussions on the managers' ESG capabilities, and
their engagement with companies.
Ki has also continued to invest in
its team, and the quality of talent attracted from both the tech
and insurance industries is testament to Ki's exciting vision. We
hired 95 people during 2023, including five interns in the summer
under the Code First Girls initiative. We also supported three
masters students from University College London over the course of
the year.
We look forward to 2024, building
on the successes and profitability achieved in 2023, along with the
launch of our unique new business model and partnerships with
capacity partners. We will continue to take advantage of the
significant opportunities presented by our efficient operating
model and look forward to releasing the further technological
developments on our road-map, pushing forward the market's digital
future.
Further information can be
found at www.ki-insurance.com.
Note 1: Ki's result has been
prepared for the purposes of Brit Limited segmental reporting and
does not constitute stand-alone financials for Ki Syndicate 1618 or
the Ki Financial Limited sub-group in whole or part.
Financial Performance
Review
Adoption of IFRS 17 'Insurance Contracts'
During the year ended 31 December
2023 the Group adopted IFRS 17 'Insurance Contracts'. IFRS 17
replaces IFRS 4 'Insurance Contracts' for accounting periods
beginning on or after 1 January 2023, with a transition date of 1
January
2022. The Group has applied
IFRS 17 fully retrospectively and therefore the comparative period
has been restated where applicable. The net impact of the
transition has been recorded in in equity.
At the date of transition (1
January 2022), total equity increased under IFRS 17 by $61.9m or
2.9% from $2,146.6m to $2,208.5m.
The result after tax for the year
ended 31 December 2022 increased from a loss of $96.3m under IFRS 4
to a profit of $308.9m under IFRS 17. This increase was
primarily driven by the effects of discounting, partly offset by
establishing the risk adjustment. Total equity at 31 December
2022 increased from $2,142.8m to $2,609.9m.
The introduction of IFRS 17 has
had no impact on our group strategy or the way we manage the
business.
Management continues to
evaluate its underwriting performance on a
non-discounted basis, with the combined ratio, the insurance
service result, the insurance operating result and insurance
premium written being used as underwriting performance
measures.
Key
Performance Indicators
At Brit we monitor and measure our
performance by reference to certain key performance indicators
(KPIs). These KPIs are used by us to manage our business and allow
us to see, at a glance, how we are performing. The
calculations of these KPIs and other performance measures are set
out in the 'key performance indicators and alternative performance
measures' section at the end of this document.
Our five KPIs show the returns
that we are generating, the performance of our underwriting
activities, our investment portfolio, and our financial
strength. The development of our KPIs over the five years (set out below)
reflects our focus on underwriting
performance and improving
underwriting market conditions,
together with the challenges presented by
the increased frequency and severity of
catastrophe events, COVID-19, and the increase in investment market
volatility.
The figures for 2022, where
applicable, have been restated and the figures for 2019 to 2021 are
as previously reported under IFRS4 'Insurance Contracts', where
relevant.
|
Business area
|
KPI
|
Commentary
|
Track
record
(show in
graph)
|
|
Overall performance
|
Return on net tangible assets
(RoNTA)
|
RoNTA shows the return generated
by our operations for the owners of Brit Limited before foreign
exchange movements, compared to the adjusted net tangible assets
deployed in our business attributable to them. The impact of the
Group's defined benefit pension schemes is excluded from both the
return and the assets in the calculation.
In 2023, our RoNTA in respect of
continuing and discontinued operations combined was 51.9%,
reflecting a positive underwriting result, a positive return
on invested assets and a positive result generated by discontinued
operations.
This return resulted in a
five-year average RoNTA of 16.5%.
RoNTA in respect of continuing
operations for 2023 was 41.7% (2022: 12.9%).
|
2023 51.9%
2022 12.6%
2021 19.4%
2020 (20.1)%
2019 18.9%
|
|
Underwriting
|
Combined ratio (undiscounted
basis)
|
The combined ratio on an
undiscounted basis in respect of continuing business is our key
underwriting metric and measures the profitability of our
underwriting. It shows how much of every $1 of premium is spent in
the total costs of sourcing and underwriting the business and
settling claims. A combined ratio under 100% indicates underwriting
profitability.
Our undiscounted combined ratio in
2023 was 85.3% (2022: 96.2%). Over the past five years, we
have delivered an average combined ratio of 97.1% despite the
impact of COVID-19. Excluding COVID-19 related claims, our
five-year average combined ratio was 93.7%.
|
2023 85.3%
2022 96.2%
2021 95.7%
2020 112.7%
2019 95.8%
|
|
Business area
|
KPI
|
Commentary
|
Track
record
(show in graph)
|
|
Underwriting
|
Risk adjusted rate
change
|
The risk adjusted rate change
(RARC) shows whether premium rates are increasing, reflecting a
hardening market, or decreasing, reflecting a softening market. A
hardening market is one indicator of increasing profitability. The
data reflects internal estimates by Brit's underwriters, based on
available year-on-year underlying renewal data after allowing for
changes to terms and conditions. Generally, no adjustment is made
to the figures to reflect the impact of inflation beyond the level
of inflation in the underlying exposure measure used in
pricing.
We achieved a compound RARC of
+7.1% in 2023 (2022: 12.4%), and a compound rate increased
since 1 January 2018 of 65.1%.
|
2023: 7.1%
2022 12.4%
2021 12.9%
2020 10.6%
2019 5.9%
|
|
Investment management
|
Investment return
|
We assess the performance of our
investment portfolio by comparing the return generated by our
invested assets, net of external investment related expenses,
against the average value of those invested assets.
Our investment strategy takes a
long-term view of markets, which can lead to significant variations
in our year-on-year return figures. Over the past five years, we
have delivered an average investment return of 2.4%.
|
2023 6.2%
2022 (2.3)%
2021 3.3%
2020 1.0%
2019 3.6%
|
|
Capital management
|
Capital ratio
|
The capital ratio measures our
financial strength position by comparing our available capital
resources to the capital we need to hold to meet our management
entity capital requirements.
Our financial position remains
strong. At 31 December 2023, Group capital resources totalled
$2,977.9m giving surplus management capital of $1,050.5m (2022:
$709.8m), or 154.5% (2022: 139.9%) over our Group management
capital requirement. During the period, our capital requirements
increased from $1,777.7m to $1,927.4m, primarily reflecting
increased requirements resulting from our 2024 underwriting
plans.
|
2023 154.5%
2022 139.9%
2021 139.1%
2020 122.1%
2019 128.4%
|
Overview of Results
The Group's income statement,
re-presented to show the key components of our result, is set out
below:
|
|
2023
$m
|
2022
$m
|
|
Insurance premium
written1
|
3,753.5
|
3,970.0
|
|
Insurance revenue
|
3,517.1
|
3,340.1
|
|
|
|
|
|
Insurance service
result
|
649.5
|
283.9
|
|
Net finance (expense)/income from
insurance and reinsurance contracts
|
(225.8)
|
208.6
|
|
Insurance operating
result
|
423.7
|
492.5
|
|
Other income, continuing
operations
|
65.6
|
33.2
|
|
Other expenses, continuing
operations
|
(126.9)
|
(90.4)
|
|
Losses on other financial
liabilities
|
(20.8)
|
(1.3)
|
|
Return on invested assets, net of
fees
|
393.8
|
(132.2)
|
|
Finance costs
|
(17.8)
|
(20.5)
|
|
Finance income
|
2.7
|
-
|
|
Profit on ordinary activities
before tax and FX
|
720.3
|
281.3
|
|
FX movements
|
(96.4)
|
110.8
|
|
Profit on ordinary activities
before tax
|
623.9
|
392.1
|
|
Tax
|
5.3
|
(104.9)
|
|
Profit on ordinary activities
after tax and FX
|
629.2
|
287.2
|
|
Profit from discontinued
operation, net of tax
|
266.2
|
21.7
|
|
Profit for the year
|
895.4
|
308.9
|
|
|
|
|
Note 1: 'Insurance premium
written' is explained in the 'insurance revenue' section below, and
is the equivalent to gross written premium as previously disclosed
under IFRS 4.
Group performance
Our record 2023 result reflected
both strong underwriting and investment results. The
underwriting result reflected increased insurance revenue, a strong
attritional performance, and reduced major loss activity,
partly offset by increased commission costs and
expenses.
Our 2022 result reflected premium
growth, a positive and resilient underwriting result (a strong
attritional performance, partly offset by major loss activity
including losses arising from the Russian
invasion of Ukraine), and a negative
investment return.
The result on continuing ordinary
activities for 2023 before tax, FX and the impact of discounting
was a profit of $702.3m (2022: loss of $117.3m), after FX and the
effects of discounting but before tax was a profit of $623.9m
(2022: $392.1m) and after tax was a profit of $629.2m (2022:
$287.2m).
Our overall profit for the year
after tax was $895.4m (2022: $308.9m). This included
profits arising from our discontinued operation, net of tax, of
$266.2m (2022: $21.7m), including the gain on sale from the sale of
Ambridge of $259.1m.
Return on adjusted net tangible
assets (RoNTA) for all operations, excluding the effects of FX, was
51.9% (2022: 12.6%). RoNTA for continuing operations, after
including FX movements, was 41.7% (2022: 12.9%).
Performance measures
In addition to our KPIs, we have
other measures that offer further insight into the detail of our
performance. These measures include:
· Revenue
related: Insurance premium
written;
· Claims
related: Claims ratio;
and
· Underwriting expense
related: Expense ratio; Commission
expense ratio; Operating expense ratio.
The performance measures set out
below are for continuing business, unless otherwise
stated.
Underwriting
Ø Overview
Our insurance operating result for the
year, excluding
the impact of discounting, was a profit of $405.7m (2022: $93.9m). Including the impact of discounting, the insurance operating result was a
profit of $423.7m (2022: $492.5m). Our
undiscounted combined ratio for continuing
business was 85.3% (2022: 96.2%), and our discounted combined ratio for
continuing business was 76.2% (2022: 88.5%).
Ø Insurance operating
result
|
|
2023
|
2022
|
|
|
Undiscounted
$m
|
Discounted
$m
|
Undiscounted
$m
|
Discounted
$m
|
|
Insurance revenue
|
3,575.6
|
3,517.1
|
3,340.1
|
3,340.1
|
|
Insurance service
expense
|
(2,963.1)
|
(2,594.3)
|
(3,148.9)
|
(2,874.1)
|
|
Net expenses from
reinsurance contracts
held
|
(206.8)
|
(273.3)
|
(97.3)
|
(182.1)
|
|
Insurance service
result
|
405.7
|
649.5
|
93.9
|
283.9
|
|
Net finance (expense)/income from
insurance & reinsurance contracts
|
-
|
(225.8)
|
-
|
208.6
|
|
Insurance operating
result
|
405.7
|
423.7
|
93.9
|
492.5
|
Ø Insurance service
result
The Group's Insurance service
result increased by 128.8% to $649.5m (2022: $283.9m). Before
the effects of discounting, the result increased by 332.1% to
405.7m. The result was driven by a reduction in the insurance
service expenses, partly offset by a reduction in insurance revenue
and higher expenses from reinsurance contracts held
(i) Insurance
revenue
Brit's insurance revenue totalled
$3,517.1m in 2023 (2022: $3,340.1m), an increase of 5.3%. The
2023 figure, before the impact of discounting and commission costs
was $3,883.1m (2022: $3,594.2m), an increase of 8.0%. This
primarily reflects a decrease in insurance premium written and
increased commission expenses on assumed business, offset by a
positive net impact of earning of premium written in previous
years. Insurance premium written is analysed
below.
Revenue recognised under the
premium allocation approach (PAA) decreased by $482.7m or 14.5% to
$2,857.4m (2022: $3,340.1m). In 2023, a number of Brit's
inwards groups were measured under the general measurement model
(GMM) for the first time. This contributed $697.7m to
insurance revenue.
A further breakdown of insurance
revenue, including the components arising from measuring groups
under the GMM, is given in note 6 to the financial
statements.
Brit uses insurance premium
written, which is equivalent to gross written premium as previously
reported under IFRS 4, to measure and monitor levels of incoming
business. Insurance written premium decrease by 5.3% at
constant rates of exchange to $3,753.5m (2022: $3,970.0m).
Core underwriting decreased by 8.1% at constant FX rates to
$2,863.5m (2022: $3,116.8m), while Ki, in
its third year of underwriting, continued to gain traction
increasing by 5.2% at constant FX rates to
$877.0m (2022: 834.1m).
Overall current year insurance
premium written decreased by $108.8m, primarily reflecting overall
reductions in our core and other underwriting segments, driven by
market conditions, the implementation of our catastrophe strategy,
and our continued focus on improving our performance by exiting
underperforming business and increasing lines on high
performing accounts. 2023 also saw a continued positive rate
environment, with an overall risk adjusted premium rate increase of
7.1% across the portfolio (2022: 12.4%).
(ii) Insurance
service expense
The Insurance service expense comprises
the following:
|
|
2023
$m
|
2022
$m
|
|
Expenses attributable to insurance
acquisition cashflows
|
|
|
|
Commissions
|
(498.7)
|
(428.7)
|
|
Other
expenses
|
(140.0)
|
(162.9)
|
|
Insurance acquisition cashflows and other directly
attributable expenses
|
(638.7)
|
(591.6)
|
|
Other directly attributable
expenses
|
(105.5)
|
(101.1)
|
|
Incurred claims and changes to
liabilities for incurred claims
|
(1,850.1)
|
(2,181.4)
|
|
Insurance service expense
|
(2,594.3)
|
(2,874.1)
|
The insurance service expense decreased
by $279.8m or 9.7% to $2,594.3m (2022: $2,874.1m). The
drivers of this were lower incurred claims and changes to
liabilities for incurred claims (down by $326.9m or 14.3% from
$2,282.5m to $1,955.6m), primarily reflecting lower major loss
activity, partly offset by higher insurance acquisition cashflows
(increased $47.1m or 8.0% from $591.6m to
$638.7m).
Insurance acquisition cashflows and other directly
attributable expenses
Our undiscounted expense ratio for
ongoing business was 26.9% (2022: 27.9%). On a discounted basis, our expense ratio was 27.2% (2022:
27.9%).
Commission costs were $498.7m and
the commission expense ratio was 18.0% (2022: $428.7m/17.3%). This
$70.0m increase reflects the increase in undiscounted insurance
revenue, our evolving in business mix and our continued drive to
reduce overall acquisition costs in the current strong
market.
Other expenses attributable to
insurance acquisition cashflows and Other
directly attributable expenses included
within the operating expense ratio were $245.5m (2022: $264.0m),
with the decrease primarily reflecting updated cost allocations
following annual discussion with our cost centre managers. The
operating expense ratio was 8.9% (2022: 10.6%), with the reduction
in the ratio partly reflect an increase in undiscounted insurance
revenue. Total Group expenses are
discussed below.
Incurred claims and changes to liabilities for incurred
claims
We continue to see strong
underlying performance across our portfolios, with strong pricing
and targeted growth in our high-performing segments. Incurred
claims and changes to liabilities for incurred claims, before
amounts recoverable from reinsurers reduced by 15.2% to $1,850.1m
(2022: $2,181.4m).
This was predominantly driven by a
reduction in major losses, partly offset by an increase in
attritional claims.
Best estimates for major losses,
net of net of amounts recoverable from reinsurers, are discussed in
the claims section below.
The increase in net attritional
claims was primarily driven by the increase in insurance revenue,
together with the impact of market conditions in certain classes
and ongoing economic uncertainty, including the impact of
inflation. Underlying claims primarily increased
in Ambridge Transactional, Property Treaty and
other underwriting, partly offset by improvements in most other
classes.
(iii) Net expenses from
reinsurance contracts held
Net expenses from reinsurance
contracts held increased by $91.2m or 50.1% to $273.3m (2022:
$182.1m). This reflects lower allocation of reinsurance premiums (down by $77.9m or 9.0%
from $863.8m to $785.9m) and lower amounts recoverable from
reinsurers for incurred claims (down by $169.1m or 24.8% from
$671.7m to $512.6m).
Outwards reinsurance premiums in
2023 were $808.4m or 22.6% of
undiscounted insurance revenue (2022: $857.1m or 25.7%), a decrease of
$48.7m. This reflected a
reduction in our catastrophe aggregate protections (driven by our
change in risk appetite following the implementation of our updated
catastrophe strategy) and reduced expenditure on
adjustable excess of loss contracts and
proportional reinsurance treaties (driven by lower insurance
written premium). The 2022 figure
included a return premium of $37.2m following an endorsement to a
2021 loss portfolio reinsurance
contract.
Amounts recoverable from
reinsurers reduced by 20.8% from $759.8m to $601.6m. This
primarily reflected the reduced level of major losses experienced
in 2023.
(iv) Claims
ratio
Our claims ratio on an
undiscounted basis for 2023 was 58.4%, a reduction of 9.9
percentage points (2022: 68.3%). On a discounted basis, our
claims ratio was 49.0% (2022: 60.6%).
Incurred claims and changes to
liabilities for incurred claims, net of amounts recoverable from
reinsurers analysed by current year and prior year development is
as follows:
|
|
2023
|
2022
|
|
|
Current
year
|
PYD
|
Total
|
Current
year
|
PYD
|
Total
|
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
|
|
|
|
|
|
|
|
|
Net incurred claims
|
(1,303.7)
|
(41.7)
|
(1,345.4)
|
(1,432.8)
|
(48.6)
|
(1,481.4)
|
|
Net risk adjustment
|
(50.1)
|
58.0
|
7.9
|
(77.2)
|
58.9
|
(18.3)
|
|
Total
|
(1,353.8)
|
16.3
|
(1,337.5)
|
(1,510.0)
|
10.3
|
(1,499.7)
|
Brit's undiscounted best estimate
reserves for major losses, net of amounts recoverable from
reinsurers, totalled $69.6m (2022: $338.5m). The events to
which Brit had material exposure were as follows:
|
Event
|
|
|
2023
|
2022
|
|
|
|
|
$m
|
$m
|
|
|
|
|
|
|
|
Hawaiian wildfires
|
|
|
51.7
|
-
|
|
Hurricane Idalia
|
|
|
17.9
|
-
|
|
Australian Floods
|
|
|
-
|
16.9
|
|
Hurricane Ian
|
|
|
-
|
280.2
|
|
Winter Storm Elliott
|
|
|
-
|
9.5
|
|
Total before Russia/Ukraine and
COVID-19 relate losses
|
|
69.6
|
306.6
|
|
Claims arising from the Russian
invasion of Ukraine
|
-
|
31.9
|
|
Total
|
|
|
69.6
|
338.5
|
Net prior year releases totalled
$16.3m (2022: $10.3m) after the movements in the risk adjustment
and after the impact of discounting. The 2023 figure includes
releases across Financial and Professional
Liability, Property Treaty, Programmes and
Facilities, and Specialty, partly offset by strengthening in
Ambridge Transactional, Casualty Treaty and Ambridge Re. The
2022 figure includes releases across Property, Specialty, Property
Treaty and Ambridge Transactional, partly offset by strengthening
in Programs and Facilities, Financial and
Professional Liability and Casualty
Treaty, and Ki.
Our financial position remains
strong, and we continue to operate a robust reserving
process. The process has not changed following the adoption
of IFRS 17.
Ø Net finance (expense)/income
from insurance and reinsurance contracts
|
|
2023
$m
|
2022
$m
|
|
Net finance (expense)/income from
insurance contracts
|
(322.7)
|
307.1
|
|
Net finance income/(expense) from
reinsurance contracts held
|
96.9
|
(98.5)
|
|
Net finance (expense)/income from
insurance and reinsurance contracts
|
(225.8)
|
208.6
|
The analysis between interest
accreted and the effect of changes in interest rates is as
follows:
|
|
2023
$m
|
2022
$m
|
|
|
Insurance
contracts
|
Reinsurance
contracts
|
Total
|
Insurance
contracts
|
Reinsurance
contracts
|
Total
|
|
Interest accreted
|
(293.7)
|
97.3
|
(196.4)
|
(28.2)
|
15.0
|
(13.2)
|
|
Effect of changes in interest
rates
|
(29.0)
|
(0.4)
|
(29.4)
|
335.3
|
(113.5)
|
221.8
|
|
|
(322.7)
|
96.9
|
(225.8)
|
307.1
|
(98.5)
|
208.6
|
Interest accreted, the unwind of
prior year discount, is based on the opening yield curves of the
period. 2022 interest accretion was based on the year ended
2021 yields, which were materially lower than those at year ended
2022 (on which the 2023 interest accretion is based), due to the
marked increase in risk free rates across all Brit's core
currencies, throughout 2022.
The effect of changes in interest
rates and other financial assumptions is driven by the movement in
yield curves during the year. The yields over 2023 have
decreased, resulting in a loss of $225.8m in the period given
Brit's net insurance contract liability (2022: increase in yields
resulting in a gain of $208.6m).
Group Expenses
Operating expenses were classified
as follows:
|
|
2023
$m
|
2022
$m
|
|
Insurance acquisition cashflows -
expenses
|
(139.9)
|
(162.9)
|
|
Other directly attributable
expenses, excluding claims
|
(105.6)
|
(101.1)
|
|
Other operating
expenses
|
(118.2)
|
(83.1)
|
|
Corporate expenses
|
(8.7)
|
(7.3)
|
|
Operating expenses - continuing operations
|
(372.4)
|
(354.4)
|
|
Expenses - discontinued operations
|
(9.1)
|
(22.7)
|
|
Total operating expenses
|
(381.5)
|
(377.1)
|
Total expenses for
continuing operations during 2023 increased by 5.1% to $372.4m (2022: $354.4m). The
main contributors to this increase were the bonus accrual and
regulatory charges and levies. These increases also include the
costs resulting from the growth of Ki.
At 31 December 2023, Group
headcount was 911 (2022: 815 in respect of continuing operations).
The increase was primarily due to the growth of Ki, targeted
underwriting expansion in favourable market conditions and the
related growth of support functions. These were partly offset by
reductions resulting from the withdrawal from certain classes of
business.
Other income
Other income totalled $82.4m
(2022: $63.8m), as set out below:
|
Other income
|
2023
$m
|
2022
$m
|
|
Fee and commission income -
continuing operations
|
21.3
|
12.3
|
|
Change in value of ultimate parent
company shares
|
44.3
|
20.9
|
|
Total other income - continuing operations
|
65.6
|
33.2
|
|
Fee and commission income -
discontinued operations
|
16.8
|
30.6
|
|
Total other income
|
82.4
|
63.8
|
Fees and commissions generated by
the Group's underwriting management activities in respect of
continuing operations increased in 2023 by 73.2% to $21.3m (2022:
$12.3m). The increase primarily reflects increased fees from
consortia.
Fees and commissions generated by
the Group's discontinued operations decreased in 2023 by 45.1% to
$16.8m (2022: $30.6m), following the sale of Ambridge in May
2023.
Losses on other financial liabilities
The statement of financial
position of the Group includes liabilities representing third party
investors' share in structured undertakings consolidated by the
Group, namely Sussex Capital. Changes in the value of these
liabilities during the year are recorded in the Group's
consolidated income statement as 'losses on other financial
liabilities'.
In 2023, the income statement
impact was a loss of $20.8m (2022: $1.3m), which represents the
underwriting result in Brit's consolidated income statement
attributable to third party capital providers.
Return on invested assets
The investment portfolio is
managed, for the most part, by Hamblin Watsa Investment Counsel
Limited, a Fairfax subsidiary with an
excellent long-term track record, whose sole business is managing
investment portfolios of Fairfax group companies. They are
supported by a number of external managers covering core fixed
income and specialised credit mandates.
The return on our invested assets
was a positive $394.4m or 6.2% (2022: a negative $132.1m or
(2.3)%). This result is analysed below:
|
Investment return
|
2023
$m
|
2022
$m
|
|
Income
|
234.4
|
86.1
|
|
Realised losses
|
(80.2)
|
(75.2)
|
|
Unrealised gains/(losses)
|
265.4
|
(131.5)
|
|
Investment return before
fees
|
419.6
|
(120.6)
|
|
Investment management
fees
|
(19.6)
|
(13.8)
|
|
Investment return, net of
fees
|
400.0
|
(134.4)
|
|
Investment related derivative
return
|
(7.2)
|
0.8
|
|
Return on associated
undertakings
|
1.6
|
1.5
|
|
Total return
|
394.4
|
(132.1)
|
|
Total return
|
6.2%
|
(2.3)%
|
Of the investment return, $0.6m
(2022: $0.1m) related to discontinued operations.
Equity markets performed
positively during 2023, as global growth remained resilient,
inflation started to moderate and markets increasingly priced in
interest rate reductions in 2024. Our equity portfolio outperformed
the market and generated a positive return of $59.1m
(2022: $12.7m), benefiting from a value
focused approach. Our return on fund investments was
$72.2m (2022: negative $11.3m).
The fixed income portfolio
generated a return of $232.6m (2022: loss of $139.0m), driven by
income and capital gains, while mortgages and loans generated $6.7m
(2022: 1.3m). The US Government bond yield curve rose up to
140bps at the shorter tenors, but tenors over one year ended the
year relatively unchanged (up to 20bps falls or rises depending on
the tenor) as the Federal Reserve Bank increased rates by 100bps
over the first half of the year, then paused and at the December
meeting pivoted to signal potential rate reductions in 2024.
Over 2023, the two-year yield fell from 4.43% to 4.25%, the
five-year yield fell from 4.00% to 3.85%. The ten-year yield
was flat at 3.88%. Investment grade spreads in the US
narrowed from 0.90% to 0.77% and in Europe narrowed from 1.56% to
1.28%, while high yield spreads in the US narrowed from 4.68% to
3.23% and in Europe narrowed from 4.90% to
3.83%.
Cash and cash equivalents
generated interest of $46.9m (2022: $14.9m). Our approach to cash
management during the year has, and continues to be, to limit the
amount of operational cash and to maximise amounts held within
short-term government bills, stepping into the higher
yields.
The amount attributable to trade
and other receivables was $2.1m (2022: $0.8m).
At 31 December 2023, the running
yield (expressed as yield as a percentage of invested assets) of
our total portfolio was 4.0% (2022: 4.0%).
In 2023, our share of the net profit of our associated
undertaking, Sutton Special Risk
Inc., was
$1.6m (2022: $1.5m). Sutton Special Risk
Inc. is a leading
Canada-based managing general
underwriter specialising in Accident &
Health. On 17 November 2023, the Group entered into a signed
securities purchase agreement with Amynta Group, for the sale of
its 49% shareholding. Since that date, Brit's investment in Sutton
has been reclassified as an asset classified as held for
sale.
Foreign exchange
We manage our currency exposures
to mitigate the impact on solvency rather than to achieve a
short-term impact on earnings. We experienced a foreign exchange
loss of $97.4m in 2023 (2022: gain of $112.6m), reflecting the
movement of the US dollar against other currencies in which we
trade and hold assets, and the impact of FX related derivatives
purchased by the Group.
The allocation of the FX result
within the Consolidated Income Statement is as follows:
|
Foreign exchange gains and (losses)
|
2023
$m
|
2022
$m
|
|
Net foreign exchange
(losses)/gains - continuing operations
|
(94.2)
|
97.3
|
|
Net foreign exchange
(losses)/gains - discontinued operations
|
(1.0)
|
1.8
|
|
(Losses)/gains on derivative
contracts - FX related instruments
|
(2.2)
|
13.5
|
|
|
(97.4)
|
112.6
|
Finance costs and finance income
Finance costs totalled $17.5m
(2022: $20.1m) and represented cost of the
revolving credit facility and other bank borrowings,
the cost of the subordinate debt and
interest payable on lease liabilities.
Finance income was $2.7m (2022:
$nil) and represented the gain of repurchasing £8.0m of subordinated debt.
Tax
Tax credited to the income
statement totalled $4.8m (2022: tax charge of $93.4m). Our
tax on ordinary activities for 2023 resulted in a tax credit of
$5.3m (2022: tax
charge of $104.9m), based on a Group profit on ordinary activities
before tax of $623.9m (2022: profit before tax of $392.1m).
In addition to this, discontinued operations attracted a tax charge
of $0.5m (2022: credit of $11.5m).
This credit of $4.8m comprised a
deferred tax credit of $22.2m, partly offset by a current tax
charge of $17.4m. The deferred tax credit reflects the change in
the UK tax rate from 19% to 25% from 1 April 2023 which was
substantially enacted on 24 May 2021.
The Group is liable to taxes on
its corporate income in a number of jurisdictions where its
companies carry on business, most notably the UK, Germany, and the
US. Corporate profits and losses in
Bermuda are exempt from tax. The tax charge is
calculated in each legal entity across the Group and then
consolidated. Therefore, the Group effective rate is sensitive to
the location of taxable profits and is a composite tax rate
reflecting the mix of tax rates in those
jurisdictions.
The 2023 Group rate varies from
the weighted average rate in those jurisdictions due to a number of
factors. The principal factors are the adoption of IFRS 17 at Group
level, profit arising on the disposal of the Ambridge subsidiaries
which is not subject to tax and the impact of the decrease is
unrecognised deferred tax losses. The rate is further influenced by
the impact of prior year adjustments, exempt income such as
dividend income, disallowable expenses and by non-UK taxes
arising in our Lloyd's syndicates.
Profit from discontinued operation
On 10 May 2023, the Group
completed the sale of Ambridge Group to Amynta Group.
Ambridge was presented as a disposal group held for sale in the
2022 financial statements of the Group and the results of the
Ambridge business have been reported as a discontinued operation in
the current and prior periods.
Profit from this discontinued
operation, net of tax, totalled $266.2m (2022: $21.7m). The
2023 figure includes $259.1m (2022: $nil) which represents the gain
on sale of the Ambridge Group, net of tax.
Financial position and capital
strength
Overview
Our business is underwritten
primarily through our wholly-aligned Lloyd's Syndicate 2987, our
innovative Ki Syndicate 1618, and the partly-aligned Lloyd's
Syndicate 2988, which benefit from Lloyd's ratings of A (Excellent)
positive outlook from A.M. Best, AA- (Very Strong) from Fitch, AA-
stable outlook from Standard & Poor's, and AA- (Very Strong)
stable outlook with Kroll Bond Rating Agency (KBRA).
Our financial position remains
strong, with our capital surplus increasing by $340.7m in the
year. At 31 December 2023, Group capital
resources totalled $2,977.9m (2022: $2,487.5m), giving surplus
management capital of $1,050.5m (2022: $709.8m), or 54.5% (2022:
39.9%) over our Group management capital requirement of $1,927.4m
(2022: $1,777.7m).
Brit has in place a $550.0m (2022:
$550.0m) revolving credit facility (RCF), the expiration date of
which was extended by two years in 2023 to 31 December 2027.
Under our capital policy we have identified a
maximum of $300.0m (2022: $300.0m) of this facility to form part of
our capital resources, with the balance available for liquidity
funding.
At 31 December 2023, the cash
drawings on the facility were $nil (2022: $10.0m) and a $10.0m
uncollateralised letter of credit (LoC) was in place (2022: $100.0m
uncollateralised) to support our underwriting activities. At the
date of this announcement, these borrowings were
unchanged.
At 31 December 2023, Ki Financial
Ltd, together with Sussex Re and Ki Member Ltd, has a $180.0m LoC
facility (2022: $180.0m) to provide a proportion of the Funds at
Lloyd's for Syndicate 1618 through a segregated account of Sussex
Re. The facility was $150.0m utilised at 31 December 2023 and
collateralised by $63.0m (2022: $180.0m fully utilised and
uncollateralised).
In addition, we have in issue
£127.0m of 3.6757% subordinated debt with
a carrying value of £127.0m / $161.9m (31 December 2022:
£135.0m/$162.4m). This instrument, which is listed on the London
Stock Exchange, was issued in December 2005, matures on 9 December
2030. The reduction in the year was following the repurchase and
cancellation of £8.0m notes on 14 December 2023.
At 31 December 2023, our gearing
ratio was 7.1% (2022: 13.6%).
Brit's invested assets (financial
investments, investments in associates, cash and cash equivalents
and derivative contracts) at 31 December 2023 were
$6,744.8m (31
December 2022: $6,011.3m).
Our asset allocation, on both a
look-through basis and statutory disclosure basis, is set out in
the tables below:
|
31
December 2023
|
Statutory
basis
|
|
|
|
Equity
securities
|
Debt
securities
|
Loan
instruments
|
Specialised investment
funds
|
Cash and cash
equivalents
|
Associated
undertakings
|
Investment
Derivatives
(net)
|
Assets held for
sale
|
Total
invested
assets
(look-through)
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
|
Look-through
basis
|
Government debt
securities
|
-
|
3,199.2
|
-
|
20.7
|
-
|
-
|
-
|
-
|
3,219.9
|
|
Corporate debt
securities
|
-
|
1,605.2
|
-
|
8.7
|
-
|
-
|
-
|
-
|
1,613.9
|
|
Structured products
|
-
|
-
|
-
|
23.2
|
-
|
-
|
-
|
-
|
23.2
|
|
Loan instruments
|
-
|
-
|
82.2
|
12.7
|
-
|
-
|
-
|
-
|
94.9
|
|
Equity securities
|
509.2
|
-
|
-
|
417.4
|
-
|
-
|
-
|
15.8
|
942.4
|
|
Cash and cash
equivalents
|
-
|
-
|
-
|
1.5
|
853.8
|
-
|
-
|
-
|
855.3
|
|
Investment related
derivatives
|
-
|
-
|
-
|
(4.6)
|
-
|
-
|
(0.2)
|
-
|
(4.8)
|
|
Total invested assets (statutory)
|
509.2
|
4,804.4
|
82.2
|
479.6
|
853.8
|
-
|
(0.2)
|
15.8
|
6,744.8
|
|
31
December 2022
|
Statutory
basis
|
|
|
|
Equity
securities
|
Debt
securities
|
Loan
instruments
|
Specialised investment
funds
|
Cash and cash
equivalents
|
Associated
undertakings
|
Investment
Derivatives
(net)
|
Assets held for
sale
|
Total
invested
assets
(look-through)
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
|
Look-through
basis
|
Government debt
securities
|
-
|
2,644.5
|
-
|
29.8
|
-
|
-
|
-
|
-
|
2,674.3
|
|
Corporate debt
securities
|
-
|
1,301.0
|
-
|
14.4
|
-
|
-
|
-
|
-
|
1,315.4
|
|
Structured products
|
-
|
-
|
-
|
18.7
|
-
|
-
|
-
|
-
|
18.7
|
|
Loan instruments
|
-
|
-
|
34.6
|
8.8
|
-
|
-
|
-
|
-
|
43.4
|
|
Equity securities
|
544.1
|
-
|
-
|
313.4
|
-
|
15.2
|
-
|
-
|
872.7
|
|
Cash and cash
equivalents
|
-
|
-
|
-
|
4.8
|
941.3
|
-
|
-
|
138.1
|
1,084.2
|
|
Investment related
derivatives
|
-
|
-
|
-
|
(1.7)
|
-
|
-
|
4.3
|
-
|
2.6
|
|
Total invested assets (statutory)
|
544.1
|
3,945.5
|
34.6
|
388.2
|
941.3
|
15.2
|
4.3
|
138.1
|
6,011.3
|
Brit's asset duration position
increased over the year, locking in the higher yields and moved to
a broadly neutral position as at 31 December 2023.
The assets remain primarily
invested in cash and fixed income securities (2023: $5,784.0m
or 85.8%
of the portfolio; 2022: $5,117.3m or
85.1%). The fixed income
portfolio is short dated, with a majority allocation to government
bills. Corporate bonds and other loan instruments represent 25.3%
(2022: 22.6%) of the total portfolio with 1.4pps (2022: 2.6pps) of this figure
being below investment grade.
The allocation to credit remained
broadly unchanged over the year. The allocation to credit risk, is
primarily defensive, focused on high quality, investment grade
non-cyclical companies. Equity allocations are invested in a
portfolio of both listed and private (non-listed) equities and
funds.
The exposure to equities, funds
and structured products has remained materially consistent over
2023 (2023: $965.6m or 14.3% of the portfolio; 2022: $891.4m or
14.8% of the portfolio), but grew in absolute terms, driven by
market movements.
The duration is broadly neutral
compared to the duration of our liabilities. The US Government bond yield curve rose up to 140bps at the
shorter tenors, but tenors over one year ended the year relatively
unchanged (up to 20bps falls or rises depending on the tenor) as
the Federal Reserve Bank increased rates by 100bps over the first
half of the year, then held them steady before signalling potential
reductions cuts in 2024 at its December meeting.
At 31 December 2023, 82.3% of our
invested assets were investment grade quality (2022:
82.2%).
Principal risks and
uncertainties
Risk Management Framework
Brit delivers shareholder value by
actively seeking and accepting risk within agreed limits. Risk
management at Brit is a continuous process that links directly to
the organisation's business and risk management strategies and the
associated Board risk tolerances.
Brit's Risk Management Framework
(RMF) applies a consistent methodology and structure to how risks
are identified, measured, managed and monitored. This process
enables us to protect policyholders and maximise shareholder value
by ensuring the risk and capital implications of business strategy
are well understood.
The RMF has the following key
elements:
· Identification: Risk events,
risks and relevant controls are identified and classified. This is
a continuous process which considers any emerging and existing
risks. The risk register sets out the
significant risks faced by the business and identifies the
potential impact and likelihood of each risk.
· Measurement:
Risks are assessed and quantified and controls
are evaluated. This is done through a combination of stochastic
modelling techniques, stress and scenario analysis, reverse stress
testing and qualitative assessment using relevant internal and
external data.
· Management:
The information resulting from risk
identification and measurement is used to improve how the business
is managed.
A key part of the RMF is the
setting of risk tolerances and risk appetite. Risk tolerances are
set by the relevant Board and represent the maximum amount of risk
Brit is willing to accept to meet its strategic objectives. Risk
appetite is set by management and reflects the maximum amount of
risk that Brit wishes to take in the current market environment.
The actual amount of risk taken is monitored against the tolerances
and appetites on an ongoing basis.
The RMF, including the risk
tolerances and appetite, reflects Brit's strategy and seeks to
ensure that risk is accepted in the areas which are expected to
maximise shareholder value whilst continuing to protect
policyholders against extreme events. The process applies to both
the Brit Group and to the individual underwriting entities (such as
the Lloyd's syndicates).
The Risk Management function, led
by the Group Chief Risk Officer & Chief Actuary, monitors
whether Brit is operating within the risk tolerance levels approved
by the relevant Boards. This includes assessments of any new
strategic initiatives and the principal risks and uncertainties
faced by the business as detailed below.
All Brit staff are involved in
ensuring there is an appropriate risk culture which promotes the
identification and management of risk. Brit's risk culture aims to
ensure the risk and capital implications of decisions are
understood and there is open communication about risks and issues
in all areas of the business.
Brit's approach to risk management
is designed to encourage clear decision-making as to which risks
Brit takes and how these are managed based on the potential
strategic, commercial, financial, compliance and legal implications
of these risks.
The sections below set out the
approach to risk governance, and the key risks identified, measured
and managed under the RMF.
Risk Governance
The Board is responsible for
overseeing our risk management and internal control systems, which
management is responsible for implementing.
Brit maintains a strong risk
governance framework using Risk Oversight Committees and Audit
Committees whose membership consists of independent non-executive
Directors. Board, Risk and Audit Committee agendas are designed to
ensure all significant areas of risk are reported on and discussed.
The Risk Oversight Committees monitor and review the risk profile
and the effectiveness of all risk management activities and, in
particular, monitor adherence to agreed risk limits.
Brit operates a three lines of
defence model for governing risk. Within the first line of defence
individual risk committees monitor day-to-day risk control
activities. The risk management function, as a second line of
defence, provides oversight over business processes and sets out
policies and procedures. Internal Audit, as a third line of
defence, provides independent assurance and monitors the
effectiveness of the risk management processes.
Our Internal Audit function
provides assurance to the Risk Oversight Committees, Audit
Committees and Boards, while external experts are regularly used
for independent assessments.
Key risks
The RMF categorises the risks to
Brit as follows:
· Overarching risk: strategic, earnings and solvency;
and
· Individual risk categories: insurance, market, liquidity,
credit, and operational and group.
Insurance risk is the key driver
of our Group capital requirements.
The key risks and uncertainties are
set out in the following table and the principal risks in the
current environment are set out below.
|
Risk category
|
Risk
|
Description
|
|
Insurance
|
Underwriting - pricing
|
Emerging experience is
inconsistent with the assumptions (e.g. inflation) and pricing
models used.
|
|
Underwriting - natural
catastrophe
|
Natural catastrophe events,
including the impact of climate risk, impacting Brit's
(re)insureds, leading to large volumes of claims.
|
|
Reserving
|
Prior year reserves are
insufficient to cover claims (net of reinsurance) e.g. due to
higher than anticipated inflation
|
|
Market
|
Investment market risk
|
Invested assets adversely affected
by changes in economic variables, such as interest rates,
inflation, bond yields, equity returns, credit spreads, credit
ratings.
|
|
Operational and group
|
People
|
Failure to attract, motivate and
retain key Directors, senior underwriters, senior management, and
other key personnel, on whom our future success is substantially
dependent.
|
Climate change financial risks and emerging
risks
Brit undertakes a formal emerging
risk review annually with the results reported to the Risk
Oversight Committee and included in the Own Risk & Solvency
Assessment (ORSA) report and Commercial Insurer's Solvency
Self-Assessment (CISSA) reports of the underwriting entities. The
review is an important part of the risk identification aspect of
the RMF and includes horizon scanning of the internal and external
risk environment to identify potential new or developing risks to
Brit. These risks can then be included in the risk register and
managed appropriately as required.
The emerging risk review has
previously identified risks such as climate change and cyber risk.
These risks have been managed throughout their development and are
now monitored as part of the business-as-usual risk management
process.
Climate
Change
Climate change has been recognised
as an emerging risk in the ORSA since 2014 and has been an area of
focus since having been identified as a high priority by Brit's
2018 emerging risks analysis. Its potential impact on the insurance
industry is an area of focus for the wider insurance market and its
regulators.
The financial risks to insurers
may include the potential for increased frequency and severity of
weather-related natural catastrophes, for example, hurricanes and
wildfires. The three main areas of risk identified for Brit are
natural catastrophes, liability claims and investment losses.
Further details on the risk management approach are in the
Strategic Report.
Geopolitics
Geopolitical events, such as the
ongoing wars in Ukraine and the Middle East, have the potential to
cause insurance losses and disruption to financial markets.
Insurance losses could arise either as a result of direct damage
from the conflicts or from second order impacts such as supply
chain disruptions and economic instability. There may also be a
potential impact on the operational costs of the Group attributable
to the downstream effects of high inflation. The Group continues to
monitor developments closely. Geopolitical risk events may also
impact the global economy, as discussed below.
Global economic
environment
Inflation in the USA and the UK
remains above target levels and interest rates have risen relative
to recent years. Recessionary risks remain given these factors as
well as geopolitical risks. Recessions may impact the frequency and
cost of claims, investment results, the likelihood of counterparty
defaults and the potential for operational risk events. Brit
continues to actively monitor and respond to changes in the
economic environment.
Brit has considered the impact of
the increased level of inflation and the economic downturn.
Increased focus has been placed on ensuring Brit's pricing models
adequately address current inflationary trends. Feeding into these
models is an enhanced framework assessing the key drivers of claim
settlement costs for each class of business. Inflationary impacts
were also considered during the year end reserving
process.
We remain cognisant of the impact
of inflation on the underlying portfolio. We continue to review the
key drivers of claim settlement costs and frequency by class of
business, which in turn will further inform any required
recalibration of our pricing models. Our reserves continue
incorporate our current view of social and economic inflation and
include a risk adjustment to allow for uncertainty.
Financial information and
availability of accounts
The financial information set out
above is unaudited and does not constitute the Company's statutory
accounts for the years ended 31 December 2023 or 2022. The
2023 financial information is derived from the Company's audited
2023 statutory accounts and the restated 2022 financial information
is also derived from Company's 2023 statutory accounts.
Statutory accounts for 2022 have
been delivered to the Registrar of Companies. The auditor has
reported on those accounts; its report was unqualified and did not
contain statements under Section 498(2) or (3) of the Companies Act
2006.
The audited statutory accounts for
2023 are available on the Company's website. The auditor has
reported on those accounts; its report was unqualified and did not
contain statements under Section 498(2) or (3) of the Companies Act
2006.
The statutory accounts for 2023
will be delivered to the Registrar of Companies following the
Company's annual general meeting.
The preliminary results were
approved by the Board on 26 March 2024.
Responsibility statement of the
Directors
The Directors confirm that, to the
best of their knowledge:
· The
audited consolidated financial statements, contained within the
Company's 2023 audited statutory accounts, which have been prepared
in accordance with UK-adopted international accounting standards in
conformity with the requirements of the Companies Act 2006, give a
true and fair view of the assets, liabilities, financial position,
and profit or loss of the Group; and
· The
Strategic Report, contained within the Company's 2023 audited
statutory accounts, includes a fair review of the development and
performance of the business and the position of the Group, together
with a description of the principal risks and uncertainties that it
faces.
Martin Thompson
Gavin Wilkinson
Group Chief Executive
Officer
Group Chief Financial Officer
26 March
2024
26 March 2024
Consolidated Income
Statement
For the year ended 31 December
2023
|
|
|
Year ended 31 December
2023
$m
|
(Restated)
Year
ended 31 December 2022
$m
|
|
Continuing Operations
|
|
|
|
|
Insurance revenue
|
|
3,517.1
|
3,340.1
|
|
Insurance service
expenses
|
|
(2,594.3)
|
(2,874.1)
|
|
Net expenses from reinsurance
contracts held
|
|
(273.3)
|
(182.1)
|
|
Insurance service result
|
|
649.5
|
283.9
|
|
Net finance (expenses)/income from
insurance contracts
|
|
(322.7)
|
307.1
|
|
Net finance income/(expenses) from
reinsurance contracts held
|
|
96.9
|
(98.5)
|
|
Net insurance finance
expenses
|
|
(225.8)
|
208.6
|
|
Interest revenue from financial
assets not measured at FVTPL
|
|
48.4
|
15.7
|
|
Other investment return
|
|
351.0
|
(150.2)
|
|
Return on derivative
contracts
|
|
(9.4)
|
14.3
|
|
Other income
|
|
65.6
|
33.2
|
|
Losses on other financial
liabilities
|
|
(20.8)
|
(1.3)
|
|
Net foreign exchange
gains
|
|
-
|
97.3
|
|
Investment return and other
income
|
|
434.8
|
9.0
|
|
Other operating expenses
|
|
(126.9)
|
(90.4)
|
|
Net foreign exchange
losses
|
|
(94.2)
|
-
|
|
Other expenses
|
|
(221.1)
|
(90.4)
|
|
Operating profit
|
|
637.4
|
411.1
|
|
Finance costs
|
|
(17.8)
|
(20.5)
|
|
Finance income
|
|
2.7
|
-
|
|
Share of net profit of
associates
|
|
1.6
|
1.5
|
|
Profit on ordinary activities
before tax
|
|
623.9
|
392.1
|
|
Tax credit/(expense)
|
|
5.3
|
(104.9)
|
|
Profit from continuing
operations
|
|
629.2
|
287.2
|
|
Discontinued operation
|
|
|
|
|
Profit from discontinued operation,
net of tax
|
|
266.2
|
21.7
|
|
Profit for the year
|
|
895.4
|
308.9
|
|
Profit attributable to:
|
|
|
|
|
Owners of the parent
|
|
836.2
|
292.8
|
|
Non-controlling
interests
|
|
59.2
|
16.1
|
|
Profit for the year
|
|
895.4
|
308.9
|
Consolidated Statement of
Comprehensive Income
For the year ended 31 December
2023
|
|
|
Year
ended
31
December
2023
$m
|
(Restated)
Year
ended
31
December
2022
$m
|
|
Profit for the year
|
|
895.4
|
308.9
|
|
Other comprehensive
(expense)/income
|
|
|
|
|
Items not to be reclassified to
profit or loss in subsequent periods:
|
|
|
|
|
Remeasurements of post-employment
benefit obligations
|
|
(23.7)
|
(40.9)
|
|
Deferred tax gain relating to
remeasurements of post-employment benefit obligations
|
|
8.4
|
14.3
|
|
Items that may be reclassified to
profit or loss in subsequent periods:
|
|
|
|
|
Change in unrealised foreign
currency translation losses on foreign operations
|
|
7.1
|
(17.4)
|
|
Total other comprehensive
expense
|
|
(8.2)
|
(44.0)
|
|
Total comprehensive income for the
year
|
|
887.2
|
264.9
|
|
Total comprehensive income for the
year attributable to:
Owners of the parent
|
|
828.0
|
248.8
|
|
Non-controlling interests
|
|
59.2
|
16.1
|
|
Total comprehensive income for the
year
|
|
887.2
|
264.9
|
Consolidated Statement of Financial
Position
At 31 December 2023
|
|
|
31
December
2023
$m
|
(Restated)
31
December
2022
$m
|
(Restated)
1
January
2022
$m
|
|
Assets
|
|
|
|
|
|
Intangible assets
|
|
122.7
|
120.0
|
205.3
|
|
Property, plant and
equipment
|
|
32.8
|
41.8
|
57.6
|
|
Investment in associated
undertaking
|
|
-
|
15.2
|
15.0
|
|
Reinsurance contract
assets
|
|
1,942.8
|
1,824.1
|
1,772.5
|
|
Employee benefits
|
|
37.1
|
62.4
|
113.8
|
|
Deferred taxation
|
|
-
|
-
|
30.3
|
|
Current taxation
|
|
3.3
|
15.5
|
10.6
|
|
Financial investments
|
|
5,875.4
|
4,912.4
|
4,015.0
|
|
Derivative contracts
|
|
20.2
|
10.8
|
15.1
|
|
Insurance and other
receivables
|
|
923.6
|
603.1
|
610.9
|
|
Assets classified as held for
sale
|
|
15.8
|
331.6
|
-
|
|
Cash and cash
equivalents
|
|
853.8
|
941.3
|
1,510.3
|
|
Total assets
|
|
9,827.5
|
8,878.2
|
8,356.4
|
|
Liabilities and Equity
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Insurance contract
liabilities
|
|
5,869.7
|
5,411.5
|
5,066.8
|
|
Borrowings
|
|
161.9
|
172.4
|
227.9
|
|
Other financial
liabilities
|
|
104.0
|
92.7
|
95.8
|
|
Provisions
|
|
2.9
|
2.2
|
2.4
|
|
Deferred taxation
|
|
42.3
|
74.9
|
10.4
|
|
Current taxation
|
|
0.2
|
0.5
|
3.8
|
|
Derivative contracts
|
|
23.7
|
10.1
|
12.5
|
|
Insurance and other
payables
|
|
539.3
|
454.4
|
728.3
|
|
Liabilities directly associated with assets classified as
held for sale
|
-
|
49.6
|
-
|
|
Total liabilities
|
|
6,744.0
|
6,268.3
|
6,147.9
|
|
Equity
|
|
|
|
|
|
Called up share capital
|
|
10.0
|
10.0
|
10.0
|
|
Share premium
|
|
932.6
|
1,432.6
|
1,432.6
|
|
Capital redemption
reserve
|
|
1.0
|
1.0
|
1.0
|
|
Capital contribution
reserve
|
|
32.2
|
32.2
|
28.5
|
|
Foreign currency translation
reserve
|
|
(95.5)
|
(102.6)
|
(85.2)
|
|
Retained earnings
|
|
1,736.9
|
829.6
|
582.0
|
|
Total equity attributable to
owners of the parent
|
|
2,617.2
|
2,202.8
|
1,968.9
|
|
Non-controlling
interests
|
|
466.3
|
407.1
|
239.6
|
|
Total equity
|
|
3,083.5
|
2,609.9
|
2,208.5
|
|
Total liabilities and
equity
|
|
9,827.5
|
8,878.2
|
8,356.4
|
Consolidated Statement of Cash
Flows
For the year ended 31 December
2023
|
|
|
Year
ended
31
December
2023
$m
|
(Restated)
Year
ended
31
December
2022
$m
|
|
Cash flows from operating
activities
|
|
|
|
|
Cash used in operations
|
|
(59.5)
|
(571.3)
|
|
Tax paid
|
|
(6.0)
|
(5.1)
|
|
Interest received
|
|
163.4
|
81.1
|
|
Dividends received
|
|
8.6
|
8.3
|
|
Purchase of shares for share-based
payment schemes
|
|
(4.9)
|
(0.4)
|
|
Net cash inflows/(outflows) from
operating activities
|
|
101.6
|
(487.4)
|
|
Cash flows from investing
activities
|
|
|
|
|
Purchase of intangible
assets
|
|
(12.4)
|
(9.2)
|
|
Purchase of property, plant and
equipment
|
|
(2.4)
|
(2.1)
|
|
Disposal of subsidiary
undertakings, net of cash disposed
|
|
128.7
|
-
|
|
Dividends from associated
undertakings
|
|
1.2
|
1.1
|
|
Net cash inflows/(outflows) from
investing activities
|
|
115.1
|
(10.2)
|
|
Cash flows from financing
activities
|
|
|
|
|
Proceeds from issue of shares and
other capital contributions
|
|
-
|
3.7
|
|
Repayment on revolving credit
facility
|
|
(10.0)
|
(35.0)
|
|
Repurchase of subordinated
debt
|
|
(7.3)
|
-
|
|
Interest paid
|
|
(19.9)
|
(11.8)
|
|
Transactions with non-controlling
interests
|
|
-
|
151.5
|
|
Dividends paid
|
|
(413.6)
|
(18.7)
|
|
Net cash (outflows)/inflows from
financing activities
|
|
(450.8)
|
89.7
|
|
Net decrease in cash and cash
equivalents
|
|
(234.1)
|
(407.9)
|
|
Cash and cash equivalents at the
beginning of the year
|
|
1,079.4
|
1,510.3
|
|
Effect of exchange rate
fluctuations on cash and cash equivalents
|
|
8.5
|
(23.0)
|
|
Cash and cash equivalents at the
end of the year
|
|
853.8
|
1,079.4
|
Consolidated Statement of Changes in
Equity
For the year ended 31 December
2023
|
|
|
Called
up
share
capital
$m
|
Share
premium
$m
|
Capital
redemption
reserve
$m
|
Capital
contribution
reserve
$m
|
Foreign
currency
translation
reserve
$m
|
Retained
earnings
$m
|
Total
attributable
to
owners of
the
parent
$m
|
Non-
controlling
interests
$m
|
Total
equity
$m
|
|
At 1 January 2023, as previously
reported
|
|
10.0
|
1,432.6
|
1.0
|
32.2
|
(102.6)
|
395.1
|
1,768.3
|
374.5
|
2,142.8
|
|
Impact of retrospective application
of new accounting policies
|
|
-
|
-
|
-
|
-
|
-
|
434.5
|
434.5
|
32.6
|
467.1
|
|
Restated balance at 1 January
2023
|
|
10.0
|
1,432.6
|
1.0
|
32.2
|
(102.6)
|
829.6
|
2,202.8
|
407.1
|
2,609.9
|
|
Profit for the year
|
|
-
|
-
|
-
|
-
|
-
|
836.2
|
836.2
|
59.2
|
895.4
|
|
Other comprehensive
income/(expense)
|
|
-
|
-
|
-
|
-
|
7.1
|
(15.3)
|
(8.2)
|
-
|
(8.2)
|
|
Total comprehensive income
recognised
|
|
-
|
-
|
-
|
-
|
7.1
|
820.9
|
828.0
|
59.2
|
887.2
|
|
Dividends
|
|
-
|
-
|
-
|
-
|
-
|
(413.6)
|
(413.6)
|
-
|
(413.6)
|
|
Capital
reduction1
|
|
-
|
(500.0)
|
-
|
-
|
-
|
500.0
|
-
|
-
|
-
|
|
At 31 December 2023
|
|
10.0
|
932.6
|
1.0
|
32.2
|
(95.5)
|
1,736.9
|
2,617.2
|
466.3
|
3,083.5
|
Note 1:
On 1 November 2023, Brit Limited effected a capital reduction,
without the cancellation of any shares, which resulted in a $500.0m
reduction to share premium and a corresponding increase in retained
earnings. Accordingly, there was no impact on total
equity.
Consolidated Statement of Changes in
Equity
For the year ended 31 December
2022
|
|
|
Called up
share
capital
$m
|
Share
premium
$m
|
Capital
redemption
reserve
$m
|
Capital
contribution
reserve
$m
|
Foreign
currency
translation
reserve
$m
|
Retained
earnings
$m
|
Total
attributable
to owners of
the parent
$m
|
Non-
controlling
interests
$m
|
Total
equity
$m
|
|
At 1 January 2022, as previously
reported
|
|
10.0
|
1,432.6
|
1.0
|
28.5
|
(85.2)
|
525.5
|
1,912.4
|
234.2
|
2,146.6
|
|
Impact of retrospective application
of new accounting policies
|
|
-
|
-
|
-
|
-
|
-
|
56.5
|
56.5
|
5.4
|
61.9
|
|
|
Restated balance at 1 January
2022
|
|
10.0
|
1,432.6
|
1.0
|
28.5
|
(85.2)
|
582.0
|
1,968.9
|
239.6
|
2,208.5
|
|
|
Profit for the year
(restated)
|
|
-
|
-
|
-
|
-
|
-
|
292.8
|
292.8
|
16.1
|
308.9
|
|
Other comprehensive
expense
|
|
-
|
-
|
-
|
-
|
(17.4)
|
(26.6)
|
(44.0)
|
-
|
(44.0)
|
|
Total comprehensive
(expense)/income recognised (restated)
|
|
-
|
-
|
-
|
-
|
(17.4)
|
266.2
|
248.8
|
16.1
|
264.9
|
|
Dividends
|
|
-
|
-
|
-
|
-
|
-
|
(18.7)
|
(18.7)
|
-
|
(18.7)
|
|
Contribution from parent in
relation to the acquisition of the Riverstone pension
plan
|
|
-
|
-
|
-
|
3.7
|
-
|
-
|
3.7
|
-
|
3.7
|
|
Transactions with non-controlling
interests
|
|
-
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
151.4
|
151.5
|
|
At 31 December 2022
(restated)
|
|
10.0
|
1,432.6
|
1.0
|
32.2
|
(102.6)
|
829.6
|
2,202.8
|
407.1
|
2,609.9
|
Nature and Purpose of Group
Reserves
Share premium: The balance represents the difference between the price at
which shares are issued and their nominal value, less any
distributions made from this account.
Capital redemption reserve:
The balance represents the amount by which share
capital is diminished in the event of a share cancellation and is
required to be recognised in a legal reserve to maintain the
Group's capital.
Capital contribution
reserve: The balance represents the amount
by which the Group has benefited from asset transfers or
contributions from the owners of the parent company, for which no
shares have been issued in exchange.
Foreign currency translation
reserve: The balance on this reserve
represents the foreign exchange differences arising from the
translation of financial statement information of entities within
the Group from functional currencies to the presentational currency
of the Group.
Retained earnings:
Retained earnings represents the cumulative
comprehensive income retained by the Group after taxation and after
any distributions made from this account.
Key performance indicators and
alternative performance measures
Return on net tangible assets
(RoNTA)
Return on net tangible assets
(RoNTA) shows the return being generated by our operations compared
to the adjusted net tangible assets deployed in our
business.
|
RoNTA from all
operations
|
Comment
|
2023
$m
|
(Restated)
2022
$m
|
|
Profit for the year after tax
attributable to the owners of the parent
|
Consolidated income
statement
|
836.2
|
292.8
|
|
Add back: Tax adjusted
amortisation
|
Amortisation of intangibles,
adjusted by the tax rate
|
7.0
|
9.5
|
|
Add back: Tax adjusted pension
charge in income statement
|
Defined benefits schemes' impact
on income statement
|
3.7
|
0.7
|
|
Add back: Tax adjusted
FX
|
FX effect for the year, adjusted
by the tax rate
|
74.9
|
(88.1)
|
|
Return, as adjusted for RoNTA calculation
|
|
921.8
|
214.9
|
|
Adjusted NTA at start of
year
|
See 'Adjusted net tangible assets'
section below.
|
2,025.1
|
1,797.1
|
|
Less: Pension asset net of
deferred tax at start of year
|
'Employee benefits' per
Consolidated Statement of Financial Position less deferred tax at
35%
|
(40.1)
|
(73.9)
|
|
External distributions, share
issuances and capital contributions
|
Weighted adjustment to reflect
distributions and shares issued in year.
|
(210.5)
|
(11.2)
|
|
NTA, as adjusted for RoNTA calculation
|
|
1,774.5
|
1,712.0
|
|
RoNTA
|
Return, as adjusted for RoNTA
calculation, divided by NTA, as adjusted for RoNTA
calculation.
|
51.9%
|
12.6%
|
|
RoNTA from continuing
operations
|
Comment
|
2023
$m
|
(Restated)
2022
$m
|
|
Profit for the year after tax
attributable to the owners of the parent, excluding discontinued
operation
|
Consolidated income
statement
|
570.0
|
271.1
|
|
Add back: Tax adjusted
amortisation
|
Amortisation of intangibles,
adjusted by the tax rate
|
7.0
|
9.5
|
|
Add back: Tax adjusted pension
charge in income statement
|
Defined benefits schemes' impact
on income statement
|
3.7
|
0.7
|
|
Add back: Tax adjusted
FX
|
FX effect for the year, adjusted
by the tax rate
|
74.9
|
(88.1)
|
|
Return, as adjusted for RoNTA calculation
|
|
655.6
|
193.2
|
|
Adjusted NTA at start of
year
|
See 'Adjusted net tangible assets'
section below.
|
2,025.1
|
1,797.1
|
|
Less: NTA relating to discontinued
operations
|
|
(203.7)
|
(212.1)
|
|
Less: Pension asset net of
deferred tax at start of year
|
'Employee benefits' per
Consolidated Statement of Financial Position less deferred tax at
35%
|
(40.1)
|
(73.9)
|
|
External distributions, share
issuances and capital contributions
|
Weighted adjustment to reflect
distributions and shares issued in year.
|
(210.5)
|
(11.2)
|
|
NTA, as adjusted for RoNTA calculation
|
|
1,570.8
|
1,499.9
|
|
RoNTA
|
Return, as adjusted for RoNTA
calculation, divided by NTA, as adjusted for RoNTA
calculation.
|
41.7%
|
12.9%
|
Adjusted net tangible
assets
Adjusted net tangible assets at
the end of each year are calculated as follows:
|
|
Comment
|
2023
$m
|
(Restated)
2022
$m
|
|
Total equity attributable to
owners
of the parent
|
Consolidated statement of
financial position
|
2,617.2
|
2,202.8
|
|
Less: Intangible assets
|
Consolidated statement of
financial position
|
(122.7)
|
(120.0)
|
|
Less: Intangible assets
|
|
-
|
(78.5)
|
|
Net tangible assets
|
|
2,494.5
|
2,004.3
|
|
Add back deferred tax liability
on
intangible assets
|
|
21.5
|
20.6
|
|
Add back deferred tax liability
on
intangible assets
|
|
-
|
0.2
|
|
Adjusted net tangible assets
|
|
2,516.0
|
2,025.1
|
Combined ratio, claims ratio and
expense ratio
The combined ratio is our key
underwriting metric and measures the profitability of our
underwriting. It shows how much of every $1 of premium is spent in
the total costs of sourcing and underwriting the business and
settling claims. A combined ratio under 100% indicates underwriting
profitability.
The component parts of the
combined ratio are the claims ratio and the expense ratio
(consisting of the commission expense ratio and the operating
expense ratio). The calculations of each of the ratios are set out
below:
|
Year ended 31 December
2023
|
|
|
Group
Underwriting
(including Ki)
|
|
$m
|
Comment
|
|
Undiscounted
|
Discounted
|
|
Claims ratio
|
'Net claims' divided by 'net
insurance revenue'
|
|
58.4%
|
49.0%
|
|
Commission ratio
|
'Insurance service expense
- commissions' divided by 'net insurance revenue'
|
|
18.0%
|
18.2%
|
|
Operating expense ratio
|
'Net expenses' divided by 'net
insurance revenue'
|
|
8.9%
|
9.0%
|
|
Expense ratio
|
Sum of the 'commission ratio' and
the 'operating expense ratio'
|
|
26.9%
|
27.2%
|
|
Combined ratio
|
Sum of the 'claims ratio' and the
'expense ratio'
|
|
85.3%
|
76.2%
|
|
Insurance revenue
|
|
|
3,575.6
|
3,517.1
|
|
Allocation of reinsurance
premiums
|
|
|
(808.4)
|
(785.9)
|
|
Net insurance revenue
|
|
|
2,767.2
|
2,731.2
|
|
Insurance service expense
- claims
|
|
|
(2,218.9)
|
(1,850.1)
|
|
Amount recoverable
from reinsurers for incurred claims
|
|
|
601.6
|
512.6
|
|
Net claims
|
|
|
(1,617.3)
|
(1,337.5)
|
|
Insurance service expense - commissions
|
The element of insurance service
expenses relating to commissions
|
|
(498.7)
|
(498.7)
|
|
Insurance service expense -
directly attributable acquisition costs
|
The element of insurance service
expenses relating to directly attributable acquisition
costs
|
|
(140.0)
|
(140.0)
|
|
Insurance service expense -
directly attributable non-acquisition costs
|
The element of insurance service
expenses relating to directly attributable
non-acquisition costs
|
|
(105.5)
|
(105.5)
|
|
Net expenses
|
|
|
(245.5)
|
(245.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Combined ratio, claims ratio and
expense ratio (continued)
|
Year ended 31 December
2022
|
|
|
Group
Underwriting
(including Ki)
|
|
|
$m
|
Comment/financial statement
reference
|
|
Undiscounted
|
Discounted
|
|
|
|
Claims ratio
|
'Net claims' divided by 'net
insurance revenue'
|
|
68.3%
|
60.6%
|
|
|
|
Commission ratio
|
'Insurance service expense
- commissions' divided by 'net insurance revenue'
|
|
17.3%
|
17.2%
|
|
|
|
Operating expense ratio
|
'Net expenses' divided by 'net
insurance revenue'
|
|
10.6%
|
10.7%
|
|
|
|
Expense ratio
|
Sum of the 'commission ratio' and
the 'operating expense ratio'
|
|
27.9%
|
27.9%
|
|
|
|
Combined ratio
|
Sum of the 'claims ratio' and the
'expense ratio'
|
|
96.2%
|
88.5%
|
|
|
|
Insurance revenue
|
|
|
3,340.1
|
3,340.1
|
|
|
|
Allocation of reinsurance
premiums
|
|
|
(857.1)
|
(863.8)
|
|
|
|
Net insurance revenue
|
|
|
2,483.0
|
2,476.3
|
|
|
|
Insurance service expense
- claims
|
|
|
(2,456.2)
|
(2,181.4)
|
|
|
|
Amount recoverable
from reinsurers for incurred claims
|
|
|
759.8
|
681.7
|
|
|
|
Net claims
|
|
|
(1,696.4)
|
(1,499.7)
|
|
|
|
Insurance service expense
- commissions
|
The element of insurance service
expenses relating to commissions
|
|
(428.7)
|
(428.7)
|
|
|
|
Insurance service expense - directly attributable acquisition
costs
|
The element of insurance service
expenses relating to directly attributable acquisition
costs
|
|
(162.9)
|
(162.9)
|
|
|
|
Insurance service expense
- directly attributable
non-acquisition costs
|
The element of insurance service
expenses relating to directly attributable
non-acquisition costs
|
|
(101.1)
|
(101.1)
|
|
|
|
Net expenses
|
|
|
(264.0)
|
(264.0)
|
|
|
Insurance revenue and insurance
premium written
Insurance revenue and insurance
premiums written are used by the Group to measure and monitor
levels of incoming business. Insurance revenue is a required
measure of revenue under IFRS 17, while insurance premiums written
is equivalent to gross written premium under the old insurance
accounting standard, IFRS 4.
|
|
Comment
|
2023
$m
|
2022
$m
|
|
Insurance revenue
|
Consolidated income
statement
|
3,517.1
|
3,340.1
|
|
Commission expense
|
Reclassification of commissions
expense on assumed business to net off against insurance
revenue
|
307.5
|
254.1
|
|
Profit commissions and
reinstatement premiums
|
Reclassification of profit
commissions in relation to assumed business and reinstatement
premiums from insurance revenue to insurance service
expense
|
20.8
|
31.4
|
|
Non-distinct investment components
and other adjustments
|
Net down of non-distinct
investment components; and other GAAP adjustments
|
(37.0)
|
40.5
|
|
Gross earned premium
|
|
3,808.4
|
3,666.1
|
|
Change in gross unearned
premiums
|
Movement in the gross unearned
premium reserve
|
(54.9)
|
303.9
|
|
Insurance premium written
|
|
3,753.5
|
3,970.0
|
Investment return
We assess the performance of our
investment portfolio by comparing the return generated by our
invested assets, net of external investment related expenses,
against the value of those invested assets.
|
|
Comment
|
2023
$m
|
2022
$m
|
|
Share of net profit of
associates
|
|
1.6
|
1.5
|
|
Return on financial investments
and cash and cash equivalents
|
|
400.0
|
(134.4)
|
|
Return on investment related
derivatives
|
|
(7.2)
|
0.8
|
|
Return on invested assets
|
|
394.4
|
(132.1)
|
|
Investment in associated
undertaking
|
|
15.8
|
15.2
|
|
Financial investments
|
|
5,875.4
|
4,912.4
|
|
Derivative contracts (investment
related)
|
|
(0.2)
|
4.3
|
|
Cash and cash
equivalents
|
|
853.8
|
941.3
|
|
Cash and cash
equivalents
|
|
-
|
138.1
|
|
Invested assets
|
|
6,744.8
|
6,011.3
|
|
Opening invested assets
|
|
6,011.3
|
5,546.2
|
|
Closing invested assets
|
|
6,744.8
|
6,011.3
|
|
Average invested assets
|
|
6,378.1
|
5,778.8
|
|
Investment return (%)
|
Return on invested assets divided
by average
invested assets
|
6.2%
|
(2.3)%
|
Capital ratio
The capital ratio measures the
strength of our statement of financial position by comparing our
available capital resources to the capital we need to hold to meet
our management entity capital requirements.
|
|
Comment
|
2023
$m
|
(Restated)
2022
$m
|
|
Adjusted net tangible
assets
|
Calculated earlier in this
section
|
2,516.0
|
2,025.1
|
|
Subordinated debt
|
|
161.9
|
162.4
|
|
Letters of credit/contingent
funding
|
Under our capital policy we have
identified a maximum of $300.0m (2022: $300.0m) of our revolving
credit facility to form part of our capital resources.
|
300.0
|
300.0
|
|
Total available capital
resources
|
|
2,977.9
|
2,487.5
|
|
Management entity capital
requirements
|
The capital required by an entity
for business strategy and regulatory requirements.
|
(1,927.4)
|
(1,777.7)
|
|
Excess of resources over
management entity capital requirements
|
|
1,050.5
|
709.8
|
|
Capital ratio
|
Total available capital resources
divided by management entity capital requirements.
|
154.5%
|
139.9%
|
Risk adjusted rate
change
The risk adjusted rate change
(RARC) shows whether premium rates are increasing, reflecting a
hardening market, or decreasing, reflecting a softening market. A
hardening market is one indicator of increasing
profitability.
The data reflects internal
estimates by Brit's underwriters, based on available year-on-year
underlying renewal data after allowing for changes to terms and
conditions. Generally, no adjustment is made to the figures to
reflect the impact of inflation beyond the level of inflation in
the underlying exposure measure used in pricing.
By its nature, this metric cannot
be reconciled to the financial statements.