More on Brit Insurance Holdings
Brit Insurance Holdings: trading statement
Brit Insurance Holdings, the UK general insurance group that took a beating in the recent hurricane season (refer to our previous report on storm losses) made a surprise announcement that it expects to end 2005 with a pre-tax profit of £60m.
Given the heavy losses that Brit suffered in the recent storm season, most analysts were expecting a weaker result for the year to December 2005.
Profitability has been driven by a good performance in its non-catastrophe exposed underwriting and by investment returns, inspite an upward revision in storm losses.
The company has revised expected storm losses (net of reinsurance) to $385m (£216m) from the previous estimate of $325m (£182m)
The company also expects to pay a final dividend of 3p per share.
There are signs that the insurance cycle is turning with some improvements in renewal rates, particularly for catastrophic insurance. Brit is reportedly withdrawing from catastrophic insurance (at a time when the outlook for this category is beginning to improve) which means that it may lag some of its peers in terms of short term growth. Naturally, this would result in longer term stability in its earnings.
The share trades at 93.5p, on a prospective PE (2006 earnings) of 9.7x, within the sector range, with a superior yield of 7.1%
Given the relatively high yield, the share may be of interest to investors looking for income rather than growth in this sector (or those seeking to balance their insurance portfolio with a higher yield, low volatility stock).
Random picks: AWG | Berkeley | Cookson | De La Rue | London Stock Exchange | Next | Signet | United Utilities | Vodafone | Go-Ahead Group