More on Brit Insurance Holdings
Brit Insurance Holdings: H1 results
Brit Insurance Holdings, the UK general insurance group, announced record interim results for the six months to June 2005. Pre-tax profits rose 61% to £112.4m (€166m).
Investment returns rose 169.4% to £59.8m and the overall combined ratio improved marginally to 87.4% (1H 2004: 88.3%). The ratio would have been far better had the reinsurance business performed better. The combined ratio in the reinsurance business deteriorated from 74.5% to 99.1% due to high levels of claims triggered by the Northern European Windstorm Erwin.
The company notes that the first half of 2005 saw some price pressure across most lines of business but that the weakening of rates is on the whole more gradual, and coming off a higher base, than in previous insurance down cycles which is attributed to better risk management and improved discipline in the market.
In the Lloyd’s market, the company reports that it maintained its strong market position, business written has exceeded budgets with good growth in earned premia. In reinsurance, premia written has exceeded budgets, following the hiring of a new team. In UK underwriting (ie outside the Lloyds market), Brit’s newest underwriting centre, the company says it has progressed well with emphasis being placed on developing the regional network.
Brit is hopeful that the recent US windstorms, especially Hurricane Katrina will lead to a significant improvement in rates particularly in certain areas of the reinsurance and marine markets. The company has tentatively estimated losses from hurricane Katrina at £82.4m. but warned that this was only a preliminary estimate.
The share trades at 89.25p, on a prospective PE (2005 earnings) of 8.9x, at the upper end of the sector range. The yield of 8% is above average.
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