Half Year Financial Report 30 June 2010

Financial highlights

• Return on equity (annualised) excluding the effect of foreign exchange on non-monetary items of 16.9% (30 June 2009: 13.1%)
• Profit before tax excluding the effect of foreign exchange on non-monetary items increased by 12.2% to £72.8m (30 June 2009: £64.9m). Profit before tax of £77.5m (30 June 2009: £8.7m loss)
• Gross written premium 13.4% lower at £851.5m (30 June 2009: £983.0m) primarily reflects proactive management of the underwriting cycle and is in line with the Group’s focus on achieving upper quartile underwriting performance. Premium rate increases of 1.1% achieved despite competitive market conditions (30 June 2009: 5.2%)
• Combined ratio excluding the effect of foreign exchange on non-monetary items of 96.5% (30 June 2009: 93.8%) including 7.1 percentage points for major claims (earthquake in Chile)
• Claims ratio excluding major claims improved by 9.0 percentage points reflecting strong profits arising from prior years and early evidence that the
• Group’s strategy to improve underwriting returns is working. This was offset by a 6.2 percentage point increase in the expense ratio due to lower premium volumes, business mix and the timing of certain expenses. Overall, the combined ratio excluding major claims improved by 2.8 percentage points
• Prior year claims reserves continue to run-off positively with releases in the period of £41.9m (30 June 2009: release of £19.0m). During the period the Group successfully commuted, at a modest profit, a major Financial Risks contract which represented 30% of the original net reserves established for sub-prime related claims in 2007
• Investment return of £57.5m or 1.6% (30 June 2009: £59.2m or 1.8%)
• Effective tax rate of 13.0% (30 June 2009: 27.6%)
• Diluted earnings per share of 87.3p (30 June 2009: loss of 8.0p)
• Recommended 2010 interim distribution maintained at 30.0p per share
• Growth in net tangible assets per share of 4.6% to £11.00 (31 December 2009: £10.52) after payment of 2009 final distribution of 30.1p per share

Business development

• Significant progress achieved in meeting the Group’s aim to be a top quartile underwriter with detailed plans rolled out by each business unit.
• Enhanced underwriting tools and portfolio analytics have been embedded throughout the organisation to enable underwriters to focus on developing the most profitable areas of accounts and re-underwrite risks that are not consistent with top quartile performance
• Continued emphasis on portfolio optimisation across the Group. In the UK the withdrawal from Local Authority (Municipal) business and a significant reduction in Private Motor is offset by the continued growth in Brit Lite, which specialises in micro-SME commercial insurance, and now represents 14% of the UK portfolio
• Continuation of the measured build-out of the Group’s overseas network with the establishment of a representative office in Australia to formalise the previous third-party relationship
• Successful completion of the corporate reorganisation, with approximately £500m of the Group’s capital resources now held outside of the UK

Dane Douetil, Group CEO of Brit Insurance Holdings N.V. commented:

“Brit Insurance has made excellent progress during the first six months towards our stated goal of delivering upper quartile underwriting performance. This progress has been reflected in the improvement of our return on equity to 16.9% despite difficult underwriting and investment markets. Particularly pleasing has been the material improvement in our underlying claims ratio from 62.0% to 53.0% once the effect of large claims (Chile this year and Air France last year) has been removed. Our successful move to the Netherlands is already bearing fruit with a strong post tax result of £67.4m.

“Although Brit Insurance is well prepared for Solvency II the industry must guard against the direct and hidden costs of the ever increasing capital and regulatory burden in the post credit crunch world. Change is required but it must be relevant and proportionate. The economic outlook remains challenging but our established multi-product franchise, geographic spread and strong balance sheet position us well to outperform the market.”

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For further information, please contact

Brit Insurance Holdings N.V. +31 (0) 20 719 1100
Dane Douetil, Chief Executive Officer, Brit Insurance +44 (0) 20 7984 8500
Neil Manser, Head of Investor Relations, Brit Insurance +44 (0) 20 7098 6980
David Haggie/Peter Rigby/Juliet Tilley, Haggie Financial +44 (0) 20 7417 8989

Notes to Editors
Brit Insurance is an international general insurance and reinsurance group specialising in commercial insurance. The Group writes a diverse portfolio of over 70 classes of insurance and reinsurance offering worldwide protection. The scope is wide-ranging: from sole traders to the largest multinational corporations; from manufacturers to professional services; from shops to satellites. Our distribution model is centred on brokers and intermediaries. Reflecting where our customers trade, we are organised into three strategic business units – Global Markets, UK and Reinsurance – which have access to our underwriting platforms including Brit Insurance Limited and our Lloyd’s syndicate, Brit Syndicate 2987.