Newly-acquired insurer Brit Insurance saw both premiums and pre-tax profits shrink last year following higher-than-expected catastrophe claims.
The Lloyd’s insurer, which has just been taken over by private equity consortium Achilles, said profit before tax fell 30 per cent to £119.2m before forex charges, from £171.3m in 2009.
Premiums written fell almost ten per cent to £1.53bn – but the company said the move was deliberate as it made changes to its underwriting portfolio.
Its profits were boosted by the release of £72.4m of claims reserves held from previous years.
Chief executive Dane Douetil said the year was “defined by stodgy pricing conditions and higher than average catastrophes”.
He added that takeover discussions had dominated the year – implying they detracted from Brit’s core operations.
And he warned that increasing regulatory costs were burdening the insurance sector in Europe.
“The Group was able to keep its costs broadly flat despite a more intrusive and costly regulatory environment and the significant costs for the implementation of Solvency II,” he said.
“The UK needs to guard carefully against becoming uncompetitive as the cocktail effect of costly regulation and the potential over-engineering of Solvency II relative to the rest of Europe pushes even more business overseas.”
Brit’s combined ratio – a measure of its profitability – crept higher in 2010, to 97.1 per cent from 94 per cent in 2009, as it said it paid “significantly higher charges for major claims during the year.”
Return on equity excluding forex was 14.4 per cent, down from 17.4 per cent in 2009, but Brit improved the headline ROE level to 14.2 per cent from 12.2 per cent the previous year.