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Cloutier: Aviation rates will rise

Brit Insurance CEO Mark Cloutier hinted last week that aviation rates could increase by as much as 50 percent in the wake of the Tripoli Airport and Malaysia Airline losses.

Asked about the bedding in of the aviation underwriting and claims team Brit acquired from QBE Underwriting, Cloutier quipped that Brit was pleased with the timing of the acquisition.

While he wouldn't be drawn on exact rate movements, Cloutier said that his underwriters had observed increases "broadly in line" with The Insurance Insider's report on the sector, which revealed on 11 August that Allianz was quoting increases of 30 to 50 percent on airline all-risk business.

Cloutier was speaking after the publication of his firm's interim results, which included a 71 percent increase in pre-tax operating profits to £96mn.

The CEO said that many P&C sector commentators had been overly gloomy regarding the current rating environment, adding that there were still sufficient margins to be had even in the US, where rates have declined recently.

"Yes, the US property premiums are under pressure, but we're still seeing some good margins in the US," he told The Insurance Insider.

"Rates are more stable in casualty insurance... and Brit has a strong position in US property binders, which are continuing to perform well - we're seeing them flat and continuing to increase."

Brit's results also showed that the Lloyd's player took advantage of current market conditions in reinsurance to significantly strengthen group-wide catastrophe cover.

As a result, the group's largest net exposure to a Lloyd's realistic disaster scenario fell from £140mn on 31 December 2013 to £106m this year.

Cloutier stressed that the decision was prudent. "We wanted to take additional tail risk out of our portfolio," the executive explained.

Analysts also made much of Brit's investment performance after the firm generated a 2.1 percent return for the half-year to 30 June.

Brit's director of strategy and corporate development Joy Ferneyhough stated that much of the success was down to its strategy of running a portfolio duration of 2.1 years and an average credit quality rating of A.

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