A surge in new business in the UK helped drive premium growth at Brit Insurance, as the company’s reinsurance unit compensated for shrinking premiums in its specialist global division.
In the nine months to September 30, gross written premiums rose 19 per cent to £1.3bn, although at constant exchange rates the increase was only 4.7 per cent.
The gains came from the company’s reinsurance division and from Brit UK, which sells property, liability and motor fleet insurance to UK companies.
Brit UK saw premiums rise 26 per cent to £335m in the period, as it took market share from established rivals.
Dane Douetil, chief executive, said: “If you look at the results for Aviva in the first half of this year, it lost 20 per cent of market share in the commercial insurance market, and we’ve been gaining from that.”
Brit Reinsurance, which makes up a quarter of the company’s gross premium, saw its premiums rise 18 per cent to £338m.
The company benefited from the lack of capital among competitors after the financial collapse, which pushed up rates by 8 per cent.
“That was a factor of the global credit crunch and the destruction on the investment side of a lot of the reinsurers’ balance sheets,” said Mr Douetil.
“So there was less capital available, but the demand was the same, and effectively market forces squeezed the rates up,” he added.
Brit Global Markets, which covers a range of risks, including bloodstock, marine and aerospace insurance, accounts for about half of all written premiums and was the worst performer for the company.
The value of the division’s written premiums fell 8.4 per cent in constant currency terms in the nine-month period, after it abandoned a number of markets such as US healthcare and providing insurance for financial institutions.
That contraction resulted in a loss of £150m from premiums that would ordinarily have been renewed.
“A few years ago we were writing as much as $40m- worth of medical expenses premiums in the US,” said Mr Douetil.
“Despite having often double-digit rate growth [in premiums charged], that was only just keeping up with drug and medical inflation, which is higher than in the rest of the economy.
“When you look at it over a long-cycle basis, we concluded that with the amount of capital we commit to it, we were never going to make the return relative to what we could make in other areas,” Mr Douetil concluded.
Shares in Brit Insurance rose 5.2p to 213.7p on Friday.
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