writing the future
Brit Limited
Annual Report 2024
We exist to ensure that uncertainty never stands in the
way of progress.
We provide market-leading specialty insurance and
reinsurance.
We make disciplined and considered decisions.
We have a culture that is open, honest and fair.
We bring together the best talent and tools to provide
service excellence.
We help people and businesses face the future and thrive.
Let’s do it together.
writing the future
Brit Limited Annual Report 2024
1
A strong performance underpinned by a clear strategic focus
• Group profit before tax from continuing operations of $661.0m (2023: $623.9m).
• Group profit after tax from continuing operations of $576.2m (2023: $629.2m).
• Return on net tangible assets on continuing operations of 23.5% (2023: 41.7%), primarily reflecting
the increased level of adjusted net tangible assets held during 2024.
• Combined ratio for continuing business after discounting of 75.7% (2023: 76.2%) and an
undiscounted combined ratio for continuing business of 85.9% (2023: 85.3%).
• Insurance service result was a profit of $674.8m (2023: $649.5m).
• Insurance premium written for 2024 of $3,779.5m, an increase of 0.5% over 2023 ($3,753.5m)
at constant rates of exchange.
• Investment return was a strong $347.7m or 5.0% (2023: $394.4m or 6.2%).
• Capital position remains strong, with a surplus over management entity capital requirements of
$987.5m or 53.0% (2023: $1,050.5m or 54.5%), after dividend payments in the year of $605.4m.
A significant proportion of our investment portfolio remains invested in cash and fixed income
securities (2024: 84.5%; 2023: 85.8%).
• Overall risk adjusted rate decrease of 1.4% (2023: increase of 7.1%).
• Key developments include:
• Ki established as a standalone operation within the Brit Limited and Fairfax groups following highly
successful launch and incubation by Brit;
• Focus on underwriting capability development, including new strategic pricing and rating engines
for a number of classes;
• Launch of Brit Re, the strategic expansion of our Bermuda presence;
• Successful first year of Ki’s enhanced offering allowing brokers to access third-party digital
capacity from multiple syndicates directly through the Ki platform;
• Ki franchise growth: Overall insurance premium written by the Ki franchise, on behalf of
Ki Syndicate 1618 and third parties, grew by 16.6% to $1,039m;
• Launch of the ‘BUILD Project Cargo’ and ‘Cyber First50’ consortia;
• Completion of the sale of our holding in Canadian MGA Sutton;
• Continued focus on our customers through claims innovation; and
• Continued focus on our digital, data and AI strategy.
Note 1: The calculations of the combined ratio and other ratios are set out in ‘key performance indicators and alternative performance measures’ on pages 190 to 194.
We have a culture that is open, honest and
fair so that our partnerships can be the
most effective they can be.
2
Brit Limited Annual Report 2024
3
contents
Strategic Report
The Strategic Report contains information about
the Group, how we make money and how we run
the business. It gives an insight into our markets,
approach to governance, sustainability and risk
management. It provides context for our Financial
Statements, sets out our key performance
indicators (KPIs) and analyses our financial
performance. It also sets out how we engage with
our people and other stakeholders and includes our
Section 172(1) Statement.
Officer Statements
Brit at a Glance
Our Underwriting
Business Review
Financial Performance Review
Financial Position and Capital Strength
Risk Management, Principal Risks and Uncertainties
Our People, Culture, Social and Community Matters
Environmental Responsibility
Non-Financial and Sustainability Information
Statement (NFSIS)
Stakeholder Engagement
Section 172(1) Statement
6
8
12
17
22
31
34
39
41
46
48
51
Governance
This report sets out other information of interest
to our stakeholders. It includes our Directors’
responsibility statement and our Directors’
statement on going concern. It also explains our
governance framework and contains our Modern
Slavery and Human Trafficking Statement.
Directors’ Report
Corporate Governance Report
Modern Slavery and Human Trafficking Statement
56
59
61
Financial Statements
This section presents the financial position,
performance and development in accordance with
generally accepted accounting practice for both
the Group and the Company. It also contains the
Auditors’ Report.
Independent Auditors’ Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Parent Company Financial Statements
64
74
75
76
77
78
79
181
Additional Information
This section explains how we calculate our KPIs and
alternative performance measures with reference
to data contained within the financial statements.
We also summarise other information relating to
the Company that is useful to stakeholders.
Key Performance Indicators and Alternative
Performance Measures
Company Information
190
195
Glossary
In this section, we include definitions of the terms
used in this Annual Report, focusing on terms
specific to the insurance industry and to Brit.
Glossary
196
Disclaimer
This document does not constitute or form part of, and should not be construed as, an offer for sale or subscription of, or solicitation of any offer or invitation or
advice or recommendation to subscribe for, underwrite or otherwise acquire or dispose of any securities (including share options and debt instruments) of the
Company nor any other body corporate nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever
which may at any time be entered into by the recipient or any other person, nor does it constitute an invitation or inducement to engage in investment activity under
Section 21 of the Financial Services and Markets Act 2000 (FSMA). This document does not constitute an invitation to effect any transaction with the Company or to
make use of any services provided by the Company. Past performance cannot be relied on as a guide to future performance.
strategic report
4
Brit Limited Annual Report 2024
This Strategic Report contains information about our business and provides an insight into
how we operate and our approach to sustainability and risk management. It provides context
for our Financial Statements, sets out our key performance indicators (KPIs) and analyses
our financial performance. All monetary figures in this report are presented in US dollars ($),
unless otherwise stated.
The calculations of the combined ratio and other underwriting ratios are set out on page 190 to 194.
6
Officer Statements
Martin Thompson, our Group
CEO, and Gavin Wilkinson,
our Group CFO, comment on
the Group’s performance
and business developments
during 2024 and look ahead
to 2025.
17
Business Review
We review market conditions,
our underwriting activities
and other business
developments during 2024.
34
Risk Management, Principal
Risks and Uncertainties
We set out our Risk
Management Framework and
explain how we will manage
the principal risks facing our
business in 2025, to ensure
we deliver our strategic
priorities. We also consider
emerging risks including
climate related risk.
48
Stakeholder Engagement
We set out our key
stakeholders, as identified
by the Board, together
with why and how we engage
with them and the outcomes
of that engagement.
8
Brit at a Glance
We introduce the Brit Group,
explain who we are and
what we do. We discuss our
underwriting philosophy and
the Brit offering. We also set
out our track record.
22
Financial
Performance Review
We set out our KPIs. We
explain how we use them to
monitor our performance and
outline their performance
from 2020 to 2024. We then
provide an analysis of the
performance of our business
during 2024.
39
Our People, Culture, Social
and Community Matters
We provide information on
our people (including how
we engage with them) and
on social and community
matters, to the extent that it
is necessary to understand
our business.
51
Section 172(1) Statement
We set out how our Directors
promote the success of the
Company and discharge their
responsibilities under Section
172(1) of the Companies Act.
12
Our Underwriting
We set out our broad range
of underwriting products
and services, and analyse
how each of our portfolios
contributed to our premium
income in 2023 and 2024.
31
Financial Position and
Capital Strength
We review our financial
position at 31 December
2024. This section includes a
discussion of our investment
portfolio.
41
Environmental Responsibility
We explain our progress on
delivering our environmental
responsibilities, and set out
our related governance,
strategy, risk management
and metrics. This section
includes our non-financial
and sustainability information
statement.
This Strategic Report was approved by the Board on 27 February 2025.
Martin Thompson
Group Chief Executive Officer
Gavin Wilkinson
Group Chief Financial Officer
strategic report
We provide
market-leading
specialty
insurance and
reinsurance
so you can
present the
best solutions
to your clients.
5
strategic report
6
Brit Limited Annual Report 2024
officer statements
I am pleased to report a strong
performance for 2024, with
an undiscounted combined ratio
of 85.9%, a discounted combined
ratio of 75.7%, and a profit before
tax from continuing operations
of $661.0m (2023: $623.9m).
The excellent underwriting and
investment results we have
delivered reflect our clear strategic focus on driving
performance and profitability.
Positive market conditions have continued during 2024, with
compound increases since 1 January 2018, the last low point
in the cycle, of 62.8%. However, we are also seeing markets
becoming more challenging, with increased competition and
rate reductions in a number of classes, resulting in overall
rate reductions of 1.4%.
Against this backdrop we have continued to be highly
disciplined and focused on underwriting profitability. The
Group’s overall insurance premium written increased by 0.5%
at constant exchange rates to $3,779.5m (2023: $3,753.5m),
mainly driven by current year premium growth and a focus
on high performing classes. We remain alert to evolving
market conditions and believe our focus on effective cycle
management makes us well positioned to navigate these.
We continue to deliver based on our four strategic pillars:
Focus; Capability; Simplification; and Culture. We believe
these are core to delivering careful, proactive management
of the insurance cycle, building on our established leadership
positions, and meeting our target returns. They will also help
us fulfil our social and environmental responsibilities.
Building on Brit’s position and reputation as a lead market
is an essential priority and we are more active than ever in
influencing and shaping the market, driving terms and price
across all lines that merit focus. This is a testament to the
high quality of our underwriting and claims teams and our
sharpened focus on developing market leading underwriting
capability and ensuring our proposition is compelling. Our
strong broker relationships remain the fundamental enabler
for this.
Our ability to deliver a best-in-class claims service is also
an important differentiator. We continued to manage very
complex situations on behalf of our clients, supporting them
when they need it most, with innovation at the heart of our
claims approach. This was demonstrated with our responses
to the Hurricanes Helene and Milton, and more recently the
devastating wildfires in California.
We continue to build on our solid foundations as we invest
in our technology strategy, broker relationships and
underwriting capabilities. We have made good progress with
our investment in digital and data-enabled capabilities, having
delivered the foundational phase, a cloud-native modern data
platform. We have also continued to enhance our underwriting
capabilities, with several classes benefiting from our new
strategic underwriting platform, resulting in an improved
customer experience, fostering growth through more
efficient processes and supporting our teams to make quicker
underwriting decisions.
We announced our strategic plan to meaningfully expand
our presence in Bermuda. Bermuda is a dynamic and
thriving multi-class (re)insurance market and the expansion
of Brit Reinsurance (Bermuda) Limited (‘Brit Re’), which
will complement our existing reinsurance underwriting
capabilities in London, is a natural next step for the Group.
The reception we have received since launch has been
outstanding, demonstrating the strength of the Brit brand.
A landmark for the Group was our announcement in December
that Ki would become a separate operation within Fairfax
from 1 January 2025. Over the last four years, Ki has grown
significantly and evolved to become a digital follow platform
offering capacity from multiple syndicates with over $1 billion
of insurance premium written through its platform in 2024.
The scale, sophistication and growth potential of Ki made this
a natural next step, enabling Brit and Ki to focus on their core
strengths in ‘lead’ and ‘follow’ respectively. We are immensely
proud of Ki’s success and look forward to a continued close
partnership between the Brit and Ki operations.
Our aspiration for the Group is to be a long-term winner in the
Lloyd’s market, supported by our clear strategic focus on lead
underwriting to drive sustainable performance and profitability.
Our 2024 results reflect another year of strong performance
and show we have the foundations from which to achieve this
through Syndicate 2987, a highly relevant lead market. In 2025
we will continue to invest in our technology strategy, broker
relationships and underwriting capabilities to build on our
established leadership positions, while retaining our long-term
focus on careful management of the insurance cycle.
We remain mindful of shifting market dynamics, and the
challenges faced by our customers and the industry, as
illustrated by the recent California wildfires. The human
impact of such events is significant and our thoughts are with
those affected. They also remind us of the role of insurance
in helping businesses and individuals navigate a complex and
ever changing risk environment. Our diversified and balanced
portfolio makes us well placed to support our customers
through Brit’s underwriting and claims expertise. This,
together with our strategy and unique culture gives me great
confidence in the outlook for Brit.
Martin Thompson
Group Chief Executive Officer
strategic report
Brit Limited Annual Report 2024
7
In 2024, Brit delivered both a strong
underwriting result and a strong
investment performance. Brit’s
profit after tax for continuing
operations was $576.2m (2023:
$629.2m), while profit for the year
including discontinued operations
totalled $573.1m (2023: $895.4m,
including the gain on the sale of
Ambridge of $259.1m). Our return on net tangible assets
(RoNTA), excluding the effects of foreign exchange, for
continuing operations was 23.5% (2023: 41.7%), and for all
operations, was 23.3% (2023: 51.9%).
Our insurance service result was a profit of $674.8m (2023:
$649.5m). This result, together with our discounted combined
ratio of 75.7% (2023: 76.2%) and our undiscounted combined
ratio of 85.9% (2023: 85.3%), reflected good underwriting
discipline and rigorous risk selection.
The Group had increased major losses in the period, with
undiscounted best estimate reserves before reinstatement
premiums of $166.1m established for Hurricane Helene and
Hurricane Milton (2023: $69.6m arising from the Hawaiian
wildfires and Hurricane Idalia). 2024 also witnessed a number of
uncorrelated large man-made risk events, including the Baltimore
Bridge collision and the CrowdStrike IT systems outage.
As part of our standard reserving process, we released
$37.8m (2023: $3.0m) of our overall net reserves established
for prior year claims, before discounting and excluding
movements in the risk adjustment. This reflected releases
across Programmes and Facilities, Specialty, Cyber,
Terrorism, Property Treaty Cat North America and Casualty
Treaty Short-Tail Risk, partly offset by adverse development in
Property UK, Healthcare Liability, Professional Indemnity US,
Property Treaty Risk North America and by Casualty Long-Tail
Risk.
Our return on invested assets net of fees was a strong
$347.7m or 5.0% (2023: $394.4m or 6.2%), with all
investment classes other than derivatives contributing to this
return. The result reflects market conditions, with strong
yields and positive equity market performance.
Our balance sheet remains strong, with adjusted net
tangible assets of $2,394.3m (2023: $2,516.0m), after
paying dividends to our shareholders of $605.4m (2023:
$413.6m) during the year. Our management capital surplus
was $987.5m or 53.0% (2023: $1,050.5m or 54.5%) over our
Group management capital requirement of $1,865.4m (2023:
$1,927.4m).
Our investment portfolio remains conservatively positioned.
It includes a large allocation to debt securities and cash
and cash equivalents (2024: $6,096.3m or 84.5%; 2023:
$5,784.0m or 85.8%), while Brit’s equity and structured
product allocation stands at $1,112.1m or 15.4% (2023:
$965.6m or 14.3%). At 31 December 2024, 79.8% of our
invested assets were investment grade quality (2023: 82.3%)
and the duration of the portfolio was broadly neutral compared
to the duration of our liabilities. At 31 December 2024, the
running yield of our total portfolio was 4.0% (2023: 4.0%).
On 8 March 2024, Brit completed the sale of Sutton, the
Canadian managing general underwriter (MGU) to Amynta
Group, recording a gain on sale of $15.2m. This sale, together
with that of Ambridge in 2023, will allow us to focus on our
strategic priorities. Importantly, they remain key partners for
Brit as independent MGUs.
From 1 January 2025, Brit Group Holdings Limited is the
new holding company for the Brit insurance businesses.
Brit Group Holdings Limited was incorporated on 7 August
2024 and is a wholly owned direct subsidiary of Brit Limited.
Ki Financial Limited, also a direct subsidiary of Brit Limited,
remains the holding company for the Ki insurance businesses.
From 2025, the Brit and Ki insurance businesses will operate
independently and these two holding companies will prepare
their own consolidated accounts and become the key
reporting groups for their respective businesses.
Strong market conditions have continued during 2024, with
rate increases continuing in a number of portfolios. However,
markets are becoming more challenging with increased
competition, leading to overall rate reductions. The world
faces ongoing volatility, challenges arising from inflation,
continuing uncertainty from global events, and increased
levels of natural catastrophe activity as seen in January
2025 with the California wildfires. The insurance market
also continues to evolve and we believe that our strategy,
discipline, market position and financial strength make us well
placed to take advantage of opportunities as they arise.
Gavin Wilkinson
Group Chief Financial Officer
strategic report
8
Brit Limited Annual Report 2024
Brit at a glance
Overview
We are a market-leading global specialty (re)insurer and one
of the largest businesses that trades primarily on the Lloyd’s
of London platform, the world’s leading specialist commercial
insurance market. We provide highly specialised insurance
products to support our clients across a broad range of
complex risks, underpinned by our strong underwriting and
claims expertise.
We care deeply about our clients’ needs, ensuring that we not
only surround them with the best talent in the industry, but
also combine the depth of our experience with technology to
deliver innovation. Acting in open, honest partnership, our
clients can be sure that with Brit by their side, the future is
not something to be feared, it is something to be seized.
A full history of Brit can be found at www.britinsurance.com.
The Fairfax group
Since June 2015, Brit has been a member of the Fairfax
Financial Holdings Limited group (Fairfax), a Canadian
company whose shares are listed on the Toronto Stock
Exchange (www.fairfax.ca).
At 31 December 2024, Fairfax owned 100% of Brit Limited.
On 13 December 2024, Fairfax exercised its option
to purchase the 13.8% of shares owned by OMERS
Administration Corporation (OMERS), the defined benefit
pension plan for municipal sector employees in the Province
of Ontario, Canada.
We believe that Fairfax is an excellent parent for Brit, enabling
us to enhance our global product offering. It provides us with
a strong and stable base for long-term growth and affords us
with opportunities to expand our underwriting and distribution
channels, combined with the freedom to pursue our own
identity, philosophy and ambitions.
Our financial strength
Our strong and efficient capital model results from our focus
on Lloyd’s. As part of the Fairfax group we also benefit from
the group’s financial strength. We believe that our efficient,
flexible and scalable operating model provides a stable
foundation that enables us to pursue our strategy of focusing
on maximising profitability of the underwriting business and
extending our global reach.
Our capabilities and ambition are underpinned by our strong
financial position. Our business is underwritten primarily
through our wholly-aligned Lloyd’s Syndicate 2987, our innovative
Ki Syndicate 1618, and the partly-aligned Lloyd’s Syndicate 2988,
which benefit from Lloyd’s ratings of A+ (Superior) positive
outlook from A.M. Best, AA- (Very Strong) from Fitch Ratings,
AA- (Very Strong) from S&P Global, and AA- (Very Strong) from
Kroll Bond Rating Agency.
In December 2024, A.M. Best reaffirmed Brit Re’s Financial
Strength Rating of ‘A’ (Excellent) and a Long-Term Issuer Credit
Rating of ‘a’ (Excellent). These ratings reflect Brit Re's financial
strength and the positive impact of having Fairfax as its
ultimate parent.
At 31 December 2024, we had capital resources equal to
153.0% of the management capital requirement needed
to support our business and Fairfax has supported our
continued capital strength allowing us to take advantage of
business opportunities as they arise. Our capital strength
provides the flexibility to allow us to cope with major losses
while not deviating from our commitment to fund profitable
expansion and to provide attractive returns.
Providing a risk service
Choosing to work with Brit means clients are buying a service,
not just buying a product. Every day, our multidisciplined
teams bring diverse skills and experience to our clients’
businesses, and our deep underwriting expertise helps
clients to effectively mitigate their risks. By working in close
collaboration across Underwriting, Claims, Actuarial and
Technology, our teams gain and share unparalleled insight into
the risks that our clients face.
Extensive distribution network
We are proud of our extensive distribution network and are
focused on tailoring our distribution strategy across four key
areas: open market, coverholders, reinsurance and digital. We
source our business through established trading relationships
with Lloyd’s brokers, wholesale brokers, retail agents and
global reinsurance intermediaries. This network allows us
to understand and exceed our clients’ needs and serve them
globally. In London, our specialist Delegated Underwriting
Management team has a reputation for its commitment to
providing an excellent broker and coverholder experience.
Our strategic objectives
In delivering our strategy, we focus onthe four ‘hows’: Focus;
Capability; Simplification; and Culture. We believe these are
core to achieving outstanding cycle management, best in class
underwriting, leadership at Lloyd’s, and targeted returns,
as well as helping us fulfil our social and environmental
responsibilities.
Underwriting and claims excellence
Underscored by comprehensive underwriting, claims and
risk services, we operate as a market lead across our
primary underwriting classes. At Brit we pride ourselves on
Underwriting and Claims excellence, deploying the latest
tools and a disciplined approach, and we have a long record
of strong performance.
Underwriting excellence
We predominantly underwrite complex, high value insurance
and reinsurance risks. Our largest source of business is the
US Excess and Surplus lines market and the majority of our
premium income is denominated in US dollars, although the
risks underwritten are distributed globally. We complement
our core classes with highly specialised niche lines which
provide both diversification and the potential for high returns.
In addition to our core Brit Syndicate 2987 platform, through
Ki Syndicate 1618 and Syndicate 2988 we managed $1.14bn
of underwriting capacity for the 2024 year of account. These
underwriting platforms, backed by diversified sources of
capital, reflect our desire to increase our flexibility, enhance
strategic report
Brit Limited Annual Report 2024
9
our relevance to clients and brokers, and reinforce the long-
term relationships we have in the market.
We have an influential and respected presence within the
Lloyd’s of London insurance market. With one of the largest
and most diverse portfolios, we underwrite primarily through
Brit Syndicates 2987, 2988 and Ki Syndicate 1618. We have
a long and successful track record of leading an extensive
range of insurance and reinsurance programmes, based
on rigorous risk selection and a disciplined approach to
underwriting. We hire the best people and develop their skills
and expertise. Combining technical expertise with industry
knowledge, we listen, we share and we collaborate, to create
best-in-class insurance solutions for our clients.
Claims excellence
Should the worst happen, our team of claims professionals
are committed to helping those affected not only to move on
from the incident, but to move forward. When a customer has
a claim, their life or business has been disrupted, or even put
in peril. They expect their insurance to deliver – and it is our
responsibility to fulfil that commitment.
Our team is highly experienced at both senior and adjuster
levels, and has successfully managed claims arising from
some of the market’s most challenging events. Our claims
professionals collaborate closely with our underwriters,
giving them real insight into the risks that our clients face,
enabling us to tailor our responses appropriately.
Broker surveys consistently highlight Brit’s effective client
engagement, proactive communications and case-by-case
approach.
Market-leading innovation
By putting innovation at the heart of our business we are
constantly looking for ways to provide the ongoing value that
will help our customers thrive in a changing world. We have
created a stimulating environment where talented original
thinkers flourish, and we channel this creativity towards
meeting real customer needs: turning smart ideas into
cutting-edge insurance solutions.
Investment management
At Brit we have a significant investment portfolio comprising
financial investments, investments in associates, investment-
related derivatives and cash. The value of our invested
assets at 31 December 2024 was $7,210.6m. The investment
portfolio is managed for the most part by Hamblin Watsa
Investment Counsel Limited, a Fairfax subsidiary with an
excellent long-term track record, whose sole business is
managing investment portfolios of Fairfax companies.
Our culture
Culture is the fabric that differentiates us from our
competition, and we have very many great aspects to our
culture at Brit. We are low politics, we are very collaborative
and we have a belief in doing absolutely the right thing for Brit.
We believe the magic is going to come from collaboration
and how well we work together across functions, how we
get the insights from claims, how we work with underwriting
technology and how we pull all of that together to make sure
that we are all moving in the right direction.
The keyword is alignment. If we add alignment to focus and all
work together, trying to achieve the same thing, then we can
achieve all of the objectives we have set for the business.
Our social responsibility
We have a longstanding ethos of social responsibility and
we have a strong culture of ‘doing the right thing’; from
volunteering in our local communities to supporting good
causes further afield. The projects we choose align with our
strategic priorities and each year ten charities are chosen
by our employees for significant support.
Our environmental responsibility
Our vision centres on ‘Writing the future’, responsibly –
leveraging our culture and products to help deliver positive
outcomes for people, the planet and our business. We actively
consider the potential implications of climate change and
sustainability, and reflect these in our underwriting and
investment strategies. We are committed to responsible
business practices and aim to act in unison with our regulator
and the rest of our industry.
strategic report
10
Brit Limited Annual Report 2024
Our track record
Insurance premium written ($m)
2,424.4
3,238.3
3,970.0
3,753.5
3,779.5
1,999.2
1,912.2
2,057.0
2,239.1
2,293.5
20202
20212
20221
20231
20241
20162
20172
20182
20192
20152
0
1,000
2,000
3,000
4,000
Combined ratio (undiscounted) (%)
85.9
20202
20212
20221
20231
20241
20162
20172
20182
20192
20152
95.8
112.7
95.7
96.2
85.3
92.2
95.9
111.8
103.2
0
20
40
60
80
100
120
Combined ratio (discounted) (%)
88.5
76.2
75.7
2022
20231
20241
0
20
40
60
80
100
120
Investment return (net of fees) (%)
1.0
3.3
6.2
5.0
0.1
2.6
4.9
(2.0)
20202
20212
20221
20231
20241
20162
20172
20182
20192
20152
3.6
(2.3)
-4
-2
0
2
4
6
RoNTA3 (%)
(20.1)
19.4
12.6
51.9
23.3
8.5
13.1
1.3
(15.2)
18.9
20202
20212
20221
20231
20241
20162
20172
20182
20192
20152
-20
-10
0
10
20
30
40
50
Capital ratio (%)
122.1
139.1
139.9
154.5
153.0
128.2
125.6
136.8
130.4
128.4
20202
20212
20221
20231
20241
20162
20172
20182
20192
20152
0
20
40
60
80
100 120 140 160
Brit at a glance
Note 1: The calculations for 2024 and 2023 are set out in ‘key performance indicators and alternative performance measures’ on pages 190 to 194.
Note 2: The figures for 2015 to 2020 are as previously reported under IFRS 4.
Note 3: RoNTA from all operations, continuing and discontinued.
We make disciplined and considered
decisions so you can rely on us to be
here for the long term.
11
strategic report
12
Brit Limited Annual Report 2024
2024
■ Total Direct Portfolios, $2,961.2m
■ Financial and Professional Liability, $685.7m
■ Programmes and Facilities, $657.9m
■ Property, $976.5m
■ Specialty, $641.1m
■ Total Reinsurance Portfolios, $813.4m
■ Casualty Treaty, $418.2m
■ Property Treaty, $395.2m
■ Underwriting classes in run-off, $7.0m
■ Other underwriting, $(2.1)m
Insurance premium written
by portfolio 2024 ($m)
Total
$3,779.5m
our underwriting
2023
■ Total Direct Portfolios, $2,866.5m
■ Financial and Professional Liability, $651.9m
■ Programmes and Facilities, $711.9m
■ Property, $908.0m
■ Specialty, $594.7m
■ Total Reinsurance Portfolios, $882.4m
■ Casualty Treaty, $543.2m
■ Property Treaty, $339.2m
■ Underwriting classes in run-off, $27.4m
■ Other underwriting, $(22.8)m
Insurance premium written
by portfolio 2023 ($m)
Total
$3,753.5m
writing the future
The breadth of classes we support, the depth of our experience and our commitment to our
clients differentiates us.
Note 1: To aid comparability, the 2023 figures have been re-presented to reflect the changes to the underwriting class monitoring structure introduced for 2024.
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Brit Limited Annual Report 2024
13
Direct Underwriting
Financial and Professional Liability
Property
Financial Lines
Directors’ and Officers’ (D&O)
As recognised experts in the D&O
market, specialising in tailoring
products to precisely match individual
clients’ needs.
Financial Institutions
As acknowledged leaders in the
traditional insurance lines, we also
offer exclusive, innovative solutions for
organisations of all sizes across mature
and emerging economies.
Transactional
Through our specialist MGA partners
we write the following Transactional
classes: Representations and
Warranties/Warranties and Indemnities.
Cyber
Global Cyber Privacy and Technology
Our knowledge of the cyber risk
landscape gives us a deeper
understanding of the different types
of cyber risk. We provide cutting-edge
products to clients ranging from agile
start-ups to multinational corporations.
Professional Lines
Healthcare Liability
With a wealth of industry expertise,
our healthcare team is committed to
providing tailored insurance solutions,
innovative products and related risk
services. We focus on hospitals, allied
health and medical liability coverage.
North American Professional Liability
An established leader in this sector, we
provide cover on both an open market
and binding authority basis. Clients
range from small start-ups to the
largest multinationals.
Property Open Market
International Property
Our underwriting team offers significant
breadth and depth of experience, and
has access to our technical expertise in
the areas such as catastrophe modelling
and policy wordings. We offer a diverse
range of market-leading property products throughout
the world and insure a wide range of clients, diverse in
size and occupancy.
North American Open Market Property
Our technical expertise in the areas of
catastrophe modelling, pricing, policy
wordings and claims has made our North
American Open Market Property team a
market of choice for both brokers and clients.
UK Property
We have a proven track record of
writing and delivering flexible commercial
solutions to address the precise nature
of our customers’ requirements, covering
both commercial and residential property.
Political Risk and Violence
Political and Credit Risk
We cover financial losses as a result
of non-payment or performance of
counterparties and confiscation,
expropriation, nationalisation, deprivation,
sequestration or forced abandonment of
fixed and mobile assets in foreign countries.
Political Violence/Terrorism
We offer a range of covers including
physical damage, denial of access and
business interruption losses arising
from perils including terrorism, strikes,
riots, civil commotion, malicious damage,
insurrection, revolution, rebellion, mutiny, war and civil war.
Private Client and Specie
Private Client
Our team has over 25 years of
underwriting experience in the high net
worth market, specialising in tailoring
products to clients’ unique needs.
Fine Art and Specie
We offer broad flexible coverage on all
risks of physical loss or damage basis. We
have the ability to design bespoke policies
in niche market areas.
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Brit Limited Annual Report 2024
our underwriting
Direct Underwriting
Programmes and Facilities
Accident and Health
Personal Accident and Medical Expenses
We are a leading Lloyd’s market offering
a broad range of specialist products
in the Accident and Health market,
concentrating on adding value to our
clients and commercial partners. Our
dynamic underwriting team is renowned for its diligence
and responsiveness. We can structure bespoke coverage
to a client's specific needs, and we have a proven track
record of working with our clients to respond to complex
claims in a timely and efficient manner.
Contingency
A recognised lead market in Lloyd’s, we
are able to offer extensive knowledge
and significant capacity. We offer three
main products (event cancellation, non-
appearance, and film and prize indemnity)
and also offer specialist cover for diverse and esoteric risks.
Property Facilities
Commercial Property
Our long-established portfolio insures a
variety of commercial risks throughout
North America, including the Gulf and
Atlantic coast territories.
Homeowners
We offer coverage for primary,
secondary and vacant dwellings as well as
condominium unit owners in the USA. We
have the ability to include flood, earthquake
and landslide, separately or as a package.
Flood
We offer primary and excess flood
solutions for residential, condominium
and commercial risks throughout the
USA. Optional loss of rents and business
interruption cover is also available.
Property Facilities
Financial Property
Where a financial institution forecloses
on a property following loan default or
an investor purchases a portfolio of
properties, it can be covered under
a real estate owned policy. We also
offer mortgage impairment coverage, which protects a
financial institution’s owned and serviced loan portfolio
against physical loss or damage where no other
insurance exists and the loan is in default.
Transportation
Commercial transportation is the lifeblood
of industry and commerce across North
America and we understand what it takes to
help clients move their business forward.
We insure commercial Automobile Physical
Damage and Motor Truck Cargo across the USA and
Canada. We support all sizes of fleet through our network
of Lloyd’s brokers and coverholders.
Long Tail Facilities
Small North American Liability
We insure small and medium-sized (SMEs)
enterprises in North America for errors
and omissions liability through our
dedicated team. Smaller enterprises are
no less complex and we take the time to
write risks that enable a small business to continue on
their growth path.
Specialty
Marine
Cargo
Our experienced and respected team
provide Cargo insurance for goods on
land, sea, air and in storage in warehouses
worldwide as well as project cargo for
construction and pre-launch for satellites.
Marine Hull and War
An expert team providing market-leading
Hull insurance across the Lloyd’s platform.
Brit insures a range of blue-water, inland
and war risks and specialist operations on
a worldwide basis.
Marine and Energy Liability
We offer specialist Marine Liability cover
through the Marine IGA programme. Our
specialist Energy Liability portfolio focuses
on Upstream, Midstream and Onshore and
Offshore Renewables.
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Brit Limited Annual Report 2024
15
Direct Underwriting
Specialty
Energy
A highly technical class with an
experienced and well-respected team
offering coverage for all aspects of
Upstream and Midstream Energy
operations, including Renewables.
Specialist Liability
Our experienced team works with their
clients to provide liability coverage to
their specific market needs. Products
include Public and Products Liability,
Employers’ Liability and Environmental
Liability. Through our specialist MGA
partners, we also write Financial and Professional
Liability (Cyber and Technology) and Specialty (Excess
Casualty; General Liability).
Reinsurance Underwriting
Casualty Treaty
We have dedicated teams for North
America and International business
based in London, offering our clients a
considerable breadth of expertise. We
underwrite on a Worldwide basis and
are a recognised quoting market. We
are a lead market on approximately half of our business,
with capacity varying according to class and source of
risk. Retrocessional risks are also actively considered.
Property Treaty
Our teams of specialist underwriters in
both London and Bermuda operate
together to provide superior service
and tailored solutions to brokers and
clients utilising a blend of up-to-date
technical expertise, embedded modelling
capability and real-world market experience. Our client
base represents a significant and established cross-
section of carriers writing simple policies to complex
risks. Our London office is focused on catastrophe
excess of loss and risk excess of loss where significant
capacity can be offered. The portfolio has global scope,
focusing on US, Europe, Japan, and Australia. Our
Bermuda office writes US Property catastrophe
reinsurance.
We bring together the best talent and
tools to provide service excellence so
you can rely on us to support you in
winning and retaining business.
16
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Brit Limited Annual Report 2024
17
business review
2024 underwriting review
Overview
For the twelve months to 31 December 2024, Brit returned
a combined ratio (CoR) before discounting for continuing
operations of 85.9% (2023: 85.3%) and an insurance service
result after discounting of $674.8m (2023: $649.5m).
Insurance premium written increased by 0.7% to $3,779.5m
(2023: $3,753.5m), or by 0.5% at constant exchange rates.
This primarily reflected an overall increase in current year
insurance premium of $91.1m, reflecting our focus on strong
performing classes, partly offset by unfavourable prior year
premium development.
Market conditions
Strong market conditions have continued during 2024, but
with some rate reductions. Brit experienced an overall
risk adjusted rate decrease of 1.4% (2023: increase of
7.1%). Direct business premium rates decreased by 1.8%
(2023: increased by 5.3%), while reinsurance business
was unchanged (2023: increase of 12.1%). Brit continued
to achieve rate increases in Programmes and Facilities,
Specialty, Casualty Treaty and Property Treaty.
Rating increases/(decreases) since 2020 by portfolio are
as follows:
2020
%
2021
%
2022
%
2023
%
2024
%
Financial and
Professional Liability
11.9
39.8
30.8
(9.3)
(9.3)
Programmes and
Facilities
7.4
7.7
10.9
15.3
4.7
Property
13.7
8.4
7.6
17.5
(1.1)
Specialty
13.0
8.6
6.7
2.2
1.2
Ambridge Speciality
15.1
16.1
8.0
Ambridge Transactional
–
18.4
0.7
Direct portfolios
11.7
15.4
14.4
5.3
(1.8)
Casualty Treaty
5.1
6.3
3.5
1.1
(0.2)
Property Treaty
8.8
7.9
9.9
33.7
0.2
Ambridge Re
9.0
6.6
9.4
Reinsurance portfolios
8.5
7.8
7.1
12.1
–
Total
10.6
12.9
12.4
7.1
(1.4)
Note 1: The 2024 and 2023 reflect the underwriting class monitoring structure in place
during 2024. The 2022 and prior figures reflect the underwriting class monitoring structure
in place during those years.
The economic environment and the impact of inflation
Brit has carefully considered the impact of the higher levels
of inflation. Increased focus has been placed on ensuring
Brit’s pricing models adequately address current inflationary
trends. Feeding into these models is an enhanced framework
assessing the key drivers of claim settlement costs for each
class of business.
Our reserves are set on a best estimate basis together with
a risk adjustment. For 2024, this risk adjustment has been
set at the 78th percentile (2023: 77th percentile) on a net
basis. As part of the year-end reserving exercise, the impact
of inflation was considered in detail by the Actuarial team to
ensure that assumptions are consistent with our forward-
looking expectations for claims inflation. Various techniques
have been considered in line with guidance from Lloyd’s and
regulators.
2024 major loss activity
Worldwide natural disasters in 2024 resulted in economic losses
of around $320bn (2023: $268bn), above the five-year average
of $261bn, while insured losses were in the region $140bn
(2023: $106bn), above the five-year average of $106bn (Source:
Munich Re).
The year’s most costy events included Hurricane Helene
(24 to 29 September 2024, economic losses of $56bn, with
insured losses of $16bn) and Hurricane Milton (7 to 10 October
2024, economic losses of $38bn, with insured losses of $25bn).
There were also a significant number of regional weather events,
such as a Japanese earthquake/tsunami, Typhoon Yagi (Asia),
Chinese floods, US tornadoes and Spanish flash floods.
Brit’s undiscounted best estimate reserves established for major
natural catastrophe losses in 2024, net of amounts recoverable
from reinsurers, amounted to $166.1m (2023: $69.6m),
comprising Hurricane Helene ($72.7m) and Hurricane Milton
($93.4m). Brit does not have material exposure to other natural
catastrophe events which occurred during the year; while we
anticipate that some claims will emerge, we expect these to be
attritional in scale.
2024 also witnessed a number of uncorrelated large man-
made risk events, including the Baltimore Bridge collision, the
CrowdStrike IT systems outage, and the attack on MV Sounion.
2023 and prior major loss activity
Net reserves held for 2023 and prior major losses were
slightly reduced during the year, driven by reductions in net
estimates for the 2023 Hawaii wildfires and Hurricane Idalia,
following favourable claims experience.
Middle East conflict
We continue to monitor the evolving nature of the Middle East
conflict. Claims information and notifications continue to
be limited and we currently expect any losses arising to be
attritional in nature.
Russian invasion of Ukraine
During 2024, net loss estimates arising from the Russian
invasion of Ukraine decreased by $3.9m to $30.7m. The
movement is largely driven by a reduction in the estimate for
Casualty Treaty, following better than expected experience.
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Brit Limited Annual Report 2024
COVID-19
The Group continues to monitor its exposure to losses arising
from the COVID-19 pandemic. During 2024, there has been
a small reduction in overall net reserves held for COVID-19
related claims, as claims continue to close broadly in line with
expectations.
Supporting our customers
Our customers are our priority. When a customer has a
claim, we understand they are likely to be facing difficult and
unexpected challenges. We believe they expect the insurance
they have purchased to respond and deliver when they need it
most. We see each claim as an opportunity to deliver the claims
service our customers need to move forward with their lives.
The Brit claims team have maintained a focus on responding
to our customers fairly and timely. We do this by pursuing
opportunities to reduce claims lifecycle and bring claims to
a resolution at every opportunity, through utilising a high
level of technical expertise and supported appropriately and
proactively by innovation and technology:
• Claims response to natural catastrophes
Brit continues to lead the London Market in its use of geospatial
technology to advance property claims adjusting capabilities,
often after catastrophe events but also through normal
course claims response. During 2024, a number of our US
customers were impacted by Hurricane Helene and Hurricane
Milton. To support these customers in their time of need,
the Brit Claims team used our proprietary machine learning
algorithm in tandem with our access to ultra-high-resolution
aerial imagery to accelerate the accurate identification of
property damage. This enabled us to fast-track payments
to the impacted customers. We have received feedback that
the lifecycle of natural catastrophe impact to payment to our
customers compares favourably to the wider market
• Complex Marine claims management
The Brit Claims teams will often have to manage incredibly
complex claims in challenging jurisdictions. In 2024,
geopolitical tensions resulted in several incidents in the Red
Sea with respect to Marine War risks. Insured tankers were
attacked by militant organisations, leaving the vessels, their
crew and valuable cargo in peril. Responding with urgency
and through the assembly of a multi-disciplinary team of
experts, Brit was able to successfully secure the recovery
of the vessels, the safe evacuation of the crews, offload the
cargo and, in one instance, avoid a potentially catastrophic
pollution event. Brit continues to demonstrate its strong
leadership in managing very complex situations on behalf of
our insureds, whilst ensuring the cooperation of co-insurers
and protecting Brit’s reputation.
• Market recognition
The Private Client claims team at Brit has consistently been
recognised for its excellent claims service. In the High Point broker
survey for 2023, it ranked second with an 84% satisfaction
rate, and in 2024 it ranked fourth with an 83% satisfaction rate.
In both years, the team received positive comments for their
efficiency, understanding and helpfulness at all stages of the
process, with same-day authorisations for repairs and quick
payouts for high-value claims. The team provides a tailored
claims proposition, recognising the trust clients place in Brit to
underwrite their homes and treasured possessions. It aims to
treat each client as an individual, offering prompt responses with
out-of-hours support, direct access to specialist claims partners,
and innovative solutions to achieve the best customer outcomes.
Other underwriting developments
• Focus on underwriting capability development
Brit continues to make good progress with its investment
in digital and data-enabled capabilities. The launch in
2023 of Brit’s new strategic pricing and rating engine for
North America Open Market Property, which marked an
important step in our strategy to use technology to facilitate
greater underwriting capability, has resulted in faster
pricing calculations, improved data quality and consistency,
resulting in an improved customer experience.
In 2024, we successfully launched the Cargo Modern
Underwriting Platform and have continued to focus on the
expansion of our underwriting platform to include further
classes as well as exploring additional capabilities that will
benefit multiple classes.
• Launch of underwriting consortia
• BUILD: In January 2024 we launched the new market
leading Project Cargo Consortium, ‘BUILD’, which Brit
co-leads with RSA. The consortium, one of the largest in
the Cargo market globally, provides comprehensive global
Project Cargo coverage.
• Cyber First50: In March 2024, the Brit Cyber BCAP team
launched ‘Cyber First50’. The Brit led and managed Lloyd’s
Consortium expedites the Cyber placement process for
large institutional clients and meets their increasing need
to secure higher Cyber limits.
• 2025 business planning
Brit remains one of the largest managing agents in the
Lloyd’s market and recognises the value and strength that
the franchise brings.
Syndicate 2987’s capacity is planned to grow by c.2% over
the 2024 year of account. As in previous years, we continue
to actively manage the portfolios, growing where the market
is strongest and where we see the best opportunities to
deliver profit for our shareholders, and taking action on the
weaker segments of the portfolio.
Syndicate 2988’s capacity is planned to grow by c.11% over
the 2024 year of account. In 2024 the Syndicate explored
the potential to participate on risks where Syndicate 2987
wasn’t on the slip, largely through third-party led consortia
and facilities. This delivered a diverse mix of complementary
income to the Syndicate and, so, the intention is to grow this
in this area in 2025.
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Brit Limited Annual Report 2024
19
Syndicate 1618 has grown significantly since its launch in
2021. Expectations are for steady growth in 2025, reflecting
Ki’s underwriting discipline in competitive market conditions
and a continued focus on the combined ratio.
The 2025 planning process also considered the strategic
expansion of Brit Re, as discussed below, with the plan
reflecting growth across Property, Casualty and Specialty
reinsurance.
Brit’s non-catastrophe reinsurance renewals at 1 January
2025 have been successfully completed, achieved within
budget and with some improvements in coverage. The
stability of Brit’s reinsurance relationships has allowed it
to benefit from the specific dynamics of Brit’s experience,
rather than being impacted by broader market issues.
Brit’s main catastrophe protections run to 1 April and
discussions are currently underway on future coverage.
• Senior underwriting appointments
• Syndicate 2987: To allow Brit CUO Jon Sullivan more
time to focus strategically across all syndicates, John
King was appointed to Group Executive Underwriter and
Active Underwriter for 2987.
• Syndicate 2988: To support Simon Bird (Active
Underwriter for Syndicate 2988) in further developing
the success of the Syndicate, Jonathan Mudd became
the Deputy Active Underwriter for Syndicate 2988.
• Ki – additional follow capacity
From 1 January 2024 brokers have been able to access
third-party digital capacity, directly through the Ki platform,
made possible through multi-year partnerships with trusted
Lloyd’s syndicates. As a result, Ki has become the first
algorithmic underwriting business in the market to be able
to underwrite and bind follow capacity on behalf of multiple
syndicates across Property, Specialty and Casualty classes.
This is a transformational change for the Lloyd’s market, a
major step towards a fully digital follow market, and provides
a compelling proposition to Lloyd’s brokers and clients.
• Strategic expansion of Brit’s Bermuda presence
In June, Brit announced its intent to embark on a strategic
plan to significantly expand its presence in Bermuda
across Property, Casualty and Specialty reinsurance,
to complement our existing reinsurance underwriting
capabilities in London. Bermuda is a dynamic and thriving
multi-class (re)insurance market and building out Brit
Reinsurance (Bermuda) Limited (Brit Re) is a natural next
step for the Group.
To support our Bermudian growth ambitions, Brit Re has
been building out its local capabilities. We have also focused
on deepening Brit Re’s board’s experience and strengthening
its governance with the following senior appointments:
• Jacques Bonneau joined the Brit Re board in June 2024
as a non-executive director. Jacques retired as CEO and
President of PartnerRe in March 2024.
• Jonathan Stephenson was appointed as Head of Office,
Bermuda, in September and appointed to the Brit Re
board in October. Prior to joining Brit, Jonathan was a
Managing Director at Guy Carpenter, based in Toronto.
The development of Brit Re has been very favourably received
in the market, with Brit’s existing reputation in the global
reinsurance market and Brit Re’s balance sheet strength
offering a high quality option for clients and brokers.
• A.M. Best’s affirmation of Brit Re’s rating
In December 2024, AM Best affirmed its Brit Re Financial
Strength Rating of A (Excellent) and a Long-Term Issuer
Credit Rating of ‘a’ (Excellent). In affirming Brit Re’s rating,
AM Best assessed its balance sheet strength as ‘very
strong’ and noted this as being ‘supported by historically
profitable underwriting results’. We are pleased that
AM Best has affirmed its rating as we begin our strategy
to meaningfully grow Brit Re.
Other key business developments
Other key strategic developments during 2024 have included:
• Ki separation
Over the last four years, Ki has grown significantly and
evolved to become a digital follow platform offering
capacity from multiple syndicates with over $1 billion of
insurance premium written through the platform in 2024.
From 1 January 2025, Ki will operate as a separate
operation within the Brit Limited and Fairfax groups. Its
scale, sophistication and growth potential makes this a
natural next step, enabling both Brit and Ki to focus on
their core strengths in ‘lead’ and ‘follow’ respectively.
To support this Brit and Ki have successfully delivered
an initiative to establish fully independent support and
compliance functions for Ki. In addition to this, on 1 January
2025, Ki Syndicate 1618’s managing agency agreement
was novated from Brit Syndicates Limited (BSL) to Asta.
We believe this was the largest novation in Lloyd’s history.
From 1 January 2025, Brit Group Holdings Limited
became the new holding company for the Brit insurance
businesses. Brit Group Holdings Limited was incorporated
on 7 August 2024 and is a wholly owned direct subsidiary
of Brit Limited. Ki Financial Limited, also a direct subsidiary
of Brit Limited, remains the holding company for the
Ki insurance businesses.
• Digital, data and artificial intelligence (AI) strategy
We continue to advance our strategy to deliver a digital,
data and AI-driven platform that improves our underwriting
performance and capabilities. In H1 2024, we delivered the
foundational phase, a cloud-native modern data platform,
fully transitioning from our legacy data warehouse. This has
greatly improved the stability of our reporting foundation,
provides a scalable platform for future investments in data
and analytics and will help manage cloud computing costs in
the long-term.
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Brit Limited Annual Report 2024
The next phase of our strategy is being progressed,
focusing on leveraging acceleration brought by GenAI, large
language models, no code/low-code platforms and related
digital architecture. The strategy includes embedding
modern ways of working to enable strong partnership
across business functions to drive accelerated business
adoption. Furthermore, we continue to mature our cyber
security, privacy and ethics, and data quality as key enablers
of our technology and data strategies.
• Sutton sale completion
On 8 March 2024, the sale of Brit’s share of Sutton,
a Canadian managing general underwriter of a range of
specialised insurance products, to Amynta group, completed.
The sale proceeds for Brit’s 49% holding were $31.0m,
with a gain on sale of $15.2m. Sutton will continue to be
a strategic business partner of Brit.
• Senior Brit corporate appointments
• Brit Limited Board changes: On 1 January 2024, Ken
Miner, the OMERS representative on the Brit Limited
Board, resigned and was succeeded by Aviral Goel. On
8 January 2025, Mr Goel resigned from the Brit Limited
board following the purchase in December 2024 by
Fairfax of OMERS’ shareholding in Brit.
• Brit Syndicates Limited board changes: On 15 April
2024, Hayley Robinson was appointed a non-executive
director of Brit Syndicates Limited. Hayley has non-
executive and senior executive experience spanning
30 years at Zurich, RSA and Aviva. Pinar Yetgin resigned
as a director on 31 August 2024.
• Chief Technology & Transformation Officer: Bilge Mert,
formerly Chief Technology Officer, moved to a new
position of Chief Technology & Transformation Officer,
taking responsibility for our transformation roadmap
and delivery, and supporting our underwriting vision and
simplification strategy.
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Brit Limited Annual Report 2024
Overall performance
Return on net tangible assets (RoNTA)
23.3%
(20.1)%
19.4%
12.6%
51.9%
23.3%
2020
2021
2022
2023
2024
-20
-10
0
10
20
30
40
50
RoNTA shows the return generated by our operations
for the owners of Brit Limited before foreign exchange
movements, compared to the adjusted net tangible
assets deployed in our business attributable to our
owners. The impact of the group’s defined benefit
pension schemes is excluded from both the return and
the assets in the calculation.
In 2024, our RoNTA in respect of continuing and
discontinued operations combined was 23.3%, reflecting
a positive underwriting result and a positive return on
invested assets.
This return resulted in a five-year average RoNTA
of 17.4%.
RoNTA in respect of continuing operations for 2024 was
23.5% (2023: 41.7%).
financial performance review
Key Performance Indicators
At Brit we monitor and measure our performance by
reference to certain key performance indicators (KPIs).
These KPIs are used by us to manage our business and allow
us to see, at a glance, how we are performing.
Our five KPIs show the returns that we are generating, the
performance of our underwriting activities, our risk adjusted
rate change, our investment portfolio, and our financial
strength. The development of our KPIs over the five years (set
out below) reflects our focus on underwriting performance
and improving underwriting market conditions, together with
the challenges presented by the increased frequency and
severity of catastrophe events, COVID-19, and the increase in
investment market volatility.
A reconciliation of each KPI to the amounts presented in
the financial statements, where relevant, is included in the
‘key performance indicators and alternative performance
measures’ section of the Annual Report starting on page 190
and definitions of each of our KPIs are included in the Glossary
starting on page 196.
The figures for 2022 to 2024 are reported on an IFRS 17
(‘Insurance Contracts’) basis, while the figures for 2020 and
2021 are as previously reported under IFRS 4 (‘Insurance
Contracts’).
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Brit Limited Annual Report 2024
23
Underwriting
Combined ratio (undiscounted basis)
85.9%
112.7%
95.7%
96.2%
85.3%
85.9%
2020
2021
2022
2023
2024
0
20
40
60
80
100
120
The combined ratio on an undiscounted basis in respect
of continuing business is our key underwriting metric and
measures the profitability of our underwriting. It shows
how much of every $1 of premium is spent in the total
costs of sourcing and underwriting the business and
settling claims. A combined ratio under 100% indicates
underwriting profitability.
Our undiscounted combined ratio in 2024 was 85.9%
(2023: 85.3%). Over the past three years, on an IFRS 17
basis we have delivered an average undiscounted
combined ratio of 89.1%.
Underwriting
Risk adjusted rate change
(1.4)%
10.6%
12.9%
12.4%
7.1%
(1.4)%
2020
2021
2022
2023
2024
0
2
4
6
8
10
12
The risk adjusted rate change (RARC) shows whether
premium rates are increasing, reflecting a hardening
market, or decreasing, reflecting a softening market.
A hardening market is one indicator of increasing
profitability. The data reflects internal estimates by
Brit’s underwriters, based on available year-on-year
underlying renewal data after allowing for changes to
terms and conditions. Generally, no adjustment is made
to the figures to reflect the impact of inflation beyond
the level of inflation in the underlying exposure measure
used in pricing.
In 2024, we experienced a compound RARC of -1.4% in
2024 (2023: +7.1%).
Investment management
Investment return
5.0%
1.0%
3.3%
(2.3)%
6.2%
5.0%
2020
2021
2022
2023
2024
-3
-2
-1
0
1
2
3
4
5
6
We assess the performance of our investment portfolio
by comparing the return generated by our invested
assets, net of external investment related expenses,
against the average value of those invested assets.
Our investment strategy takes a long-term view of
markets, which can lead to significant variations in our
year-on-year return figures. Over the past five years, we
have delivered an average investment return of 2.6% per
annum.
Capital management
Capital ratio
153.0%
122.1%
139.1%
139.9%
154.5%
153.0%
2020
2021
2022
2023
2024
0
20
40
60
80
100
120
140
160
The capital ratio measures our financial strength
position by comparing our available capital resources
to the capital we need to hold to meet our management
entity capital requirements.
Our financial position remains strong. At 31 December
2024, Group capital resources totalled $2,853.3m
(2023: $2,977.9m) giving surplus management capital of
$987.9m (2023: $1,050.5m), or 153.0% (2023: 154.5%)
over our Group management capital requirement.
During the period, our capital requirements decreased
from $1,927.4m to $1,865.4m, primarily resulting from
our 2025 underwriting plans.
strategic report
24
Brit Limited Annual Report 2024
Overview of Results
The Group’s income statement, re-presented to show the key components of our result, is set out below:
2024
$m
2023
$m
Insurance premium written1
3,779.5
3,753.5
Insurance revenue
3,465.5
3,517.1
Insurance service result
674.8
649.5
Net finance expense from insurance and reinsurance contracts
(207.3)
(225.8)
Other income, continuing operations
89.1
65.6
Other expenses, continuing operations
(192.4)
(126.9)
Losses on other financial liabilities
(4.6)
(20.8)
Return on invested assets, net of fees
347.7
393.8
Finance costs
(14.6)
(17.8)
Finance income
–
2.7
Profit on ordinary activities before tax and FX
692.7
720.3
FX movements
(31.7)
(96.4)
Profit on ordinary activities before tax
661.0
623.9
Tax (expense)/credit
(84.8)
5.3
Profit on ordinary activities after tax and FX
576.2
629.2
(Loss)/profit from discontinued operation, net of tax
(3.1)
266.2
Profit for the year
573.1
895.4
Note 1: ‘Insurance premium written’ is explained in the ‘insurance revenue’ section below, and is the equivalent to gross written premium as previously disclosed under IFRS 4.
Group performance
Our 2024 result reflected both strong underwriting and investment results. The underwriting result reflected an increase in
net insurance revenue, a decrease in net insurance claims (including an improved attritional performance, higher prior year
reserve releases and increased major loss activity), partly offset by increased commission costs and expenses.
The result on continuing ordinary activities for 2024 before tax was a profit of $661.0m (2023: $623.9m) and after tax was
a profit of $576.2m (2023: $629.2m).
Our overall profit for the year after tax was $573.1m (2023: $895.4m). This included a loss arising from our discontinued
operation, net of tax, of $3.1m (2023: $266.2m, including the gain from the sale of Ambridge of $259.1m).
Return on adjusted net tangible assets (RoNTA) for all operations, excluding the effects of FX, was 23.3% (2023: 51.9%). RoNTA
for continuing operations, after excluding FX movements, was 23.5% (2023: 41.7%).
Performance measures
In addition to our KPIs, we have other measures that offer further insight into the detail of our performance. These measures
include:
• Revenue related: Insurance premium written;
• Claims related: Claims ratio; and
• Underwriting expense related: Expense ratio.
A reconciliation of each performance measure to the amounts presented in the financial statements is included in the Annual
Report starting on page 190 and a definition of each measure is included in the Glossary starting on page 196.
The performance measures set out below are for continuing business, unless otherwise stated.
financial performance review
strategic report
Brit Limited Annual Report 2024
25
Underwriting
Insurance service result
2024
$m
2023
$m
Insurance premium written
3,779.5
3,753.5
Insurance revenue
3,465.5
3,517.1
Allocation of reinsurance premiums
(693.7)
(785.9)
Net insurance revenue [a]
2,771.8
2,731.2
Insurance claims and claims-related expenses
(1,803.8)
(1,850.1)
Amounts recoverable from reinsurers
482.0
512.6
Net insurance claims [b]
(1,321.8)
(1,337.5)
Acquisition expenses
(664.8)
(638.7)
Other directly attributable expenses
(110.4)
(105.5)
Insurance-related expenses [c]
(775.2)
(744.2)
Insurance service result [a] + [b] + [c]
674.8
649.5
Undiscounted combined ratio
85.9%
85.3%
Discounted combined ratio
75.7%
76.2%
Overall, we delivered a discounted combined ratio of 75.7% (2023: 76.2%) and an insurance service result of $674.8m (2023:
$649.5m), an increase of 3.9%. We have also delivered an undiscounted combined ratio of 85.9% (2023: 85.3%). This result
demonstrates strong underlying underwriting performance despite a more challenging operating environment.
(i) Insurance premiums written
Brit uses insurance premium written, which is equivalent to gross written premium as previously reported under IFRS 4, to
measure and monitor levels of incoming business. An analysis of insurance premium written by portfolio is given on page 12,
and a reconciliation of insurance premium written to insurance revenue is set out on page 193.
Insurance premiums written increased by 0.7% to $3,779.5m (2023: $3,753.5m). The moderate increase was led by current
year premium growth in our core syndicate, Syndicate 2987, driven by strong growth in Property and Speciality, in particular
Property Open Market. This was partly offset by reductions in Syndicate 2988 and Ki, reflecting Brit’s reduced share of 2988
as well as more competitive market dynamics as we observed more challenging pricing conditions across areas of the portfolio.
While pricing remained strong in 2024, we experienced an overall risk-adjusted rate change of -1.4% (2023: +7.1%). Rate
increases were primarily seen in Programmes and Facilities, Specialty and Casualty Treaty, while reductions were primarily
seen in Financial and Professional, where the market has been highly competitive. Overall, we remain focused on maintaining
strict underwriting discipline and retaining core profitable accounts. Market conditions are discussed on page 17.
(ii) Net insurance revenue
Net insurance revenue, which comprises insurance revenue less an allocation of reinsurance premiums, increased by 1.5% to
$2,771.8m (2023: $2,731.2m). A reduction in total insurance revenue was offset by a reduction in reinsurance premiums, as
set out below.
Insurance revenue
Insurance revenue decreased by 1.5% to $3,465.5m (2023: $3,517.1m) during 2024. This was driven by a reduction in Brit’s level
of participation in Syndicate 2988 for the 2024 Year of Account as well as impacts from the decision to close the Sussex speciality
and diversified funds. A further breakdown of insurance revenue is given in Note 6 to the financial statements.
Insurance revenue comprises gross premiums earned less inwards reinstatement premiums, profit commissions and
non-distinct investment components, and is net of assuming ceding commissions earned on inwards reinsurance.
strategic report
26
Brit Limited Annual Report 2024
financial performance review
Allocation of reinsurance premiums
The allocation of reinsurance premiums decreased by 11.7% to $693.7m (2023: $785.9m). This reflects Brit’s ongoing strategy
to optimise the outwards programme to cede less profitable business, resulting in a reduction of both proportional reinsurance
treaties and excess of loss contracts.
The allocation of reinsurance premiums comprises ceded premiums earned less outwards reinstatement premiums, profit
commissions and non-distinct investment components, and is net of outwards ceding commissions.
(iii) Net insurance claims
Net insurance claims, which comprises claims and claims-related expenses net of amounts recoverable from reinsurers,
decreased by 1.2% to $1,321.8m (2023: $1,337.5m).
Claims
Our claims ratio improved by 1.3pps to 47.7% (2023: 49.0%) on a discounted basis, which reflects:
• An improved attritional claims experience, largely due to favourable claims experience in our Programme and Facilities
portfolios, partially offset by unfavourable experience within areas of Property, Speciality and Cyber. Our attritional claims
were also impacted by a number of risk events in 2024, including the Baltimore Bridge collision and the CrowdStrike IT
outage.
• Higher major loss experience, driven by loss estimates arising from Hurricane Helene and Milton. A breakdown is provided in
the table below.
• Favourable prior year development of $123.0m in 2024 (2023: $16.3m), after the impact of discounting, consisting of
$65.0m in best estimate releases and $58.0m of risk adjustment releases. The 2024 figure includes releases within
Programmes and Facilities, Specialty, Cyber, Terrorism, Property Treaty Cat North America and Casualty Treaty Short-Tail
Risk, partly offset by adverse development in Property UK, Healthcare Liability, Professional Indemnity US, Property Treaty
Risk North America and by Casualty Long-Tail Risk. The 2023 figure includes releases across Financial and Professional
Liability, Property Treaty, Programmes and Facilities, and Specialty.
Brit’s undiscounted best estimate reserves for major losses, net of amounts recoverable from reinsurers but before
reinstatement premiums, totalled $166.1m (2023: $69.6m). The events to which Brit had material exposure were as follows:
Event
2024
$m
2023
$m
Hurricane Helene
72.7
–
Hurricane Milton
93.4
–
Hawaiian wildfires
–
51.7
Hurricane Idalia
–
17.9
Total
166.1
69.6
We continue to reserve conservatively and have increased our reserves to the 78th percentile (2023: 77th percentile),
resulting in a net risk adjustment above the best estimate of $227.7m (2023: $193.5m).
(iv) Insurance-related expenses
Insurance-related expenses, which comprises acquisition expenses and other directly attributable expenses, increased by
4.2% to $775.2m (2023: $744.2m).
Acquisition expenses increased by 4.1% to $664.8m (2023: $638.7m). This consists of direct commission costs (2024:
$505.3m; 2023: $498.7m) and an allocation of the expense base which are deemed directly related to the acquisition of
insurance contracts. The increase in the acquisition expense is largely driven by an increase in non-commission acquisition
expenses relating to increased headcount.
Other attributable expenses increased by 4.6% to $110.4m (2023: $105.5m), driven by an overall increase in the Group
expense base, partly offset by updated cost allocations following our annual review.
strategic report
Brit Limited Annual Report 2024
27
The Group expense base is discussed below.
Net finance (expense)/income from insurance and reinsurance contracts
The analysis between the unwind of discounting and the impact of changes in interest rates is as follows:
2024
$m
2023
$m
Insurance
contracts
issued
Reinsurance
contracts
held
Total
Insurance
contracts
issued
Reinsurance
contracts
held
Total
Unwind of discount
(320.1)
90.2
(229.9)
(293.7)
97.3
(196.4)
Impact of changes in interest rates
48.5
(25.9)
22.6
(29.0)
(0.4)
(29.4)
(271.6)
64.3
(207.3)
(322.7)
96.9
(225.8)
The net interest accretion expense increased by 17.1% to $229.9m (2023: $196.4m). This was predominantly driven by the
increase in net insurance liabilities over the period as well as an additional cohort of business being measured under the
general measurement model.
In 2024, the moderate increase in interest rates between 2023 and 2024 resulted in a favourable $22.6m impact from changes
in discount rate assumptions, while in 2023 the reduction in rates between 2022 and 2023 resulted in an unfavourable $29.4m
expense.
Group operating expenses
Operating expenses were classified as follows:
2024
$m
2023
$m
Insurance service expenses excluding claims and commissions
(269.9)
(245.5)
Other operating expenses
(192.4)
(126.9)
Operating expenses – continuing operations
(462.3)
(372.4)
Expenses – discontinued operations
–
(9.1)
Total operating expenses
(462.3)
(381.5)
Total expenses for continuing operations during 2024 increased by 21.2% to $462.3m (2023: $372.4m). The main contributors
to this increase were headcount and legal and professional fees, partly offset by a reduction in regulatory levies and charges.
These increases also include the costs resulting from the work to enable Ki to operate as a standalone operation from 2025.
At 31 December 2024, Group headcount was 1,104 (2023: 911 in respect of continuing operations). The increase was primarily due
to the growth of Ki, targeted underwriting expansion in favourable market conditions and the related growth of support functions.
A further breakdown of expenses is given in Note 13 to the financial statements.
Other income
Other income totalled $89.1m (2023: $82.4m), as set out below:
Other income
2024
$m
2023
$m
Fee and commission income – continuing operations
23.3
21.3
Change in value of ultimate parent company shares
65.8
44.3
Total other income – continuing operations
89.1
65.6
Fee and commission income – discontinued operations
–
16.8
Total other income
89.1
82.4
Fees and commissions generated by the Group’s underwriting management activities in respect of continuing operations
increased in 2024 by 9.4% to $23.3m (2023: $21.3m). The increase primarily reflects increased commissions from
intermediary activities and increased fees and commission from our non-aligned syndicate.
Fees and commissions generated by the Group’s discontinued operations in 2024 was $nil (2023: $16.8m), following the sale
of Ambridge in May 2023.
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28
Brit Limited Annual Report 2024
financial performance review
Losses on other financial liabilities
The statement of financial position of the Group includes liabilities representing third party investors’ share in structured
undertakings consolidated by the Group, namely Sussex Capital. Changes in the value of these liabilities during the year are
recorded in the Group’s consolidated income statement as ‘losses on other financial liabilities’.
In 2024, the income statement impact was a loss of $4.6m (2023: $20.8m), which represents the underwriting result in Brit’s
consolidated income statement attributable to third party capital providers.
Return on invested assets
The investment portfolio is managed, for the most part, by Hamblin Watsa Investment Counsel Limited, a Fairfax subsidiary with
an excellent long-term track record, whose sole business is managing investment portfolios of Fairfax group companies. They
are supported by a number of external managers covering core fixed income and specialised credit mandates.
The return on our invested assets was a positive $347.7m or 5.0% (2023: $394.4m or 6.2)%). This result is analysed below:
Investment return
2024
$m
2023
$m
Income
284.3
234.4
Realised gains/(losses)
91.6
(80.2)
Unrealised (losses)/gains
(19.9)
265.4
Investment return before fees
356.0
419.6
Investment management fees
(17.1)
(19.6)
Investment return, net of fees
338.9
400.0
Investment related derivative return
(6.4)
(7.2)
Share of net profit of associates
–
1.6
Profit on disposal of associates
15.2
–
Total return
347.7
394.4
Total return
5.0%
6.2%
Of the investment return, $nil (2023: $0.6m) related to discontinued operations.
Equity markets performed positively over the year, as economic data remained resilient, inflation reduced, and the Federal
Reserve Bank reduced rates by 100 basis points. Our equity portfolio generated a positive return of $74.8m (2023: $59.1m),
benefiting from a value focused approach. Our return on fund investments was a positive $85.6m (2023: $72.2m).
The fixed income portfolio generated a return of $134.5m (2023: $232.6m), driven by income and capital gains, while
mortgages and loans generated $8.3m (2023: $6.7m). The US Government Bond yield curve fell up to 113 basis points at tenors
under two years and rose up to 75 basis points at tenors over two years, as the Federal Reserve Bank added two 25 basis
point rate reductions in the fourth quarter of 2024 to its 50 basis point reduction in September, and as the US Presidential
election concluded. Over 2024, the two-year yield was relatively unchanged at 4.24% (2023: 4.25%), the five-year yield rose
from 3.85% to 4.38% and the ten-year yield rose from 3.88% to 4.57%. Investment grade spreads narrowed in the US from
0.77% to 0.60% and in Europe narrowed from 1.28% to 0.92%, while high yield spreads in the US narrowed from 3.23% to
2.87% and in Europe narrowed from 3.83% to 3.08%.
Cash and cash equivalents generated interest of $52.8m (2023: $46.9m). Our approach to cash management during the year
has, and continues to be, to limit the amount of operational cash and to maximise amounts held within short-term government
bills, stepping into the higher yields.
The amount attributable to trade and other receivables was $nil (2023: $2.1m).
At 31 December 2024, the running yield (expressed as yield as a percentage of invested assets) of our total portfolio was 4.0%
(2023 4.0%).
During 2024, the Group had no associated undertakings, following the reclassification on 17 November 2023 of Sutton Special
Risk Inc. to an asset held for sale. Return on associated undertakings in 2023 was $1.6m. Sutton was disposed of on 8 March
2024, resulting in a profit on disposal of associates of $15.2m.
strategic report
Brit Limited Annual Report 2024
29
Foreign exchange
As explained on page 33, we manage our currency exposures to mitigate the impact on solvency rather than to achieve a short-
term impact on earnings. We experienced a foreign exchange loss of $31.7m in 2024 (2023: loss of $97.4m), reflecting the
movement of the US dollar against other currencies in which we trade and hold assets, and the impact of FX related derivatives
purchased by the Group.
The allocation of the FX result within the Consolidated Income Statement is as follows:
Foreign exchange (losses)/gains
2024
$m
2023
$m
Net foreign exchange (losses) – continuing operations
(54.6)
(94.2)
Net foreign exchange (losses) – discontinued operations
–
(1.0)
Gains/(losses) on derivative contracts – FX related instruments
22.9
(2.2)
(31.7)
(97.4)
Finance costs and finance income
Finance costs totalled $14.6m (2023: $17.8m) and represented cost of the revolving credit facility and other bank borrowings,
the cost of the subordinated debt and interest payable on lease liabilities.
Finance income was $nil (2023: $2.7m, representing the gain of repurchasing £8.0m of subordinated debt).
Tax
Our tax on ordinary activities for 2024 resulted in a tax charge of $84.8m (2023: tax credit of $5.3m), based on a Group profit
on ordinary activities before tax of $661.0m (2023: profit before tax of $623.9m). In 2024, there was no tax arising from
discontinued operations (2023: charge of $0.5m).
This charge of $84.8m comprised current tax charge of $13.3m and a deferred tax charge of $71.5m.
The Group is liable to taxes on its corporate income in a number of jurisdictions where its companies carry on business, most
notably the UK and the US. Corporate profits and losses in Bermuda are exempt from tax. The tax charge is calculated in each
legal entity across the Group and then consolidated. Therefore, the Group effective rate is sensitive to the location of taxable
profits and is a composite tax rate reflecting the mix of tax rates in those jurisdictions.
The 2024 Group rate varies from the weighted average rate in those jurisdictions due to a number of factors. The principal
factors are the impact of the increase in unrecognised deferred tax losses and prior year adjustments offset by the rate
change from 35% to 25% arising on the pension authorised surplus repayment and the profit arising on the disposal of Sutton
subsidiaries which is not subject to tax. The rate is further influenced by the impact of exempt income such as dividend income,
disallowable expenses and by non-UK taxes arising in our Lloyd’s syndicates.
Results from discontinued operation
On 10 May 2023, the Group completed the sale of the Ambridge group to the Amynta group. Ambridge was presented as a
disposal group held for sale in the 2022 financial statements of the Group and the results of the Ambridge business were
reported as a discontinued operation in 2023.
Loss from discontinued operation, net of tax, in 2024 totalled $3.1m (2023: profit of $266.2m), relating to an adjustment to
the Ambridge sale proceeds under the terms of the Securities Purchase Agreement. The 2023 figure includes $259.1m which
represents the gain on sale of the Ambridge group, net of tax.
30
strategic report
Brit Limited Annual Report 2024
31
financial position and capital strength
Financial position
At 31 December 2024, our adjusted net tangible assets
totalled $2,394.3m (2023: $2,516.0m).
Summary consolidated statement of financial position
2024
$m
2023
$m
Assets
Intangible assets
138.8
122.7
Reinsurance contract assets
1,873.4
1,942.8
Insurance and other receivables
743.4
923.6
Financial investments, investments in
associated undertakings and cash
7,211.2
6,729.2
Assets classified as held for sale
–
15.8
Investment related derivatives
7.0
6.8
FX related derivatives
8.6
13.4
Other assets
67.7
73.2
Total assets
10,050.1
9,827.5
Liabilities
Insurance contract liabilities
6,336.9
5,869.7
Deferred tax on intangible assets
22.3
21.5
Borrowings
159.0
161.9
Investment related derivatives
7.6
7.0
FX related derivatives
6.2
16.7
Insurance and other payables
372.5
539.3
Other liabilities
102.2
127.9
Total liabilities
7,006.7
6,744.0
Net assets
3,043.4
3,083.5
Adjusted net tangible assets (Note 1)
2,394.3
2,516.0
Note 1: A reconciliation of adjusted net tangible assets to the amounts presented in the
financial statements is included in the Annual Report on page 191.
Of our net assets of $3,043.4m at 31 December 2024 (2023:
$2,617.2m), $2,510.8m (2023: $2,617.2m) were attributable
to the owners of Brit Limited, while $532.6m (2023: $466.3m)
were attributable to non-controlling interests.
On 17 November 2023, the sale of Sutton the Amynta group
was agreed. The transaction closed on 8 March 2024. At
31 December 2023, Sutton was classified as an asset held
for sale.
In addition to the result recognised through the consolidated
income statement, the other movements in our net assets as
recognised in the Consolidated Statement of Comprehensive
Income and the Consolidated Statement of Changes in Equity
included defined benefit pension scheme related gains and
charges (2024: $5.1m net loss; 2023: $15.3m net loss);
changes in unrealised foreign currency translation gains on
foreign operations (2024: $2.7m net loss; 2023: $7.1m net
gain); dividends paid (2024: $605.4m; 2023: $413.6m).
At 31 December 2024, no assets (2023: $15.8m) or liabilities
(2023: $nil) were classified as held for sale. In 2023, these
related to Sutton and are further explained in Notes 17 to the
financial statements.
Capital strength
Our financial position remains strong, with our capital surplus
decreasing by $63.0m in the year. At 31 December 2024, Group
capital resources totalled $2,853.3m (2023: $2,977.9m), giving
surplus management capital of $987.5m (2023: $1,050.5m),
or 53.0% (2023: 54.5%) over our Group management capital
requirement of $1,865.4m (2023: $1,927.4m).
Dividends
During 2024, dividends totalling of $605.4m (2023: $413.6m)
were paid. Of this, $33.3m (2023: $40.6m) was paid to
class A shareholders in accordance with the Brit Limited
shareholders’ agreement, and $572.1m (2023: $373.0m) was
paid to the class B shareholders.
Reserving policy
Preserving a strong financial position is critical to the long-
term success of an insurance business. The Group maintains
appropriate loss reserves to cover its estimated future
liabilities. Reserves are estimates that involve actuarial and
statistical projections of the expected cost of the ultimate
settlement and administration of claims. The reserving
process is robust and managed by the Chief Risk Officer
and Chief Actuary and under the oversight of the Reserving
Committee. Reserving estimates are prepared quarterly
and are based on facts and circumstances then known,
predictions of future developments, estimates of future
trends in claims frequency and severity and other variable
factors such as inflation. Movement in these reserves forms
an integral element of our operating result.
Maintaining reserves is critical to safeguard future
obligations to policyholders and our approach provides a
secure foundation. It also provides a secure foundation for
the pricing of new business which is particularly critical in
a soft rating environment.
Our reserving policy is to reserve to a best estimate and
carry an explicit risk adjustment, as required under IFRS 17
(Insurance Contracts) above that best estimate. Under the
requirements of IFRS 17, we also apply discounting to our
reserves.
strategic report
32
Brit Limited Annual Report 2024
Asset allocation
Brit’s invested assets (financial investments, investments in associates, cash and cash equivalents and investment derivative
contracts) at 31 December 2024 were $7,210.6m (2023: $6,744.8m).
Our asset allocation, on both a look-through basis and statutory disclosure basis, is set out in the tables below. The look-though
basis sets out the underlying instruments held within our debt securities portfolio and within our specialised investment funds.
Statutory basis
31 December 2024
Equity
securities
$m
Debt
securities
$m
Loan
instruments
$m
Specialised
investment
funds
$m
Cash
and cash
equivalents
$m
Associated
undertakings
$m
Investment
Derivatives
(net)
$m
Assets held
for sale
$m
Total
invested
assets
(look-
through)
$m
Look-through basis
Government debt securities
–
3,230.5
–
60.5
–
–
–
–
3,291.0
Corporate debt securities
–
1,911.4
–
45.3
–
–
–
–
1,956.7
Structured products
–
–
27.8
–
–
–
–
27.8
Loan instruments
–
–
83.0
13.7
–
–
–
–
96.7
Equity securities
620.3
–
–
464.0
–
–
–
–
1,084.3
Cash and cash equivalents
–
–
–
1.5
750.4
–
–
–
751.9
Investment related derivatives
–
–
–
2.8
–
–
(0.6)
–
2.2
Total invested assets (statutory)
620.3
5,141.9
83.0
615.6
750.4
–
(0.6)
–
7,210.6
31 December 2023
Look-through basis
Government debt securities
–
3,199.2
–
20.7
–
–
–
–
3,219.9
Corporate debt securities
–
1,605.2
–
8.7
–
–
–
–
1,613.9
Structured products
–
–
–
23.2
–
–
–
–
23.2
Loan instruments
–
–
82.2
12.7
–
–
–
–
94.9
Equity securities
509.2
–
–
417.4
–
–
–
15.8
942.4
Cash and cash equivalents
–
–
–
1.5
853.8
–
–
–
855.3
Investment related derivatives
–
–
–
(4.6)
–
–
(0.2)
–
(4.8)
Total invested assets (statutory)
509.2
4,804.4
82.2
479.6
853.8
–
(0.2)
15.8
6,744.8
The assets remain primarily invested in cash and fixed income securities (2024: $6,096.3m or 84.5% of the portfolio; 2023:
$5,784.0m or 85.8%). The fixed income portfolio is short dated, with a majority allocation to government bills. Corporate bonds
and other loan instruments represent 28.5% (2023: 25.3%) of the total portfolio with 2.2pps (2023: 1.4pps) of this figure being
below investment grade.
The allocation to credit increased marginally over the year. The allocation to credit risk, is primarily defensive, focused on high
quality, investment grade non-cyclical companies. Equity allocations are invested in a portfolio of both listed and private (non-
listed) equities and funds.
The exposure to equities, funds and structured products has increased over 2024 (2024: $1,112.1m or 15.4% of the portfolio;
2023: $965.6m or 14.3% of the portfolio), driven by market movements.
At 31 December 2024, the duration of our assets was broadly neutral compared to the duration of our liabilities.
financial position and capital strength
strategic report
Brit Limited Annual Report 2024
33
At 31 December 2024, 79.8% of our invested assets were
investment grade quality (2023: 82.3%). An analysis of the
credit quality of our invested assets is set out below:
Invested assets by rating
2024
%
2023
%
AAA
50.8
53.7
AA
2.2
5.4
A
16.9
13.5
BBB and below
7.6
8.9
P-1 and P-2
2.3
0.8
Other
20.2
17.7
Total
100.0
100.0
Other includes equities, funds and investment related derivatives
Gearing
At 31 December 2024, our gearing ratio was 6.9% (2023: 7.1%).
Brit has in place a $550.0m (2023: $550.0m) revolving credit
facility (RCF), the expiration date of which is 31 December
2027. Under our capital policy we have identified a maximum
of $300.0m (2023: $300.0m) of this facility to form part of
our capital resources, with the balance available for liquidity
funding.
At 31 December 2024, the cash drawings on the facility were
$nil (2023: $nil), with no letters of credit (LoCs) in place
(2023: $10.0m uncollateralised). At the date of this report,
these borrowings were unchanged.
At 31 December 2024, Ki Financial Ltd, together with Sussex
Re and Ki Member Ltd, has a $230.0m LoC facility (2023:
$180.0m) to provide a proportion of the Funds at Lloyd’s for
Ki Syndicate 1618 through a segregated account of Sussex
Re. The facility was $150.0m utilised at 31 December 2024
and collateralised by $63.0m (2023: $150.0m utilised/$63.0m
collateralised).
In addition, we have in issue £127.0m of 3.6757% subordinated
debt with a carrying value of £127.0m/$159.0m (2023:
£135.0m/$161.9m). This instrument, which is listed on the
London Stock Exchange, was issued in December 2005,
matures on 9 December 2030.
Foreign exchange management
At 31 December 2024, our US-dollar denominated net assets
equated to 100.1% of our total net assets (2023: 95.1%),
reflecting the currency denomination of the majority of the
business we write. Our net assets, analysed by currency, are
as follows:
Net assets/(liabilities) by currency
2024
%
2023
%
US dollar
100.1
95.1
Sterling
(1.9)
(0.3)
Canadian dollar
(0.2)
2.3
Euro
(1.3)
0.3
Australian dollar
3.3
2.6
Total
100.0
100.0
The reporting currency for the Group’s consolidated Financial
Statements is US dollars, as are the functional and reporting
currencies of a number of our subsidiaries, including all of
our underwriting subsidiaries. A portion of our revenues
and expenses, and assets and liabilities, are denominated
in currencies other than US dollars, hence we are exposed
to fluctuations in the values of those currencies against the
US dollar. These fluctuations impact our reported operating
results and our assets and liabilities.
Our strategic approach to managing FX risk is to match the
currencies of our liabilities and capital requirements with the
assets we hold. As a consequence of this, because we report
our results in US dollars, we import some exchange rate
volatility into the income statement through the revaluation of
our net tangible assets. The Group’s net tangible assets are,
however, largely matched against our capital requirement,
protecting our shareholders against the risk of additional
capital being required as a result of FX volatility. Any excess
is held in US dollars.
strategic report
34
Brit Limited Annual Report 2024
Risk Management Framework
Brit delivers shareholder value by actively seeking and
accepting risk within agreed limits. Risk management at Brit is
a continuous process that links directly to the organisation’s
business and risk management strategies and the associated
Board risk tolerances.
Brit’s Risk Management Framework (RMF) applies a consistent
methodology and structure to how risks are identified,
measured, managed and monitored. This process enables us
to protect policyholders and maximise shareholder value by
ensuring the risk and capital implications of business strategy
are well understood.
The RMF has the following key elements:
• Identification: Risk events, risks and relevant controls are
identified and classified. This is a continuous process which
considers any emerging and existing risks. The risk register
sets out the significant risks faced by the business and
identifies the potential impact and likelihood of each risk.
• Measurement: Risks are assessed and quantified
and controls are evaluated. This is done through a
combination of stochastic modelling techniques, stress and
scenario analysis, reverse stress testing and qualitative
assessment using relevant internal and external data.
• Management: The information resulting from risk
identification and measurement is used to improve how the
business is managed.
A key part of the RMF is the setting of risk tolerances and risk
appetite. Risk tolerances are set by the relevant Board and
represent the maximum amount of risk Brit is willing to accept
to meet its strategic objectives. Risk appetites are set by
management and reflect the maximum amount of risk that Brit
wishes to take in the current market environment. The actual
amount of risk taken is monitored against the tolerances and
appetites on an ongoing basis.
The RMF, including the risk tolerances and appetite, reflects
Brit’s strategy and seeks to ensure that risk is accepted in
the areas which are expected to maximise shareholder value
whilst continuing to protect policyholders against extreme
events. The process applies to both the Brit Group and to the
individual underwriting entities.
Strategy
Business strategy
Risk tolerances and appetites
Risk Management Framework
Planning and Capital Processes
Identification
Business plan
Measurement
Economic capital requirements
Management
Capital allocation
The Risk Management function, led by the Group Chief Risk
Officer & Chief Actuary, monitors whether Brit is operating
within the risk tolerance levels approved by the relevant
Boards. This includes assessments of any new strategic
initiatives and the principal risks and uncertainties faced by
the business as detailed below.
All Brit staff are involved in ensuring there is an appropriate
risk culture which promotes the identification and
management of risk. Brit’s risk culture aims to ensure the
risk and capital implications of decisions are understood and
there is open communication about risks and issues in all
areas of the business.
Brit’s approach to risk management is designed to encourage
clear decision-making as to which risks Brit takes and
how these are managed based on the potential strategic,
commercial, financial, compliance and legal implications of
these risks.
The sections below set out the approach to risk governance,
and the key risks identified, measured and managed under
the RMF.
Risk Governance
The Board is responsible for overseeing our risk management
and internal control systems, which management is
responsible for implementing.
Brit maintains a strong risk governance framework using
Risk Oversight Committees and Audit Committees whose
membership consists of independent non-executive Directors.
Board, Risk and Audit Committee agendas are designed
to ensure all significant areas of risk are reported on and
discussed. The Risk Oversight Committees monitor and
review the risk profile and the effectiveness of all risk
management activities and, in particular, monitor adherence
to agreed risk limits.
Brit operates a three lines of defence model for governing
risk. Within the first line of defence individual risk committees
monitor day-to-day risk control activities. The Risk
Management function, as a second line of defence, provides
oversight over business processes and sets out policies and
procedures. Internal Audit, as a third line of defence, provides
independent assurance and monitors the effectiveness of the
risk management processes.
Our Internal Audit function provides assurance to the Risk
Oversight Committees, Audit Committees and Boards,
while external experts are regularly used for independent
assessments.
Key risks
The RMF categorises the risks to Brit as follows:
• Overarching risk: strategic, earnings and solvency; and
• Individual risk categories: insurance, market, liquidity,
credit, and operational and group.
Insurance risk is the key driver of our Group capital
requirements.
risk management, principal risks and uncertainties
strategic report
Brit Limited Annual Report 2024
35
The key risks and uncertainties are set out in the following table and the principal risks in the current environment are further
described below.
Risk category
Risk
Description
Principal
risks
Overarching
Strategic
Risk that Brit’s strategy is not appropriate or is not implemented effectively.
Earnings
Unexpected earnings volatility leads to unexpected losses.
Solvency
Capital ratio falls below the level targeted by management.
Insurance
Underwriting – pricing
Emerging experience is inconsistent with the assumptions (e.g. inflation) and
pricing models used.
✓
Underwriting – natural
catastrophe
Natural catastrophe events, including the impact of climate risk, impacting
Brit’s (re)insureds, leading to large volumes of claims.
✓
Underwriting – man
made catastrophe
Extreme man-made events, such as terrorist attacks or cyber-attacks,
impacting Brit’s (re)insureds, leading to large volumes of claims.
✓
Underwriting –
reinsurance
Failure to obtain reinsurance on attractive terms, or failure to recover under
reinsurance arrangements.
Reserving
Prior year reserves are insufficient to cover claims (net of reinsurance) e.g.
due to higher than anticipated inflation.
✓
Market
Investment market risk
Invested assets adversely affected by changes in economic variables, such as
interest rates, inflation, bond yields, equity returns, credit spreads and credit
ratings.
✓
Currency
Exchange rate fluctuations materially impact our financial performance.
Liquidity
Liquidity
Insufficient financial resources available to meet liabilities as they fall due.
Credit
Counterparty risk
Deterioration in the creditworthiness of, defaults by, or reputational issues
related to, premium debtors, reinsurers or other third parties with whom we
transact business.
Operational
and group
People
Failure to attract, motivate and retain key Directors, senior underwriters,
senior management, and other key personnel, on whom our future success is
substantially dependent.
✓
Systems and processes Failure of our systems or processes, impacting our ability to conduct business
and our ability to provide continuity of service to our clients.
Information security
Failure to properly protect information could compromise the confidentiality,
integrity or availability of our information and data, potentially resulting in
financial loss and legal, regulatory, and reputational consequences.
Outsourcing
arrangements
Failure on the part of any third-party to perform agreed outsourced services,
on which we are heavily reliant.
Reputational
Damage to reputation due to actions taken by Brit or related parties and the
impact this has on Brit’s business and operations.
Regulatory and legal
Legislation or regulation adversely affects Brit’s operations.
Conduct
Failure to ensure the Group’s products and services deliver the right
outcomes for consumers.
Change management
Major projects or other key changes are not implemented effectively.
strategic report
36
Brit Limited Annual Report 2024
Principal risks
The table below provides additional information on the principal risks in the current environment and how we manage them.
Principal risk
Mitigation tools
Metrics
Status
Underwriting – pricing
Inadequate pricing
could have a material
adverse effect
on our results
for underwriting
operations and
financial condition.
• Strategic focus on underwriting
performance rather than on top
line growth.
• Strong governance processes
around strategy and planning.
• Pricing discipline is maintained
through strict underwriting
guidelines, monitoring of the
delegated authorities and
enforcement of the technical
pricing framework.
• Efficient use of the outwards
reinsurance programme.
• Monitoring of pricing adequacy
metrics and risk adjusted rate
change.
Risk adjusted rate change (2024:
decrease of 1.4%; 2023: increase
of 7.1%).
We achieved positive
rate rises from 2018
to 2023, following four
years of rate reductions.
2024 experienced a
small rate reduction.
Active rebalancing of the
portfolio remains a key
focus for management.
Underwriting – natural and man-made catastrophe
Naturally occurring
or man-made
catastrophic event(s)
could result in large
insured losses that
adversely impact our
financial results and
potentially our capital
position.
• Diverse portfolio of risks
written.
• Regular modelling and
monitoring against natural
and man-made catastrophe
risk appetite by our exposure
management team.
• Effective outwards reinsurance
programme in place.
• Clear limits set for key
accumulations and conservative
use of line size by our
underwriters.
• Identification and monitoring of
emerging risks such as climate
change, developing cyber threat
landscape and geopolitical risks.
Largest five natural and man-made
realistic disaster scenarios (based on
net of reinsurance losses):
Event ($m 1/10/24)
Gross
Net
Natural catastrophes
San Francisco earthquake
1,511
774
Gulf of Mexico windstorm
964
530
Pinellas windstorm
842
489
Los Angeles earthquake
845
484
North East windstorm
930
341
Man-made catastrophes
Terror – Rockefeller Center
439
266
Terror – WTC
396
251
NCBR – Nuclear
362
272
Cyber – Cloud Cascade
251
146
Cyber – Ransomware
Contagion
202
134
Management has
focused on actively
optimising the portfolio
to ensure gross
exposure is in line with
appetite, reinsurance
protection is adequate,
and that catastrophe
exposed business is
appropriately priced to
ensure that the Group is
resilient.
Climate risk and the
cyber threat landscape
are key considerations,
and Brit continues to
develop its assessment,
mitigation, and
management of this risk.
risk management, principal risks and uncertainties
strategic report
Brit Limited Annual Report 2024
37
Reserving
Estimating insurance
reserves is
inherently uncertain
and, if insufficient,
may have a material
adverse effect on
our results and
financial condition.
• Brit’s reserving philosophy has
resulted in a track record of
prior year reserve releases.
• Actuarial team recommend
reserves independently
from underwriting division
using established actuarial
techniques.
Reserve releases, after discounting
and including movement in risk
adjustment, in 2024 of $123.0m (2023:
$16.3m).
Reserves are held
at a best estimate,
with an additional
risk adjustment. Our
reserves are discounted
per the provisions of
IFRS 17.
No change to the best
estimate approach from
prior years.
For 2024, the risk
adjustment has been set
at the 78th percentile
(2023: 77th percentile)
on a net basis.
Investment risk
Invested assets
are susceptible
to changes in
economic conditions.
A decrease in the
value of our invested
assets may have a
material adverse
effect on our results,
financial condition
and liquidity.
• Strong governance processes
around investment strategy.
• Regular monitoring against
investment risk appetite which
includes defined limits for
solvency, earnings risk and
liquidity risk.
• Investment guidelines in place
for individual asset classes and
monitored regularly.
Return on invested assets, net of fees
(2024: 5.0%; 2023: 6.2%).
Running yield (2024: 4.0%; 2023: 4.0%).
Financial markets
remain volatile
reflecting geopolitical
and economic
uncertainty. Our
portfolio remains
highly liquid, and was
primarily invested in
cash and investment
grade fixed income
securities at
31 December 2024.
People
The loss of key
employees or by an
inability to attract
and retain qualified
personnel, could
adversely affect Brit.
• Our remuneration strategy
(including share-based
remuneration) is designed to
reward talent and success.
We have a proven track record
in being able to retain high-
performing staff.
• Succession and contingency
plans are in place in the event
of the loss of a key employee.
• Regular monitoring of employee
turnover and morale.
• Our culture of openness,
inclusiveness and collaboration.
Staff turnover (2024: 10.7%;
2023: 12.0%).
The Group’s key
functions continued to
operate effectively.
The current
environment remains
competitive with a
number of our peers
actively seeking
talented staff. We
actively manage our
remuneration and HR
policies to ensure we
continue to retain and
attract the best staff.
Current turnover
rates remain within our
appetite.
Climate change financial risks and emerging risks
To the extent that climate change related financial risks and emerging risks are contained within the above principal risks they
are managed as set out above. In addition, climate change related financial risks are discussed on page 42. Other emerging
risks such as geopolitical risks are discussed in Note 4.7 to the financial statements, starting on page 120.
38
strategic report
Brit Limited Annual Report 2024
39
Introduction
To generate value, we recognise that our people, culture,
social and community strategies must be both sustainable and
aligned to the long-term interests of all our stakeholders. We
seek to make both a positive contribution to society and to be
aware of the long-term consequences of our actions. We also
seek to generate new commercial opportunities by developing
strong stakeholder relationships and by recruiting and
retaining a highly skilled, engaged and motivated workforce.
Our people and culture
Overview
Our people are our greatest asset and managing our talent
appropriately contributes significantly to our success.
During 2024 we continued to strengthen our highly committed
team. Through the attraction and recruitment of new talent and
the ongoing development of existing expertise, we continued
to live our culture and increase performance. In 2024 we had
302 new joiners, and our net headcount increased by 193.
This growth primarily related to the build of Ki’s standalone
capability. We have also continued to strengthen our core
regulatory, compliance and support teams, including the
opening of a Brit operation in India to help us grow and source
technology and data talent, and have recruited to support our
strategic growth of Brit Re in Bermuda.
We are committed to developing the capability, behavioural
and leadership skills required for our teams to outperform.
We continue to invest in the future of Brit through our
leadership, graduate and intern programmes.
In 2024, we launched a new behavioural framework which sets
out the behavioural expectations of leaders, managers and
individual contributors aligned to our strategy.
Brit’s Mental Health and Wellbeing commitment aims for
everyone to proactively manage their mental and physical
health in order to maintain healthy and productive lives. We
encourage open conversations about mental and physical
health in the workplace, provide opportunities to learn about
common mental health signs and symptoms, have trained
mental health first aiders and we offer a variety of benefits,
policies and resources to support our teams and help
everyone thrive.
Brit Syndicates Limited continues to have Chartered Insurer
status through the Chartered Insurance Institute. This
prestigious designation signifies to our colleagues and
customers that we are committed to the pursuit of the
highest standards and demonstrates our adherence to ethical
good practice.
Brit’s cross-functional Social Committee has continued to
organise a range of social, sports, community and charitable
events for employees during the year. We have an active
football and netball team who regularly play friendly and
competitive matches as well as running and cycling clubs.
In 2024 voluntary staff turnover was 10.7% (2023: 12.0%).
At 31 December 2024, 26.7% (2023: 20.1%) of staff had
completed at least five years of service and 12.0% (2023:
13.0%) had served at least ten years.
Details of Brit’s employment policies are given in the
‘Employment’ section of the Directors’ Report on page 57.
Inclusion and diversity (I&D)
In 2024 Brit has continued to focus on I&D and have run
a number of successful initiatives.
We have four Employee Resource Groups (ERGs), covering
Race and Belonging, LGBTQ+, Gender, and Disabilities. We also
have a Mental Health and Wellbeing Group which sits alongside
the ERGs. These groups are an opportunity for colleagues
to come together in a safe-space and discuss issues of
importance to them, including successes and challenges,
and share ideas for events and initiatives. Our ERGs are
empowered to produce informative comms and events. Each
ERG has an executive sponsor which demonstrates our
commitment to I&D from our leadership team as well as giving
additional visibility to the groups.
Brit was nominated for the Inclusion and Diversity award at
the National Insurance Award and National Diversity Awards,
thirteen colleagues were nominated for Women in Insurance
awards, across different areas of the business and Janet
Henderson (Group Executive Underwriter) won the London
Market Professional of the Year award. Isha Gupta (Senior
Manager ERM) was a finalist in the Risk Professional of the
Year award.
In July 2024, Lloyd’s announced the creation of its Inclusive
Futures Coalition. Brit is the programme’s first contributing
partner. Inclusive Futures targets meaningful, lasting
change by enabling black and ethnically diverse individuals
to participate and progress from the classroom to the
boardroom. The initiatives were designed based on the
feedback of over 250 black and ethnically diverse Lloyd’s
market colleagues, alongside experts from the fields of
finance, academia and I&D.
In December the Executive Committee and Board approved
our new three-year I&D strategy.
Staff engagement
Engagement with our staff allows us to assess the extent to
which they are motivated and helps us identify where we need
to focus. High engagement results have a positive impact on
our team performance and employee retention, our service
quality and our overall business performance, ultimately
benefitting all stakeholders.
Following the bi-annual Employee Engagement Survey that
was undertaken in the fourth quarter of 2024, the Group and
teams have been focusing on their results and implementing
actions to improve on specific areas.
At Brit, we believe that good communication is an essential
part of empowering our teams to be able to perform at their
best. The Board engages with employees via the Executive
our people, culture, social and community matters
strategic report
40
Brit Limited Annual Report 2024
Directors. The Executive Directors use a suite of internal
communication methods to foster a two-way conversation
with colleagues, cascading information, ensuring alignment,
and understanding of our strategic priorities and goals, and
inviting feedback:
• Our Intranet (The Hub) provides colleagues with the latest
news and evergreen information from around the Group.
Our internal podcasts hosted on the Hub help people to
hear from differing voices throughout the business.
• Email communications ensures key messages are shared
with colleagues in an engaging format. Spotlight articles
are shared on a monthly basis and offer a closer look into
aspects of the business.
• TV screens on our working floors provide another further
communication with colleagues about employee benefits,
our culture, our ERGs, and our underwriting products.
• Our regular all-Company Town Hall updates help to bring all
the Company together to hear about important Company
news, strategy, I&D amongst other topics. These townhalls
are presented by colleagues at all levels of the organisation
and from different departments, showing collaboration in
action.
Social and community
We are committed to supporting the communities in which we
operate and charities that are meaningful to employees. Our
objective is to select charitable giving and community projects
based on three criteria: projects should be for a good cause
and operate in an area relevant to us, financial involvement
should be for the benefit of the good cause, and projects
should offer alignment with our strategic priorities.
During 2024, Brit donated $4.0m (2023: $1.7m) under its
charitable initiatives. In addition to this, Brit employees
completed 122.5 volunteering days (2023: 99.5 days). In the
year, Brit:
• Supported ten charities chosen by employees. We donated
a sum of money to each charity at the start of the year
and continued donations with fundraising activities through
the year;
• Further promoted staff involvement in the community by
granting every employee two additional days of paid leave
a year to volunteer their time to a registered local charity;
• Continued our support for the Soweto Academy, a school
that educates boys and girls from the age of five to 18 in
Kibera, the largest slum in Africa;
• Donated $2.6m to Bloodwise, a charity supporting all types
of blood cancer research;
• Supported Team BRIT, a team of disabled motor racing
drivers, since 2017. In 2024, we continued our contract
with Team BRIT, as title sponsor, to support their racing
academy and success on the racetrack;
• Brit participated in The City Giving Day in September 2024
raising $9k;
• Donated $127k to Articulation, in association with the
National Gallery which supports young children from
predominantly secondary schools across the UK who do not
get much opportunity to learn the art of speaking publicly
or with confidence. The ‘Articulate’ programme encourages
children to enhance their speaking skills through discussing
pictures and paintings at the Gallery; and
• Continued to run a payroll giving scheme and match any
money raised by employees participating in charitable
events. In 2024 we paid out over $281k through payroll and
gave $521k through sponsorship matching.
our people, culture, social and community
strategic report
Brit Limited Annual Report 2024
41
Overview
Climate change will have a major impact on our business and
on all our stakeholders. Brit actively considers the potential
implications of climate change and sustainability on its
investment and underwriting strategies, how it should engage
more widely on environmental and ethical issues, and its own
sustainability initiatives.
We remain committed to responsible business practices and
aim to act in unison with our regulator and the rest of our
industry. We are active members of ClimateWise, submitting
our fourth report in 2024, and we participate in ESG initiatives
within the Lloyd’s market and the wider Fairfax group. Brit has
also worked to incorporate guidance issued by the Taskforce
of Climate Change-Related Financial Disclosures (TCFD) into its
reporting. Throughout 2023 we developed our ESG strategy
and framework with the support of external consultancy, and
at the start of 2024 we appointed a Head of ESG to lead the
implementation of our strategy across the organisation.
Governance
Since 2014, climate change has been on our Board’s agenda.
From this point, the Board has focused on developing its
understanding of the uncertainty associated with climate
change and climate-related risks and opportunities.
While retaining direct oversight of climate change and ESG-
related matters, the Board has delegated responsibility to
subsidiary boards and committees.
The Brit Syndicates Limited (BSL) board receives quarterly ESG
updates, and has nominated one of its non-executive directors
to provide Board oversight to Brit’s ESG roadmap. BSL’s Chief
Risk Officer is responsible for overseeing Brit’s response to
managing financial risks arising from climate change.
The BSL board committees have embraced climate-related
issues as follows:
• BSL Audit Committee: The Audit Committee is responsible
for overseeing internal controls, adherence to reporting
requirements, and approval of climate-related disclosures.
• BSL Investment Committee: ESG/Climate risk has been
a standing agenda item since 2021. Climate risk metrics
are provided on a monthly basis which are considered in
strategic decisions as relevant.
• BSL Risk Oversight Committee (ROC): Oversees the
financial risks arising from climate change. Its review
focuses on natural catastrophe, liability and transition risk.
It oversees key initiatives and, where necessary, makes
risk-related recommendations to the BSL Board.
• Brit Re Risk Oversight Committee: Regularly considers
climate change related risks
Management oversight
Brit has implemented the following climate-related
Committees and Working Groups:
• Executive Committee (EC): The EC has overall
responsibility for ESG matters and is extensively involved
in key strategic decisions involving climate change.
• Climate Change Risk Working Party (CCRWP): The
multidisciplinary CCRWP is responsible for managing
financial risks arising from climate change and it provides
a forum for identifying and escalating any material risks
that require further investigation. It reports to the ROC.
• ESG Steering Committee (ESGSC): The ESGSC reports
to the EC and has responsibility for delivering the ESG
strategy. It is chaired by the Head of ESG and includes
senior representation from Underwriting, Investments,
Finance, Risk, Claims, Legal and Communications.
• BSL Underwriting Committee: Receives management
information on natural catastrophe risk including regions
and perils impacted by climate change. It is responsible for
managing this risk in line with business appetite, and for
reviewing the ‘Brit View of Risk’.
• Responsible Underwriting Working Group is a sub-
committee of the ESGSC, with specific focus on ESG
related underwriting activities, including developing Brit’s
approach and framework to responsible underwriting,
and embedding climate-related processes into Brit’s
underwriting guidelines, policies and operations.
• ESG Data Working Group: The ESG Data Working Group
is a sub-group on the ESGSC. It has a specific focus on
developing and analysing data, metrics and reporting, and
ensures that all requests for ESG-related information are
adequately and consistently responded to.
Strategy
In 2023 we refreshed our ESG Strategy, which is closely
linked to our business strategy, and in January 2024, we
appointed our first Head of ESG. Our vision centres on ‘Writing
the future, responsibly’ – leveraging our culture and products
to help deliver positive outcomes for people, the planet and our
business. Our strategy has four key pillars:
• Reducing our environmental footprint;
• Enabling the net zero transition;
• Responsible product deployment; and
• An inclusive culture for our people.
Climate change has the potential to create more vulnerable
geographies, policyholders and investment sectors. Care
needs to be taken when underwriting risks in areas potentially
exposed to climate change to ensure they are priced
appropriately and overexposure to these areas is avoided.
Brit recognises the potential for increased frequency and
severity of natural catastrophes due to climate change, and
our underwriting and exposure management teams work
together to identify and quantify the potential impact of
increasingly frequent events. Our investment strategy takes a
long-term view focusing on identifying sustainable businesses.
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Brit Limited Annual Report 2024
Underwriting strategy
Brit’s underwriting guidelines encourage an appropriate level
of due diligence within the underwriting process at a product
level, reducing exposure to businesses with poor sustainability
practices. In the longer term, these will form part of a referral
framework which will influence our business appetite and growth
strategy. In addition, underwriters are actively encouraged
to consider and assess ethical, sustainable and governance
approach of insureds within their portfolio. We review our ESG
appetite and underwriting criteria on an annual basis.
Across the business, we have undertaken various initiatives
to align ourselves to the broader Lloyd’s market, and have
implemented products that promote improvements in ESG
standards across our client base. These include:
• Renewable Energy: In Specialty, we identified opportunities
to provide insurance cover for climate-transitioning business
(e.g. the renewable energy sector). Brit continues to provide
coverage for renewable energy producers, an area for
further growth in 2025;
• Cargo: Our Marine Cargo team insure an increasing amount
of parts and equipment that is destined for use in number of
green energy power plants, including solar, wind and hydro
plants;
• Financial Institutions and Directors and Officers: We
are using external data platforms for financial and ESG
information about prospective clients. ESG scores are
factored into the underwriting decision process; and
• Financial Institutions: In 2024 we partnered in a new
facility offering cover for the risks relating to fraud within
the Carbon Credit market.
Brit has been progressing the integration of externally
sourced ESG scores into the underwriting process. The work
to date has allowed Brit to better understand the composition
of its portfolio and to better understand the drivers of these
scores. In the longer term these insights will shape a key input
to the Brit Underwriting Strategy, helping to optimise risk
selection and business mix.
We have also developed guidance for our underwriters when
underwriting risks in these industries, and will be monitoring
the impact this has on portfolio ESG scores.
In 2024 we reviewed our underwriting in a number of ESG
sensitive industries, to ensure we are best positioned to
support insureds in their transition to net-zero. This support
includes developing our understanding of their transition
plans, and monitoring trends to assess how realistic those
transition plans are.
Investment strategy
ESG considerations are integrated across our investment
strategy to ensure we fully understand the portfolio exposure.
We regularly review the sector exposure of our portfolios
to ensure we monitor and fully understand the portfolio
exposures to climate exposed sectors, and supplement this
with detailed reports from external managers on the ESG
positioning of the portfolios managed on our behalf along with
the engagement they have with investee companies on our
behalf. These reports include details on the carbon intensity
of the portfolios and exposure to carbon sensitive sectors.
We also undertake annual ESG reviews of the equity positions
in our portfolios.
When undertaking manager selection exercises, we ensure
selected managers have strong ESG credentials, and
integrate ESG into their security selection processes, and
we include ESG guidelines in our external manager mandates.
We aim to have a lower carbon intensity index and to reduce
carbon intensity through time. We have incorporated ESG into
our annual due diligence reviews of the investment managers
since 2019 and hold regular discussions on the managers’
ESG capabilities, and their engagement with companies.
We focus on asset classes where ESG considerations can be
most impactful, such as equity and corporate bonds. Where
we select commingled funds or exchange traded funds, we
assess the ESG restrictions in the funds, and invest in funds
with specific ESG criteria meeting our ESG approach.
Risk management
Risk Management Framework
Climate change has been recognised as an emerging risk in
Brit’s ORSAs since 2014 and has been an area of focus since
having been identified as a high priority in the 2018 emerging
risks analysis.
Brit’s Risk Management Framework (RMF) (page 34) sets
out the methodology by which Brit identifies, measures, and
manages risks associated with climate change. Brit considers
natural catastrophe risk, liability risk and investment risk
to be the most material risks. Using Board tolerances and
management metrics, exposure to the above risk types is
managed and monitored on an ongoing basis.
The Risk Management Framework applies to all risks faced by
the Group including climate change, biodiversity and nature
related risks.
The RMF is reviewed annually, and regulatory developments
are monitored on an ongoing basis. All Brit syndicates have
been compliant with PRA Supervisory Statement SS3/19
since 2021 which sets expectations for firms regarding their
consideration of climate risk.
Climate risk management
Natural catastrophe risk
Natural catastrophe risk relates to the physical risks of
increased frequency and severity of weather-related natural
catastrophes. This could result in additional claims. Climate
change to date may already be affecting present-day weather
events and therefore claims.
Brit’s Research and Development team within the Risk
Management function are responsible for developing the
natural catastrophe modelling. Vendor models such as’ Verisk’
environmental responsibility
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Brit Limited Annual Report 2024
43
and ‘KatRisk’ (developed by scientists and specialists) are used
for the most material and established perils. The modelling
is supplemented using the ‘Brit View of Risk’ which is a set of
in-house adjustments used to apply Brit’s view of risk to vendor
model outputs. Brit continuously monitors scientific studies,
and regularly reviews both the completeness of existing models
and the application of the Brit View of Risk.
The natural catastrophe modelling is leveraged in pricing,
outwards reinsurance purchasing and the risk appetite
framework. Brit seeks to ensure a balanced and well diversified
portfolio (including exposure to weather perils). Brit has
reviewed its property underwriting strategy in recent years and
has sought to reduce exposure in peak catastrophe regions.
Brit’s exposure to natural catastrophe risks at an overall and
peril-region level at key return periods is monitored on an
ongoing basis by the Risk Management function. Board limits
are in place to ensure Brit is not over-exposed to natural
catastrophe risk, and reinsurance is purchased to manage
tail risk.
Liability risk
Climate change could result in liability claims arising from
litigation against Brit’s clients. For example, claims could arise
from firms being held responsible for directly contributing
to climate change, not taking climate change into account in
business decisions or inadequate disclosures.
Brit’s exposure is managed by use of limits on gross underwriting
exposure, contract wording and through the purchase of
reinsurance. There is uncertainty over whether courts rule
against insurers and if so, over what time horizon. The number of
climate change litigation related claims notifications is monitored
to enable early identification of any material increase.
Market risk
Investment losses have the potential to arise from exposure
to industries contributing to climate change whose market
value could reduce as the economy transitions away from
fossil fuels. This transition risk could occur over the short
or long-term depending on government policies and financial
market movements.
Brit has a diversified investment portfolio, with limits on
exposure to individual issuers. Additionally, Brit has developed
metrics to monitor investment exposure to potentially ‘at-risk’
industries such as oil and gas or transport. An annual review
of equity holdings is conducted which includes a review of the
ESG strategy of the underlying companies.
Other risks
There may be reputational risk to firms if customers deem
they are insufficiently responsive to concerns about climate
change. Brit has developed an ESG strategy, as discussed
above, which seeks to address this.
Climate scenario analysis and understanding climate risk
Climate scenario analysis is key to understanding the potential
impact of climate-related risks. Analysis performed to date
has identified physical risks arising from natural catastrophes
as having the highest potential for losses. This is therefore a
key area of focus.
PRA stress tests
Brit Syndicate 2987 participated in the PRA Climate Change
Biennial Exploratory Stress Test (CBES) in 2021. The exercise
was designed to assess the impact of climate change on
physical and asset risks over a 30-year time horizon in three
policy action scenarios. It also required general insurance
participants to consider the impact of seven PRA-designed
litigation scenarios on liability classes as well as articulation
of Brit’s current and future risk management actions. These
scenarios provided valuable information for ongoing risk
management given the long-term nature of climate change as
a peril.
Building on CBES, a more detailed climate change related
litigation risk scenario analysis was also performed in 2022.
This considered the potential gross and net impact of climate
change related litigation under three hypothetical scenarios.
Internal scenario analysis
In addition to the above, Brit performs climate change
related scenario analysis in each syndicate’s ORSA which
encompasses natural catastrophe, market and lability risk.
The findings from the scenarios have been integrated into:
• The internally developed ‘Brit View of Risk’ which is used to
supplement natural catastrophe modelling software;
• Brit’s Property catastrophe underwriting strategy,
identifying the regions and perils most sensitive to climate
change;
• Industry level exposure monitoring for Brit’s asset
portfolio for ‘high risk’ sectors;
• Clarity on potential losses to be accounted for in
underwriting and business planning decisions; and
• The ORSA process, to ensure climate change related risks
are considered across relevant areas of the business.
Risk is further discussed in Note 4 to the financial statements.
Metrics: climate and environment
Energy management and greenhouse gas reduction
As part of our dedication to our environmental responsibilities
we continually seek to improve the sustainability of our
business. In 2024 we have continued to focus on greenhouse
gas (GHG) reduction, carbon management, staff engagement
and data collection for our scope 3 emissions.
We have plans for 2025 to set targets for scope 1 and 2, and
aspects of scope 3. We also plan to investigate the process
of having targets checked and validated by the Science Based
Targets initiative (SBTi) during the next financial year.
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Brit Limited Annual Report 2024
Carbon management
2024 focus
Our carbon management focus during 2024 was as follows:
• Net-zero: We are on our own journey to net-zero. We are
reviewing our operations to actively reduce our emissions,
waste and water consumption. We currently offset our
carbon emissions through ClimateCare.
• Supply chain: Work continues to streamline our supply
chain, as we seek to minimise our carbon footprint. During
2025, we plan to work with our supply chain to identify and
measure those suppliers who contribute most significantly
to our Scope 3 Category 1 emissions. This will allow us
to set a baseline and begin to work with our suppliers to
deliver improvements.
• Travel: Brit’s travel policy encourages booking lower
carbon-intensive flights. Brit has heavily invested in
transforming the way it works by introducing flexible
working and by upgrading its digital and video conferencing
systems.
• Employee commuting: During 2024 we ran our first
commuting survey for UK based employees. This allowed
us to baseline average commuting (scope 3, category 7)
emissions, which we plan to disclose in our 2025 report.
We encourage employees to commute using public
transport, offering a season ticket loan scheme and a cycle
to work scheme.
• Waste management: During 2024, we changed our waste
management supplier. Our intention is to disclose 2025
metrics in our 2025 annual report.
• Internal hospitality: We continue to use a hospitality
provider that is committed to sustainable food
procurement.
• Staff engagement: During 2024, Brit continued to engage
our employees in ESG matters and initiatives. We ran three
volunteering days with an environmental and biodiversity
focus and celebrated five ESG days.
Measurement and offset
We have continued with our initiative to offset our scope 1 and
2 carbon emissions through ClimateCare (www.climatecare.
org). For every tonne of carbon generated we fund the
equivalent reduction through ClimateCare’s carbon reduction
projects. At 31 December 2024 we remained fully Energy
Saving Opportunities Scheme (ESOS) compliant.
We measure and monitor our carbon footprint covering
scope 1, 2 and 3 (category 6). In 2024 our carbon emissions
per employee covering scope 1, 2 and 3 (category 6), before
offset, were 1.9 tonnes (2023: 3.2 tonnes), all of which has
been offset (2023: all offset).
The sources of our emissions were as follows:
Emission source
2024
CO2 (tonnes)
2023
CO2 (tonnes)
Gas (Note 1)
139
196
Electricity (Note 1)
199
222
Business travel – air (Note2)
1,621
2,455
Business travel – hotels (Note 2)
33
45
Business travel – other (Note 2)
12
17
Total carbon footprint before offset
2,004
2,935
Offset
(2,004)
(2,935)
Total carbon footprint after offset
–
–
Emissions per employee were as follows:
2024
CO2 (tonnes)
2023
CO2 (tonnes)
Number of employees at
31 December, excluding NEDs
1,045
911
Carbon footprint per employee
before offset
1.9
3.2
Carbon footprint per employee
after offset
–
–
Note 1: Where Brit operates from offices which form part of a larger commercial
development, usage and emission data has been supplied by the building manager. Where
data was unavailable, estimates have been used. Where Brit operates out of serviced office
suites, it has no control over the management of utilities, with that responsibility falling to the
landlord. Such serviced accommodation is considered out of scope for this purpose.
Note 2: For all travel including air, hotels and rail, data has been provided from our travel
agent partner, through whom travel is arranged. The figures do not currently include RF
(Radiative Forcing).
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Brit Limited Annual Report 2024
45
Brit’s Streamlined Energy and Carbon Reporting (SECR) as follows:
2024
2023
kWh
GHG
(CO2 tonnes)
kWh
GHG
(CO2 tonnes)
Scope 1
755,422
139.4
1,072,927
196.0
Scope 2
703,248
178.7
1,106,717
222.0
Note 1: The scope of table differs from the carbon emissions reported above, in that it only covers UK based operations, in accordance with SECR requirements for unlisted companies.
Note 2: Gas and Electricity values for the fourth quarter were estimated by using the values from the first quarter as the seasonality of the data for those quarters are closely aligned.
Note 3: All UK electricity used is 100% renewable, and as such we utilised the GHG conversion factors published by the UK Government on 8 July 2024 for these calculations.
Note 4: For all travel including air, hotels and rail, data has been provided from our travel agent partner, through whom travel is arranged.
Note 5: In the UK, Brit operates out of an office which forms part of a larger commercial development. Usage and emission data has been supplied by the building manager.
Note 6: Includes gas purchased for consumption in Brit’s UK office, for which data has been supplied by the building manager.
Note 7: Includes electricity purchased for consumption in Brit’s UK office, for which data has been supplied by the building manager.
Brit had de-minimis Scope 3 emissions from business travel in rental or employee-owned vehicles in 2024 and 2023.
Metrics in Brit’s operations
The setting of risk tolerances and risk appetite is a key part of risk management. We are focused on developing a metrics and
targets framework to manage climate-related risks and opportunities. We continue the process of developing an internal ‘ESG
scorecard’ for our underwriting portfolio, and have climate risk metrics for our investment portfolio.
Brit has been working on integrating ESG scores from an external data provider into its underwriting processes, and are
trialling an internal ESG dashboard to monitor ESG scores and CO2 analysis at the portfolio and class level.
We also have a set of key climate change-related underwriting and investment metrics that are being monitored on a quarterly
basis, and reported to the CCRWP on a half-yearly basis. These include board tolerance levels, the number of climate change
related litigation notifications, and the investment exposure to higher risk industries.
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Brit Limited Annual Report 2024
non-financial and sustainability information statement (NFSIS)
Brit continues to develop aspects of its non-financial and sustainability information reporting, such as non-financial
performance indicators and targets by which to manage climate-related risks. Brit’s NFSIS statement, as required by
section 414CA and 414CB of the Companies Act 2006, is set out below:
Non-financial reporting information
Section and page reference
A description of Brit’s business model.
An overview of the business and strategy is presented
per ‘Brit at a Glance’ (pages 8 to 10).
Principal risks relating to the non-financial matters set out in
section 414CB (1) (a) to (e), arising in connection with Brit’s
operations, likely impacts from any such principal risks, and
how they are managed.
Risk management, principal risks and uncertainties
(pages 34 to 37), and environmental responsibility
(pages 41 to 45).
Non-financial performance indicators.
Brit monitors a range of non-financial metrics relating to
sustainability. Within Climate Change Risk Working Party
(CCRWP) we have metrics for underwriting relating to
natural catastrophe risk and breaches of board tolerance
relating to climate change; Litigation risk and the number
of climate litigation notifications by cedent. We also
monitor our exposure to ‘high risk’ industries within our
investments. As these figures are commercially sensitive,
we are not disclosing them at this time, other than those
set out in Climate and Environment (pages 43 to 45).
Sustainability and climate-related financial information
Section and page reference
The governance arrangements in relation to assessing and
managing climate-related risks.
The governance arrangements to assess and manage
climate-related risks and opportunities are outlined in the
Governance section of the Environmental responsibility
disclosure on page 41.
How Brit identifies, assesses, and manages climate-related
risks and opportunities.
Brit’s approach to identifying, assessing, and managing
climate-related risks and opportunities is presented
in the Risk management section of the Environmental
responsibility disclosure on page 42.
Overall risk management processes are presented in
the Risk management, principal risks and uncertainties
disclosure from page 34.
How processes for identifying, assessing, and managing
climate-related risks are integrated into Brit’s overall risk
management process.
A description of the principal climate-related risks and
opportunities arising in connection with Brit’s operations; and the
time periods by reference to which those risks and opportunities
are assessed.
Brit’s approach to identifying, assessing, and managing
climate-related risks and opportunities is presented
in the Risk management section of the Environmental
responsibility disclosure on page 42.
In addition, we are aware of the scale of the global
investment that is required to achieve the global
transition to 2050 net-zero, and are actively exploring
the underwriting opportunities that a just transition will
bring, be they new insurance products, new asset types,
or emerging localities.
A description of the actual and potential impacts of the climate-
related risks and opportunities on Brit’s business model and
strategy.
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47
Sustainability and climate-related financial information
Section and page reference
An analysis of the resilience of Brit’s business model and
strategy, taking into consideration different climate-related
scenarios.
We are addressing climate-related scenarios in the
resilience of the business model through several
strategies:
Physical Risk: We have focused on managing exposure to
natural catastrophes by decreasing peak zone exposures,
and non-renewing catastrophe-intensive accounts. We
have also reduced reliance on catastrophe reinsurance
due to its increasing cost.
Transition Risk: We have identified opportunities to
provide insurance cover for climate-transitioning
businesses, such as the renewable energy sector.
We expect customers in carbon-intensive industries
to have clear and measurable transition plans, and
underwriters consider this when pricing and quoting
risks. ESG considerations are integrated within
investment guidelines, with an objective of gradually
increasing the ESG standing of the portfolio over time.
Litigation Risk: We have introduced climate change
exclusions within most of the Specialty book to clarify our
stance. Underwriters consider potential climate change
litigation losses as part of their due diligence.
Targets used by Brit to manage climate-related risks and to
realise climate-related opportunities and performance against
those targets.
In 2024 we progressed the measurement of insurance-
associated emissions and expect to set an internal
baseline for these in early 2025. This will allow us to
investigate the appropriateness of targets in this
emissions category.
Brit’s key performance indicators used to assess progress
against targets used to manage climate-related risks and
realise climate-related opportunities and a description of the
calculations on which those key performance indicators are
based.
Brit continues to develop its ESG related non-financial
performance indicators and will report on these in future
periods. Please also refer to comment in ‘Non-financial
performance indicators’ above.
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Brit Limited Annual Report 2024
stakeholder engagement
The Board recognises the importance of engaging with its broader stakeholder base. The Company’s key stakeholders,
as identified by the Board, are set out below, together with why and how we engage with them and the outcomes of that
engagement.
Clients and Intermediaries
Why we engage
Form of engagement
Impact of engagement
We work with brokers and partners to
share expertise and deliver a seamless
service for our clients.
As a specialty insurer, almost 100%
of Brit’s business is distributed via
intermediaries. Engagement and building
strong relationships with them are
crucial for us to source business and to
deliver the best service and products
for our insureds.
Intermediaries also provide a range
of services to Brit, for which we
remunerate them via brokerage and
commissions.
Any new intermediary is subject to a
robust on-boarding process.
Brit underwriters engage with
intermediaries in a number of ways,
including in person and by electronic
means.
To maximise our intermediary
relationships, Brit has entered into
Board-approved strategic partnership
agreements with seven of our largest
brokers, covering over 66% of
our premium income. Under these
agreements Brit pays an annual fee,
which gives access to a range of
services.
Broker surveys consistently highlight
Brit’s efficient client engagement, and
proactive communications.
By engaging with clients and
intermediaries we provide a risk
service that helps clients not only
prepare for but manage and mitigate
the risks they face.
By building stronger and deeper
relationships with our intermediaries,
we believe we put ourselves in a
stronger position to quickly take
advantage of new opportunities and
understand and satisfy changing
customer needs.
When a client has a claim, their life or
business has been disrupted, or even
put in peril, they expect their insurance
to deliver. It is our responsibility to fulfil
that commitment. At Brit, we see every
claim as an opportunity to help our
clients move forward.
When a client has a claim we engage
directly with them or their intermediary
to ensure their needs are met. Following
a major loss event, we instigate
additional measures including 24/7
contact with claims administrators,
and swiftly establishing dedicated loss
funds.
Engagement with our clients,
intermediaries and other service
providers after an event reinforces
our provision of a risk service that
helps people not only move on from
an event but helps them to move
forward rapidly with confidence.
Reinsurers
Why we engage
Form of engagement
Impact of engagement
Brit purchases reinsurance to help
manage risk, reduce volatility, enhance
earnings, control aggregations and
create capital efficiency.
We also engage when we make
recoveries.
Brit uses its appointed brokers for
the majority of reinsurer interactions,
allowing us to benefit from their
expertise.
Brit also engages directly with
reinsurers. These tend to be with our
largest reinsurance counterparties.
This engagement allows Brit to
access up to date market information
and a broad range of reinsurance
counterparties and products, thereby
effectively managing its risk appetite.
When we make recoveries, such
engagement helps to expedite the
process.
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49
Investment managers
Why we engage
Form of engagement
Impact of engagement
We manage the assets which support
our underwriting and ensure that clients’
claims can be paid. We manage those
assets with a long-term view and aim to
maximise return while controlling the
level of market risk.
We implement our investment strategy
using the expertise of investment
managers and we engage with them to
monitor their performance, to ensure
terms of the investment management
agreements are met and to gain
additional insights.
We have regular discussions with our
managers to monitor performance
and assess the outlook for investment
markets. We also receive regular written
investment reports.
We have regular and ad-hoc discussions
to review new investment opportunities.
We also perform annual due diligence on
their operational processes.
Investment managers regularly present
to the Investment Committee.
Engaging with our investment
managers allows us to ensure that
assets are managed within our risk
tolerances and guidelines and that any
changes are implemented in a timely
fashion. Insights from our investment
managers enhance our strategy and
performance.
Engagement allows us to discuss new
opportunities, helps us understand
their approach to ESG issues,
validates the sustainability of our
portfolio and helps us confirm assets
are managed robustly and with
effective controls in place.
Capital providers
Why we engage
Form of engagement
Impact of engagement
Working with third-party capital
providers, primarily on Ki and Syndicate
2988, creates the opportunity to
increase Brit’s footprint and proposition
to clients.
Engagement with third-party capital
providers also supports our growth
strategy for those vehicles.
Brit regularly engages with the third-
party shareholders of Ki. It also
engages with current and prospective
providers ahead of an underwriting
year, to market Syndicate 2988, and to
understand investor appetite. After an
underwriting year incepts, Brit formally
meets each provider regularly to discuss
performance, outlook and any other
relevant matter.
The successful implementation of
the Ki and Syndicate 2988 strategies
is dependent on developing strong
relationships with third-party
investors. Such engagement helps
facilitate this.
The insight we gain from interactions
and feedback helps us ensure that our
propositions can continuously evolve
in line with investor appetite.
Members
Why we engage
Form of engagement
Impact of engagement
Our aim is to provide long term
sustainable value for our shareholder,
Fairfax. Engagement ensures that our
objectives are aligned and that our
strategy, operating environment and
performance are clearly understood.
Brit’s ultimate shareholder is
represented on the Brit Limited Board
and there is regular contact between
Brit executives and senior management
and those of our shareholder.
This engagement helps ensure that
Brit’s strategy is aligned to and
supported by our shareholder.
It also presents us with underwriting
and investment opportunities,
including collaboration with other
members of the Fairfax group.
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Brit Limited Annual Report 2024
Regulators
Why we engage
Form of engagement
Impact of engagement
Regulators are key stakeholders and
Brit’s relevant Boards are pro-active
in ensuring that Brit meets regulators’
expectations around compliance,
transparency and aligning the business
with regulators’ objectives.
Brit engages with regulators to ensure
that:
• We understand their regulatory
objectives and how they apply to Brit;
and
• Regulators have a proper
understanding of Brit’s business
model, strategy and risk appetite, and
how they align to regulatory objectives.
Brit engages with its principal regulators
through:
• Regular meetings between supervisory
teams, key decision-makers and
authorised persons at Brit, including
Directors;
• Sharing of key business updates
and internal documents to ensure
regulators have a thorough
understanding of Brit’s business;
• Responding to thematic reviews and
information requests;
• Engaging with Lloyd’s across the
business including around business
planning and compliance; and
• Ensuring the relevant boards are kept
up-to-date on regulatory matters as
communicated by regulators.
Engagement with regulators impacts
Brit through:
• The Periodic Summary and Close
and Continuous supervision
approach by the PRA enables Brit to
respond promptly on any concerns
or focus areas;
• Engagement on thematic reviews
and information requests enables
Brit to contribute to regulators’
understanding of the market;
• Brit’s regular engagement enables
it to pro-actively plan its response
to areas of regulatory focus,
e.g. operational resilience;
• Engagement assists Brit to meet the
prudential and conduct standards
required by regulators; and
• Directors and employees
understand their regulatory
responsibilities.
Key suppliers
Why we engage
Form of engagement
Impact of engagement
Supply chain integrity is critical as we
rely on a number of key suppliers of
goods and services to help us meet
the needs of our customers and other
stakeholders.
On-going engagement helps us ensure
that those needs are met and ensures
that the standards set by those suppliers
meet Brit’s criteria.
Such suppliers include providers
of IT systems, claims management,
professional services, facilities and
travel providers.
Brit determines the risk of the potential
engagement by investigating the potential
spend value, criticality of the services to
be provided. Brit has a rigorous
on-boarding process for new suppliers.
Brit has strong partnerships with a
number of critical suppliers, fostered
by a range of activities including ongoing
dialogue and meetings. We also engage
with key suppliers in areas such as
technical and product roadmaps,
integration planning and disaster
recovery.
Such supplier engagement enables
us to:
• Provide a better service to,
and satisfy the needs of, our
stakeholders;
• Enhance current operational
processes, leading to better
efficiencies and increased
competitive advantage;
• Comply with appropriate laws and
regulations;
• Improve the Company’s
technological resilience; and
• Ensure the robustness and integrity
of our suppliers, such as their
compliance with the Modern Slavery
Act 2015.
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51
section 172(1) statement
Introduction
The Brit Limited Directors’ key responsibility is to promote
the success of the Company, and the broader Brit Group.
This principle is embodied in the Board’s terms of reference
and is the cornerstone of their discussions and decision
making. Each Director is cognisant that in discharging this key
responsibility, they must have regard to:
• The likely consequences of any decisions in the long-term;
• The interests of the Company’s employees;
• The need to foster the Company’s business relationships
with suppliers, customers and others;
• The impact of the Company’s operations on the community
and environment;
• The desirability of the Company maintaining a reputation for
high standards of business conduct; and
• The need to act fairly between shareholders of the Company.
The Directors of Brit Limited consider, both individually and
collectively, that they have acted in the way they consider, in
good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole (having
regard to the stakeholders and matters set out in s172(1)
(a-f) of the Act).
The Board’s approach to section 172(1) and decision making
The Board’s terms of reference, which are reviewed annually,
clearly articulate the Board’s responsibilities, the role of
the Chair and matters reserved for the Board. They also
set out which of the Board’s powers and responsibilities
may be delegated to other committees and the governance
mechanisms by which the Board monitors those committees’
activities and performance. The Chair ensures that these
terms of reference are adhered to and, by doing so, ensures
that Directors have due regard for all appropriate factors
during the decision-making process.
Our strategy
The Board is responsible for a number of key strategic
decisions, including approving the business plans, objectives
and strategy of the Group. It is also responsible for managing
Group capital, including the setting of Group Capital Policy and
the recommendation of dividends to shareholders.
The Group’s strategy and business plans are approved
annually by the Board. The Board also assesses how the
strategy underpins long-term value creation, and on-going
performance is discussed and monitored at Board meetings.
The Directors’ assessment of long-term value creation also
considers the Group’s resilience. Directors monitor relevant
underwriting, reserving, business, operational, credit, market
and liquidity risk appetites and tolerances, and ensure the
Group has an effective Risk Management Framework in place.
Board information
The Board receives regular information on a range of relevant
topics, and receives information on other areas as requested
by the Directors from time to time.
The Board receives regular formal reports on the operations
and performance of the Company from the Group Chief
Executive Officer and the Group Chief Financial Officer. The
Board also receives regular reports from the chairs of
the committees of the Board such as the Audit Committee,
Remuneration Committee and Nomination Committee, and
from the managers of its principal subsidiaries’ boards
including those of Brit Syndicates Limited, Brit Reinsurance
(Bermuda) Limited and Ki Financial Limited. Each of these
reports provides an update on areas necessary to help the
Directors promote the success of Brit Limited.
In addition, the Board receives and considers a number of ad
hoc or annual reports.
Our policies and practices
All relevant factors are appropriately addressed by the Board
when considering matters reserved for it, as set out in its
terms of reference.
The Board also ensures that appropriate consideration
is given to relevant factors by the committees to which it
delegates responsibilities. The Board reviews the terms
of reference of such committees on an annual basis, and
receives regular updates and reports from those committees’
chairs.
The Board also reviews the Company’s key policies on an
annual basis, ensuring that all relevant considerations to
assist it discharge its responsibilities are embedded in the key
operations of the business. These policies help to promote the
long-term success of the Company by focusing on areas such
as the key operations of the Company.
The Board reviews its key stakeholder map on an annual
basis. New key stakeholder relationships are identified
through information received and considered by the Board
on a regular basis, or through the Board’s consideration and
approval of substantial contracts and commitments.
Training
To assist the Directors in discharging their responsibilities,
they are provided with on-going training and development
opportunities. They have received a number of in-depth
briefings on specific relevant issues.
For the wider workforce, there is a comprehensive staff
development programme tailored to meet individual needs.
Elements of this training are mandatory, with all staff
required to successfully complete e-learning modules on key
areas such as money laundering, bribery and corruption, data
protection, fraud and cyber risk.
strategic report
52
Brit Limited Annual Report 2024
Our culture
Building and maintaining the Company’s reputation and its high
standards of business conduct are essential to the future
success of the Company. This is embedded in our culture.
Our brand purpose informs everything we do, from how we
communicate, to how we develop and deliver our services, to
how we work together.
The Company also maintains a ‘Code of Conduct’ setting out
the standard we expect from all of our staff. This is regularly
reviewed and updated, and compliance is attested to by each
employee on an annual basis.
Our people
Our people are key to our success. How we engage with them
and how we invest in them is set out on pages 39 to 40.
Our stakeholders
The Board recognises the importance of engaging with its
broader stakeholder base. The Company’s key stakeholders,
as identified by the Board, are set out on pages 48 to 50,
together with why and how we engage with them and the
outcomes of that engagement.
Community and environment
The Board recognises the importance of not only generating
value for our shareholder but also to contribute to wider
society. We do this through a number of initiatives, as set out
on page 40. We also monitor and manage our environmental
impact, as set out on page 41.
Key decisions made by the Directors during the year
Ki Financial Limited
During 2024, Brit and Ki successfully delivered an initiative
to establish Ki as a standalone operation within the Brit
Limited Group. Following the successful establishment of
fully independent support and compliance functions for Ki,
supported by a transitional services agreement with Brit
Group Services Limited, and the transfer of all Ki staff to
a new Ki service company, the Brit Limited Board approved
the separation on 10 December 2024. The Board also
approved the novation to Asta from Brit Syndicates Limited
as Ki Syndicate 1618’s managing agent, effective from
1 January 2025.
In arriving at this decision, the Board considered the
success of the separation work that had been executed
in 2024. The Board also considered Brit’s and Ki’s
immediate and longer-term strategic priorities and
their different business models, as well as the interests
of their shareholders, and other stakeholders such
as its employees and policyholders. It concluded that
opportunities presented by this separation, while
remaining within the Brit Limited Group, would position
Brit and Ki well for the longer term. Brit also liaised closely
with its principal shareholder, with Ki management, Ki’s
other investor and Lloyd’s.
Dividends
During 2024, dividends totalling of $605.4m were paid.
Of this, $33.3m was paid to class A shareholder in
accordance with the Brit Limited shareholders’ agreement,
and $572.1m was paid to the class B shareholder.
In considering this decision, the Directors assessed Brit’s
ongoing underwriting strategy and capital requirements,
its capital policy, the Shareholder Agreement, and its
obligation to act fairly between members. It was mindful of
its agreed obligations to both its minority shareholder and
to its majority shareholder. Brit also liaised closely with its
principal shareholder with regard to the dividend payments.
2024 Brit Reinsurance (Bermuda) Limited Group (Brit Re)
business strategy and 2025 business plan and
capital requirements
The Directors reviewed and approved the proposals to embark
on a strategic plan to significantly expand its presence in
Bermuda across Property, Casualty and Specialty reinsurance.
The Board also approved the Brit Re 2025 business plan.
The Directors considered Brit Re’s role in the Company’s
immediate and longer-term strategic priorities, how an
expansion of Brit Re would impact together with the risks
facing the business, and how such an expansion would
complement our existing reinsurance underwriting capabilities
in London. They also considered the needs and expectations
of the Company’s shareholders, the interest of its clients and
employees, and those of the wider stakeholder group.
section 172(1) statement
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Brit Limited Annual Report 2024
53
Financial statements and reserving position
The Directors approved the financial statements for the
year ended 31 December 2023, on 26 March 2024. As part
of this process, the Directors considered and approved
the claims reserves held by the Group’s underwriting
entities. These financial statements were the first annual
statements prepared on an IFRS 17 basis. As part of
this process, it also approved a number of key IFRS 17
metrics such as the amount and confidence level of the risk
adjustment. On 5 September 2024, the Board approved the
Group’s 2024 Interim Report.
The Board considered the Company’s statutory financial
reporting obligations and those of its primary shareholder.
It considered and approved the policy decisions taken by
the Company and ensured they were aligned to its primary
shareholder’s expectations. The Board also ensured it had
adequate training on IFRS 17. In considering these key factors
and in approving the final reserving positions, the Directors
were mindful of the importance of maintaining the Group’s
policy of reserving on a best estimate basis with a specific
risk margin adjustment. This policy provides robust security
to our policyholders, while ensuring the long-term financial
strength of the Group, thereby protecting the interests of our
key stakeholders including our clients, members and employees.
2025 Brit Group business plan and capital requirements
On 5 November 2024, the Directors reviewed and approved
the 2025 business plan. The plan included the Group’s
underwriting and investment strategy, together with the
capital needed to support the plan.
The Directors considered the Company’s immediate and
longer-term strategic priorities, together with the risks
facing the business. They also considered the needs and
expectations of the Company’s shareholders, the interest
of its clients and employees, and those of the wider
stakeholder group. After due discussion, the Directors
concluded that the plans and attaching capital positioned
the Company well for 2025 and the longer term.
Subordinated Notes due 2030 (the subordinated notes):
Substitution of issuer
On 30 October, the Board discussed and considered the
substitution of the issuer of the subordinated notes.
The Board resolved to delegate authority to approve this
substitution to a sub-committee of the Board, to be convened
in January 2025. This sub-committee met on 13 January
2025 and approved the substitution, with Brit Group Holdings
Limited being substituted in place of Brit Limited as issuer and
principal debtor with effect on and from 22 January 2025.
In approving the change of issuer, the Board considered
the business needs of the two intermediate holding
companies owned by Brit Limited, Brit Group Holdings
Limited and Ki Financial Limited. It also considered the
position of its shareholder, and of other stakeholders such
as the holders and trustee of the subordinated notes.
Audit tender and auditor appointment
During 2024, as required under the Auditors and Third
Country Auditors Regulations 2016 (SATCAR), the Audit
Committee undertook an audit tender. Following the tender
process, the Committee recommended the reappointment of
PricewaterhouseCoopers LLP as the Group’s and Company’s
external auditor, effective for the year ending 31 December
2026. The recommendation of the Audit Committee was
considered and approved by the Board on 10 December 2024.
In approving the recommendation of the Audit Committee
and re-appointing PricewaterhouseCoopers LLP, the Board
considered the quality of the firms participating in the
tender based on a number of pre-determined weighted
criteria, and the interests of the Company, its finance
department and its principal shareholder.
Tax strategy
In October, the Board reviewed and approved the Group’s
tax strategy and approved its publication on the Brit limited
website.
In reviewing and approving the tax strategy, the Board
considered its statutory obligations. It also ensured the
strategy and policy enabled the Company to meet expectations
around tax governance and risk management, and ensured they
facilitated an appropriate framework for managing the Group’s
tax risks. In addition, the Board considered the interests of its
stakeholders, primarily those of its shareholders.
Capital Policy
In July, the Board considered and approved the Group
Capital Policy.
In reviewing and approving the policy, the Board considered
regulatory requirements in each of the jurisdiction in which
it operates, and the internal and external reporting bases
and requirements. It also ensured the policy facilitated an
appropriate framework for managing the Group’s capital
requirements. In addition, the Board considered the interests
of its stakeholders.
54
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Brit Limited Annual Report 2024
55
governance
Directors’ Report
This report sets out other information of
interest to shareholders. It includes information
on our shareholders, the Directors’ responsibility
statement and the Directors’ statement on
going concern.
Directors’ Report
Corporate Governance Report
Modern Slavery and Human Trafficking Statement
56
59
61
Corporate Governance Report
This report explains our governance framework.
Modern Slavery and Human Trafficking Statement
This statement sets out the steps taken by us to
ensure that slavery and human trafficking are not
taking place in our supply chains or in any part of
our business.
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Brit Limited Annual Report 2024
The Directors present their report together with the
audited consolidated financial statements for the year ended
31 December 2024.
Principal activities, review of business and other disclosures
Details of the Company’s principal activities and a review
of the business, including how the business environment is
likely to affect its future development and performance, are
included in the Strategic Report.
Directors
The following Directors held office during the financial year:
Mr Gordon Campbell – Chair
Mr Martin Thompson – Group Chief Executive Officer
Mr Gavin Wilkinson – Group Chief Financial Officer
Mr Mark Allan – Executive Director
Mr Simon Lee – Non-executive Director
Mr Michael Wallace – Non-executive Director
Ms Andrea Welsch – Non-executive Director
Mr Aviral Goel – Non-executive Director
(appointed 1 January 2024, resigned 8 January 2025)
Mr Ken Miner – Non-executive Director
(resigned 1 January 2024)
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Directors’
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires that the Directors prepare financial
statements for each financial year. Under company law the
Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the
state of affairs of the Company and of the profit and loss
of the Company for that period. In preparing these financial
statements, the Directors are required to:
• Select suitable accounting policies and then apply them
consistently;
• Make judgements and accounting estimates that are
reasonable and prudent;
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business; and
• State whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements.
The Directors are responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and Company’s transactions and disclose with
reasonable accuracy at any time the financial position of
the Group and Company and enable them to ensure that the
financial statements comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors confirm that, to the best of their knowledge:
• The consolidated financial statements, which have been
prepared in accordance with UK-adopted international
accounting standards, give a true and fair view of the assets,
liabilities, financial position, and profit or loss of the Group;
• The Company financial statements, which have been prepared
in accordance with United Kingdom Accounting Standards,
comprising FRS 102, give a true and fair view of the assets,
liabilities and financial position of the company; and
• The Strategic Report includes a fair review of the
development and performance of the business and the
position of the Group, together with a description of the
principal risks and uncertainties that it faces.
Dividends
A $12.9m dividend was paid to the class A shareholders on
21 March 2024 in accordance with the Brit Limited shareholders’
agreement at an amount equal to $0.14 per share. A further
dividend of $20.4m was paid to the class A shareholders
on 11 December 2024 in accordance with the Brit Limited
shareholders’ agreement at an amount equal to $0.22 per
share. Total dividends paid to class A shareholders in 2023
were $40.6m.
A $175.0m dividend was paid to the class B shareholders on
21 March 2024 in accordance with the Brit Limited shareholders’
agreement at an amount equal to $0.30 per share. A further
dividend of $397.1m was paid to the class B shareholders
on 11 December 2024 in accordance with the Brit Limited
shareholders’ agreement at an amount equal to $0.69 per
share. Total dividends paid to class B shareholders in 2023
were $373.0m.
Share capital
The Company’s ordinary issued share capital at 31 December
2024 comprised two classes of ordinary shares, class A
ordinary and class B ordinary, which are fully paid.
Voting rights
The Company’s articles of association provide that a
resolution put to the vote of a general meeting must be
decided on a show of hands unless a poll is duly demanded in
accordance with the articles.
The Company’s articles of association may only be amended
by the unanimous approval of the Company’s shareholders.
Shareholders
FFHL Group Limited acquired 92,364,532 A Ordinary shares
from OMERS Administration Corporation on 13 December 2024.
The Company’s shareholder at the time of this report is as
follows:
Shareholder
Units
Class
% of total
ordinary
shares
FFHL Group Limited
577,137,562
B Ordinary
86.2
FFHL Group Limited
92,364,532
A Ordinary
13.8
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Brit Limited Annual Report 2024
57
Significant agreements
The following agreement, which was in force at 31 December
2024, may be terminated on a change of control of the Company.
Revolving Credit Facility
The Group has a syndicated revolving credit facility (RCF)
which provides for $550.0m of committed multi-currency
financing. Amounts under the RCF can be drawn until
30 November 2027, and the RCF terminates on 31 December
2027, on which date all outstanding facilities must be repaid.
The RCF also contains a change of control provision under
which, upon the occurrence of a change of control, the lenders
may refuse to fund utilisation requests under the RCF, cancel
their commitments and demand immediate repayment of all
outstanding amounts.
At 31 December 2024, there were no cash drawings on the
facility (2023: $nil), and no letters of credit were in place
(2023: $10m uncollateralised). At the date of this report,
these borrowings were unchanged.
Employment
We employ a truly diverse, genuinely inclusive work
environment. We comfortably and confidently bring our whole
selves to work, because we know we’ll be respected, valued and
accepted, whoever we are. Our Employee Resource Groups are
safe spaces for people to share their experiences, aspirations
and suggestions about how we do things. Our People Forum
encourages open, meaningful conversations, which helps us get
to know each other – our different lives and perspectives.
We have four pillars which represent our vision for inclusion
and diversity at Brit:
• Our colleagues consider us to be a progressive organisation
which demonstrates its commitment to inclusion and
diversity both across the business and in our sector.
• We have a robust recruitment process to ensure we
attract and recruit the best talent from a diverse talent
pool and we make sure candidates are given an equitable
playing field regardless of their identity or characteristic.
• We are an organisation that accepts, recognises,
encourages, celebrates and promotes diversity in all its
forms and adopts a zero-tolerance approach to all forms
of discriminatory and non-inclusive behaviour.
• Our leadership and management populations act as role
models and allies, actively raising awareness, challenging
prejudice and demonstrating best practice approach
regarding inclusion and diversity at Brit.
We encourage employees to speak up on any matters that
concern them and have policies and processes to support and
encourage this.
We provide a competitive remuneration and benefits package.
This is kept under constant review to make sure it stays
relevant. We also understand the power of ‘thank you’, so we
make a point of acknowledging and rewarding extraordinary
effort and achievement by teams or individuals. Our Employee
Share Ownership Plan provides an opportunity for employees
to be involved in the Company’s performance.
Energy consumption and greenhouse gas emissions
Brit’s energy consumption and greenhouse gas emissions, and
its related strategy, are discussed on pages 43 to 45.
Political donations
Neither the Company nor any of its subsidiaries made any
political donations during the year.
Disclosure of information to the Group’s and Company’s auditor
In accordance with the provisions of section 418 of the
Companies Act 2006, each of the persons who are Directors of
the Company at the date of approval of this report confirms that:
• So far as the Director is aware, there is no relevant audit
information (as defined in the Companies Act 2006) of
which the Company’s auditor is unaware; and
• The Director has taken all the steps that he/she ought to
have taken as a Director to make himself/herself aware of
any relevant audit information (as defined) and to establish
that the Company’s auditor is aware of that information.
Auditor and audit tender
PricewaterhouseCoopers LLP remain in office as the Group’s
and Company’s auditor.
PricewaterhouseCoopers LLP was first appointed auditor
of the Group and Company for the year ended 31 December
2016. Under the Statutory Auditors and Third Country Auditors
Regulations 2016 (SATCAR), there is a requirement for all
Public Interest Entities (PIEs) to conduct a tender at least every
10 years and rotate auditors after at least every 20 years.
During 2024 the Group Audit Committee undertook an audit
tender and recommended to the Board the reappointment of
PricewaterhouseCoopers LLP as the Group’s and Company’s
external auditor, effective for the year ending 31 December
2026. The reappointment of PricewaterhouseCoopers LLP was
approved by the Board on 10 December 2024.
Events occurring after the reporting date
• Subordinated Notes due 2030 (the notes): With effect on
and from 22 January 2025, Brit Group Holdings Limited
was substituted in place of Brit Limited as issuer and
principal debtor under the notes. The notes continue to
be guaranteed by Brit Insurance Holdings Limited. The
substitution reflects changes to the Brit Group structure.
• California wildfires (January 2025): The Group has
potential exposures to claims resulting from the California
wildfires of January 2025, which will be accounted for in
the period ending 31 December 2025. After taking into
account potential reinsurance recoveries and reinstatement
premiums, the Brit Limited Group’s initial estimate, based on
information available at the date of this report, is a net cost
before tax of between $130m and $160m.
Future Brit Limited consolidated statuary financial statements
Following the substitution of Brit Group Holdings Limited in
place of Brit Limited as issuer and principal debtor under the
subordinated notes, Brit Limited no longer has securities in issue
that are listed on the London Stock Exchange and therefore
for 2025 is not required to produce consolidated financial
statements. Therefore the expectation is that Brit Limited will
not produce consolidated financial statements in future.
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Brit Limited Annual Report 2024
directors’ report
As Brit Group Holdings Limited is now the issuer of the
subordinated notes it is required to produce consolidated
financial statements going forward. Brit Limited’s other
subsidiary, Ki Financial Limited, will also produce consolidated
financial statements going forward.
Going concern
As part of its going concern assessment, the Board considered:
• Brit’s baseline 2025 financial plan and 2025 outlook:
Syndicate capacity has increased for 2025, for both Syndicate
2987 and Syndicate 2988. Within Syndicate 2987, the overall
growth in capacity is modest with the focus on growth
within areas where conditions are most favourable and a
reduced appetite where the market is more challenging. For
Syndicate 2988, growth is largely coming from a targeted
expansion within third party led consortia and facilities.
• Brit’s recent underwriting performance: During 2024,
Brit demonstrated the strength of its business with a
combined ratio before the effects of discounting of 85.9%.
This strong ratio is partly driven by market conditions,
together with Brit’s management of its underwriting
portfolio. Brit’s comparable 2023 combined ratio of 85.3%
also reflected a robust underwriting performance. In
considering underwriting performance, the Directors were
able to assess the underlying quality of the underwriting
portfolio and its reflection in the 2025 plan.
• Execution of catastrophe strategy: The Director’s
considered the changes to the Group’s catastrophe
strategy implemented in 2022 and 2023 and how this
was reflected in the 2025 plan. The Board noted the
Group’s focus on achieving minimum rate requirements,
increasing inflationary guards and minimum valuations,
and redistributing capacity away from catastrophe
intensive regions.
• Strong market conditions: Strong market conditions
have continued during 2024, albeit but with some rate
reductions. Brit experienced an overall risk adjusted rate
decrease of 1.4% (2023: increase of 7.1%).
• Brit’s reserving policy and track record: Brit has a policy
of reserving on a best estimate basis and, under IFRS 17,
carrying an explicit risk adjustment above that estimate.
This policy has led to a track record of modest annual
best estimate reserve releases. This reserving approach,
which has been adopted unchanged for the 2025 plan, has
demonstrated the robustness of Brit’s approach.
• Investment market conditions and outlook: The Directors
considered the current economic environment, and
concluded it was appropriately reflected in the 2025 plan.
• Liquidity: The Directors considered the liquidity position of
the Group. The Group ended 2024 in a strong position, with
cash and cash equivalents of $751.9m on a look through
basis. The Directors also considered the duration of the
investment portfolio and the forecast yields for 2025.
The Directors also noted the availability of the $550.0m
Revolving Credit Facility to 31 December 2027. Brit’s 2025
plan envisages the Group’s liquidity position continuing in 2025.
• Risk and risk management: The Board considered the risks
faced by Brit, and the management of those risks, including
emerging risks such as those arising from climate change,
geopolitical events such as Russia’s invasion of Ukraine,
and the global economic environment including the current
inflationary environment. These risks are discussed in
more detail on pages 36 to 37 and in Note 4 to the financial
statements.
A review of the financial performance of the Group is set out
on pages 22 to 29. The financial position of the Group, its cash
flows and borrowing facilities are set out on pages 31 to 33.
After assessing the evidence from the reviews performed,
the Directors concluded they have a reasonable expectation
that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in
preparing the financial statements.
Information included in the Strategic Report
The information below is not shown in the Directors’ report
because it is shown in the Strategic Report instead under
s414C(11).
• Future developments of the business
Disclosures regarding future developments of the business
can be found on pages 17 to 20.
• Employee engagement
Disclosures regarding employee engagement can be found
on pages 39 to 40.
• Stakeholder engagement
Disclosures regarding stakeholder engagement can be
found on pages 48 to 50.
• Charitable donations
Disclosures regarding charitable donations can be found
on page 40.
• Financial instruments
Details of the Group’s Risk Management Framework
supporting our investment in financial instruments is set
out on pages 34 to 37.
• Environmental related disclosures
Disclosures regarding environmental matters can be found
on pages 41 to 45.
• Non-Financial and sustainability information statement
(NFSIS)
Disclosures regarding NFSIS can be found on pages 46
to 47.
By order of the Board
Joe Marinelli
Company Secretary
27 February 2025
Brit Limited – 08821629
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59
Introduction
The Company has not applied any corporate governance
code for the financial year. Instead, the Company prefers
to adopt governance arrangements that are bespoke to its
circumstances and adaptable to future change.
The governance arrangements adopted by the Company
concern the management of the Company and its subsidiaries
(the Brit Group). The operation of those arrangements over
the financial year ended 2024 are summarised below.
Until 13 December 2024, the Company was (ultimately)
owned in majority by Fairfax Financial Holdings Limited and in
minority by OMERS Administration Corporation. Thereafter,
the Company has been wholly owned (ultimately) by Fairfax
Financial Holdings Limited. This has impacted the composition
of the Board as outlined below.
Board of Directors
During the financial year, the average number of directors
was eight – comprising five non-executive directors and
three executives. Four of those non-executive directors were
considered to be independent from the Company, while the
remainder were representatives of Fairfax Financial Holdings
Limited and OMERS Administration Corporation, respectively.
The representative of OMERS Administration Corporation
resigned from the Board upon Fairfax Financial Holdings
Limited becoming the sole (ultimate) owner of the Company
in December. The composition of the Board provides an
appropriate balance of independent non-executive challenge,
executive leadership and shareholder representation.
A complete list of Directors during the financial year is
available within the Directors’ Report on page 56.
The primary responsibility of the Board is to review and
oversee the achievement of Group strategy. In doing so, the
Board ensures that the Group is appropriately capitalised to
support that strategy, and that material risks threatening its
achievement are appropriately managed.
The Board meets quarterly and at such other times as required.
Chair
The Chair is responsible for the effectiveness of the Board.
Principally, they manage and draw on Board membership to
ensure discussions benefit from an appropriate balance of
executive leadership, independent non-executive challenge and
shareholder expectations. Further, they have a responsibility
for injecting wider stakeholder views into discussion.
Audit Committee
The Audit Committee comprises two independent non-executive
directors of the Company and the Chair of the equivalent
committee operated by the Company’s subsidiary, Brit
Syndicates Limited. As a material subsidiary, this arrangement
improves the Audit Committee’s oversight of Group matters.
In line with the Disclosure Guidance and Transparency rules
that applied to the Company until 22 January 2025, the Audit
Committee contains at least one member who has competence
in accounting or auditing, and the members as a whole have
competence relevant to the sector in which the Company operates.
The Audit Committee is responsible for monitoring the
integrity of the Group’s financial statements, the effectiveness
of the Group Internal Control and Internal Audit frameworks,
and the relationship with the Group’s External Auditor.
The Audit Committee meets quarterly and at such other times
as required. The committee reports into the Board after each
meeting.
Remuneration Committee
The Remuneration Committee comprises four members –
including one executive and three non-executive directors. Two
of those non-executive directors are independent, while the
other is a representative of Fairfax Financial Holdings Limited.
The committee is chaired by an independent non-executive
director who is also the Chair of the Board. This arrangement
ensures that remuneration discussions are informed by
executive management and shareholder expectations, while
remaining subject to independent challenge.
The Remuneration Committee is responsible for setting
the Group’s remuneration policy and executive director
remuneration. Remuneration is designed to be fair and to
promote the achievement of Brit Group strategy. No director
is involved in setting their own remuneration.
The Remuneration Committee meets biannually and at such
other times as required. The committee reports into the
Board after each meeting.
Nominations Committee
The composition of the Nominations Committee is aligned to
that of the Remuneration Committee. Besides the benefits
outlined above, this arrangement accounts for (1) the Chair of
the Board also being the Chair of the Nominations Committee,
in support of their responsibility to manage the effectiveness
of the Board and (2) for the Chair of Brit Syndicates Limited to
be a member of the Nominations Committee, also in support of
their responsibility to manage the effectiveness of the Board
for Brit Syndicates Limited.
The Nomination Committee leads the appointment of directors to
the Company and material subsidiaries (including Brit Syndicates
Limited), and keeps under review succession arrangements
for those directors, having regard to the skills, knowledge and
experience required to achieve the Brit Group strategy.
The Nomination Committee meets biannually and at such other
times as required. The committee reports into the Board
after each meeting.
Effectiveness Reviews
The Board and Board committees are subject to periodic
internal and external review. The most recent review was
conducted externally over the fourth quarter of 2023 and the
first quarter of 2024 and all recommendations arising from
that review have been addressed.
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corporate governance report
Executive Management
Aside from the functions reserved to the Board or otherwise
delegated to committees of the Board, all management
functions are delegated to the Chief Executive Officer. In
turn, the Chief Executive Officer delegates authority to the
executive team, and operates the Executive Committee to
manage that arrangement.
Future Developments
To enable separation between the Brit and Ki business, the
Group has been restructured to arrange Ki entities beneath
the existing Ki holding company (Ki Financial Limited) and
Brit entities beneath a new Brit holding company (Brit Group
Holdings Limited). During the first quarter of 2025, the
governance arrangements adopted by the Company in the
management of the Brit Group will be adopted by Brit Group
Holdings Limited. In turn, the Company will be repurposed as
a holding company for both the Brit and Ki businesses.
By order of the Board
Joe Marinelli
Company Secretary
27 February 2025
governance
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61
modern slavery and human trafficking statement
This statement sets out the steps taken by Brit Limited to
ensure that slavery and human trafficking are not taking place
in our supply chains or in any part of our business. Slavery and
human trafficking can occur in many forms, such as forced
labour, child labour, domestic servitude, sex trafficking and
workplace abuse. Given the nature of the work that we do, we
believe that there is a low risk of slavery or human trafficking
having any connection with our business. We must, however, not
be complacent, and all staff have a responsibility to be aware
of any risks in our business and in our wider supply chains and
report any concerns to senior management.
Our business
At Brit, we provide highly specialised insurance products to
support our clients across a broad range of complex risks. We
have a major presence in Lloyd’s of London (Lloyd’s), the world’s
specialist insurance market provider, and a significant US and
international reach. We have local offices in Bermuda, South
Africa and Japan.
We operate globally via our own international distribution network
and broker partners. The average number of employees working
at Brit during 2024, including non-executive Directors, was 1,038
and the result after tax in 2024 was a profit of $573.1m.
Our supply chains
We source our business through trading relationships
with Lloyd’s brokers, wholesale brokers, retail agents and
reinsurance intermediaries. Most of our reinsurance business
is sourced through global reinsurance brokers.
We require that contractual agreements with third-party
suppliers contain obligations to ensure compliance with the
Modern Slavery Act 2015.
Our Global Procurement and Outsourcing Policy ensures that
information around our requirements is detailed and available
to our wider business.
Our policies on slavery and human trafficking
We are committed to ensuring that there is no modern slavery
or human trafficking in our supply chains or in any part of
our business. We believe in paying people fairly and properly
for their work. This policy reflects our commitment to acting
ethically and with integrity in all our business relationships and
to implementing and enforcing effective systems and controls
to ensure slavery and human trafficking is not taking place
anywhere in our supply chains.
Due diligence processes for slavery and human trafficking
As part of our initiative to identify and mitigate risk we have in
place systems to:
• Identify and assess potential risk areas in our supply chains.
We give all suppliers a copy of this statement and request
a copy of their statement (if they are required to have one);
• Mitigate the risk of slavery and human trafficking occurring
in our supply chains. We set clear expectations for our
suppliers by informing them of our Code of Conduct, which
states ‘Brit does not tolerate modern slavery or any form
of human trafficking within its business or supply chains.
Brit does not allow harsh or inhumane treatment and we
expect our suppliers to share our values’;
• Monitor potential risk areas in our supply chains. Staff are
encouraged to report any concerns to senior management
and there is a risk register operated by the Head of
Operational Risk to record any such concerns;
• Ensure appropriate recruitment practices are carried out,
using reputable employment agencies. We verify the practices
of any new recruitment agency as part of our terms of
business with them and before accepting any candidates and
temporary workers from that agency. We also request a copy
of the agency’s modern slavery statement (if it is required to
have one). We ask any agency supplying us with candidates
to conduct verification checks on those individuals (including
verification of identity, references, evidence of qualifications
and criminal and financial checks). We also carry out more
detailed pre-employment screening which include criminal
and credit checks, media searches and regulatory checks as
required for all future joiners; and
• Protect whistleblowers. At Brit, workers, customers
and suppliers are encouraged to report any concerns
related to our activities or supply chains. This includes
circumstances which may give rise to increased risk of
slavery or human trafficking. Our whistleblowing procedure
is designed to make it easy for people to make disclosures
without fear of retaliation.
Key Performance Indicators
Several key performance indicators are collated from
across the business to measure the effectiveness of existing
processes and controls and performance against specific
appetites as set by the Board and/or management. These KPIs
are proportionate to the risk profile of the Group and where
applicable, include Modern Slavery and Human Trafficking
considerations (e.g. the completion rate of staff mandatory
training measures the completeness of all new starter training
modules, of which Modern Slavery and Human Trafficking is one).
Training
To ensure a high level of understanding of the risks of modern
slavery and human trafficking in our supply chains and our
business, we provide appropriate training to members of staff.
Our commitment
This statement is made pursuant to section 54(1) of the
Modern Slavery Act 2015 and constitutes our Group’s slavery
and human trafficking statement for the financial year ending
31 December 2024.
This Modern Slavery and Human Trafficking Statement is
reviewed by Brit’s Board of Directors at least annually and may
be amended from time to time.
By order of the Board
Joe Marinelli
Company Secretary
27 February 2025
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financial statements
Brit Limited Annual Report 2024
63
Independent Auditors’ Report to the
Members of Brit Limited
Consolidated Financial Statements
Parent Company Financial Statements
64
72
181
financial statements
financial statements
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Brit Limited Annual Report 2024
Independent Auditors’ Report to the Members of Brit Limited
Report on the audit of the
financial statements
Opinion
In our opinion:
• Brit Limited’s group financial statements and company
financial statements (the “financial statements”) give
a true and fair view of the state of the group’s and
of the company’s affairs as at 31 December 2024 and
of the group’s profit and the group’s cash flows for the
year then ended;
• the group financial statements have been properly
prepared in accordance with UK-adopted international
accounting standards as applied in accordance with the
provisions of the Companies Act 2006;
• the company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards, including FRS 102 “The Financial Reporting
Standard applicable in the UK and Republic of Ireland”, and
applicable law); and
• the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements, included within the
Annual Report, which comprise: the Consolidated and Parent
Statement of Financial Position as at 31 December 2024; the
Consolidated Income Statement, the Consolidated Statement
of Comprehensive Income, the Consolidated Statement of Cash
Flows, and the Consolidated and Parent Statement of Changes
in Equity for the year then ended; and the notes to the financial
statements, comprising material accounting policy information
and other explanatory information.
Our opinion is consistent with our reporting to the
Audit Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the
Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We remained independent of the group in accordance with
the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical
Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with
these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC’s Ethical Standard
were not provided.
Other than those disclosed in Note 16, we have provided no
non-audit services to the company or its controlled undertakings
in the period under audit.
Our audit approach
Overview
Audit scope
• Our audit scope has been determined to provide
coverage of all material financial statement line items.
We performed full scope audit procedures over one of the
group’s components, namely the syndicates (comprising
syndicates 2987, 2988 and 1618). In addition, we have
ensured appropriate coverage has been obtained over
the Brit Limited group’s consolidation adjustments.
• For certain other components, we performed audit
procedures over specified financial statement line
item balances; and
• For the remaining components that were not
inconsequential, analytical procedures were performed
by the group engagement team.
Key audit matters
• Valuation of the undiscounted best estimate of the liability
for incurred claims and the corresponding asset for
incurred claims (group);
• Valuation of estimated ultimate premiums (group);
• Valuation of financial investments with valuations modelled
using unobservable inputs (group);
• Valuation of the deferred tax asset related to carried
forward losses (group);
• Valuation of shares in group undertakings (parent).
Materiality
• Overall group materiality: $34.6m (2023: $35.1m) based
on 1% of insurance revenue (rounded down).
• Overall company materiality: $11.6m (2023: $11.5m)
based on 1% of total assets (net of intercompany assets)
(rounded down).
• Performance materiality: $25.9m (2023: $26.3m) (group)
and $8.7m (2023: $8.6m) (company).
The scope of our audit
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the
financial statements.
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Brit Limited Annual Report 2024
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Key audit matter
How our audit addressed the key audit matter
Valuation of the undiscounted best estimate of the liability for
incurred claims and the corresponding asset for incurred
claims (group)
See notes 2.4.1, 3.2.1 and 23 of the group financial
statements for disclosures of related accounting policies,
judgements and estimates.
The group estimates the Liability for Incurred Claims (the
‘LIC’) and the corresponding Asset for Incurred Claims (the
‘AIC’) based on the fulfilment cash flows related to incurred
claims. The fulfilment cash flows incorporate, in an unbiased
way, all reasonable and supportable information available.
They reflect current estimates from the perspective of the
entity, include an explicit adjustment for non-financial risk
(the risk adjustment) and are discounted for the time
value of money.
The valuation of the LIC and the AIC involve complex and
subjective judgements about future events. We focussed
particularly on the undiscounted best estimate component
of the LIC and AIC given the level of judgement involved in their
determination, and the sensitivity of the valuation of the
undiscounted LIC and the AIC to underlying assumptions.
Note: The valuation of the risk adjustment and the impact
of discounting on the valuation of the best estimate of the
LIC and the AIC was included within this key audit matter
last year. These aspects of the key audit matter have been
removed as the inherent risk associated with them following
the implementation of IFRS 17 in 2023 has reduced.
We tested the group’s undiscounted best estimate of the LIC
and the AIC with the assistance of our actuarial specialists,
by performing the following work:
• We understood, assessed and tested the design and
operating effectiveness of key controls over the group’s
estimation of ultimate claims and the associated
reinsurance recoveries. This included controls over the
extraction of source data supporting management’s
calculations from the underlying systems, and the review
and approval of the ultimate claims and the associated
reinsurance recoveries;
• We developed a point estimate of ultimate claims and
the associated reinsurance recoveries related to non-
catastrophe claims. We used our point estimates
to challenge management’s estimates;
• We understood the approach used to establish the
ultimate claims and the associated reinsurance
recoveries in relation to catastrophe events and the
consistency of its application across the group. We tested
the process by which management identified exposed
insurance contracts and assessed key assumptions used
by management. For catastrophe events that occurred
in prior years we tested notifications received, payments
made and assessed the assumptions made by management
supporting the remaining best estimate Liability for
Incurred Claims and the associated reinsurance
recoveries.In concluding on the reasonableness
of management’s estimates in this area, we also considered
PwC’s market view for major events;
• We tested the underlying source data including claims
incurred, claims payments, reinsurance purchases and
reinsurance recoveries to supporting documentation; and
• We tested the application of the claims payment patterns
which are used to convert the ultimate claims and the
associated reinsurance recoveries into the incurred best
estimate liability/asset fulfilment cashflows.
Based on the work performed, the valuation of the undiscounted
best estimate LIC and the AIC were consistent with the
evidence received.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the audit
of the financial statements of the current period and include
the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including
those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon,
were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Determination of the measurement model to be applied to the
valuation of insurance and reinsurance contracts, which was
a key audit matter last year, is no longer included because,
following the implementation of IFRS 17 in 2023, the group’s
measurement framework is now embedded which has acted
to reduce the inherent risk within this area in the current
year. Otherwise, the key audit matters below are consistent
with last year.
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Independent Auditors’ Report to the members of Brit Limited
Key audit matter
How our audit addressed the key audit matter
Valuation of estimated ultimate premiums (group)
See notes 2.4.1(I), 3.2.1(c) and (d), 3.3.1(a), 6 and 23 of the
group financial statements for disclosures of related
accounting policies, judgements and estimates.
Insurance revenue in each reporting period represents
the change in the Liability for Remaining Coverage (‘LRC’)
that relates to services for which the group expects
to receive consideration, and, for GMM business specifically,
an allocation of premiums that relates to the recovery
of insurance acquisition cash flows. The associated future
ultimate premium fulfilment cash flows (‘estimated ultimate
premiums’) could be adjusted to alter the recognition
of insurance revenue over time leading us to focus on this
area in our audit.
Estimated ultimate premiums are formed by applying
assumptions about past events, current conditions and
forecasts of future conditions. These estimates are
particularly uncertain where business is conducted through
a delegated underwriting authority arrangement (‘DUA’).
We tested the group’s estimated ultimate premiums
by undertaking the following work:
• We understood, assessed and tested the design and
operating effectiveness of the governance and controls
over the monitoring of estimated ultimate premiums;
• Assisted by our actuarial specialists, we reprojected
estimated ultimate premiums by class of business and
by underwriting year for the 2023 and prior underwriting
years, challenging management to provide explanations
where differences were identified. For estimated ultimate
premiums on the 2024 underwriting year, we understood
how management derived them and challenged them
accordingly based on our understanding of the business;
• We tested the current calendar year data used in the
actuarial projections noted above to source systems,
and tested that historical data was consistent
year-on-year; and
• We tested the conversion of the estimated ultimate
premiums to fulfilment cashflows and tested the change
in the LRC over the period, including amounts recognised
within insurance revenue.
Based on the above procedures the estimated ultimate
premiums, the change in LRC over the period and therefore
insurance revenue, were found to be consistent with the
evidence obtained.
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Independent Auditors’ Report to the members of Brit Limited
Key audit matter
How our audit addressed the key audit matter
Valuation of financial investments with valuations modelled using
unobservable inputs (group)
See notes 2.4.3(c)(xiii), 3.3.5 and 25 of the group financial
statements for disclosures of related accounting policies,
judgements and estimates.
The group investment portfolio contains level 3 investments
measured at fair value and whose fair value is determined
using unobservable inputs. Fair values for these investments
can only be calculated using estimates and judgements and
accordingly these investments require additional audit focus.
We coordinated with our internal valuation specialists
based in Canada who centrally tested the valuation of level
3 investments. We assessed and tested management’s
controls over the valuation of level 3 investments, including
management’s review of the models and key inputs. For
a sample of level 3 investments we performed the following:
• We obtained management’s valuation memos
and/or models, and developed an understanding of the
investment and valuation methodology used;
• We engaged our specialists (and experts, where
applicable) to review the appropriateness of the valuation
methodology/models applied and key inputs/assumptions
used in the valuations; and in certain instances
developed an independent point estimate to challenge
management’s valuation;
• We corroborated key inputs/ assumptions in the valuation
models to third party support (where possible); and
• For investment fund assets, we performed back-testing
(reconciliation between the latest audited and unaudited
fund financial statements) and investigated significant
differences identified. We used this work to assess the
reasonableness of the current year end investment fund
asset valuation.
Based on the above procedures, the valuation of the level 3
investments was consistent with the evidence obtained.
Valuation of the deferred tax asset related to carried forward
losses (group)
See notes 2.4.8(b), 3.3.4 and 22 of the group financial
statements for disclosures of related accounting policies,
judgements and estimates.
At 31 December 2024, the group has recognised a material
deferred tax asset (‘DTA’). A DTA is recognised to the extent
that future profits are considered likely to be available to utilise
the asset. The extent of future profits is subject to a number
of significant assumptions relating to the future performance
of the group and as such was a focus for our audit.
With the assistance of our tax specialists, we performed
the following procedures in order to assess the
valuation of the DTA:
• We assessed management’s calculation of the DTA to test
whether it was calculated in accordance with current tax
legislation and reflected enacted corporation tax rates;
• We agreed inputs to management’s calculation to audited
financial information, submitted tax computations, and
approved business forecasts as appropriate;
• We reviewed management’s assessment of historic
forecasts to determine the robustness of management’s
forecasting process, and therefore the reliability
of forecasts used in the calculation of the DTA;
• We assessed the reasonableness of assumptions
relating to future forecasts and considered the impact
of alternative scenarios in the future forecasts; and
• We read and assessed the appropriateness
of management’s disclosures in relation to the
recognised DTA.
Based on these procedures, the valuation of the DTA was
consistent with the evidence obtained.
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Key audit matter
How our audit addressed the key audit matter
Valuation of shares in group undertakings (parent)
See notes 1.2(a) and 3 of the parent company financial
statements for disclosures of related accounting policies,
judgements and estimates.
In the company’s statement of financial position, the shares
in group undertakings are reported at cost less impairment.
Management carry out an impairment assessment on an
annual basis which requires judgement and the application
of underpinning assumptions and as such this was a focus
for our audit.
We performed the following audit procedures to assess the
valuation of the shares in group undertakings:
• We assessed the shares in group undertakings for
an indication of impairment considering our understanding
of the business;
• Where there was an indicator of impairment we tested the
value-in-use (VIU) calculations and impairment analyses
performed by management which included validating the
accuracy of the input data and testing the key assumptions
used. We used experts to assist us in challenging the
discount rate applied in the VIU calculations; and
• We performed sensitivity testing to support our
final conclusions.
Based on these procedures, the valuation of the shares
in group undertakings was found to be consistent with the
evidence obtained.
Independent Auditors’ Report to the members of Brit Limited
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
group and the company, the accounting processes and controls,
and the industry in which they operate.
Brit is a global specialty insurer and reinsurer, present
in Lloyd’s of London with operations in Bermuda, and writes
insurance business internationally. The group is structured
into five segments (see Note 5 to the consolidated financial
statements) and is a consolidation of a number of separate legal
entities. A full scope audit was performed for one significant
component located in the United Kingdom, namely the syndicates
(comprising syndicates 2987, 2988 and 1618). In addition, we
have ensured appropriate coverage has been obtained over the
Brit Limited group’s consolidation adjustments.
For certain other components, we identified account balances
which were considered to be significant in size or audit risk
at the financial statement line item level in relation to the
consolidated financial statements, and performed financial
statement line item audit procedures over these specified
balances. Analytical procedures over the remaining components
that were not inconsequential were performed by the group
engagement team.
In establishing the overall approach to the group audit, we
determined the type of work that needed to be performed at the
components by us, as the group engagement team, or by the
component audit team, being PwC Canada, who operated under
our instruction. Where the work was performed by a component
audit team, we determined the level of involvement we needed
to have in the audit work at the component to be able to conclude
whether sufficient appropriate audit evidence had been obtained.
The group engagement team had regular interaction with the
component team during the audit process. The engagement
leader and senior members of the group engagement team
reviewed in detail all reports with regards to the audit approach
and findings submitted by the component auditor. This, together
with additional procedures performed at the group level,
as described above, gave us the evidence we needed for our
opinion on the consolidated financial statements as a whole.
The impact of climate risk on our audit
As part of our audit we made enquiries of management
to understand the extent of the potential impact of climate
risk on the group’s and company’s financial statements, and
we remained alert when performing our audit procedures for
any indicators of the impact of climate risks. We assessed the
consistency of the disclosures related to climate risk within
the Annual Report against the knowledge obtained from our
work. Our procedures did not identify any material impact
as a result of climate risk on the group’s and company’s
financial statements.
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Independent Auditors’ Report to the members of Brit Limited
Materiality
The scope of our audit was influenced by our application
of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate
on the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Financial statements
– group
Financial statements
– company
Overall
materiality
$34.6m (2023: $35.1m)
$11.6m (2023: $11.5m)
How we
determined
it
1% of insurance
revenue
(rounded down)
1% of total assets (net
of intercompany assets)
(rounded down)
Rationale for
benchmark
applied
In determining our
materiality, we have
considered financial
metrics which we
believe to be relevant
to the primary users
of the consolidated
financial statements.
We concluded a revenue
based metric was
most relevant to the
users. A revenue based
metric provides a good
representation of the
size and complexity
of the business and
it is not distorted
by insured catastrophe
events to which the
group is exposed
or to the levels
of external reinsurance
purchased by the group.
Due to the nature
of the parent company’s
operations (a holding
company) total assets
(net of intercompany
assets) is an appropriate
and generally
accepted benchmark.
For each component in the scope of our group audit, we
allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across
components was $1.7m to $32.9m. Certain components were
audited to a local statutory audit materiality that was also less
than our overall group materiality.
We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality.
Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our testing
of account balances, classes of transactions and disclosures,
for example in determining sample sizes. Our performance
materiality was 75% (2023: 75%) of overall materiality,
amounting to $25.9m (2023: $26.3m) for the group financial
statements and $8.7m (2023: $8.6m) for the company
financial statements.
In determining the performance materiality, we considered
a number of factors – the history of misstatements, risk
assessment and aggregation risk and the effectiveness
of controls – and concluded that an amount in the middle of our
normal range was appropriate.
We agreed with the Audit Committee that we would report
to them misstatements identified during our audit above
$1.7m (group audit) (2023: $1.7m) and $0.5m (company audit)
(2023: $0.5m) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and
the company’s ability to continue to adopt the going concern
basis of accounting included:
• Evaluating management’s analysis and supporting
documentation as it related to the group and company’s
going concern;
• Inspecting management’s going concern analysis based
on audit procedures performed, considering the group’s
and company’s capital, solvency and liquidity positions; and
• Assessing the disclosures made in the financial
statements in respect of going concern.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group’s and the company’s ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the group’s
and the company’s ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report.
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Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for
the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do
not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated.
If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures
to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing
to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we
also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course
of the audit, the information given in the Strategic Report
and Directors’ Report for the year ended 31 December 2024
is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and
company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the
Strategic Report and Directors’ Report.
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for the
financial statements
As explained more fully in the Statement of Directors’
responsibilities, the directors are responsible for the
preparation of the financial statements in accordance with
the applicable framework and for being satisfied that they give
a true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the company’s ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate
the group or the company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken
on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud, is detailed below.
Based on our understanding of the group and industry, we
identified that the principal risks of non-compliance with laws
and regulations related to breaches of regulatory principles,
such as those governed by the Prudential Regulation Authority
and the Financial Conduct Authority and those regulations set
by the Council of Lloyd’s, and we considered the extent to which
non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations
that have a direct impact on the financial statements such
as the Companies Act 2006 and UK tax legislation. We evaluated
management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk
of override of controls), and determined that the principal risks
financial statements
Brit Limited Annual Report 2024
71
Independent Auditors’ Report to the members of Brit Limited
were related to posting of inappropriate journals and management
bias in accounting estimates. The group engagement team shared
this risk assessment with the component auditors so that they
could include appropriate audit procedures in response to such
risks in their work. Audit procedures performed by the group
engagement team and/or component auditors included:
• Discussions with the Board, management, internal audit
and the compliance function, including consideration
of known or suspected instances of non-compliance with
laws and regulations, and fraud;
• Assessment of matters reported on the whistleblowing
helpline and management’s investigation of such matters;
• Reviewing relevant meeting minutes;
• Testing and challenging, where appropriate, the
assumptions and judgements made by management
in their significant accounting estimates;
• Identifying and testing journal entries identified as potential
indicators of fraud; and
• Designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related
to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations,
or through collusion.
Our audit testing might include testing complete populations
of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting
a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular
items for testing based on their size or risk characteristics.
In other cases, we will use audit sampling to enable us
to draw a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at: www.
frc.org.uk/auditorsresponsibilities. This description forms part
of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and
only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
• we have not obtained all the information and explanations
we require for our audit; or
• adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by
law are not made; or
• the company financial statements are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we
were appointed by the members on 14 June 2016 to audit the
financial statements for the year ended 31 December 2016 and
subsequent financial periods. The period of total uninterrupted
engagement is 9 years, covering the years ended
31 December 2016 to 31 December 2024.
Paul Pannell
Senior Statutory Auditor
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
28 February 2025
72
Brit Limited Annual Report 2024
financial statements
contents
Index to the Consolidated Financial Statements
Consolidated Income Statement
74
Consolidated Statement of Comprehensive Income
75
Consolidated Statement of Financial Position
76
Consolidated Statement of Cash Flows
77
Consolidated Statement of Changes in Equity
78
Notes to the Consolidated Financial Statements:
79
Note 1
General information
79
Note 2
Accounting policies and basis of preparation
79
Note 3
Significant judgements and estimates
98
Note 4
Risk management policies
102
Note 5
Segmental information
122
Note 6
Insurance revenue
125
Note 7
Investment return
126
Note 8
Net finance income or expenses from
insurance and reinsurance contracts held
127
Note 9
Return on derivative contracts
127
Note 10
Discontinued operation
127
Note 11
Other income (including changes in value
of other financial liabilities)
128
Note 12
Net foreign exchange (losses)/gains
128
Note 13
Operating expenses
129
Note 14
Staff costs
130
Note 15
Finance costs and finance income
130
Note 16
Auditors’ remuneration
131
Note 17
Investment in associated undertaking
131
Note 18
Non-controlling interests
132
Note 19
Tax credit/(expense)
134
Note 20
Intangible assets
136
Note 21
Property, plant and equipment
138
Note 22
Deferred taxation
139
Note 23
Insurance and reinsurance contracts
141
Note 24
Employee benefits
155
Note 25
Financial assets and liabilities
160
Note 26
Derivative contracts
166
Note 27
Insurance and other receivables
168
Note 28
Leases where the Group acts as a lessor
168
Note 29
Cash and cash equivalents
168
Note 30
Borrowings
169
Note 31
Insurance and other payables
170
Note 32
Called up share capital
170
Note 33
Dividends
171
Note 34
Cash flows provided by operating activities
171
Note 35
Share-based payments
173
Note 36
Consolidated entities
175
Note 37
Related party transactions and Ultimate
Parent Company
177
Note 38
Guarantees and contingent liabilities
179
Note 39
Events occurring after the reporting date
179
Brit Limited Annual Report 2024
73
financial statements
contents
Introduction to the Primary Statements
Consolidated Income Statement
The income statement shows income earned and expenses incurred by all the companies of Brit. Other items are shown in the
statement of comprehensive income. The numbers in brackets are costs or losses incurred.
Consolidated Statement of Comprehensive Income
As well as the profit or loss reported in the income statement, there are a number of other items not reported in the income
statement which are instead shown here. These are gains and losses in the Group’s pension scheme, any tax associated with these
gains or losses and foreign exchange gains and losses on the translation of foreign operations into US dollars. The statement starts
from profit or loss reported in the income statement and adjusts for any gains and losses arising as a result of the pension scheme
and foreign operations to show the overall result.
Consolidated Statement of Financial Position
The statement of financial position is a summary of assets and how the assets have been funded through liabilities and equity
investment by shareholders.
Consolidated Statement of Cash Flows
The cash flow statement shows how we generate cash through our operating activities, how we have spent cash (investing activities)
and how we have borrowed or spent cash to fund our business for all the companies in the Group.
Consolidated Statement of Changes in Equity
The statement of changes in equity shows how the various lines in the equity section of the Group’s statement of financial position
have moved during the year.
74
Brit Limited Annual Report 2024
financial statements
consolidated income statement
For the year ended 31 December 2024
Note
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Continuing Operations
Insurance revenue
5, 6, 23
3,465.5
3,517.1
Insurance service expenses
5, 23
(2,579.0)
(2,594.3)
Net expenses from reinsurance contracts held
5, 23
(211.7)
(273.3)
Insurance service result
674.8
649.5
Net finance expenses from insurance contracts
5, 8, 23
(271.6)
(322.7)
Net finance income from reinsurance contracts held
5, 8, 23
64.3
96.9
Net insurance finance expenses
(207.3)
(225.8)
Interest revenue from financial assets not measured at FVTPL
7
52.8
48.4
Other investment return
7
286.1
351.0
Profit on disposal of associates
17
15.2
–
Return on derivative contracts
9
16.5
(9.4)
Other income
11
89.1
65.6
Losses on other financial liabilities
11
(4.6)
(20.8)
Investment return and other income
455.1
434.8
Other operating expenses
13
(192.4)
(126.9)
Net foreign exchange losses
12
(54.6)
(94.2)
Other expenses
(247.0)
(221.1)
Operating profit
675.6
637.4
Finance costs
15
(14.6)
(17.8)
Finance income
15
–
2.7
Share of net profit of associates
17
–
1.6
Profit before tax
661.0
623.9
Tax (expense)/credit
19(a)
(84.8)
5.3
Profit from continuing operations
576.2
629.2
Discontinued operation
(Loss)/profit from discontinued operation, net of tax
10
(3.1)
266.2
Profit for the year
573.1
895.4
Profit attributable to:
Owners of the parent
506.8
836.2
Non-controlling interests
66.3
59.2
Profit for the year
573.1
895.4
The accompanying Notes on pages 79 to 179 are an integral part of the consolidated financial statements.
Brit Limited Annual Report 2024
75
financial statements
Note
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Profit for the year
573.1
895.4
Other comprehensive expense
Items not to be reclassified to profit or loss in subsequent periods:
Remeasurements of post-employment benefit obligations
24
0.1
(23.7)
Deferred tax (loss)/gain relating to remeasurements of post-employment benefit
obligations
19(b)
(5.2)
8.4
Items that may be reclassified to profit or loss in subsequent periods:
Change in unrealised foreign currency translation losses on foreign operations
(2.7)
7.1
Total other comprehensive expense
(7.8)
(8.2)
Total comprehensive income for the year
565.3
887.2
Total comprehensive income for the year attributable to:
Owners of the parent
499.0
828.0
Non-controlling interests
18
66.3
59.2
Total comprehensive income for the year
565.3
887.2
The accompanying Notes on pages 79 to 179 are an integral part of the consolidated financial statements.
consolidated statement of comprehensive income
For the year ended 31 December 2024
76
Brit Limited Annual Report 2024
financial statements
consolidated statement of financial position
At 31 December 2024
Note
31 December
2024
$m
31 December
2023
$m
Assets
Intangible assets
20
138.8
122.7
Property, plant and equipment
21
27.4
32.8
Reinsurance contract assets
23
1,873.4
1,942.8
Employee benefits
24
35.0
37.1
Deferred tax assets
22
3.6
–
Current tax assets
1.7
3.3
Financial investments
25
6,460.8
5,875.4
Derivative contracts
26
15.6
20.2
Insurance and other receivables
27
743.4
923.6
Assets classified as held for sale
10, 17
–
15.8
Cash and cash equivalents
29
750.4
853.8
Total assets
10,050.1
9,827.5
Liabilities and Equity
Liabilities
Insurance contract liabilities
23
6,336.9
5,869.7
Borrowings
30
159.0
161.9
Other financial liabilities
25
–
104.0
Provisions
2.6
2.9
Deferred tax liabilities
22
121.2
42.3
Current tax liabilities
0.7
0.2
Derivative contracts
26
13.8
23.7
Insurance and other payables
31
372.5
539.3
Total liabilities
7,006.7
6,744.0
Equity
Called up share capital
32
10.0
10.0
Share premium
932.6
932.6
Capital redemption reserve
1.0
1.0
Capital contribution reserve
32.2
32.2
Foreign currency translation reserve
(98.2)
(95.5)
Retained earnings
1,633.2
1,736.9
Total equity attributable to owners of the parent
2,510.8
2,617.2
Non-controlling interests
18
532.6
466.3
Total equity
3,043.4
3,083.5
Total liabilities and equity
10,050.1
9,827.5
The accompanying Notes on pages 79 to 179 are an integral part of the consolidated financial statements. These consolidated
financial statements were approved by the Board of Directors on 27 February 2025 and were signed on its behalf by:
Martin Thompson
Gavin Wilkinson
Group Chief Executive Officer
Group Chief Financial Officer
Registered number: 08821629
Brit Limited Annual Report 2024
77
financial statements
consolidated statement of cash flows
For the year ended 31 December 2024
Note
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Cash flows from operating activities
Cash provided by/(used in) operations
34
314.4
(59.5)
Tax paid
(11.5)
(6.0)
Interest received
231.1
163.4
Dividends received
10.1
8.6
Purchase of shares for share-based payment schemes
(8.6)
(4.9)
Net cash inflows from operating activities
535.5
101.6
Cash flows from investing activities
Purchase of intangible assets
20
(27.3)
(12.4)
Purchase of property, plant and equipment
21
(1.0)
(2.4)
Disposal of associated undertaking
17
15.2
–
Disposal of subsidiary undertakings, net of cash disposed
10
–
128.7
Dividends from associated undertakings
–
1.2
Net cash (outflows)/inflows from investing activities
(13.1)
115.1
Cash flows from financing activities
Repayment on revolving credit facility
–
(10.0)
Repurchase of subordinated debt
30
–
(7.3)
Interest paid
(13.7)
(19.9)
Dividends paid
33
(605.4)
(413.6)
Net cash outflows from financing activities
(619.1)
(450.8)
Net decrease in cash and cash equivalents
(96.7)
(234.1)
Cash and cash equivalents at the beginning of the year
853.8
1,079.4
Effect of exchange rate fluctuations on cash and cash equivalents
(6.7)
8.5
Cash and cash equivalents at the end of the year
29
750.4
853.8
The accompanying Notes on pages 79 to 179 are an integral part of the consolidated financial statements.
78
Brit Limited Annual Report 2024
financial statements
consolidated statement of changes in equity
Note
Called up
share
capital
$m
Share
premium
$m
Capital
redemption
reserve
$m
Capital
contribution
reserve
$m
Foreign
currency
translation
reserve
$m
Retained
earnings
$m
Total
attributable
to owners of
the parent
$m
Non-
controlling
interests
$m
Total
equity
$m
At 1 January 2023
10.0
1,432.6
1.0
32.2
(102.6)
829.6
2,202.8
407.1
2,609.9
Profit for the year
–
–
–
–
–
836.2
836.2
59.2
895.4
Other comprehensive
income/(expense)
–
–
–
–
7.1
(15.3)
(8.2)
–
(8.2)
Total comprehensive
income recognised
–
–
–
–
7.1
820.9
828.0
59.2
887.2
Dividends
33
–
–
–
–
–
(413.6)
(413.6)
–
(413.6)
Capital reduction1
–
(500.0)
–
–
–
500.0
–
–
–
At 31 December 2023
10.0
932.6
1.0
32.2
(95.5)
1,736.9
2,617.2
466.3
3,083.5
Profit for the year
–
–
–
–
–
506.8
506.8
66.3
573.1
Other comprehensive
expense
–
–
–
–
(2.7)
(5.1)
(7.8)
–
(7.8)
Total comprehensive
income recognised
–
–
–
–
(2.7)
501.7
499.0
66.3
565.3
Dividends
33
–
–
–
–
–
(605.4)
(605.4)
–
(605.4)
At 31 December 2024
10.0
932.6
1.0
32.2
(98.2)
1,633.2
2,510.8
532.6
3,043.4
1. On 1 November 2023, Brit Limited effected a capital reduction, without the cancellation of any shares, which resulted in a $500.0m reduction to share premium and a corresponding
increase in retained earnings. Accordingly, there was no impact on total equity.
Nature and Purpose of Group Reserves
Share premium: The balance represents the difference between the price at which shares are issued and their nominal value, less
any distributions made from this account.
Capital redemption reserve: The balance represents the amount by which share capital is diminished in the event of a share
cancellation and is required to be recognised in a legal reserve to maintain the Group’s capital.
Capital contribution reserve: The balance represents the amount by which the Group has benefited from asset transfers
or contributions from the owners of the parent company, for which no shares have been issued in exchange.
Foreign currency translation reserve: The balance on this reserve represents the foreign exchange differences arising from
the translation of financial statement information of entities within the Group from functional currencies to the presentational
currency of the Group.
Retained earnings: Retained earnings represents the cumulative comprehensive income retained by the Group after taxation and
after any distributions made from this account.
The accompanying Notes on pages 79 to 179 are an integral part of the consolidated financial statements.
Brit Limited Annual Report 2024
79
financial statements
notes to the consolidated financial statements
The first three Notes provide details of the basis of preparation and accounting policies applied in producing these financial
statements and the significant accounting estimates and judgements therein.
1
General information
The consolidated financial statements of Brit Limited and its subsidiaries (collectively, the Group) for the year ended 31 December 2024
were authorised for issue in accordance with a resolution of the Directors on 27 February 2025. The Group’s principal activity is the
underwriting of general insurance and reinsurance business.
Brit Limited (the Company) is a private company limited by shares, incorporated and domiciled in England and Wales, United Kingdom. The
address of the registered office is The Leadenhall Building, 122 Leadenhall Street, London, England, EC3V 4AB.
2
Accounting policies and basis of preparation
2.1
Basis of preparation
The consolidated financial statements for the year ended 31 December 2024 have been prepared in accordance with UK-adopted
international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those
standards. The accounting policies of the Group have been applied consistently to all the years presented, unless otherwise stated.
The consolidated financial statements have been compiled on a going concern basis and prepared on a historical cost basis, except
for financial investments, other assets (as defined in Note 2.4.3(c)), derivative contracts and other financial liabilities which have
been measured at fair value. The consolidated financial statements are presented in US dollars and all values are rounded to the
nearest $0.1m except where otherwise indicated.
Certain amounts recorded in the financial statements include estimates and assumptions made by management, particularly about
(re)insurance assets and liabilities, investment valuations, interest rates and other factors. Actual results may differ from the estimates
made. Further details on estimates, judgements and assumptions are included within Note 3 to the consolidated financial statements.
The Directors have reviewed the principal risks and uncertainties faced by the Group as summarised in Note 4.7. Brit manages such
emerging risks in line with its Risk Management Framework.
The Directors have considered various factors in order to be satisfied that a going concern basis of preparation is appropriate.
Such factors include, but are not limited to, recent underwriting performance, reserving policy and track record, the Group’s liquidity
position and the Group’s financial plans.
After assessing evidence in respect of these considerations, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future. Therefore, they consider it appropriate
to continue to adopt the going concern basis for the preparation of its consolidated financial statements.
The consolidated financial statements include the results of the Company and all its subsidiary undertakings (collectively, the Group)
made up to the same accounting date.
2.1.1
New and amended standards adopted by the Group
The Group has applied the following standards and amendments for the first time for the annual reporting period commencing
1 January 2024:
• Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (Amendments to IAS 1)
• Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
• Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
The amendments listed above did not have any material impact on the amounts recognised in prior periods or the current period, and
are not expected to significantly affect future periods.
80
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
2
Accounting policies and basis of preparation (continued)
2.1
Basis of preparation (continued)
2.1.2
New standards and interpretations not yet adopted
At the date of authorisation of these financial statements, the following amendments to standards were in issue but not yet effective
and have not been early adopted by the Group:
Amendment
Effective for periods commencing on or after
Lack of Exchangeability (Amendments to IAS 21)
1 January 2025
Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)
1 January 2026
The Group is in the process of assessing the impact of these amendments on the Group's consolidated financial statements, but the
current expectation is that any impact will not be material.
At the date of authorisation of these financial statements, the following standards which have not been applied in these financial
statements were in issue but not yet effective:
Standard
Effective for periods commencing on or after
IFRS 19 Subsidiaries without Public Accountability: Disclosures
1 January 2027
IFRS 18 Presentation and Disclosure in Financial Statements
1 January 2027
IFRS 19 allows for certain eligible subsidiaries of parent entities that report under IFRS to apply reduced disclosure requirements.
The Group does not expect this standard to impact its consolidated financial statements or have a significant impact
on its operations.
IFRS 18 will replace IAS 1 Presentation of Financial Statements, introducing new requirements that will increase the comparability of the
financial performance of similar entities and provide more relevant information and transparency to users. IFRS 18 will not impact the
recognition or measurement of items in the financial statements and therefore there will be no impact on the Group's net profit or net
assets. However, there is likely to be an impact on presentation and disclosure in the Group's consolidated financial statements. The
Group is in the process of assessing the detailed implications of IFRS 18 on the Group's consolidated financial statements.
2.2
Basis of consolidation and equity accounting
The consolidated financial statements include the financial statements of the Company, its subsidiaries and the Group’s participation
in Lloyd’s syndicates’ assets, liabilities, revenues and expenses. Subsidiaries are those entities (including structured entities) that
an investor controls, when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
Non-controlling interests in the results are shown separately in the consolidated income statement, statement of comprehensive
income, consolidated statement of changes in equity and statement of financial position respectively.
The financial statements of the subsidiaries are prepared up to 31 December each year. Consolidation adjustments are made
to convert subsidiary financial statements from local GAAP into IFRS to remove any dissimilar accounting policies that may exist.
Subsidiaries are consolidated from the date control is transferred to the Group and cease to be consolidated from the date
control is transferred from the Group. All inter-company balances, profits and transactions are eliminated. The acquisition method
of accounting is used to account for business combinations by the Group.
Underwriting members at Lloyd’s have several but not joint liability for the transactions of the syndicates in which they participate.
Therefore, for each managed syndicate on which the Group participates, only the relevant proportion of the transactions, assets and
liabilities of those syndicates are reflected in the consolidated financial statements. Syndicate assets are held subject to trust deeds
for the benefit of the syndicate’s insurance creditors. As at 31 December 2024:
• Brit UW Limited, a subsidiary of the Group, provided 100% of the capital for Syndicate 2987 and therefore all transactions,
assets and liabilities of Syndicate 2987 have been included in the Group’s financial statements.
• Subsidiaries of the Group participated as members of Syndicate 2988, providing 67.98%, 75.86% and 51.28% of the capital for
the 2022, 2023, and 2024 years of account respectively. Consequently, the proportionate shares of the transactions, assets
and liabilities of Syndicate 2988 have been included in the Group’s financial statements.
• Ki Member Limited, a subsidiary of the Group, provided 100% of the capital for Ki Syndicate 1618 and therefore all transactions,
assets and liabilities of Ki Syndicate 1618 have been included in the Group’s financial statements.
Brit Limited Annual Report 2024
81
financial statements
2
Accounting policies and basis of preparation (continued)
2.2
Basis of consolidation and equity accounting (continued)
If control of a subsidiary (including a structured entity) is lost during the reporting period, the assets and liabilities of that entity will be
derecognised from the consolidated statement of financial position. The revenues and expenses of the entity will no longer be consolidated
following the date that control is lost. The difference between the fair value of the consideration received, if any, from the transaction
resulting in a loss of control and the fair value of the subsidiary’s net assets will be recognised as a gain or loss in the income statement.
Associates are those entities over which the Group has the power to exercise significant influence but not control. As set out in Note 17,
the Group disposed of its only investment in an associated undertaking on 8 March 2024. Prior to that disposal, the Group’s investment
in an associated undertaking was accounted for under the equity method of accounting, whereby associated undertakings are carried
in the consolidated statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associate,
less any impairment in value. The consolidated income statement reflects the Group‘s share of the post-acquisition results of operations
of the associated undertaking up to the date of disposal, and the consolidated statement of comprehensive income reflects the Group’s
share of the comprehensive income of the associated undertaking up to the date of disposal. The financial statements of the associated
undertaking disposed of by the Group are prepared up to 31 December each year.
2.3
Business combinations
The acquisition method of accounting is used for business combinations. The cost of an acquisition is measured as the aggregate
of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest (NCI) in the
acquiree, where relevant. Acquisition-related costs are expensed as incurred. Where goodwill or a bargain purchase arises, this
is accounted for in accordance with the policy set out in Note 2.4.4(a).
When the Group acquires a business, it assesses the identifiable assets acquired and liabilities assumed, measured initially
at their fair values at the acquisition date, for appropriate classification and designation in accordance with the contractual terms,
economic circumstances and pertinent conditions at the acquisition date. This includes the separation of embedded derivatives
in host contracts by the acquiree. No reclassification of insurance contracts is required as part of the accounting for the business
combination. Thus, insurance contracts are classified on the basis of the contractual terms and other factors at the inception of the
contract or modification date.
The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value
or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
If the business combination is achieved in stages, any previously held equity interest is remeasured at its fair value at the acquisition
date, and any resulting gain or loss is recognised in profit or loss.
Any contingent consideration will be recognised at fair value at the acquisition date and, where relevant, remeasured at subsequent
reporting dates. Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted
for within equity. Contingent consideration that is classified as an asset or liability within or outside the scope of IFRS 9 is measured
at fair value through profit or loss (FVTPL).
2.4
Other accounting policies
2.4.1 Insurance and reinsurance contracts
The accounting policies outlined below relate to both insurance contracts issued, and reinsurance contracts held, unless stated
otherwise. The Group issues both insurance and reinsurance contracts to policyholders, therefore all references to insurance
contracts issued also apply to reinsurance contracts issued by the Group.
(a) Classification
Contracts under which the Group accepts significant insurance risk are classified as insurance contracts. Contracts held
by the Group under which it transfers significant insurance risk related to underlying insurance contracts are classified
as reinsurance contracts.
Insurance and reinsurance contracts that expose the Group to financial risk but do not transfer significant insurance risk are
accounted for as financial instruments under IFRS 9. The Group does not have any insurance or reinsurance contracts that have
been classified under IFRS 9.
Insurance contracts may be issued and reinsurance contracts may be initiated by the Group, or they may be acquired in a business
combination or in a transfer of contracts that do not form a business. All references in these accounting policies to ‘insurance
contracts’ and ‘reinsurance contracts’ include contracts issued, initiated or acquired by the Group, unless otherwise stated.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.1 Insurance and reinsurance contracts (continued)
(b) Separating components from insurance and reinsurance contracts
The Group assesses its insurance contracts to determine if they contain distinct components which must be accounted for under
another IFRS other than IFRS 17. After separating any distinct components, the Group applies IFRS 17 to all remaining components
of the host. Currently, the Group’s contracts issued and held do not include distinct components that require separation.
Some of the insurance contracts issued and reinsurance contracts held by the Group contain profit commission arrangements.
These arrangements result in a minimum guaranteed amount being repaid to either the Group or the policyholder in all
circumstances, either through the form of a claim, profit commission or both. The minimum guaranteed amounts meet the definition
of a non-distinct investment component given they are highly interrelated with the insurance component of the reinsurance
contracts. The non-distinct investment component is not accounted for separately but the value incurred each reporting period
is excluded from insurance revenue and insurance service expenses for the insurance contracts issued by the Group, and net
expenses from reinsurance contracts held for the reinsurance contracts held by the Group. No further investment components have
been identified by the Group.
(c) Level of aggregation
Insurance contracts are aggregated into groups for measurement purposes. Groups of insurance contracts are determined by:
• Identifying portfolios of insurance contracts;
• Dividing a portfolio into a minimum of three groups (contracts that are onerous on initial recognition; contracts that on initial
recognition have no significant possibility of becoming onerous subsequently; and those contracts remaining in the portfolio);
• Dividing each set of contracts into annual cohorts (i.e. by year of issue) to arrive at groups of contracts.
Portfolios comprise contracts subject to similar risks and managed together. Contracts within a portfolio that would fall into different
groups, only because law or regulation specifically constrains the Group’s practical ability to set a different price or level of benefits
for policyholders with different characteristics, are included in the same group.
Portfolios of reinsurance contracts held are assessed for aggregation separately from portfolios of insurance contracts issued.
Applying the IFRS 17 grouping requirements, reinsurance contracts held within each portfolio and annual cohort are aggregated into
the below groups:
• A group of contracts for which there is a net gain at initial recognition;
• A group of contracts for which, on initial recognition, have no significant possibility of a net gain arising subsequently; and
• Any remaining groups of contracts in the annual cohort.
(d) Initial recognition
The Group recognises insurance contracts it issues from the earliest of the following:
• The beginning of the coverage period of the group of contracts;
• The date when the first payment from a policyholder in the group becomes due; and
• For a group of onerous contracts, when the group becomes onerous.
Groups of reinsurance contracts held are initially recognised from the earlier of the following:
• The beginning of the coverage period of the group of reinsurance contracts held; and
• The date the Group recognises an onerous group of underlying insurance contracts, if the Group entered into the related
reinsurance contract held at or before that date.
Notwithstanding the above, the Group delays the recognition of a group of reinsurance contracts held that provide proportional
coverage until the date that any underlying insurance contract is initially recognised, if that date is later than the beginning of the
coverage period of the group of reinsurance contracts held.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.1 Insurance and reinsurance contracts (continued)
(e) Modification and derecognition
The Group derecognises an insurance contract when:
• It is extinguished, i.e. when the obligation specified in the insurance contract expires, is discharged or is cancelled; or
• If the terms of the contract are modified and additional criteria discussed below are met.
When the terms of an insurance contract are modified by the Group, for example by agreement with the counterparties
or by a change in regulation, the Group treats the modification as a derecognition if any of the following conditions are met:
• The modified contract would have been excluded from the scope of IFRS 17;
• The Group would have separated different components from the host contract;
• The modified terms would have had a substantially different contract boundary;
• The modified contract would have been included in a different group of contracts; or
• The original contract was accounted for under the premium allocation approach (PAA), but the modification means the
contract no longer meets the PAA eligibility criteria.
If a contract modification meets none of the conditions, the Group treats the changes in cash flows caused by the modification
as changes in estimates of the fulfilment cash flows.
(f) Contract boundary
The measurement of a group of contracts includes all the future cash flows within the boundary of each contact in the group,
determined as follows.
Insurance contracts
Cash flows are within the boundary of an insurance contract if they arise from substantive rights and obligations that exist during
the reporting period in which the Group can compel the policyholder to pay the premiums, or in which the Group has a substantive
obligation to provide the policyholder with insurance contract services. A substantive obligation to provide insurance contract
services ends when:
a) the Group has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or level
of benefits that fully reflects those risks; or
b) both of the following criteria are satisfied:
i. the Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contains the contract
and, as a result, can set a price or level of benefits that fully reflects the risk of that portfolio; and
ii. the pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate
to periods after the reassessment date.
Reinsurance contracts
Cash flows are within the contract boundary if they arise from substantive rights and obligations that exist during the reporting
period in which the Group is compelled to pay amounts to the reinsurer or has a substantive right to receive services from
the reinsurer.
A substantive right to receive services from the reinsurer ends when the reinsurer:
a) Has the practical ability to reassess the risks transferred to it and can set a price or level of benefits that fully reflects those
reassessed risks; or
b) Has a substantive right to terminate the coverage.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.1 Insurance and reinsurance contracts (continued)
(g) Measurement – Contracts measured under the PAA
The Group’s policy is to apply the PAA to all groups of insurance contracts when eligible. The PAA may be applied to a group
of insurance contracts if at inception of the group:
a) The coverage period of each contract in the group is one year or less; or
b) The Group reasonably expects that such simplification would produce a measurement of the liability for remaining coverage
(‘LRC’) for the group that would not differ materially from the one that would be produced under the general measurement
model (‘GMM’).
On initial recognition of each group of contracts measured under the PAA, the carrying amount of the LRC is measured as the
premiums received on initial recognition minus any insurance acquisition cash flows allocated to the group at that date. The Group
has chosen not to expense insurance acquisition cash flows when they are incurred.
Subsequently, the carrying amount of the LRC is increased by any premiums received and the amortisation of insurance acquisition
cash flows recognised as expenses, and decreased by the amount recognised as insurance revenue for services provided and any
additional insurance acquisition cash flows allocated after initial recognition. On initial recognition of each group of contracts, the
Group expects that the time between providing each part of the service and the related premium due date is no more than a year.
Accordingly, the Group has chosen not to adjust the LRC to reflect the time value of money and the effect of financial risk.
If at any time during the coverage period facts and circumstances indicate that a group of contracts is onerous, then the Group
recognises a loss in profit or loss and increases the LRC to the extent that the current estimates of the fulfilment cash flows that
relate to remaining coverage exceed the carrying amount of the LRC.
The Group recognises the liability for incurred claims (‘LIC’) of a group of insurance contracts at the amount of the fulfilment
cash flows relating to incurred claims. The fulfilment cash flows comprise estimates of future cash flows, adjusted to reflect the
time value of money and the associated financial risks, and a risk adjustment for non-financial risk. The fulfilment cash flows are
discounted at current rates and do not reflect the Group's own non-performance risk.
The estimates of future cash flows incorporate, in an unbiased way, all reasonable and supportable information available without
undue cost or effort about the amount, timing, and uncertainty of those future cash flows. To do this, the Group estimates the
expected value (i.e. the probability-weighted mean) of the full range of possible outcomes. The fulfilment cash flows use estimates
that reflect conditions that exist at the measurement date.
The risk adjustment for non-financial risk for a group of insurance contracts, determined separately from the other estimates, is the
compensation required for bearing uncertainty about the amount and timing of the cash flows that arises from non-financial risk.
The Group applies the same accounting policies to measure a group of reinsurance contracts held with the following modifications:
• The carrying amount of a group of reinsurance contracts held at each reporting date is the sum of the asset for remaining
coverage (‘ARC’) and the asset for incurred claims (‘AIC’).
• The Group measures the estimates of the present value of future cash flows using assumptions that are consistent with those
used to measure the underlying insurance contracts, with an adjustment for any risk of non-performance by the reinsurer.
• The risk adjustment for non-financial risk is the amount of risk being transferred by the Group to the reinsurer.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.1 Insurance and reinsurance contracts (continued)
(h) Measurement – Contracts not measured under the PAA
For certain groups of contracts recognised in 2023 and 2024, the Group determined that the criteria to be eligible for measurement
under the PAA had not been met. These groups are typically those with a longer claim tail and have greater exposure to future
changes in discount rates impacting the subsequent measurement of the fulfilment cash flows under the GMM.
The Group measures a group of insurance contracts not eligible for the PAA as the total of the fulfilment cash flows and the
contractual service margin (‘CSM’). The CSM of a group of insurance contracts represents the unearned profit that the Group will
recognise in profit or loss as it provides services under those contracts.
On initial recognition of a group of insurance contracts, if the total of (a) the fulfilment cash flows, (b) any cash flows arising at that
date (to the extent they are not included in the fulfilment cash flows), and (c) any amount arising from the derecognition of assets for
insurance acquisition cash flows related to the group is a net inflow, then the group is not onerous. In this case, the CSM is measured
as the equal and opposite amount of the net inflow, which results in no income or expenses arising on initial recognition. To the extent
the contract is not profitable (also referred to as ‘onerous’), there is no CSM to measure and a loss is recognised in the profit or loss
immediately for the net cash outflow.
In the event of an onerous group of contracts a loss component will be established which determines the amounts of fulfilment
cash flows that are subsequently presented in profit or loss as reversals of losses and excluded from insurance revenue when
they occur. When the fulfilment cash flows are incurred, they are allocated between the loss component and the remaining LRC
on a systematic basis.
Where a group of insurance contracts generates cash flows in a foreign currency, the Group treats the group of insurance
contracts, including the CSM, as a monetary item. The CSM is denominated in a single currency before the translation to the
functional currency. The CSM is set as the predominant currency within the group of insurance contracts.
The carrying amount of a group of insurance contracts at each reporting date is the sum of the LRC and the LIC. The LRC comprises
(a) the fulfilment cash flows that relate to services that will be provided under the contracts in future periods and (b) any remaining
CSM at that date. The LIC includes the fulfilment cash flows for incurred claims and expenses that have not yet been paid, including
claims that have been incurred but not reported.
The fulfilment cash flows of the group of insurance contracts are measured at the reporting date using current estimates of future
cash flows, current discount rates and current estimates of the risk adjustment for non-financial risk. Changes in the fulfilment cash
flows are recognised as follows:
• Changes relating to future service – adjusted against the CSM, unless the group is onerous, and measured applying the inception
discount rates for the group. If the group becomes onerous, then the CSM will be reduced to zero and a loss component established,
whereas if the group becomes profitable the loss component will be reversed through profit or loss and a CSM established.
• Changes relating to current or past services – recognised in the insurance service result in profit or loss.
• Effect of the time value of money, financial risk and changes therein on estimated future cash flows – recognised as insurance
finance income or expenses.
The carrying amount of the CSM at each subsequent reporting date is the carrying amount at the start of the reporting
period, adjusted for:
• The CSM of any new contracts that are added to the group in the period.
• Interest accreted on the carrying amount of the CSM during the period, measured at the discount rate
at inception of the group.
• Changes in fulfilment cash flows that relate to future service, except to the extent that the group is or becomes onerous and
a loss component is established.
• The effect of any currency exchange differences on the CSM.
• The amount recognised as insurance revenue reflecting the services provided in the year.
Changes in the fulfilment cash flows that relate to future service typically arise from subsequent changes to: (a) the ultimate
premiums expected to be received for a group of contracts; and (b) the ultimate value of claims that are expected to be incurred, set
as a ratio to the ultimate expected premiums.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.1 Insurance and reinsurance contracts (continued)
(h) Measurement – Contracts not measured under the PAA (continued)
For the measurement of a group of reinsurance contracts held, the Group applies the same accounting policies as those applied
to insurance contracts issued, with the following modifications:
• The CSM represents a net cost or net gain on purchasing reinsurance, meaning the CSM can be either positive or negative
unlike for issued groups of contracts. However, if any net cost on purchasing reinsurance coverage relates to insured events
that have occurred already, then the Group recognises the cost immediately in profit or loss as an expense.
• The CSM is adjusted and as a result income is recognised in profit or loss when the underlying group of insurance contracts
recognises a loss component on initial recognition, if the reinsurance contract is entered into before or at the same time
as the underlying contracts are recognised.
• A loss-recovery component is created or adjusted for the group of reinsurance contracts held to depict the adjustment to the
CSM, which determines that amounts that are subsequently presented in profit or loss as reversals of recoveries of losses
from the reinsurance contracts and are excluded from the allocation of reinsurance premiums paid.
• The same modifications described above in relation to contracts measured under the PAA.
(i) Insurance receivables and payables
The premiums and claims related to groups of insurance contracts will typically remain within the insurance contract liability
or reinsurance contract asset until the point at which they are cash settled. However, there are exceptions to this rule whereby the
Group will recognise a separate receivable or payable on the balance sheet. These include (a) where cash that has been received
at the reporting date has yet to be allocated and it is not possible to reasonably determine whether the cash should be attributed
to the LRC/ARC or the LIC/AIC; and (b) where the Group has extended a loss fund payment to a third party. Loss fund payments
do not represent the settlement of a claim with the policyholder, therefore the Group does not account for these payments
as a reduction to the fulfilment cash flows.
(j) Retroactive reinsurance
Brit holds reinsurance contracts that cover events that have already occurred but the financial effect of which is still uncertain.
An example is loss portfolio transfer ('LPT') held by the Group that provides insurance coverage against an adverse development
of claims that have already occurred. In such contracts, the insured event is the determination of the ultimate cost of the claim. This
means that the ARC is released over the expected settlement period of the claims of the underlying insurance contract (since that is,
in effect, the coverage period of the reinsurance contract).
For such contracts, a CSM is only established on initial recognition if the contract is in a net gain position. If there is a net cost
position on inception, the loss is immediately recognised in profit or loss as an expense. On subsequent measurement, any CSM
established at initial recognition is not adjusted for changes in fulfilment cash flows.
(k) Presentation
Income and expenses from reinsurance contracts held are presented separately from income and expenses from insurance
contracts issued. Income and expenses from reinsurance contracts held, other than insurance finance income or expenses, are
presented on a net basis as 'net expenses from reinsurance contracts' in the insurance service result.
The Group does not disaggregate changes in the risk adjustment for non-financial risk between the insurance service result and
insurance finance income or expenses. All changes in the risk adjustment for non-financial risk that relate to current or past
services are included in the insurance service result.
The Group has chosen not to disaggregate amounts recognised in the statement of profit or loss and OCI.
Insurance revenue and insurance service expenses exclude any investment components and are recognised as follows.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.1 Insurance and reinsurance contracts (continued)
(l) Insurance revenue
Contracts measured under the PAA
When applying PAA, insurance revenue for the period is the amount of expected premium receipts (excluding any investment
component and adjusted to reflect the time value of money, if applicable) allocated to the period. For most groups of contracts,
the Group allocates expected premium receipts to each period of insurance contract services on the basis of the passage of time.
However, for some groups of insurance contracts, the expected pattern of release of risk during the coverage period differs
significantly from the passage of time; therefore, the expected premium receipts are allocated based on the expected timing
of incurred insurance service expenses. Additionally, ceding commissions that are not contingent on claims are accounted for
as a reduction to insurance revenue for reinsurance contracts issued by the Group.
Contracts not measured under the PAA
The Group recognises insurance revenue as it satisfies its performance obligations. For contracts not measured under the PAA,
the insurance revenue relating to services provided during the reporting period represents the total of the changes in the LRC that
relate to services for which the Group expects to receive consideration, and comprises the following items:
• A release of the CSM, measured based on coverage units provided.
• Changes in the risk adjustment for non-financial risk relating to current services.
• Claims and other insurance service expenses incurred in the year, generally measured at the amounts expected at the
beginning of the year.
• Other amounts if any, such as experience adjustments for premium receipts, other than those that relate to future service.
In addition, the Group allocates a portion of premiums that relate to recovering insurance acquisition cash flows to each period
in a systematic way. The Group recognises the allocated amount, adjusted for interest accretion at the discount rates determined
on initial recognition of the related group of contracts, as insurance revenue and an equal amount as insurance service expenses.
The amount of CSM recognised as insurance revenue in a reporting period is determined by identifying the coverage units in the
group, allocating the CSM remaining at the end of the period (before any allocation) equally to each coverage unit provided in the
period and expected to be provided in future periods, and recognising in profit or loss the amount of the CSM allocated to coverage
units provided in the period. The number of coverage units is the quantity of services provided by the contracts in the group,
determined by considering for each contract the quantity of benefits provided and its expected coverage period. The coverage units
are updated at each reporting date and the Group has opted not to discount them.
(m) Insurance service expenses
Insurance service expenses arising from insurance contracts are recognised in profit or loss generally as they are incurred and
exclude investment components. These expenses comprise the following items:
• Incurred claims and other insurance service expenses;
• Amortisation of insurance acquisition cash flows: For contracts not measured under the PAA, this is equal to the amount
of insurance revenue recognised in the year that relates to recovering insurance acquisition cash flows. For contracts
measured under the PAA, the Group amortises insurance acquisition cash flows on a consistent basis to the earning
of premiums in insurance revenue;
• Losses on onerous contracts and reversals of such losses;
• Adjustments to the liabilities for incurred claims that do not arise from the effects of the time value of money, financial risk and
changes therein; and
• Impairment losses on assets for insurance acquisition cash flows and reversals of such impairment losses.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.1 Insurance and reinsurance contracts (continued)
(n) Net income/(expenses) from reinsurance contracts
Net expenses from reinsurance contracts comprise an allocation of reinsurance premiums paid, less amounts recovered
from reinsurers.
The Group recognises an allocation of reinsurance premiums paid in profit or loss as it receives service from a reinsurer. For
contracts not measured under the PAA, the allocation of reinsurance premiums paid relating to services received for each period
represents the total of the changes in the ARC that relate to services for which the Group expects to pay consideration. For
contracts measured under the PAA, the allocation of reinsurance premiums paid for each period is the amount of expected premium
payments for receiving services in the period.
The recognition of, or any subsequent changes to, the loss-recovery component will also be reflected in the allocation of reinsurance
premiums paid in the period.
(o) Insurance and reinsurance finance income and expenses
Insurance and reinsurance finance income or expenses comprises the changes in the carrying amount of the group of (re)insurance
contracts arising from the effect of the time value of money and changes in the time value of money.
2.4.2 Revenue recognition (other than insurance revenue)
Revenue is measured by the Group based on the consideration to which it expects to be entitled through contracts with customers
(net of refunds). Amounts collected on behalf of third parties are excluded from revenue. When control of a service is transferred
to a customer, the related revenue is then recognised.
(a) Management fee income
The Group receives administration and broking fees from non-aligned syndicates, in accordance with management agreements
that are agreed on an annual basis and specify the services to be provided. These services are in relation to ‘effectively managing
and operating’ the syndicate and are therefore provided continuously throughout the year. As a result, these services are treated
as a single performance obligation. The price is fixed with no variable element and is matched against the single performance
obligation. Consequently, the passage of time is used to measure the amount of fees and commission to be recognised.
(b) Underwriting agency fee income
The Group also receives commissions for the placement or underwriting of policies on behalf of other insurers. Such commissions,
which are measured as a portion of the policy premium, are recognised at the later of the policy inception date or when the policy
placement has been completed.
Brit also receives fees in respect of the costs and expenses of establishing and administering Lloyd’s consortia and conducting the
underwriting on their behalf.
The services provided are classed as ‘establishing and administering’ the consortia and are provided continuously throughout the
year. As a result, this is treated as a single performance obligation and measured in accordance with the measurement bases set
out in the relevant consortia agreements.
2.4.3 Financial instruments
(a) Investment return
Investment income comprises realised and unrealised gains and losses on its financial assets held for investment purposes
(investments) that have been measured at FVTPL, less investment management fees. Any interest and dividends are recognised
as part of realised gains and losses, and the dividends are only recognised when the shareholders’ right to receive the payment
is established.
Realised gains and losses on investments are calculated as the difference between net sales proceeds and cost, and are recognised
when the sale transaction occurs. Unrealised gains and losses on investments are calculated as the difference between the valuation
at the date of the statement of financial position and the valuation at the last statement of financial position or purchase price,
if acquired during the year. Unrealised investment gains and losses include adjustments in respect of unrealised gains and losses
recorded in prior years, which have been realised during the year and are reported as realised gains and losses in the current year’s
income statement.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.3 Financial instruments (continued)
(b) Interest revenue calculated using the effective interest method
Interest revenue is calculated using the effective interest method, by applying the effective interest rate (EIR) to the gross carrying
amount of financial assets recognised at amortised cost. Where there is objective evidence of impairment (‘credit-impaired’ assets),
the EIR is applied to the net carrying amount of financial assets recognised at amortised cost.
(c) Financial assets and financial liabilities
(i) Summary of measurement categories
The Group classifies its financial assets and liabilities in the following categories under IFRS 9:
Classification
Rationale
Financial Assets
Investments – equity securities
FVTPL
Mandatory
Investments – debt securities
FVTPL
Mandatory
Investments – mortgages and loans
FVTPL
Mandatory
Investments – specialised investment funds
FVTPL
Mandatory
Trade and other receivables
Amortised cost
Cash flow characteristics (solely payments of principal
and interest), hold to collect business model
Other assets (Fairfax shares
purchased for awards)
FVTPL
Mandatory
Derivative contracts
FVTPL
Mandatory
Cash and cash equivalents
Amortised cost
Cash flow characteristics (solely payments of principal
and interest), hold to collect business model
Financial Liabilities
Derivative contracts
FVTPL
Mandatory
Borrowings
Amortised cost
Mandatory
Other financial liabilities
FVTPL
Designated
Trade and other payables
Amortised cost
Mandatory
The accounting classification of any financial instrument issued or acquired by Brit is determined by assessing the fact pattern of the
rights and obligations of both the issuer and acquirer and by applying the recognition criteria set out in the relevant accounting
standard. In the case of issued financial instruments, this assessment includes the determination of whether an item is to be
classified as either financial liability or equity.
Trade and other receivables refers to the ‘insurance and other receivables’ line item on the Group’s statement of financial position
along with any such items included within ‘assets classified as held for sale’, but excludes ‘prepayments’, and ‘other assets’.
Other assets refer to the investment in Fairfax shares held by the Group in order to settle long-term incentive plan (LTIP) awards
including any such items included within ‘assets classified as held for sale’.
Other financial liabilities refer to financial liabilities in respect of third-party investments in consolidated structured entities and
investment funds.
Trade and other payables refers to the ‘insurance and other payables’ line item on the Group’s statement of financial position along
with any such items included within ‘liabilities directly associated with assets classified as held for sale’, excluding ‘deferred income’,
‘lease liabilities’ and share-based payment liabilities recorded within ‘other creditors’.
The Group does not apply hedge accounting.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.3 Financial instruments (continued)
(c) Financial assets and financial liabilities (continued)
(ii) Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the
instrument. All ‘regular way purchases and sales’ of financial assets are recognised on the trade date, i.e. the date that the Group
commits to purchase or sell the asset. Regular way purchases and sales are purchases and sales of financial assets that require
delivery of assets within the time frame generally established by regulation or convention in the marketplace.
At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or minus, in the case of a financial
asset or financial liability not at FVTPL, transaction costs that are incremental and directly attributable to the acquisition or issue
of the financial asset or financial liability, such as fees and commissions. Transaction costs of financial assets and financial liabilities
carried at FVTPL are expensed in profit or loss. Immediately after initial recognition, an expected credit loss (ECL) allowance
is recognised for financial assets measured at amortised cost.
Trade and other receivables are recognised initially at the amount of consideration that is unconditional, unless they contain
significant financing components when they are recognised at fair value. Fair value of borrowings on initial recognition is normally
determined by reference to the fair value of the proceeds received.
(iii) Amortised cost and effective interest rate (EIR)
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal
repayments, plus or minus the cumulative amortisation using the effective interest method for any difference between the initial amount
and the maturity amount and, for financial assets, adjusted for any loss allowance. The EIR is the rate that exactly discounts estimated
future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a
financial asset (i.e. the amortised cost before any impairment allowance) or to the amortised cost of a financial liability. The calculation
does not consider the ECL and includes transaction costs, premiums or discounts and fees, and points paid or received that are integral
to the EIR. When the Group revises the estimates of future cash flows, the carrying amount of the respective financial asset or financial
liability is adjusted to reflect the new estimate discounted using the original EIR. Any changes are recognised in the income statement.
The recognition of interest revenue is outlined in the Note 2.4.3(b).
(iv) Classification and subsequent measurement of debt instrument assets
Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective.
The classification and subsequent measurement of debt instruments depend on:
• The Group’s business model for managing the asset; and
• The cash flow characteristics of the asset (represented by solely payments of principal and interest (SPPI)).
Based on these factors, the Group classifies its debt instruments into one of the following three measurement categories:
• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent SPPI, and that
are not designated at FVTPL, are measured at amortised cost. The carrying amount of these assets is adjusted by any ECL
allowance recognised. Interest revenue from these financial assets is included in ‘interest revenue from financial assets not
measured at FVTPL’ using the EIR method.
• FVOCI: Financial assets that are held for collection of contractual cash flows and for selling the assets, where the assets’ cash
flows represent SPPI, and that are not designated at FVTPL, are measured at FVOCI. The Group does not hold any financial
assets that would meet these criteria.
• FVTPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL. A gain or loss, other than
those relating to foreign exchange movements, on a debt investment that is subsequently measured at FVTPL is recognised and
presented in the consolidated statement of profit or loss within net gains on FVTPL investments in the period in which it arises.
Foreign exchange gains or losses are recognised in ‘net foreign exchange gains/(losses)’ in the period in which they arise.
(v) Business Model
The business model reflects how the Group manages assets in order to generate cash flows. That is, it reflects whether the
Group’s objective is solely to collect the contractual cash flows from assets or to collect both the contractual cash flows and cash
flows arising from the sale of assets. If neither of these is applicable (e.g., financial assets are held for trading purposes), then the
financial assets are classified as part of the other business model and measured at FVTPL.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.3 Financial instruments (continued)
(c) Financial assets and financial liabilities (continued)
(v) Business Model (continued)
Factors considered by the Group in determining the business model for a group of assets include past experience on how the cash
flows for these assets were collected, how the asset’s performance is evaluated and reported to key management personnel, how
risks are assessed and managed and how managers are compensated.
The Group’s debt instruments held for investment purposes are mandatorily classified as FVTPL in accordance with the Group’s
business model for managing investments on a fair value basis. There is a documented investment strategy to manage investments
on a fair value basis, as opposed to primarily collecting contractual cash flows or primarily selling assets, and this is consistent
with investment risk being assessed on a portfolio basis. Information relating to investments is provided internally to the Group’s
Directors and key managers on a fair value basis.
(vi) SPPI
Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and sell, the Group
assesses whether the financial instruments’ cash flows represent SPPI (the SPPI test). In making this assessment, the Group considers
whether the contractual cash flows are consistent with a basic lending arrangement (i.e. interest includes only consideration for the
time value of money, credit risk, other basic lending risks, and a profit margin that is consistent with a basic lending arrangement).
Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related
financial asset is classified and measured at FVTPL.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are SPPI.
The Group reclassifies debt investments when and only when its business model for managing those assets changes. The
reclassification takes place from the start of the first reporting period following the change.
The Group may also irrevocably designate financial assets at FVTPL, if doing so significantly reduces or eliminates a mismatch
created by assets and liabilities being measured on different bases. The Group has not designated any such financial assets during
the current period.
(vii) Classification and subsequent measurement of equity instrument assets
Equity instruments are instruments that meet the definition of equity from the issuer’s perspective (i.e. instruments that do not
contain a contractual obligation to pay, and that evidence a residual interest in the issuer’s net assets). The Group subsequently
measures all equity investments at FVTPL. Gains and losses on equity investments at FVTPL, other than those relating to foreign
exchange, are included in the line ‘investment return’ in the income statement. Foreign exchange gains or losses are recognised
in ‘net foreign exchange gains/(losses)’ in the period in which they arise.
The Group chooses not to apply the FVOCI option for equity instruments that are not held for trading.
(viii) Impairment of financial assets
The Group assesses, on a forward-looking basis, the ECL associated with its debt instrument assets carried at AC. The Group
recognises a loss allowance for such losses at each reporting date. The measurement of the ECL reflects:
• An unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes;
• The time value of money; and
• Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events
(including historical losses), current conditions, and forecasts of future economic conditions.
The Group applies the simplified approach for impairment of trade and other receivables as well as any contract assets arising from
contracts with customers and recognises the lifetime ECL at initial recognition of such financial assets. Where it becomes probable
that a counterparty will enter bankruptcy, any such assets with that counterparty are deemed to be ‘credit-impaired’.
Individual receivables are written off by the Group when there is no reasonable expectation of recovering the asset or a portion
thereof. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage
in a repayment plan with the Group, and when the Group determines that the counterparty does not have assets or sources
of income that could generate sufficient cash flows to repay the amounts subject to the write-off.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.3 Financial instruments (continued)
(c) Financial assets and financial liabilities (continued)
(ix) Derecognition of financial assets
Financial assets, or a portion thereof, are derecognised when the contractual rights to receive the cash flows from the assets
have expired, or when they have been transferred and either (i) the Group transfers substantially all the risks and rewards
of ownership; or (ii) the Group neither transfers nor retains substantially all the risks and rewards of ownership and the Group has
not retained control.
(x) Classification and subsequent measurement of financial liabilities
In both the current and prior period, financial liabilities are classified and subsequently measured at amortised cost, except for
derivatives and other financial liabilities, which are measured at FVTPL.
Other financial liabilities are recognised in respect of third-party investments in consolidated structured entities and investment funds.
The fair value of the investments by independent third parties is determined by reference to the net assets of those entities, which
may also require reference to the underlying net assets of other vehicles or investment funds in which those entities have invested.
The Group has designated other financial liabilities as FVTPL to eliminate an accounting mismatch that would otherwise arise
from recognising the gains or losses on these liabilities on a different basis. The insurance and investment assets and liabilities
of consolidated structured entities and investment funds are measured at fair value and, in the absence of designation as FVTPL, the
other financial liabilities would be measured at amortised cost (with changes in fair value not recognised). The Group has concluded that
its financial statements would provide more relevant information if other financial liabilities were, therefore, measured as at FVTPL.
Accordingly, gains or losses in respect of changes in fair value of other financial liabilities are recognised through the income statement.
(xi) Derecognition of financial liabilities
A financial liability is derecognised when it is extinguished, which is when the obligation in the contract is discharged,
cancelled or expired.
(xii) Derivative contracts
Derivative financial instruments include foreign exchange contracts, forward rate agreements, interest rate futures, currency and
interest rate swaps, and other financial instruments that derive their value mainly from underlying interest rates, foreign exchange
rates, credit indices, commodity values, or equity instruments.
Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into, and are subsequently
remeasured at FVTPL. All derivatives are carried as assets when fair value is positive, and as liabilities when fair value is negative.
Derivative contracts may be traded on an exchange or over-the-counter (OTC). Exchange-traded derivatives are standardised and
include certain futures and option contracts. OTC derivative contracts are individually negotiated between contracting parties and
include forwards and swaps.
Derivatives are subject to various risks including market, liquidity and credit risk, similar to those related to the underlying financial
instruments. Many OTC transactions are contracted and documented under International Swaps and Derivatives Association (ISDA)
master agreements, or their equivalent, which are designed to provide legally enforceable set-off in the event of default, reducing
the Group’s exposure to credit risk. The notional or contractual amounts associated with derivative financial instruments are not
recorded as assets or liabilities on the statement of financial position as they do not represent the fair value of these transactions.
(xiii) Fair value measurements
Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market
participants at the measurement date. The fair value of financial assets and liabilities traded in active markets (which are the
principal markets or, in the absence of a principal market, the most advantageous markets that maximise the amount that would be
received to sell the asset, or minimise the amount that would be paid to transfer the liability) are based on quoted market bid and ask
price for both financial assets and financial liabilities respectively.
The fair value of financial assets and liabilities that are not traded in an active market, including over-the-counter derivatives,
is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market
conditions existing at each reporting date. Valuation techniques include the use of comparable recent arm’s-length transactions,
reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and others
commonly used by market participants which make the maximum use of observable inputs.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.3 Financial instruments (continued)
(c) Financial assets and financial liabilities (continued)
(xiv) Offsetting of financial instruments
Financial assets and liabilities are offset, and the net amount reported in the statement of financial position only when there
is a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or to realise the
assets and settle the liability simultaneously.
2.4.4 Intangible assets
(a) Goodwill
Goodwill is initially measured at cost, being the excess of the fair value of the consideration transferred and the amount recognised
for NCIs and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If those amounts are less
than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss
as a bargain purchase.
After initial recognition, goodwill is not amortised but is measured at cost less any accumulated impairment losses. Goodwill is tested for
impairment annually or more frequently if events or circumstances indicate that it might be impaired. For the purposes of impairment
testing, goodwill acquired in a business combination is allocated to an appropriate cash generating unit (CGU) that is expected to benefit
from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with
the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of, and the
portion of the cash-generating unit retained.
(b) Syndicate participation rights
Lloyd’s syndicate participation rights that have been acquired on acquisition of a subsidiary are initially recognised at fair value.
They are considered to have an indefinite useful life as they will provide benefits over an indefinite future period and are therefore
not subject to an annual amortisation charge. The continuing value of the underwriting capacity is reviewed for impairment annually
by reference to the expected future profit streams to be earned from the respective syndicate, with any impairment in value being
charged to the income statement.
(c) Trade names
Trade names that have been acquired on acquisition of a subsidiary are initially recognised at fair value. They are considered to have
an indefinite useful life as they will provide benefits over an indefinite future period and are, therefore, not subject to an annual
amortisation charge. The carrying value of the trade names is reviewed for impairment annually by reference to the expected future
profit streams to be earned from the CGUs to which the trade names relate, with any impairment in value being charged to the
income statement.
(d) Computer software
Acquired computer software licences are capitalised based on the costs incurred to acquire and bring into use the specific software.
Internal development costs that are directly associated with the production of identifiable and unique software products, controlled
by the Group, are also capitalised where the cost can be measured reliably, the Group intends to and has adequate resources
to complete development, and the computer software will generate future economic benefits. All items of computer software are
finite life assets and amortised on a straight-line basis over their expected useful lives, not exceeding a period of five years.
(e) Distribution channels
Distribution channels that have been acquired on acquisition of a subsidiary are initially recognised at fair value. They are deemed to be
finite life assets and amortised on a straight-line basis over their expected useful economic lives, not exceeding a period of 15 years.
(f) Employee-related intangibles
A non-compete agreement in favour of the Group, signed upon acquisition of a subsidiary, and non-compete clauses in certain
employee contracts acquired in business combinations, have been recognised at fair value. These are considered to be finite
life assets and, as such, are amortised on a straight-line basis over their expected useful economic lives, not exceeding a period
of three years.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.5 Property, plant and equipment
Property, plant and equipment are carried at cost, less accumulated depreciation and any impairment in value. Depreciation
is calculated so as to write-off the cost over their estimated useful economic lives on a straight-line basis having regard to the
residual value of each asset, as follows:
Land
Indefinite
Buildings
30 years
Office refurbishment
3-15 years
Computers, office machinery, furniture and equipment
3-7 years
The assets’ residual values and useful lives are reviewed at the date of each statement of financial position and adjusted if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Gains and losses on the disposal of property, plant and equipment are determined by comparing
proceeds with the carrying amount of the asset and are included in the income statement. Costs for repairs and maintenance are
expensed as incurred.
2.4.6 Impairment
Goodwill, syndicate participation rights and trade names are not subjected to amortisation but are tested annually for impairment
as they are assets with an indefinite useful life. Other assets, except for assets arising from insurance contracts; deferred tax
assets; assets arising from employee benefits; financial assets within scope of IFRS 9 ‘Financial Instruments’; and non-current
assets (or disposal groups) classified as held for sale, are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
If the carrying value of an asset is impaired, it is reduced to the recoverable amount by an immediate charge to the income
statement. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
Value in use is based on discounting cash flows at the Group’s weighted average cost of capital which is loaded where significant
uncertainties exist. Assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Cash flow
forecasts have been performed to account for the impact of climate change.
Impairment reviews are made by comparing carrying value to recoverable amount.
2.4.7
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position include cash in hand, deposits held at call with banks, and other
short-term, highly liquid investments with a maturity of three months or less at the date of acquisition.
2.4.8
Income taxes
Income tax comprises current and deferred tax. Income tax is recognised in the income statement except where it relates to an item
which is recognised in equity.
(a) Current income tax
Current income tax is the expected tax payable on the taxable profit for the period using tax rates (and laws) enacted,
or substantively enacted, at the date of the statement of financial position and any adjustment to the tax payable in respect
of previous periods. The Group calculates current income tax using current income tax rates.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.8
Income taxes (continued)
(b) Deferred income tax
Where relevant deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities, and their carrying amounts in the consolidated financial statements. If the deferred income tax arises
from initial recognition of an asset or liability in a transaction, other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss, it is not recognised.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the
statement of financial position, and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which
the temporary differences can be utilised.
Deferred income tax relating to items recognised in other comprehensive income is also recognised in other comprehensive income.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities, and when the deferred income taxes relate to the same fiscal authority.
Deferred tax assets and liabilities are not discounted.
(c) Pillar Two Model Rules
The Group has determined that the global minimum top-up tax – which it is required to pay under Pillar Two legislation – is an income
tax in the scope of IAS 12. The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the
top-up tax and accounts for it as a current tax when it is incurred.
2.4.9 Employee benefits
The Group operates a number of defined contribution schemes. It also makes payments into a number of personal money purchase
pension plans. Contributions in respect of these schemes are charged to the income statement in the period to which they relate.
The Group also operates two defined benefit pension schemes. The asset recognised in the statement of financial position in respect
of a defined benefit scheme is the fair value of the scheme assets less the present value of the defined benefit obligation, which
is determined by discounting the estimated future cash outflows. The discount rate is based on market yields at the reporting date
of high-quality corporate bonds that have terms to maturity which approximate to those of the related pension liability. An asset
is recognised only to the extent that it is considered available in the form of future refunds from the plan, in particular taking into
consideration any minimum funding requirements that apply to the plan.
Actuarial gains and losses are recognised immediately through other comprehensive income.
The Group determines the net interest expense/income on the net defined benefit liability/asset for the period by applying the
discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit
liability/asset.
Past service costs arising in the period are recognised as an expense at the earlier of the date when the plan amendment
or curtailment occurs, and the date when the Group recognises related restructuring costs or termination benefits.
The Group recognises an accrual in respect of profit-sharing, bonus plans, and long service cash awards where a contractual
obligation to employees exists or where there is a past practice that has created a constructive obligation.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.10 Share-based payments
The fair value of equity instruments granted under share-based payment plans are recognised as an expense and spread over the
vesting period of the instrument. The total amount to be expensed is determined by reference to the fair value of the awards made
at the grant date.
At the date of each statement of financial position, the Group revises its estimate of the number of equity instruments that are
expected to become exercisable and it recognises the impact of the revision of original estimates, if any, in the income statement.
Where the awards have been granted by a parent company and are therefore treated as equity-settled, a corresponding adjustment
is made to equity over the remaining vesting period.
Where the awards have been granted by the Company and are therefore treated as cash-settled, a liability is provided for settlement
of the awards. The corresponding adjustment arising on a revision of the original estimate is made to that liability. In addition, the fair
value of the award and ultimate expense are adjusted upon a change in the market share price of the underlying shares or at the
valuation date. The liability is remeasured at each reporting date and on settlement, at which point it is derecognised from the
statement of financial position.
2.4.11 Provisions and contingencies
Provisions are liabilities with uncertainties in the amount or timing of payments. Provisions are recognised if there is a present
obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate of the amount of the obligation can be made at the date of the statement
of financial position.
A contingent liability is a possible obligation that arises from past events, or a present obligation that is not recognised as it is not
probable that an outflow of resources will be required to settle the obligation, or the amount of obligation cannot be measured with
sufficient reliability. A contingent liability is disclosed but not recognised.
2.4.12 Leases
The Group leases various offices under rental contracts that are typically from 1 to 15 years, but may have extension options. Lease
terms are negotiated on an individual basis and contain a wide range of terms and conditions. Leased assets are recognised as right-
of-use assets and corresponding liabilities are recorded at the date at which the leased assets are available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease liabilities include the net present value of the following lease payments:
• Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the
commencement date; and
• Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which
is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee
would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security, and conditions. To determine this, the Group uses recent third-party financing received
by the individual lessee (where available) and, if necessary, makes adjustments to reflect subsequent changes in financing conditions
and other adjustments specific to the lease (for example, to reflect lease term, country of leased asset, contract currency,
and security).
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included
in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability
is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.12 Leases (continued)
Right-of-use assets are measured at cost comprising of the following:
• The amount of the initial measurement of lease liability;
• Any lease payments made at or before the commencement date less any lease incentives received;
• Any initial direct costs; and
• Restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense
in profit or loss. Short-term leases are leases with a term of 12 months or less.
Extension and termination options are included in a number of leases across the Group. These are used to maximise operational
flexibility in terms of managing the assets used in the Group’s operations. Most of the extension and termination options held are
exercisable only by the Group and not by the respective lessor.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. It assesses
the lease classification of a sublease with reference to the right-of-use asset arising from the head lease, not with reference
to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption, then it classifies the
sublease as an operating lease. The Group recognises assets held under a finance lease in its statement of financial position, and
presents them as a receivable at an amount equal to the net investment in the lease. The lessor will derecognise the carrying
amount of the underlying asset (i.e. right-of-use-asset) that relates to the sublease, and the difference between this and the net
investment in lease is recognised in the income statement. Subsequently, finance income will be recognised over the lease term with
a corresponding increase in the net investment in the lease. Any cash received by the Group is recorded as a reduction in the net
investment in the lease.
2.4.13 Foreign currency translation
Items included in the financial statements of the parent and subsidiaries are measured using the functional currency, which is the
primary economic environment in which the entity operates. The Group presents its consolidated financial statements in US dollars,
which is the functional currency of the parent.
Foreign currency transactions are recorded in the functional currency for each entity using the exchange rates prevailing at the
dates of the transactions, or at the average rate for the period when this is a reasonable approximation.
Substantially all of the Group’s operations have US dollars as their functional currency. Monetary assets and liabilities denominated
in foreign currencies are translated at period end exchange rates. The resulting exchange differences on translation are recorded
in the income statement. Non-monetary assets and liabilities that are measured at historical cost denominated in a foreign currency
are not retranslated.
The functional currencies of some of the Company’s subsidiaries differ from the consolidated Group US dollar presentation
currency. As a result, the assets and liabilities of these subsidiaries, including any goodwill arising on consolidation, are translated
on consolidation at the rates of exchange prevailing at the balance sheet date. Revenue and expenses are translated at the average
rate of exchange for the period. The unrealised gain or loss resulting from this translation is recognised in other comprehensive
income and transferred to a foreign currency translation reserve.
2.4.14 Segmental reporting
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur
expenses, whose operating results are regularly reviewed by the entity’s chief operating decision maker and for which discrete
financial information is available.
2.4.15 Dividend and capital distributions
Dividend and capital distributions to the Company’s shareholders are recognised in the Group’s financial statements in the period
in which they are declared and appropriately approved.
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Accounting policies and basis of preparation (continued)
2.4
Other accounting policies (continued)
2.4.16 Collateral
The Group receives collateral from certain reinsurers and pledges collateral where required for regulatory purposes and other
funding arrangements. Collateral received in the form of cash is recognised as an asset on the statement of financial position with
a corresponding liability for the repayment. Non-cash collateral received is not recognised on the statement of financial position.
Except where it is used for the purposes of the agreement to which it relates, collateral pledged is not derecognised from the
statement of financial position unless it is cash or where the Group defaults on its obligations under the relevant agreement.
2.4.17 Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through
a sale transaction, rather than through continuing use and a sale is considered highly probable. They are measured at the lower
of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from
employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance
contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs
to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not
in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale
of the non-current asset (or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified
as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue
to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately
from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately
from other liabilities in the balance sheet.
A discontinued operation is a component of the entity that has been disposed of, or is classified as held for sale, and that represents
a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line
of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations
are presented separately in the statement of profit or loss.
3
Significant judgements and estimates
3.1
Introduction
In preparing the Group’s consolidated financial statements management makes various judgements and estimates that affect the
reported amount of assets, liabilities, income and expenses. Such judgements and estimates are regularly re-evaluated and are
based on a combination of historical experience and other factors, including exposure analysis, expectations of future experience
and expert judgement.
3.2
Significant judgements
The judgements that management has made in applying the Group’s accounting policies that have the most significant effect on the
amounts recognised in the financial statements are outlined below.
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Significant judgements and estimates (continued)
3.2
Significant judgements (continued)
3.2.1
Judgement involved in the measurement of insurance and reinsurance contracts
(a) Level of aggregation
The Group is required to aggregate insurance contracts into groups and portfolios for measurement purposes. The assessment
of which risks are similar and how contracts are managed, as well as how each portfolio should then be subdivided into groups
of insurance contracts, requires judgement to be exercised by management.
The Group manages insurance contracts issued with reference to its Direct Portfolios, such as Financial and Professional Liability
and Programmes and Facilities, which are reported to senior management for each insurance carrier and are referred to in the
strategic report. After being subdivided into property, casualty and speciality risks, the Group has determined that these Direct
Portfolios meet the definition of 'similar risks and managed together'.
The Group has determined that these portfolios are subdivided into groups of insurance contracts for measurement purposes based
on Year of Account and class of business. A class of business represents a specific risk that is underwritten within a Direct Portfolio, for
instance insurance contracts covering cyber-related risks represent a class of business within the Financial and Professional Liability
Direct Portfolio. Based on historical experience management has determined that all insurance contracts issued by the Group have the
potential to turn onerous and therefore each portfolio is allocated to either a profitable or onerous group of insurance contracts.
The Group aggregates portfolios of reinsurance contracts held based on type of reinsurance and the insurance carrier ceding the
risk, further subdivided by property, casualty and speciality risks.
(b) PAA eligibility
The Group applies the simplified measurement model to all insurance contracts when the eligibility criteria are met. For contracts
with coverage periods greater than 12 months, management must assess if the simplification would produce a measurement of the
liability/asset for remaining coverage (LRC/ARC) for the group of contracts that would not differ materially from the one that would
be produced under the General Measurement Model.
The criterion is not met if, at the inception of the group of contracts, the Group expects significant variability in the fulfilment cash flows
that would affect the measurement of the LRC during the period before a claim is incurred. In making this assessment, the Group must
assess what scenarios may reasonably be expected that would create significant variability in the fulfilment cash flows. The Group
exercises judgement in setting criteria to assess whether the quantum of variability in fulfilment cash flows is considered significant.
(c) Insurance revenue
When applying PAA, insurance revenue for the period is the amount of expected premium receipts (excluding any investment
component and adjusted to reflect the time value of money, if applicable) allocated to the period.
The Group allocates expected premium receipts to each period on the basis of the passage of time, unless the expected incidence
of risk during the coverage period differs significantly from the passage of time, in which case the premium receipts are allocated
based on the expected timing of incurred insurance service expense. Judgement is involved in determining if the release of risk
during the coverage period differs significantly from the passage of time.
When applying the general measurement model (GMM), the Group applies judgement in the determination of the coverage units
provided or received in the current period. For contracts which do not provide coverage against adverse development, coverage
units are generally allocated linearly over the coverage period of each contract, as exposure typically remains constant throughout.
For loss portfolio transfers, the insured event consists of all claims payments up to the final settlement payment. The coverage
period will be the expected claims settlement period, and the expected quantity of benefits will be the level of claims reserve held.
Coverage units will be based on both the quantum of reserve and length of time the reserve is held.
(d) Future cash flows
The projection of ultimate premiums, reinstatement premiums and claims are estimated using a range of standard actuarial
techniques, such as Basic Chain Ladder, Bornhuetter-Ferguson and Initial Expected Loss Ratio.
The key assumption underpinning the Basic Chain Ladder and Bornhuetter-Ferguson projection methods is that the historical
development of premiums and claims is representative of future development. Claims inflation is taken into account in the Initial
Expected Loss Ratio selections, but is otherwise assumed to be in line with historical inflation trends, unless explicit adjustments for
other drivers of inflation such as legislative developments are deemed appropriate.
The initial ultimate selections derived by the actuarial department, along with the underlying key assumptions and methodology,
are discussed with class underwriters, divisional underwriting directors and the claims team. The actuarial department may apply
judgement and adjust the initial ultimates following these discussions to reflect instances where past trends may not apply in future.
Following this exercise, the ultimate premiums and claims are then reviewed and approved by the Reserving Committee.
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3
Significant judgements and estimates (continued)
3.2
Significant judgements (continued)
3.2.2 Judgement involved in the measurement of insurance and reinsurance contracts (continued)
(e) Discount rates
The Group is required to apply discount rates to the expected future cash flows in measuring the insurance contract liabilities and
reinsurance contract assets. Management has exercised its judgement in determining that the 'bottom-up' estimation technique
should be used in calculating these discount rates.
(f) Risk adjustment
IFRS 17 does not specify the method that an entity should apply in determining the risk adjustment for non-financial risk. Management
has exercised its judgement in determining that the 'Value-at-Risk' approach should be used in calculating the risk adjustment.
3.2.2 Judgement in the measurement of leases
The accounting for leases under IFRS 16 requires an incremental borrowing rate to use as the discount rate for the leases. The
Group took advantage of the practical expedient in IFRS 16 to apply a single discount rate to its entire portfolio of leases, with the
rate calculated as the weighted average of discount rates applied in each jurisdiction in which the Group has leases. The property
leases do not explicitly or implicitly state interest rates, therefore unsecured borrowing rates for individual leases have been
estimated by using the borrowing rate for the Group in the jurisdictions that the leases are held.
Extension and termination options are included in a number of leases across the Group. These are used to maximise operational
flexibility in terms of managing the assets used in the Group’s operations. Most of the extension and termination options held are
exercisable only by the Group, and not by the respective lessor. Management have exercised judgement in determining whether there
is a significant expectation that these options would be exercised.
3.3
Significant estimates
The sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amount
of assets and liabilities within the next financial year have been outlined below.
3.3.1 Significant estimates in the measurement of insurance and reinsurance contracts
(a) Future cash flows
There are several sources of uncertainty that need to be considered in the estimate of the future cash flows. Significant areas
requiring estimation include:
• Estimates of expected cash flows in the measurement of the Group’s obligations to pay for future insured events, and
insurance contract services plus any investment components. This includes the estimation of premium written during the
reporting period, especially with regards to delegated arrangements where financial information is provided to the Group
on a periodic basis and assumptions are required to estimate the amounts written at the reporting date. Premiums, including
reinstatement premiums, are estimated net of commissions. The expected commissions are estimated based on historical
average acquisition expenses applied to the estimated premiums.
• Estimates of expected cash flows to settle obligations to pay for insured events that have occurred, and insurance contract
services already provided plus any investment components. This includes loss events that have occurred, but not been
reported, events not in data (‘ENIDs’) and other incurred expenses. Uncertainty in the estimation of these cash flows primarily
arises from the frequency and severity of claims, the estimated cash settlement patterns and uncertainties regarding future
inflation rates. Where a class of business may not lend itself to statistical estimation techniques due to low data volumes,
a policy-by-policy review will typically be performed to supplement statistical estimates. Lastly, in the event of a catastrophe,
estimates of future cash flows are determined using a combination of outputs from modelling software and a detailed review
of contracts exposed to the event in question.
• The corresponding estimate of the amount of outwards reinsurance contracts based on assumptions of the estimated on the
underlying inwards insurance contract, plus the effect of any risk of non-performance by the reinsurer where material.
Sensitivities to a change in claims ratio against the carrying value of the insurance contract liabilities are included in Note 4.1.3.
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3
Significant judgements and estimates (continued)
3.3
Significant estimates (continued)
3.3.1 Significant estimates in the measurement of insurance and reinsurance contracts (continued)
(b) Discount rates
Estimation is involved in determining discount rates that reflect the time value of money, and the financial risks associated with the
cash flows of the insurance contract.
The risk-free rate component of the discount rate is calculated using standard Smith-Wilson Extrapolation including all liquid points
available for government bonds. Estimation of the illiquidity premium component of the discount rate requires significant judgement. The
illiquidity premium is the difference between the risk-free rates and the current yields for a representative investment grade corporate
bond portfolio, denominated in relevant currencies and adjusted to remove expected credit losses and credit risk premium.
The discount rates applied by currency in the current and prior period are as follows:
Year ended 31 December 2024
Year ended 31 December 2023
1 Year
%
5 Years
%
10 Years
%
15 Years
%
1 Year
%
5 Years
%
10 Years
%
15 Years
%
USD
4.64
4.83
5.17
5.37
5.00
4.57
4.70
4.81
GBP
4.74
4.68
5.14
5.51
4.95
3.93
4.26
4.60
EUR
2.38
2.50
2.91
3.23
3.38
2.64
2.86
3.08
CAD
3.36
3.82
4.43
4.60
5.28
4.51
4.37
4.41
Sensitivities to a change in discount rates against the carrying value of the insurance contract liabilities are included in Note 4.3.2.
(c) Risk adjustment
Risk adjustment for non-financial risk is determined to reflect the compensation that an insurer would require for bearing non-
financial risk. The Group has estimated the risk adjustment via a confidence level approach. This has been based on a review
of distributions estimated using the Bootstrap method. The Bootstrap distributions are estimated gross and net of reinsurance
contracts, with reinsurance contracts calculated as the difference between the two.
The chosen confidence level of the risk adjustment is set and reviewed annually. At 31 December 2024, the risk adjustment is set
at a net confidence level of 78% (2023: 77%) over the lifetime of the contracts.
Sensitivities to a change in confidence level against the carrying value of the insurance contract liabilities are included in Note 4.1.3.
3.3.2 Intangible assets
Intangible assets with indefinite useful lives are tested for impairment on an annual basis in accordance with IAS 36 ‘Impairment
of Assets’. This impairment review is performed at the level of cash-generating units (CGUs), with the carrying value of each CGU
(including its intangible assets) compared to its value in use.
The estimate of the value in use of each CGU is significant to the Group’s statement of financial position. This estimate is based
on forecasts of future profits that are approved by management, with discounting at the Group’s weighted average cost of capital.
The intangible assets of the Group with an indefinite useful life consist of goodwill, syndicate participation rights, and trade names.
The carrying amount at the date of the statement of financial position was as follows: goodwill: $13.0m (2023: $13.4m); trade names:
$0.7m (2023: $0.7m); and syndicate participation rights: $70.8m (2023: $70.8m).
For further information on impairment testing and sensitivity of key assumptions in respect of intangible assets, refer to Note 20.
3.3.3 Defined benefit pension plans
The Group has two funded defined benefit pension schemes. The obligations arising from these schemes are determined using
actuarial valuations, which involves making assumptions that may differ from actual developments in the future. These include
the determination of the discount rate, inflation, mortality rates, and future pension increases. Due to the complexities involved
in their valuation and their long-term nature, defined benefit obligations are highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
The Group’s defined benefit obligations are supported by scheme assets, with the net of the scheme obligations and scheme assets
presented within net pension assets in the statement of financial position.
In recent years the Group’s defined benefit pension schemes have both executed ’buy-ins’ whereby each pension scheme purchased
a bulk annuity insurance policy which matches the benefits due to members. The assets arising from these insurance policies are
held within the scheme assets and therefore form part of net pension assets in the statement of financial position.
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3
Significant judgements and estimates (continued)
3.3
Significant estimates (continued)
3.3.3 Defined benefit pension plans (continued)
As a result of these buy-ins the Group does not expect significant volatility in the carrying amount of net pension assets.
The carrying amount of net pension assets at the date of the statement of financial position was $35.0m (2023: $37.1m). For further
information, refer to Note 24.
3.3.4 Recoverability of deferred tax assets
The consolidated statement of financial position includes total deferred tax assets of $138.0m (2023: $132.4m), split between:
• Deferred tax assets of $3.6m (2023: $nil) presented within deferred tax assets;
• Deferred tax assets of $134.4m (2023: $132.4m) presented within deferred tax liabilities (pursuant to IAS 12 offset provisions).
The recognition of these deferred tax assets is dependent on the expectation that there will be sufficient future taxable profits
against which the deferred tax assets can be recovered. This estimate of future taxable profits is significant to the Group’s
statement of financial position.
The Group’s estimate of future taxable profits for the purpose of assessing the recoverability of deferred tax assets is based
on Lloyd’s approved syndicate plans and forecast profits for the Brit Group UK entities which are available for group relief.
Based on the estimate of future taxable profits and the scenario modelling management concluded that $138.0m (2023: $132.4m)
of deferred tax assets are recoverable, including $113.9m (2023: $101.7m) in respect of carried forward losses which can be carried
forward indefinitely and have no expiry date.
A potential deferred tax asset of $30.9m (2023: $20.6m) has not been recognised as it is not yet possible to measure the
asset reliably.
For further information, refer to Note 22.
3.3.5 Fair values of financial investments
The Group’s financial investments are carried in the consolidated statement of financial position at fair value. Determining the fair
value of certain financial investments requires estimation, particularly where the valuation is based on models or inputs that are
unobservable in the market. Such financial investments are classified as level three within the fair value hierarchy.
For the Group the most significant estimates are made around valuing investments in limited partnerships and specialised
investment funds. Determining the fair value of these financial investments requires adjustments in respect of illiquidity that are
unobservable.
For further information, refer to Note 25.
4
Risk management policies
This Note provides details of key risks that the Group is exposed to and explains the Group’s strategies and the role of management
in mitigating these risks.
4.1
Insurance risk
Insurance risk arises from the possibility of an adverse financial result due to actual experience being different from that expected
when an insurance product was designed and priced. The actual performance of insurance contracts is subject to the inherent
uncertainty in the occurrence, timing and amount of the final insurance liabilities. This is the principal risk the Group is exposed
to as the Group’s primary function is to underwrite insurance contracts. The risk arises due to the possibility of insurance contracts
being under-priced, under-reserved or subject to unforeseen catastrophe claims.
The areas of insurance risk discussed below include underwriting (including aggregate exposure management), reinsurance
and reserving.
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4
Risk management policies (continued)
4.1
Insurance risk (continued)
4.1.1
Underwriting risk
(a) Introduction
Underwriting risk is the risk that insurance premiums will not be sufficient to cover the future losses and associated expenses.
It arises from the fluctuations in the frequency and severity of financial losses incurred through the underwriting process by the
Group as a result of unpredictable events.
The Group is also exposed to the risks resulting from its underwriters accepting risks for premiums which are insufficient to cover
the ultimate claims which result from such policies. The underwriting and economic environment and the associated impact
on premium rates, including trends due to the underwriting cycle and inflation, are factored into the Group’s pricing models and risk
management tools, and is continually monitored to assess whether any corrective action is required. Additional controls over the
underwriting strategy are described in the section below.
The Group primarily writes its business through Lloyd’s and therefore can take advantage of Lloyd’s centralised infrastructure
and service support. Lloyd’s also has an established global distribution framework, with extensive licensing agreements providing
the Group access to over 200 territories. Primarily using the Lloyd’s platform to underwrite, subjects the Group to a number
of underwriting risks. The Group relies on the efficient functioning of the Lloyd’s market. If for any reason Brit Syndicates Limited
(BSL) was restricted or otherwise unable to write insurance through the Lloyd’s market, there would be a potentially material
adverse effect on the Group’s business. In particular, any damage to the brand or reputation of Lloyd’s, increase in tax levies imposed
on Lloyd’s participants or deterioration in Lloyd’s asset base when compared with its liabilities may have a material adverse effect
on the Group’s ability to write new business.
Brit also benefits from the ability to write business based on the Lloyd’s financial rating, which allows the Group to write more
business as part of the Lloyd’s platform. A downgrade in Lloyd’s financial strength ratings may have an adverse effect on the Group.
The Group also writes business through Brit Reinsurance (Bermuda) Limited (Brit Re).
(b) Controls over underwriting strategy
The Board sets the Group’s underwriting strategy for accepting and managing underwriting risk. The Group, Brit Re and syndicates'
Underwriting Committees meet regularly to drive the underwriting strategy and to monitor performance against the plans. The
assessment of underwriting performance is all-encompassing applying underwriting key performance indicators (KPIs), technical
pricing management information (MI), premium monitoring, delegated underwriting operations and claims. The risks are managed
by the committees in line with the underwriting risk policy and within the risk tolerance set by the underwriting entity Boards and risk
appetites set by the committee. The underwriting risk policy also sets out a number of controls, which are summarised below.
The Group carries out a detailed annual business planning process for each of its underwriting units. The resulting plans set out
premium, territorial and aggregate limits and reinsurance protection thresholds for all classes of business and represent a key tool
in managing concentration risk. Performance against the plans is monitored on a regular basis by the Underwriting Committees
as well as by the Boards of the regulated entities. A dedicated Risk Aggregation Team also performs catastrophe modelling and
Realistic Disaster Scenario (RDS) analysis on a regular basis to ensure that the Group’s net losses remain within its risk appetite.
The Group has developed underwriting guidelines, limits of authority and business plans which are binding upon all staff authorised
to underwrite. These are detailed and specific to underwriters and classes of business. Gross and net line size limits are in place for
each class of business with additional restrictions in place on catastrophe exposed business.
A proportion of the Group’s insurance risks are written by third parties under delegated underwriting authorities, with the
remaining being written through individual risk acceptances or through reinsurance treaties. The third parties are closely vetted
in advance and are subject to tight reporting requirements. In addition, the performance of these contracts is closely monitored
by underwriters and/or portfolio managers, and regular audits are carried out.
The technical pricing framework ensures that the pricing process in the Group is appropriate. It ensures pricing methodologies
are demonstrable and transparent and that technical (or benchmark) prices are assessed for each risk. The underwriting and
actuarial functions work together to maintain the pricing models and assess the difference between technical price and actual
price. The framework also ensures that sufficient data is recorded and checked by underwriters to enable the Group to maintain
an effective rate monitoring process.
Compliance is checked through both a peer review process and, periodically, by the Group’s internal audit department which
is entirely independent of the underwriting units. In order to limit risk, the number of reinstatements per policy is limited, deductibles
are imposed, policy exclusions are applied and whenever allowed by statute, maximum indemnity limits are put in place per
insured event.
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4
Risk management policies (continued)
4.1
Insurance risk (continued)
4.1.1
Underwriting risk (continued)
(c) Underwriting risk profile
The core insurance portfolio of property, cyber, marine, energy and casualty covers a variety of largely uncorrelated events and also
provides some protection against the underwriting cycle as different classes are at different points in the underwriting cycle. The
underwriting portfolio is managed to target top quartile underwriting performance and the mix of business is continually adjusted
based on the current environment (including the current pricing strength of each class). This assessment is conducted as part
of the business planning and strategy process which operates annually and uses inputs from the technical pricing framework. The
business plan is approved by the entity level Boards and is monitored monthly.
The Group underwrites a well-diversified portfolio across multiple regions and classes. While underlying risk and the policyholder
may be situated anywhere in the world, 80.3% of the insurance revenue for the Group in 2024 relates to either the United States
or United Kingdom (2023: 82.4%).
(d) Geographical concentration of insurance revenue
The Group enters into policies with policyholders from all over the world, with the underlying risk relating to premiums spread
worldwide. This allows the Group to benefit from a wide geographic diversification of risk. The four principal locations of the
Group’s policyholders are the United States, UK, Europe and Canada. The geographical concentration of insurance revenue
is disclosed in Note 5(b).
(e) Portfolio mix
The Group underwrites business in a wide variety of classes. The breakdown of insurance revenue before reinsurance by principal
lines of business is summarised below:
2024
Insurance revenue
2023 (restated*)
Insurance revenue
$m
%
$m
%
Financial and Professional
680.6
19.6
695.5
19.8
Programmes and Facilities
660.8
19.1
831.1
23.6
Property
852.3
24.6
745.7
21.2
Specialty
594.9
17.2
536.3
15.3
Casualty Treaty
343.8
9.9
440.4
12.5
Property Treaty
308.3
8.9
254.7
7.2
Classes in run-off and Other lines
24.8
0.7
13.4
0.4
3,465.5
100.0
3,517.1
100.0
* 2023 amounts have been restated to re-allocate amounts previously included within Ambridge lines of business. This is consistent with how management currently views the Group’s
lines of business.
The Group underwrites a mix of both insurance and reinsurance, long and short-tail business across a number of geographic areas
which results in diversification within the Group’s portfolio. The business mix is monitored on an ongoing basis.
The risk profile of Brit’s underwriting portfolio is set out in more detail in the sections below.
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4
Risk management policies (continued)
4.1
Insurance risk (continued)
4.1.1
Underwriting risk (continued)
(e) Portfolio mix (continued)
(i) Core Underwriting and Ki
(1) Financial and Professional (FinPro)
Directors and Officers (D&O)
Coverage provided to both directors and officers and companies for personal liability
or securities-related lawsuits.
Financial Institutions (FI)
Coverage of financial institutions for risks including internal and external fraud, and
liability to customers, shareholders and regulators.
Transactional
Transactional Insurance, including Representations and Warranties, and Warranties
and Indemnities.
Cyber Privacy and Technology
Coverage of first- and third-party risks relating to network security, privacy and
data protection risks.
Healthcare
Coverage of hospitals, allied health and long-term care liability, predominantly in the US.
US Professional Indemnity
Coverage for professional negligence, errors and omissions, provided on both an open
market and a binding authority basis.
Financial and professional lines are typically long-tailed, meaning that on average the claims are not settled for several years
after the expiry of the policy, which increases exposure to claims inflation. Other key risks relate to increasing claim frequency
due to global recessions or systemic malpractice, as well as an increasing prevalence of cyber security risk. This portfolio is also
exposed to the risk of latent claims arising from risks that were not envisaged at the time of writing the policy.
(2) Programmes and Facilities
Accident and Health
Coverage for personal accident and medical expenses, kidnap and ransom,
and contingency.
Long Tail Facilities
Coverage of legal expenses for individuals, companies and affinity groups worldwide,
and of professional negligence, errors and omissions for small and medium-sized
enterprises in the US and Canada.
Property Facilities
Coverage of commercial and residential properties and for financial institutions, loan
servicers and property investors, including lender-placed hazard and flood protection
as well as commercial automobile physical damage and motor truck cargo across the
US and Canada.
The Programmes and Facilities portfolio consists of business written on a delegated authority basis. Property Facilities is exposed
to catastrophe claims, particularly US windstorms, earthquakes, floods and terrorist events, and to an increased frequency of fire
and weather-related events.
Accident and Health offers diversification due to low correlation with other business lines. Personal accident has the potential
to suffer from large losses due to a high concentration of multiple deaths from a catastrophe or large claims from highly valued
insured individuals. Medical expense claims are subject to high inflationary costs and may experience a high claim frequency.
Contingency classes have exposure to multiple claims from a single event.
The key risks relating to Long Tail Facilities lie with increasing claim frequency due to global recessionary events
or systemic malpractice.
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4
Risk management policies (continued)
4.1
Insurance risk (continued)
4.1.1
Underwriting risk (continued)
(e) Portfolio mix (continued)
(i) Core Underwriting and Ki (continued)
(3) Property
Political Risk and Trade Credit*
Covers non-payment/performance of counterparties and confiscation, expropriation,
nationalisation, deprivation, sequestration or forced abandonment of overseas assets.
Political Violence
Covers physical damage and business interruption losses due to perils including
terrorism, riots, war, chemical, biological and/or radiological attacks.
Open Market and Worldwide Property
Coverage of commercial property in the US and internationally.
UK Property
UK property package covers for individuals and small or medium-sized enterprises.
Private Client* and Specie
Coverage of fine art, specie and private client risks.
* Class of business not underwritten by Ki in 2023 or 2024
Brit provides property cover on a worldwide basis, with the largest exposures in the US. The open market, UK and worldwide
property lines are exposed to catastrophe claims, particularly windstorms, earthquakes, floods and terrorist events, and
to an increased frequency of fire and weather-related events. The Political Risk and Political Violence classes are exposed
to individual large losses arising from terrorist attacks or state action.
(4) Specialty
Marine
Coverage for cargo, hull, marine war and marine liability.
Energy
Coverage for upstream and midstream operations, including renewables.
Specialist Liability
Coverage for UK and international liability business including Employers, Public,
Products and Environmental Liability across a range of territories.
North American portfolio, covering a range of classes including general liability,
umbrella, professional liability, personal accident, auto liability, environmental liability,
medical malpractice and workers compensation. Target client focus is broad and
includes but is not limited to captives, Risk Retention Groups, regional, super-regional
and nationwide carriers.
The Specialty portfolio includes a diverse range of business lines. However, the portfolio is exposed to large losses on individual
risks, for example due to the loss of marine vessels or offshore oil platforms. The Employers’ Liability (EL) and Public Liability (PL)
portfolios are exposed to large losses resulting from bodily injury claims, and the risk of latent claims arising from risks that were
not envisaged at the time of writing the policy.
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4
Risk management policies (continued)
4.1
Insurance risk (continued)
4.1.1
Underwriting risk (continued)
(e) Portfolio mix (continued)
(i) Core Underwriting and Ki (continued)
(5) Casualty Treaty
Casualty Treaty
Casualty and Accident Treaty reinsurance. Worldwide portfolio, writing predominantly
non-proportional reinsurance (including retrocession) covering all the principal casualty
classes as well as Personal Accident and other accident classes. These include Property
Terror, Products Recall, Credit/Bond/Surety, Political Risks and Contingency.
The Casualty Treaty business is exposed to man-made catastrophe claims such as terrorism, increased claim activity in the event
of an economic downturn and the potential for latent claims which were not foreseen at the time the policies were underwritten.
This division contains the longest tailed liabilities the Group holds, i.e. there can be a significant delay between the loss event and final
settlement of a claim. This delay can result in the final settlement being subject to significant claims inflation.
(6) Property Treaty
Property Treaty*
Catastrophe excess of loss, risk excess of loss reinsurance and retrocession.
* Class of business not underwritten by Ki in 2023 or 2024
The key exposures for Property Treaty are US windstorms and Californian earthquakes. Property Treaty also has exposures
to Japanese earthquakes and European windstorms.
(ii) Aggregate exposure management
The Group closely monitors aggregations of exposure to natural catastrophe events against agreed risk appetites using stochastic
catastrophe modelling tools, along with knowledge of the business, historical loss information, and geographical accumulations.
Climate change impacts natural catastrophe events and Brit’s approach to climate change is discussed in section 4.7.1. Analysis and
monitoring also measures the effectiveness of the Group’s reinsurance programmes.
Aggregations of exposure to man-made catastrophes are monitored using inhouse scenario analysis and Lloyd’s RDS’s.
The Group’s catastrophe risk tolerance is reviewed and set by the Boards on an annual basis. The last review of catastrophe risk
tolerances was in March 2024.
For major natural catastrophe events, the Group has tolerances for gross and net Worldwide All Perils at the 1-in-250-year return
period expressed as a percentage of the Brit Limited Group Shareholder Equity. More granular tolerances at lower return periods
and by region are set for Brit’s syndicates and Brit Re. Board tolerances are also set for major man-made catastrophe events.
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notes to the consolidated financial statements
4
Risk management policies (continued)
4.1
Insurance risk (continued)
4.1.1
Underwriting risk (continued)
(e) Portfolio mix (continued)
(ii) Aggregate exposure management (continued)
Stress and scenario tests are also run, such as Lloyd’s and internally developed RDS’s. Below are the key RDS losses to the Group
for all classes combined (unaudited):
Estimated
Industry loss
$m
Gross
$m
Modelled
Group loss at
1 October 2024
Net
$m
Gross
$m
Modelled
Group loss at
1 October 2023
Net
$m
Gulf of Mexico windstorm
111,000
964
530
979
429
Florida Miami windstorm
131,000
533
273
609
240
US North East windstorm
81,000
930
341
944
311
San Francisco earthquake
80,000
1,511
774
1,499
586
Japan earthquake
55,886
296
196
299
198
Japan windstorm
11,876
88
55
100
64
European windstorm
26,800
111
75
132
91
Actual results may differ materially from the losses stated above given the significant uncertainties within model assumptions,
techniques and simulations applied to calculate these event loss estimates. There could also be non-modelled losses which result
in actual losses exceeding these figures. Moreover, the portfolio of insured risks changes dynamically over time.
4.1.2 Reinsurance
The Group purchases reinsurance to manage its exposure to individual risks and aggregation of risks arising from individual large
claims and catastrophe events. This allows the Group to mitigate exposure to insurance losses, reduce volatility of reported results
and protect capital.
Proportional quota share reinsurance is purchased to provide protection against claims arising either from individual large claims
or aggregation of losses. Quota share reinsurance is also used to manage the Group’s net exposure to classes of business where
the Group’s risk appetite is lower than the efficient operating scale of the class of business on a gross of reinsurance basis. These
placements are reviewed on the basis of market conditions.
The Group also has in place a comprehensive programme of excess of loss reinsurances to protect itself from severe size
or frequency of losses:
• Facultative reinsurance is used to reduce risk relating to individual contracts. The amount of cover bought varies by class
of business. Facultative reinsurance is also used as a tool to manage the net line size on individual risks to within tolerance.
• Risk excess of loss reinsurance is used to protect a range of individual inwards contracts which could give rise to individual
large claims. The optimal net retention per risk is assessed for each class of business given the Group’s risk appetite during
the business planning exercise.
• Aggregate catastrophe excess of loss covers are in place to protect against combined property claims from multiple policies
resulting from catastrophe events. This is supplemented by specific covers for peril regions, catastrophe swaps, catastrophe
bonds and industry loss warranties where they are a cost-efficient means to ensure that the Group remains within its
catastrophe risk appetite.
In December 2020 Brit issued a catastrophe bond which provides $300m of reinsurance protection to Syndicate 2987. The bond
has a four-year term and covers losses from US named windstorms and US earthquakes. The bond was issued in the UK via
a protected cell of Sussex Capital Limited that is not consolidated by the Group, and which has entered into a reinsurance contract
with Syndicate 2987. The catastrophe bond expired on 31 December 2024 and was not renewed.
Given the fundamental importance of reinsurance protection to the Group’s risk management, the Group has in place internal
controls and processes to ensure that the reinsurance arrangements provide appropriate protection of capital and maintain our
ability to meet policyholder obligations. The Syndicate and Brit Re Underwriting Committees oversee the purchase of reinsurance.
Brit Limited Annual Report 2024
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financial statements
4
Risk management policies (continued)
4.1
Insurance risk (continued)
4.1.2 Reinsurance (continued)
The Group remains exposed to a number of risks relating to its reinsurance programme:
• It is possible for extremely severe losses to exhaust the reinsurance purchased. Any losses exceeding the reinsurance
protection would be borne by the Group.
• Some parts of the programme have limited reinstatements which limit the amount that may be recovered from second or subsequent
claims. If the entirety of the cover is exhausted, it may not be possible to purchase additional reinsurance at a reasonable price.
• A dispute may arise with a reinsurer which may mean the recoveries received are lower than anticipated.
• Basis risk on reinsurance which responds to something other than Brit’s Ultimate Net Loss.
These risks are managed through a combination of techniques and controls including risk aggregation management, capital modelling
and internal actuarial review of outward reinsurance costs. The counterparty risk in relation to reinsurance purchased is managed
by the Credit Committee. This is further discussed in the Credit risk section below.
4.1.3 Reserving risk
Reserving risk relates to the risk that the actual cost of losses for policyholder obligations incurred is different from the amounts
provided for within the liability for incurred claims, net of reinsurance, due to inaccurate assumptions or unforeseen circumstances.
This is a key risk for the Group as the net liability for incurred claims is the largest component of the Group’s liabilities and the
actual final cost of losses incurred is inherently uncertain. The BSL Reserving Committee is responsible for the management of Brit
Syndicates 2987 and 2988’s reserving risk, and the Brit Re Reserving Committee performs a similar function for Brit Re. Until
1 January 2025, the BSL Reserving Committee was also responsible for the management of Ki Syndicate 1618’s reserving risk. From
this date, responsibility was transferred to the Ki Reserving Committee, which forms part of the governance structure under Ki’s
new third party managing agency agreement.
The Group has a rigorous process for measuring incurred claims and a number of controls are used to mitigate reserving risk. The
process starts with controls over claims data which ensure complete and accurate recording of all paid and notified claims. Claims
adjusters validate policy terms and conditions, adjust claims and investigate suspicious or disputed claims in accordance with the
Group’s claims policy.
The liability for incurred claims includes a ‘best estimate’ as at the balance sheet date, which includes estimates for both reported and
incurred but not reported (IBNR) losses. For reported losses case reserves are set using the experience of specialist claims adjusters,
underwriters and external experts where necessary. For IBNR losses, estimates are calculated using further actuarial techniques
to capture potential liabilities arising from claims not yet reported or where further liabilities could arise beyond information available
to date. This is particularly the case for the longest tailed classes of business where the final settlement can occur several years after
the claim occurred. Actuarial triangulation techniques are employed by the Group’s experienced actuaries to establish the IBNR reserve.
These techniques project IBNR reserves based on historical development of paid and incurred claims by underwriting year.
For the most uncertain claims, the triangulation techniques are supplemented by additional methods to ensure the established
insurance contract liabilities are appropriate. The Actuarial function works closely with other business functions such
as underwriting, claims and risk aggregation management to ensure that they have a full understanding of the emerging claims
experience across the Group. Further details on the actuarial methods used can be found in Note 23. Inflation and other relevant
economic factors are considered as part of the process.
The Group’s Reserving Policy sets out the approach to estimating incurred claims and is designed to produce accurate and reliable
estimates that are consistent over time and across classes of business. The Actuarial best estimate set out in the policy is subject
to BSL and Brit Re Reserving Committee sign-off as part of the formal governance arrangements for the Group. The estimate agreed
by the committees is used as a basis for the ‘best estimate’ component of the liability for incurred claims. A risk adjustment is also
applied over and above the best estimate to allow for the inherent uncertainty within the best estimate reserve. Finally, the insurance
contract liabilities are presented to the respective Audit Committees for recommendation to the relevant Boards.
The liabilities can be more or less than what will ultimately be required to meet the claims arising from earned business. The level
of uncertainty varies significantly between the classes written by the Group but typically is highest for those classes where there
are significant delays in the settlement of the final claim amount. More specifically, the key areas of uncertainty are considered to be
claims from the long-tailed direct and long-tailed reinsurance classes. The issues contributing to this heightened uncertainty are
common to all entities which write such business. Further details on the insurance contract liabilities, including changes over time
and claims development tables, can be found in Note 23.
110
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
4
Risk management policies (continued)
4.1
Insurance risk (continued)
4.1.3 Reserving risk (continued)
The table below provides a sensitivity analysis of the potential impact of a change in the claims ratio and of a change in the
confidence level used for determining the risk adjustment on the Group's profit or loss before tax. The sensitivity was calculated
by adjusting the risk adjustment 2.5 percentage points above/below the current confidence level. Other potential risks beyond the
ones described could have additional financial impacts on the Group.
Impact of change on profit before tax
Gross
2024
$m
Net
2024
$m
Gross
2023
$m
Net
2023
$m
Change in claims ratio1 (1% increase)
(18.0)
(13.2)
(18.6)
(13.4)
Change in claims ratio1 (1% decrease)
18.0
13.2
18.6
13.4
Change in confidence level used for determining the
risk adjustment (2.5% increase)
65.2
48.6
55.7
40.4
Change in confidence level used for determining the
risk adjustment (2.5% decrease)
(45.6)
(34.0)
(30.9)
(22.4)
1 The calculations of the combined ratio and other ratios are set out in ‘key performance indicators and alternative performance measures’ on pages 190 to 194.
The analysis is based on the information at the reporting date. It involves a change in an assumption while holding all other
assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions might be correlated.
Subject to taxation, the impact on shareholders’ equity would be the same as that on profit following a change in the net claims
and risk adjustment confidence level.
4.2
Investment risk management
4.2.1 Introduction
This section describes the Group’s approach to managing investment risk, from both a quantitative and a qualitative perspective.
Investment risk includes market risk (which is covered in section 4.3), investment credit risk (which is covered in section 4.4) and
liquidity risk (which is covered in section 4.5).
4.2.2 Investment governance framework
Investment risk is managed in line with the elements of the Risk Management Framework (RMF) – identification, measurement and
management. The Brit Limited Board has overall responsibility for determining the investment strategy, with the BSL and Brit Re
boards exercising control over the syndicates’ and Brit Re’s investment portfolios, including defining risk tolerances. This is achieved
through investment policies and guidelines, which reflect the risk appetite and the business strategy of the Group and individual
entities within the Group.
The BSL Investment Committee and the Brit Re Operations Committee have been mandated to review, advise and make
recommendations to the respective Boards on investment strategy with a view to optimising investment performance. The
investment strategy is executed through outsourced investment management agreements, which is in line with prevailing
regulations, with Hamblin Watsa Investment Counsel Limited (HWIC) and a range of other third-party investment managers.
The entity level Risk Oversight Committees ensure that the investment risk is managed within the framework and also report to the
relevant Boards. An Investment and Treasury Operations Committee oversees the operational risk that is relevant to the investment
management function.
Information is provided at least quarterly covering portfolio composition, performance, forecasting and the results of stress and
scenario tests. Any operational issues and breaches to the risk appetite framework are reported to the entity level Risk Oversight
Committee and the Board.
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financial statements
4
Risk management policies (continued)
4.2
Investment risk management (continued)
4.2.3 Risk tolerance
Investment risk tolerances are set by the entity Boards, defining the appetite to investments, solvency risk, concentration risk, credit
quality, currency risk and liquidity risk. The appetite to these elements of investment risk is derived from the overall risk appetite and
business strategy and reflects a number of factors, including the current and expected economic climate, capital management strategy,
liquidity needs and asset liability matching (ALM) policy. The investment risk tolerance helps determine the strategic asset allocation.
Risk metrics are monitored and reported on regularly, to ensure that performance is within the Board-approved levels and limits
continue to remain appropriate, within the governance framework highlighted above.
4.2.4 Solvency matching
Assets are considered by both currency and duration profile in relation to the liabilities thereby managing the impact of foreign
exchange and interest rate risk on the solvency position.
Under this strategy, the total assets of each underwriting entity within the Group are sought to be held in proportion to the
currencies of that entity’s technical provisions. For each Group underwriting entity, a solvency matched benchmark is calculated.
This benchmark is the cash flow profile for investments which would minimise the sensitivity of the Group’s solvency position
to changes in interest and exchange rates. The Group seeks to implement this through the use of cash, investments and foreign
exchange forward contracts in the respective currencies. The investment guidelines for each entity stipulate duration limits and the
positioning and sensitivity for both the asset and solvency position is reported quarterly.
Given increased interest rates, the Group has increased its portfolio duration since YE22. The asset portfolio duration is longer
than the insurance contract liability duration, albeit within the relevant Board tolerances. As a result a parallel increase in interest
rates would lead to a reduction in asset values greater than the reduction in discounted insurance contract liabilities. The sensitivity
to interest rate changes is shown on page 112.
4.2.5 Investment management
The investment management strategy is delivered, at the entity level, through outsourced Investment Management Agreements
(IMAs) with HWIC and a range of other third-party investment managers. The IMAs prescribe the investment parameters within
which investment managers are permitted to make asset allocation decisions on behalf of the respective entities. Each of the Group’s
investing entities is governed by separate investment policies; these detail the parameters, roles and responsibilities relating to the
management of each entity’s investment portfolio.
4.3
Market risk
4.3.1 Introduction
Market risk is the risk that the fulfilment cash flows of insurance and reinsurance contracts and the fair value or future cash flows
of financial instruments will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate
risk, currency risk and other price risk. Credit risk on financial investments and cash is covered in the credit risk section.
4.3.2 Interest rate risk
Introduction
Interest rate risk in the context of Market risk is the risk that the value of the Group's assets and liabilities and/or future cash flows
are adversely impacted by changes in market interest rates. The Group is exposed to interest rate risk, primarily in the US, through
its investment portfolio, borrowings, cash and cash equivalents, insurance contract liabilities and reinsurance contract assets.
This risk is managed by reducing the mismatch between asset and liability duration positions as discussed above. The sensitivity
of financial investments to interest rate risk is indicated by their respective durations. This is defined as the modified duration,
which is the change in the price of the security subject to a 100 basis points parallel shift in interest rates. The greater the duration
of a security, the greater the possible price volatility.
The duration of the investment portfolio is set within an allowable range relative to the targeted duration and monitored
on a quarterly basis.
Included within Note 4.5 are tables that set out the remaining maturity profile of the Group's monetary assets and liabilities, including
financial investments and insurance contract liabilities. These maturity profiles provide an indication of the duration of these assets
and liabilities and therefore their sensitivity to changes in market interest rates.
112
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financial statements
notes to the consolidated financial statements
4
Risk management policies (continued)
4.3
Market risk (continued)
4.3.2 Interest rate risk (continued)
Sensitivity to changes in investment yields
The sensitivity of profit to the changes in investment yields is set out in the table below. The analysis is based on information at the
reporting date. It involves a change in an assumption while holding all other assumptions constant. In practice, this is unlikely
to occur, and changes in some of the assumptions might be correlated.
This analysis demonstrates that the impact of changes in investments yields on financial investments and insurance and reinsurance
contract balances is expected to be offset to an extent.
Impact on profit before tax
Financial
investments
2024
$m
Insurance
and reinsurance
contracts
2024
$m
Financial
investments
2023
$m
Insurance
and reinsurance
contracts
2023
$m
Increase
50 basis points
(102.4)
66.4
(90.9)
62.5
100 basis points
(204.9)
132.8
(181.8)
125.0
Decrease
50 basis points
102.4
(66.4)
90.9
(62.5)
100 basis points
204.9
(132.8)
181.8
(125.0)
Analysis of larger movements in yield is not shown above as the relationship between profit and investment yields is linear in respect
of Brit’s portfolio. Subject to taxation, the effect on shareholders’ equity would be the same as the effect on profit.
Brit Limited Annual Report 2024
113
financial statements
4
Risk management policies (continued)
4.3
Market risk (continued)
4.3.3 Currency risk
Introduction
Currency risk is the risk that movements in exchange rates impact the financial performance or solvency position of the Group.
The investment policy includes requirements to ensure that assets are appropriately matched to the liabilities for each of the main
currencies. The Group’s main currencies are US dollar (USD); Sterling (GBP); Canadian dollar (CAD); Euro (EUR); and Australian
dollar (AUD). Group capital is held in proportion to the liabilities, to minimise the impact on solvency and distributable earnings from
movements in exchange rates. The split of assets and liabilities for each of the Group’s main currencies, converted to US dollars,
is set out in the tables below:
USD $m
GBP £ Conv.$m
CAD $ Conv. $m
EUR € Conv. $m
AUD $ Conv. $m
Total Conv. $m
At 31 December 2024
Financial instruments1
6,511.0
295.8
277.0
263.6
138.6
7,486.0
Insurance and reinsurance contracts2
(3,681.6)
(364.9)
(182.3)
(197.7)
(37.1)
(4,463.6)
Other assets and liabilities
(114.7)
(140.8)
416.7
(74.1)
(66.1)
21.0
Net assets/(liabilities) before the effect
of foreign exchange derivatives
2,714.7
(209.9)
511.4
(8.2)
35.4
3,043.4
Adjustment for foreign
exchange derivatives
332.1
151.3
(516.5)
(33.0)
66.1
–
Net assets/(liabilities) after the effect
of foreign exchange derivatives
3,046.8
(58.6)
(5.1)
(41.2)
101.5
3,043.4
At 31 December 2023
Financial instruments1
5,952.1
230.3
307.9
260.1
125.7
6,876.1
Insurance and reinsurance contracts2
(3,202.9)
(325.2)
(180.6)
(172.4)
(45.8)
(3,926.9)
Other assets and liabilities
(106.6)
(74.5)
433.8
(77.0)
(41.4)
134.3
Net assets/(liabilities) before the effect
of foreign exchange derivatives
2,642.6
(169.4)
561.1
10.7
38.5
3,083.5
Adjustment for foreign
exchange derivatives
292.8
159.3
(491.6)
(2.1)
41.6
–
Net assets/(liabilities) after the effect
of foreign exchange derivatives
2,935.4
(10.1)
69.5
8.6
80.1
3,083.5
1. The Group’s financial instruments are defined in Note 2.4.3(c) and reconciled to the financial statements in Note 25.
2. The Group’s ‘insurance and reinsurance contracts’ refers to the following items presented on the Group’s statement of financial position: reinsurance contract assets; and insurance
contract liabilities.
The non-US dollar denominated net assets of the Group may lead to profits or losses (depending on the mix relative to the liabilities),
should the US dollar vary relative to these currencies.
Foreign currency forward contracts may be used to achieve the desired exposure to each currency. From time to time the Group
may also choose to utilise foreign currency derivatives to manage the risk of reported losses due to changes in foreign exchange
rates. The details of all foreign currency derivative contracts entered into are given in Note 26.
The degree to which derivatives are used is dependent on the prevailing costs versus the perceived benefit to shareholder value
from reducing the chance of a reported loss due to changes in foreign exchange rates.
114
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financial statements
notes to the consolidated financial statements
4
Risk management policies (continued)
4.3
Market risk (continued)
4.3.3 Currency risk (continued)
In accordance with IFRS, non-monetary items are recorded at original transaction rates and are not revalued at the reporting date.
This means these amounts in the statement of financial position are carried at a different exchange rate to the remaining assets and
liabilities, with the resulting exchange differences that are created being recognised in the income statement. The Group considers
this to be a timing issue which can cause volatility in the income statement.
Sensitivity to changes in foreign exchange rates
The table below gives an indication of the impact on profit of a percentage movement in the relative strength of the US dollar against
the value of GBP, CAD, EUR, and AUD individually, after taking into consideration the effect of hedged positions and items recorded
as non-monetary assets and liabilities under IFRS. The analysis is based on the information as at 31 December 2024. It involves the
change in an assumption (i.e. single currency fluctuation) while holding all other assumptions constant. In practice, this is unlikely
to occur, and changes in some of the assumptions might be correlated.
Impact on profit before tax
Financial
instruments
2024
$m
Insurance and
reinsurance
contracts
2024
$m
Financial
instruments
2023
$m
Insurance and
reinsurance
contracts
2023
$m
USD weakens
10% against GBP
29.6
(36.5)
23.1
(32.5)
10% against CAD
27.7
(18.2)
30.8
(18.1)
10% against EUR
26.4
(19.8)
26.0
(17.2)
10% against AUD
13.9
(3.7)
12.6
(4.6)
USD strengthens
10% against GBP
(29.6)
36.5
(23.1)
32.5
10% against CAD
(27.7)
18.2
(30.8)
18.1
10% against EUR
(26.4)
19.8
(26.0)
17.2
10% against AUD
(13.9)
3.7
(12.6)
4.6
Subject to taxation, the effect on shareholders’ equity would be the same as the effect on profit.
4.3.4
Other price risk
Introduction
This is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices
(other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the
individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.
Financial assets and derivatives that are recognised at their fair value are susceptible to losses due to adverse changes in their
prices. This is known as price risk.
Listed investments are recognised in the financial statements at quoted bid price. If the market for the investment is not considered
to be active, then the Group establishes fair valuation techniques. This includes using recent arm’s-length transactions, consideration
of the current fair value of other similar investments, discounted cash flow models and other valuation techniques that are commonly
used by market participants.
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financial statements
4
Risk management policies (continued)
4.3
Market risk (continued)
4.3.4
Other price risk (continued)
Brit has a limit on the proportion of its assets it can invest in risk assets which includes equities and derivatives. This combined with
active monitoring of exposure by geography and industry helps manage downside risk.
The prices of fixed and floating rate income securities are predominantly impacted by currency, interest rate and credit risks. Credit
risk on investments is discussed in the following section of this Note.
Sensitivity to changes in other price risk
The sensitivity of the profit to the changes in the prices of equity is set out in the table below. The analysis is based on the information
as at 31 December of each year presented. It involves the change in an assumption while holding all other assumptions constant.
In practice, this is unlikely to occur, and changes in some of the assumptions might be correlated. No changes were made by the
Group in the methods and assumptions used in preparing the below analysis.
Impact on profit before tax
2024
$m
2023
$m
Increase in fair value
10%
123.6
98.9
20%
247.2
197.8
30%
370.7
296.7
Decrease in fair value
10%
(123.6)
(98.9)
20%
(247.2)
(197.8)
30%
(370.7)
(296.7)
Subject to taxation, the effect on shareholders’ equity would be the same as the effect on profit.
4.4
Credit risk
This is the risk that one party causes a financial loss for the other party by failing to discharge an obligation in a timely manner. The
main sources of credit risk relate to:
• Reinsurers: through the failure to pay valid claims against a reinsurance contract held by the Group;
• Brokers and coverholders: where counterparties fail to pass on premiums or claims collected or paid on behalf of the Group;
• Investments: through the issuer default of all or part of the value of a financial instrument or the market value of that
instrument; and
• Cash and cash equivalents: through the default of the banks holding the cash and cash equivalents.
The insurance and non-insurance related counterparty credit risks are managed separately by the Group.
4.4.1 Non-insurance credit risk
Investment credit risk management process
The Group Board has overall responsibility for investment credit risk. The investment guidelines and investment policy set out
clear limits and controls around the level of investment credit risk. This includes a tolerance on matching of asset and liabilities
by currency, concentration guidelines that restrict the exposure to any individual counterparty and monitoring of exposure
by industry and geography. The investment guidelines further limit the type, credit quality and maturity profile of both the Group’s
cash and investments. In addition, the investment risk framework further limits potential exposure to credit risk through aggregate
investment risk limits.
During 2024, the BSL Investment Committee was chaired by Andie Welsch, a non-Executive Director of the BSL Board. This
committee is responsible for the immediate oversight of the Group’s UK investments and the Brit Re Board is responsible for the
immediate oversight of the Group’s Bermuda investments. Ultimately, both are responsible to the Brit Limited Board.
116
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
4
Risk management policies (continued)
4.4
Credit risk (continued)
4.4.1 Non-insurance credit risk (continued)
Non-insurance credit risk profile
The summary of the non-insurance credit risk exposures for the Group's assets is set out in the tables below.
AAA
$m
AA
$m
A
$m
P-1
$m
P-2
$m
BBB and
below
$m
Equities
$m
Not rated
$m
Total
$m
At 31 December 2024
Financial investments
3,244.5
112.3
1,148.7
–
–
504.0
620.3
831.0
6,460.8
Derivative contracts
–
–
–
–
–
–
–
15.6
15.6
Trade and other receivables1
–
–
–
–
–
–
–
143.6
143.6
Other assets1
–
–
–
–
–
–
153.8
–
153.8
Cash and cash equivalents
424.5
43.5
73.4
164.0
1.9
43.1
–
–
750.4
3,669.0
155.8
1,222.1
164.0
1.9
547.1
774.1
990.2
7,524.2
At 31 December 2023
Financial investments
3,237.8
85.1
808.5
–
–
575.2
509.2
659.6
5,875.4
Derivative contracts
–
–
–
–
–
–
–
20.2
20.2
Trade and other receivables1
–
–
–
–
–
–
–
173.1
173.1
Other assets1
–
–
–
–
–
–
118.7
–
118.7
Cash and cash equivalents2
383.5
282.3
103.2
57.1
–
27.7
–
–
853.8
3,621.3
367.4
911.7
57.1
–
602.9
627.9
852.9
7,041.2
1. ‘Trade and other receivables’ and ‘Other assets’ are defined in Note 2.4.3. To ensure the table presents non-insurance credit risk, debtors arising out of direct insurance operations and
debtors arising out of reinsurance operations have been excluded, and are instead presented as part of insurance credit risk (Note 4.4.2). All ‘Trade and other receivables’ balances are
presented before any allowance for credit losses.
2. ‘Cash and cash equivalents’ at 31 December 2023 also includes those cash and cash equivalents reclassified as ‘held for sale’.
The table above gives an indication of the level of credit worthiness of assets that are most exposed to credit risk. The ratings are
mainly sourced from Standard & Poor’s and where these are not available an equivalent rating agency.
4.4.2 Insurance credit risk
Insurance credit risk management process
Insurance credit risk arises primarily from reinsurers (whereby reinsurers fail to pay recoveries due to the Group in a timely
manner), direct policyholders (where policy holders fail to pay premium in a timely manner) and brokers and coverholders (whereby
intermediaries fail to pass on premiums due to the Group in a timely manner).
The Credit Committee is responsible for the management of credit risk arising from insurance activities.
Reinsurer credit risk is managed by transacting only with reinsurance counterparties that satisfy a minimum level of financial
strength or provide appropriate levels of collateral and have been approved for use by the Credit Committee. The reinsurer security
list, which sets out the list of approved reinsurance counterparties, is reviewed at least annually and following any significant change
in risk profile, which includes any changes to reinsurers’ financial ratings. Credit risk appetite limits are set for reinsurance entities
and groups to limit accumulations of risk. These positions are monitored quarterly against current balance sheet exposures and
in relation to a number of extreme loss scenarios.
Reinsurance aged debt is monitored and managed against the management risk appetite limits set by the Credit Committee.
In instances where there is deemed to be a specific risk of non-payment, this is allowed for within reinsurance contract assets.
In respect of balances relating to insurance or reinsurance operations, which are outside the scope of IFRS 17, a loss allowance
provision may be made.
Any breaches of credit risk tolerance and/or appetite are reported to the Risk Oversight Committee and the Board at least quarterly.
Credit risk associated with insurance contracts issued is not considered a material risk to the Group as it has the right to terminate
contracts should the policyholder default on its premium payment obligations.
Brit Limited Annual Report 2024
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financial statements
4
Risk management policies (continued)
4.4
Credit risk (continued)
4.4.2 Insurance credit risk (continued)
Insurance credit risk profile
The reinsurance contract assets presented on the Group’s statement of financial position include the asset for incurred claims (AIC)
and the asset for remaining coverage (ARC).
A summary of the credit quality of the AIC, is set out in the tables below:
AAA
$m
AA
$m
A
$m
B
$m
Collateral
$m
Not rated
$m
Total
$m
At 31 December 2024
Asset for incurred claims
5.8
992.9
555.5
3.0
175.9
19.6
1,752.7
At 31 December 2023
Asset for incurred claims
5.6
952.8
533.2
2.8
168.8
18.9
1,682.1
As at 31 December 2024, collateral of $175.9m (2023: $168.8m) had been drawn against reinsurance assets.
As at 31 December 2024, the maximum exposure to credit risk from insurance contracts is $1,790.2m (2023: $1,964.1m) which
relates to premiums and other insurance receivables, and the maximum exposure to credit risk from reinsurance contracts
is $2,054.2m (2023: $2,055.3m), which relates to reinsurance recoveries from claims outstanding.
As at 31 December 2024 the gross carrying amount of debtors arising from direct insurance operations and reinsurance
operations, which are not credit-rated, is $436.7m (2023: $623.6m). These amounts are presented within ‘Insurance and other
receivables’ in the consolidated statement of financial position and included within ‘Trade and other receivables’ in the Notes to the
financial statements – refer to Note 2.4.3 for a definition of ‘Trade and other receivables’.
The following table shows movements during the year in the loss allowance against debtors arising from direct insurance operations
and reinsurance operations:
Loss allowance against insurance
and reinsurance debtors
$m
2024
Opening provision at 1 January
7.9
Release for the year
0.3
Net foreign exchange differences
(0.3)
Closing provision at 31 December
7.9
2023
Opening provision at 1 January
8.5
Release for the year
(0.3)
Net foreign exchange differences
(0.3)
Closing provision at 31 December
7.9
The following table shows the amount of debtors arising from direct insurance operations and reinsurance operations that is past
due but not impaired at the end of the year:
2024
$m
2023
$m
0-3 months past due
1.1
(0.5)
4-6 months past due
1.3
32.9
7-9 months past due
0.7
32.2
10-12 months past due
0.3
0.2
More than 12 months past due
4.7
7.5
8.1
72.3
118
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
4
Risk management policies (continued)
4.5
Liquidity risk
Liquidity risk is the risk that the Group may not have cash available to pay obligations when due. The predominant liquidity risk the
Group faces is the daily calls on its available cash resources in respect of claims arising from insurance contracts.
The Group monitors the levels of cash and cash equivalents on a daily basis, ensuring adequate liquidity to meet the expected cash
flow requirements due over the short-term.
The Group also limits the amount of investment in illiquid securities in line with the liquidity policy set by the Boards. This involves
ensuring sufficient liquidity to withstand an internally developed stressed scenario which includes a severe catastrophe event (with
associated payment and funding requirements) and financial market volatility. Contingent liquidity also exists in the form of a Group
revolving credit facility. The investment portfolio invests in a diversified portfolio of securities. Concentration is manged via
concentration risk limits, and is monitored on an ongoing basis to ensure sufficient diversification.
The tables below present, for the Group’s monetary assets and liabilities, the remaining maturity profile at the reporting date
based on contractual terms or expected payment dates. The amounts presented are fair values or approximations of fair values
except as follows:
• For insurance contract liabilities, the amounts presented are estimates of the present value of the future cash flows
as included in the liability for remaining coverage of groups of insurance contracts accounted for under the general
measurement model and in the liability for incurred claims of all groups of insurance contracts.
• For borrowings and lease liabilities, the amounts shown are undiscounted future cash flows.
31 December 2024
<1 year
$m
1-2 years
$m
2-3 years
$m
3-4 years
$m
4-5 years
$m
More than
5 years
$m
Equities
$m
Total
$m
Assets
Financial investments
1,105.9
763.6
485.3
977.6
571.5
1,936.5
620.4
6,460.8
Derivative contracts
11.3
0.1
–
–
–
4.2
–
15.6
Trade and other receivables1
572.3
–
–
–
–
–
–
572.3
Other assets
–
–
–
–
–
–
153.8
153.8
Cash and cash equivalents
750.4
–
–
–
–
–
–
750.4
2,439.9
763.7
485.3
977.6
571.5
1,940.7
774.2
7,952.9
31 December 2024
<1 year
$m
1-2 years
$m
2-3 years
$m
3-4 years
$m
4-5 years
$m
More than
5 years
$m
Equities
$m
Total
$m
Liabilities
Insurance contract liabilities
1,505.7
1,119.1
787.8
580.2
437.7
1,524.8
–
5,955.3
Derivative contracts
6.5
–
–
7.3
–
–
–
13.8
Borrowings
5.8
5.8
5.8
5.8
5.8
164.5
–
193.5
Trade and other payables1
268.1
–
–
–
–
–
–
268.1
Lease liabilities
4.2
5.6
5.6
5.5
5.3
2.2
–
28.4
1,790.3
1,130.5
799.2
598.8
448.8
1,691.5
–
6,459.1
1. Refer to Note 2.4.3 for the Group’s definitions of ‘Trade and other receivables’ and ‘Trade and other payables’.
Brit Limited Annual Report 2024
119
financial statements
4
Risk management policies (continued)
4.5
Liquidity risk (continued)
31 December 2023
<1 year
$m
1-2 years
$m
2-3 years
$m
3-4 years
$m
4-5 years
$m
More than
5 years
$m
Equities
$m
Total
$m
Assets
Financial investments
1,094.3
821.7
573.6
180.5
988.4
1,707.7
509.2
5,875.4
Derivative contracts
19.4
0.3
0.5
–
–
–
–
20.2
Trade and other receivables1
788.8
–
–
–
–
–
–
788.8
Other assets
–
–
–
–
–
–
118.7
118.7
Cash and cash equivalents
853.8
–
–
–
–
–
–
853.8
2,756.3
822.0
574.1
180.5
988.4
1,707.7
627.9
7,656.9
31 December 2023 (restated2)
<1 year
$m
1-2 years
$m
2-3 years
$m
3-4 years
$m
4-5 years
$m
More than
5 years
$m
Equities
$m
Total
$m
Liabilities
Insurance contract liabilities
1,444.2
1,023.0
723.2
537.6
711.2
1,097.0
–
5,536.2
Derivative contracts
16.7
0.4
–
–
6.6
–
–
23.7
Borrowings2
6.0
5.9
5.9
5.9
6.0
173.4
–
203.1
Other financial liabilities
–
–
–
–
–
–
104.0
104.0
Trade and other payables1
463.4
–
–
–
–
–
–
463.4
Lease liabilities
2.7
4.1
5.5
5.5
5.5
7.5
–
30.8
1,933.0
1,033.4
734.6
549.0
729.2
1,277.9
104.0
6,361.1
1. Refer to Note 2.4.3 for the Group’s definitions of ‘Trade and other receivables’ and ‘Trade and other payables’.
2. The amounts relating to borrowings have been restated to reflect the undiscounted future cash flows in accordance with the requirements of IFRS 7. Previously this disclosure included
the amortised cost carrying value of the borrowings.
4.6
Operational risk
Operational risk is the potential for loss arising from the failure of people, process or technology or the impact of external events.
The nature of operational risk means that it is dispersed across all functional areas of Brit. Operational risk exposures are managed
through a consistent set of management processes that drive risk identification, assessment, control and monitoring.
The BSL Operations Committee, chaired by the Group Chief Operating Officer, is a key governance committee reporting to the
Executive Committee. The BSL Operations Committee is responsible for managing operational risk in line with the operational
risk policy and the risk tolerance and management appetite limits set by the BSL Board and management respectively. Each
individual risk committee is provided with relevant operational risk updates and these committees include operational risk owners
within executive management who actively manage operational risk within their respective areas (such as Underwriting, Claims,
Investments and Finance).
An operational Risk Management Framework is in place to ensure an appropriate standard approach is taken to managing
operational risk across the Group. The key elements of this framework are:
• Allocation of responsibility for the identification and assessment of operational risk. Standard tools are used to facilitate
these assessments;
• Definition of standard elements of sound operating controls that are expected to be in place to address all identified operational risks;
• A process that integrates with Brit’s internal model to support the setting and monitoring of operational risk appetite and tolerances;
• Governance, reporting and escalation for operational risk;
• Infrastructure supporting the operational Risk Management Framework; and
• Operational risk management training and awareness.
A conduct risk framework is in place across the Group to ensure Brit’s products and services continue to meet the needs of our
customers.
120
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
4
Risk management policies (continued)
4.7
Emerging risks
Brit undertakes a formal emerging risk review annually with the results reported to the BSL and Brit Re Risk Oversight Committees
and included in the Own Risk and Solvency Assessment (ORSA) report and Commercial Insurer’s Solvency Self-Assessment (CISSA)
reports of the underwriting entities. The review is an important part of the risk identification aspect of the RMF and includes horizon
scanning of the internal and external risk environment to identify potential new or developing risks to Brit. These risks can then be
included in the risk register and managed appropriately as required.
The emerging risk review has previously identified risks such as climate change and cyber risk. These risks have been managed
throughout their development and are now monitored as part of the business-as-usual risk management process.
4.7.1
Climate Change
Climate change has been recognised as an emerging risk since 2014 and has been an area of focus since having been identified
as a high priority by Brit’s 2018 emerging risks analysis. Its potential impact on the insurance industry is an area of focus for the
wider insurance market and its regulators.
The financial risks to insurers may include the potential for increased frequency and severity of weather-related natural
catastrophes, for example, hurricanes and wildfires. The three main areas of risk identified for Brit are natural catastrophes, liability
claims and investment losses. Further details on the risk management approach are included in the Strategic Report.
4.7.2
Geopolitics
Geopolitical events, such as the ongoing wars in Ukraine and the Middle East, have the potential to cause insurance losses and
disruption to financial markets. Insurance losses could arise either as a result of direct damage from the conflicts or from second
order impacts such as supply chain disruptions and economic instability.
During 2024, net loss estimates arising from the Russian invasion of Ukraine decreased by $3.9m to $30.7m, largely driven
by a reduction in the estimate for Casualty Treaty following better than expected experience.
The Group continues to monitor the evolving nature of the Middle East conflict. Claims information and notifications continue to be
limited and we currently expect any losses arising to be attritional in nature.
There may also be a potential impact on the operational costs of the Group attributable to the downstream effects of high
inflation resulting from geopolitical events. Such events may also impact the global economy, which could in turn impact the value
of Brit's investments.
The Group continues to monitor developments closely.
4.7.3
Cyber risk
The cyber threat landscape continues to develop with increasingly sophisticated attack techniques such as ransomware as a service,
increasing interconnectivity (such as networked critical infrastructure and cloud data storage), and the advancement of generative
artificial intelligence (AI).
Brit has invested significantly in developing our understanding of cyber underwriting risk, including the potential drivers of aggregate
loss events. Third-party vendor tools have been licensed, providing enhanced threat intelligence and data. The ongoing development
of the cyber exposure management approach remains an area of focus given the evolving threat environment.
Similarly, Brit has invested significantly in our own cybersecurity. An annual risk-based evaluation is conducted to ensure Brit retains
the capability to detect security vulnerabilities and safeguard our systems.
Brit Limited Annual Report 2024
121
financial statements
4
Risk management policies (continued)
4.8
Capital management
Brit defines management entity capital as the amount of capital that the Board of each underwriting entity determines that it should
hold, taking into account the requirements of shareholders, regulators, policyholders, and the Boards’ solvency risk appetite. The
capital policy is set by the entity and Group Boards. Management entity capital requirements are in excess of capital requirements
under the Solvency II capital regime, which became effective on 1 January 2016.
The capital requirements are based on the output of the internal model which reflects the risk profile of the business.
The capital policy requires capital to be held well in excess of regulatory minimum requirements, underpinning Brit’s financial
strength. The policy ensures the capital adequacy of the Group as a whole, and each entity, through an efficient capital structure.
Brit proactively responds to developments in the financial environment to ensure its capital strength is maintained while optimising
risk adjusted returns.
The Group’s total available capital consists of net tangible assets (after the exclusion of the deferred tax liability on intangible assets
and non-controlling interest), subordinated debt, letters of credit, and contingent funding. Further details of the Group’s total
available capital and the management capital requirement (unaudited) are on page 194.
All regulatory capital requirements have been complied with during the year by the Group’s individual insurance subsidiaries.
The Lloyd’s market is subject to the solvency and capital adequacy requirements of the Prudential Regulation Authority (PRA).
Any regulatory intervention by the PRA in respect of Lloyd’s may adversely affect the Group. The PRA may impose more stringent
requirements on Lloyd’s which may result in higher capital requirements or a restriction on trading activities for entities within
the Group. If Lloyd’s fails to satisfy its solvency test in any year, the PRA may require Lloyd’s to cease trading and/or its members
to cease or reduce their underwriting exposure, which may result in a material adverse effect to the Group’s reputation, financial
condition and results of operations.
During 2024, Brit primarily underwrote through the Group’s principle wholly aligned Lloyd’s syndicate, Syndicate 2987, through
Syndicate 2988 and Ki Syndicate 1618, which benefit from the Lloyd’s credit ratings of A+ (Excellent) from A.M. Best, AA- (Very
Strong) from Fitch and AA- (Very Strong) from Standard & Poor’s. Any downgrade in Lloyd’s financial strength ratings may have
an adverse effect on the Group.
The Group’s business plan and underwriting capacity may be affected by any decrease in the value of the Group’s Funds at Lloyd’s
or by recommendations from the Lloyd’s Franchise Board. The Group is also reliant upon the compliance of Lloyd’s with US
regulations, including the maintenance by Lloyd’s of its trading licences and approvals in the US.
4.9
Ki
Ki Syndicate 1618 is the first fully digital and algorithmically driven Lloyd’s syndicate offering instant capacity, accessible anywhere,
at any time. It started writing business from 1 January 2021, writing a mix of lines that are either already underwritten by Brit
Syndicates 2987 and 2988, or other approved nominated syndicates.
From 1 January 2025, the Brit and Ki insurance businesses have operated independently within the Brit Limited Group. Ki Financial
Limited, a direct subsidiary of Brit Limited, remains the holding company for the Ki insurance business. Brit Limited will continue
to control Ki Financial Limited and its subsidiaries through holding the majority of the voting rights in that entity (refer to Note 18 for
further details).
On 1 January 2025, as part of Ki operating as a standalone business, a third party was appointed as managing agent for Ki Syndicate
1618, succeeding BSL (a member of the Brit Limited Group). The Group ensured an orderly transition of Ki Syndicate 1618’s managing
agency and ensured compliance with regulatory requirements. This transition included a cross-functional review of Ki’s corporate
governance arrangements, regulatory compliance, people, processes and control environment. The BSL Board approved the change
in managing agent on 10 December 2024.
Before Ki started operating as a standalone business, the Group’s Risk Management function reviewed key components of Ki's Risk
Management Framework. This included risk governance and processes, the risk policy framework, and risk register and controls.
It concluded that the Ki Risk Management Framework and associated control environment were appropriate.
122
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
5
Segmental information
This Note breaks down the operating results summarised in the income statement into the main business areas of the Group.
It also shows how our insurance revenue is split globally. This analysis is designed to help you understand how each segment of our
business has performed and how we have allocated our shareholders’ capital.
For the year ended 31 December 2024, the reportable segments identified were as follows:
• ‘Core Underwriting’ is Syndicate 2987, Brit’s share of Syndicate 2988 and Brit Reinsurance (Bermuda) Limited, with trading
between the two syndicates eliminated. It includes both direct and reinsurance business:
• Direct business represents the Group’s international and US business predominantly transacted with wholesale buyers
of insurance, rather than individuals. Risks are large and usually syndicated by several underwriters by means of the
subscription market; and
• Reinsurance business (essentially the insurance of insurance and reinsurance companies) and includes writing non-
proportional cover for major events such as earthquakes or hurricanes. These insurance and reinsurance companies
calculate how much risk they want to retain and then pass on their remaining exposure to reinsurers in return
for a premium.
• ‘Other Underwriting’, includes the Group’s special purpose vehicles, net of trading with the ‘Core Underwriting’ segment.
• ‘Investments’ represents the Group’s investment activity, excluding that associated with the ‘Ki’ reporting segment.
• ‘Corporate’, which is made up of residual income and expenditure and foreign exchange movements not allocated
to other segments.
• ‘Ki Segment’ represents the activities of the Ki Financial Limited sub-group, which underwrites business through Ki Syndicate
1618. This information has been prepared for the purposes of Brit Limited segmental reporting and does not constitute stand-
alone financials for Ki Syndicate 1618 or the Ki Financial Limited sub-group in whole or part.
The segmental analysis includes ‘continuing operations’, thereby reconciling to the Consolidated Income Statement. For details of the
‘discontinued operation’, see Note 10.
The Group's methodology for deriving its segmental KPIs is outlined on pages 190 to 194.
These ratios are presented after the impact of gains/losses on other financial liabilities and before any adjustment for
non-controlling interests.
Brit Limited Annual Report 2024
123
financial statements
5
Segmental information (continued)
(a) Income statement by segment
Year ended 31 December 2024
$m
Core
Underwriting
Other
Underwriting
Total Brit
Underwriting
(excluding Ki)
Investments
Corporate
Total Brit
(excluding Ki)
Ki Segment
Total
Group
Insurance revenue
2,666.9
1.7
2,668.6
–
–
2,668.6
796.9
3,465.5
Acquisition costs
(512.5)
(0.3)
(512.8)
–
–
(512.8)
(152.0)
(664.8)
Incurred claims and changes to liabilities
for incurred claims and other directly
attributable expenses
(1,465.9)
2.7
(1,463.2)
–
–
(1,463.2)
(451.0) (1,914.2)
Insurance service expenses
(1,978.4)
2.4
(1,976.0)
–
–
(1,976.0)
(603.0) (2,579.0)
Allocation of reinsurance premiums
(561.9)
–
(561.9)
–
–
(561.9)
(131.8)
(693.7)
Amount recoverable from reinsurers
for incurred claims
426.2
–
426.2
–
–
426.2
55.8
482.0
Net expenses from reinsurance
contracts held
(135.7)
–
(135.7)
–
–
(135.7)
(76.0)
(211.7)
Insurance service result
552.8
4.1
556.9
–
–
556.9
117.9
674.8
Net finance expenses from insurance
contracts
(224.3)
(2.0)
(226.3)
–
–
(226.3)
(45.3)
(271.6)
Net finance income from reinsurance
contracts held
56.1
(0.1)
56.0
–
–
56.0
8.3
64.3
Net insurance finance expenses
(168.2)
(2.1)
(170.3)
–
–
(170.3)
(37.0)
(207.3)
Interest revenue from financial assets
not measured at FVTPL
–
–
–
41.4
–
41.4
11.4
52.8
Other investment return
–
–
–
237.9
–
237.9
48.2
286.1
Profit on disposal of associate
–
–
–
–
15.2
15.2
–
15.2
Return on derivative contracts
–
–
–
(6.4)
22.9
16.5
–
16.5
Other income
14.5
8.8
23.3
–
65.8
89.1
–
89.1
Losses on other financial liabilities
–
(4.6)
(4.6)
–
–
(4.6)
–
(4.6)
Investment return and other income
14.5
4.2
18.7
272.9
103.9
395.5
59.6
455.1
Other operating expenses
(154.7)
–
(154.7)
–
(5.9)
(160.6)
(31.8)
(192.4)
Net foreign exchange losses
–
–
–
–
(51.4)
(51.4)
(3.2)
(54.6)
Other expenses
(154.7)
–
(154.7)
–
(57.3)
(212.0)
(35.0)
(247.0)
Operating profit/(loss)
244.4
6.2
250.6
272.9
46.6
570.1
105.5
675.6
Finance costs
–
–
(10.5)
(10.5)
(4.1)
(14.6)
Finance income
–
–
–
–
–
–
Share of net profit of associate
–
–
–
–
–
–
Profit/(loss) before tax
250.6
272.9
36.1
559.6
101.4
661.0
Tax expense
(84.8)
Profit for the year
576.2
Ratios
Claims ratio
45.5%
45.4%
45.4%
55.1%
47.7%
Expense ratio
28.2%
28.2%
28.2%
27.2%
28.0%
Combined ratio
73.7%
73.6%
73.6%
82.3%
75.7%
Combined ratio (undiscounted)
85.9%
124
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
5
Segmental information (continued)
(a) Income statement by segment (continued)
Year ended 31 December 2023
$m
Core
Underwriting
Other
Underwriting
Total Brit
Underwriting
(excluding Ki)
Investments
Corporate
Total Brit
(excluding Ki)
Ki Segment
Total
Group
Insurance revenue
2,636.9
13.9
2,650.8
–
–
2,650.8
866.3
3,517.1
Acquisition costs
(435.4)
(2.3)
(437.7)
–
–
(437.7)
(201.0)
(638.7)
Incurred claims and changes to liabilities
for incurred claims and other directly
attributable expenses
(1,503.3)
(6.2)
(1,509.5)
–
–
(1,509.5)
(446.1) (1,955.6)
Insurance service expenses
(1,938.7)
(8.5) (1,947.2)
–
–
(1,947.2)
(647.1) (2,594.3)
Allocation of reinsurance premiums
(620.9)
–
(620.9)
–
–
(620.9)
(165.0)
(785.9)
Amount recoverable from reinsurers
for incurred claims
449.3
–
449.3
–
–
449.3
63.3
512.6
Net expenses from reinsurance
contracts held
(171.6)
–
(171.6)
–
–
(171.6)
(101.7)
(273.3)
Insurance service result
526.6
5.4
532.0
–
–
532.0
117.5
649.5
Net finance expense from insurance
contracts
(282.4)
(0.7)
(283.1)
–
–
(283.1)
(39.6)
(322.7)
Net finance income from reinsurance
contracts held
90.0
–
90.0
–
–
90.0
6.9
96.9
Net insurance finance expenses
(192.4)
(0.7)
(193.1)
–
–
(193.1)
(32.7)
(225.8)
Interest revenue from financial assets
not measured at FVTPL
–
–
–
38.8
–
38.8
9.6
48.4
Other investment return
–
–
–
299.3
–
299.3
51.7
351.0
Return on derivative contracts
–
–
–
(7.2)
(2.2)
(9.4)
–
(9.4)
Other income
14.3
7.0
21.3
–
44.3
65.6
–
65.6
Losses on other financial liabilities
–
(20.8)
(20.8)
–
–
(20.8)
–
(20.8)
Investment return and other income
14.3
(13.8)
0.5
330.9
42.1
373.5
61.3
434.8
Other operating expenses
(95.2)
–
(95.2)
–
(8.7)
(103.9)
(23.0)
(126.9)
Net foreign exchange losses
–
–
–
–
(92.3)
(92.3)
(1.9)
(94.2)
Other expenses
(95.2)
–
(95.2)
–
(101.0)
(196.2)
(24.9)
(221.1)
Operating profit/(loss)
253.3
(9.1)
244.2
330.9
(58.9)
516.2
121.2
637.4
Finance costs
–
–
(13.7)
(13.7)
(4.1)
(17.8)
Finance income
–
–
2.7
2.7
–
2.7
Share of net profit of associate
–
1.6
–
1.6
–
1.6
Profit/(loss) before tax
244.2
332.5
(69.9)
506.8
117.1
623.9
Tax credit
5.3
Profit for the year
629.2
Ratios
Claims ratio
48.8%
48.7%
48.7%
49.7%
49.0%
Expense ratio
25.1%
25.1%
25.1%
33.5%
27.2%
Combined ratio
73.9%
73.8%
73.8%
83.2%
76.2%
Combined ratio (undiscounted)
85.3%
Brit Limited Annual Report 2024
125
financial statements
5
Segmental information (continued)
(b) Geographical information
The Group’s strategic business units operate mainly in five geographical areas, though the business is managed on a worldwide
basis. The segmental split shown below is based on the location of the underlying risk.
Insurance revenue
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
United States
2,393.2
2,509.9
United Kingdom
389.8
386.9
Canada
121.0
154.0
Europe (excluding UK)
139.2
132.5
Other (incIuding worldwide)
422.3
333.8
3,465.5
3,517.1
The nature of the London Market business is such that the insureds and reinsureds are often operating on a multi-territory
or worldwide basis and hence coverage is often provided on a worldwide basis. Insurance revenue on a multi-territory or worldwide
basis included in ‘Other’ in the table above.
The table below provides an analysis of the Group’s non-current assets in three geographical areas, though the business is managed
on a worldwide basis. Non-current assets excludes financial instruments, deferred tax assets, post-employment benefit assets, and
rights arising under insurance contracts:
Non-current assets
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
United Kingdom
146.2
134.5
Other (including worldwide)
20.0
21.0
166.2
155.5
6
Insurance revenue
This Note shows the breakdown of the Group’s insurance revenue recognised in the year between contracts measured under the
premium allocation approach (PAA) basis and those measured under the general measurement model (GMM) basis.
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Amounts relating to changes in liabilities for remaining coverage:
CSM recognised for services provided
180.1
103.3
Change in risk adjustment for non-financial risk expired
34.1
19.4
Expected incurred claims and other insurance service expenses
726.9
398.9
Insurance acquisition cash flows recovery
277.5
138.1
Contracts not measured under the PAA
1,218.6
659.7
Contracts measured under the PAA
2,246.9
2,857.4
Total insurance revenue
3,465.5
3,517.1
126
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
7
Investment return
This Note shows the income generated through investing funds. It also shows the gains and losses generated on various types
of investment assets as a result of the movement in their market values.
Year ended 31 December 2024
Investment
income
$m
Net realised
gains/(losses)
$m
Net unrealised
gains/(losses)
$m
Total investment
return
$m
Cash and cash equivalents
52.8
–
–
52.8
Trade and other receivables
–
–
–
–
Interest revenue from financial assets not measured at FVTPL
52.8
–
–
52.8
Equity securities
9.8
92.6
(27.6)
74.8
Debt securities
213.4
(3.3)
(75.6)
134.5
Mortgages and loans
8.3
–
–
8.3
Specialised investment funds
–
2.3
83.3
85.6
Other investment return before expenses
231.5
91.6
(19.9)
303.2
Investment management expenses
(17.1)
–
–
(17.1)
Other investment return
214.4
91.6
(19.9)
286.1
Total investment return
267.2
91.6
(19.9)
338.9
Year ended 31 December 2023
Investment
income
$m
Net realised
gains/(losses)
$m
Net unrealised
gains/(losses)
$m
Total investment
return
$m
Cash and cash equivalents
46.9
–
–
46.9
Trade and other receivables
2.1
–
–
2.1
Interest revenue from financial assets not measured at FVTPL
49.0
–
–
49.0
Equity securities
8.2
44.5
6.4
59.1
Debt securities
170.3
(130.8)
193.1
232.6
Mortgages and loans
6.1
0.6
–
6.7
Specialised investment funds
0.8
5.5
65.9
72.2
Other investment return before expenses
185.4
(80.2)
265.4
370.6
Investment management expenses
(19.6)
–
–
(19.6)
Other investment return
165.8
(80.2)
265.4
351.0
Total investment return
214.8
(80.2)
265.4
400.0
In the year ended 31 December 2023 investment return in respect of the discontinued operation included investment income from
cash and cash equivalents of $0.6m. All ‘Other investment return’ relates to continuing operations.
Brit Limited Annual Report 2024
127
financial statements
8
Net finance income or expenses from insurance and reinsurance contracts held
This Note shows the breakdown of net finance expenses from insurance contracts issued and the net finance income from
reinsurance contracts held.
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Net finance income/(expenses) from insurance contracts
Interest accreted
(320.1)
(293.7)
Effect of changes in interest rates and other financial assumptions
48.5
(29.0)
Total net finance expenses from insurance contracts
(271.6)
(322.7)
Net finance (expenses)/income from reinsurance contracts held
Interest accreted
90.2
97.3
Effect of changes in interest rates and other financial assumptions
(25.9)
(0.4)
Total net finance income from reinsurance contracts held
64.3
96.9
During 2024, Brit recognised net finance expenses from insurance contracts issued and reinsurance contracts held of $207.3m
and a total investment return on financial assets of $338.9m (see Note 7), resulting in a net financial result of $131.6m. In terms
of relationship, the expense recognised from accreting interest on the net insurance liabilities is expected to partially offset against the
investment income received on financial assets, whilst the impact of changes in discount rates on the net insurance liabilities is expected
to partially offset against the fair value gains or losses arising on financial assets driven by their correlation to movements in interest
rates. Brit expects that its investment strategy, which takes a long-term view of markets and can lead to volatility in year-on-year
returns principally driven by fair value gains and losses, will produce a positive net financial result over a long-term time horizon.
9
Return on derivative contracts
This Note shows the effect on the income statement of derivative contracts held during the year, and which help manage exposure
to fluctuations in interest rates and foreign exchange rates. Derivatives are shown analysed between investment and currency
related derivatives, reflecting the way the business is managed.
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Investment-related non-currency options
(6.4)
(7.2)
Currency forwards
22.9
(2.2)
Return on derivative contracts
16.5
(9.4)
10
Discontinued operation
This Note describes the composition of the operation that was classified as discontinued in the year ended 31 December 2023 and
illustrates its impact on the Group in terms of financial performance and cash flow information. It also sets out the assets and
liabilities of the disposal group classified as held for sale.
There were no operations classified as discontinued operations in the year ended 31 December 2024. In 2023, the operations
of Ambridge were classified as discontinued. On 10 May 2023, Brit completed the sale of Ambridge, its US and European
based managing general underwriter (MGU) to Amynta. As such, the results of the Ambridge business have been reported
as a discontinued operation in the comparative period. In the event the operations of Ambridge achieved certain performance
criteria during the period 1 January 2023 to 31 December 2023, additional cash consideration of up to $100.0m would have been
receivable in the second quarter of 2024. As the performance criteria were not met, no additional consideration was received. For
further information on discontinued operations in 2023, please refer to Note 10 of the Group’s 2023 Annual Report.
Under the terms of the Group’s sale of Ambridge to Amynta the Group has an obligation to indemnify Amynta against any tax
assessment. Thus during 2024 $3.1m has been provided for in the statement of financial position and presented within (loss)/profit
from discontinued operation, net of tax in the consolidated income statement.
128
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
11
Other income (including changes in value of other financial liabilities)
This Note shows the analysis of other income generated in the year, including changes in value of other financial liabilities.
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Fees and commission from non-aligned syndicate
6.2
3.4
Change in value of ultimate parent company shares held by Brit
65.8
44.3
Net commission fee income from intermediary activities
5.0
19.3
Consortium income
8.3
10.9
Other
3.8
4.5
Other income
89.1
82.4
Change in value of other financial liabilities*
(4.6)
(20.8)
Total
84.5
61.6
Attributable to:
Continuing operations
84.5
44.8
Discontinued operation
–
16.8
84.5
61.6
* Other financial liabilities are investments by third parties in structured insurance and investment entities consolidated by the Group.
12
Net foreign exchange losses
The Group operates in multiple countries and currencies and is exposed to gains and losses arising as a result of movement
in various foreign currency exchange rates. This Note explains the foreign exchange gains or losses as a result of converting the
income, expenses, assets and liabilities from foreign currencies to US dollars.
The Group recognised foreign exchange losses of $54.6m (2023: losses of $95.2m) in the income statement in the year. Foreign
exchange gains and losses result from the translation of the statement of financial position items using closing exchange rates,
and translation of income statement items using the exchange rates prevailing at the dates of the relevant transactions, or at the
average rate for the period when this is a reasonable approximation.
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Gains/(losses) on foreign exchange arising from:
Financial instruments measured at FVTPL
(68.5)
27.7
Other items
13.9
(122.9)
Net foreign exchange losses
(54.6)
(95.2)
Attributable to:
Continuing operations
(54.6)
(94.2)
Discontinued operation
–
(1.0)
(54.6)
(95.2)
Brit Limited Annual Report 2024
129
financial statements
12
Net foreign exchange losses (continued)
The Principal exchange rates applied are set out in the table below.
Average
Year ended
31 December
2024
Closing
Average
Year ended
31 December
2023
Closing
Sterling
0.782
0.798
0.804
0.784
Canadian dollar
1.370
1.438
1.350
1.319
Euro
0.924
0.966
0.925
0.905
Australian dollar
1.516
1.615
1.506
1.466
South African rand
18.319
18.870
18.441
18.288
In accordance with IAS 1 ‘Presentation of Financial Statements’, exchange gains and losses are presented on a net basis. They are
reported within income where they result in a net gain and within expenses where they result in a net loss.
13
Operating expenses
This Note provides a breakdown of total operating expenses incurred by the Group during the year. Expenses are presented within
other operating expenses when they do not relate to the fulfilment of insurance contracts issued or reinsurance contracts held
by the Group.
$m
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Salary, pension and social security costs (Note 14)
217.0
184.7
Other staff related costs
65.1
49.2
Depreciation, amortisation and impairment
17.5
16.0
Other expenses
162.7
131.6
Total operating expenses
462.3
381.5
Amounts presented in:
Insurance service expenses
269.9
254.6
Other operating expenses
192.4
126.9
Total operating expenses
462.3
381.5
Attributable to:
Continuing operations
462.3
372.4
Discontinued operation
–
9.1
Total operating expenses
462.3
381.5
130
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
14
Staff costs
This Note gives a breakdown of the total cost of employing staff (including executive and non-executive Directors) and gives the
average number of people employed by the Group during the year.
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Wages and salaries
180.0
151.8
Social security costs
22.7
18.8
Pension costs
14.3
14.1
Total staff costs
217.0
184.7
The monthly average number of employees during the year, including executive and non-executive Directors, was as follows:
Year ended
31 December
2024
Number
Year ended
31 December
2023
Number
Underwriters
296
296
Claims staff
71
74
Other underwriting and direct support staff
4
9
Management
241
208
Administration
426
372
Total employees
1,038
959
‘Management’ includes non-executive Directors and employees who have other members of staff reporting to them.
Director emoluments are included on page 187.
15
Finance costs and finance income
Finance costs arise from interest due on moneys borrowed by the Group and any other amounts payable in respect of those
borrowings or borrowing facilities. Finance costs also include interest payable on lease liabilities. Further details of the Group’s
borrowings are set out in Note 30.
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Revolving credit facility and other bank borrowings
7.7
10.2
Interest payable on lease liabilities
0.9
1.1
Subordinated debt
6.0
6.2
Total finance costs
14.6
17.5
Attributable to:
Continuing operations
14.6
17.8
Discontinued operation
–
(0.3)
14.6
17.5
Brit Limited Annual Report 2024
131
financial statements
15
Finance costs and finance income (continued)
In 2024 the Group repurchased no subordinated debt. On 14 December 2023, the Group repurchased £8,031,000 of the
subordinated debt for £5,893,730, including accrued interest. The income resulting from this transaction, all of which was
attributable to continuing operations, was as follows:
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Carrying value of repurchased subordinated debt
–
10.0
Consideration for repurchase
–
(7.3)
Total finance income
–
2.7
16
Auditors’ remuneration
The Group engages PricewaterhouseCoopers LLP to perform the audit of the Group and all subsidiaries except for Camargue companies.
The remuneration of the auditors or their associates is analysed as follows:
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Audit of the Group and Company financial statements
1.5
0.9
Audit of subsidiaries
2.5
1.3
Audit related assurance services
0.3
0.5
Total audit and audit related assurance services
4.3
2.7
Total non-audit services
0.2
–
Total audit and non-audit services
4.5
2.7
17
Investment in associated undertaking
This Note describes the investment made in an associated undertaking and provides summarised income statements and
statements of financial position of that associate.
Sutton Special Risk Inc. (‘Sutton’)
On 2 January 2019 Brit Insurance Holdings Limited acquired 49% of the issued shares of Sutton for a total purchase consideration
of CAD$17.2m. Sutton is a Canadian managing general underwriter of a range of specialised insurance products, including
Accident and Health.
On 17 November 2023, the Group entered into a signed securities purchase agreement with Amynta, for the sale of its 49%
shareholding. The investment in Sutton was therefore classified as an asset classified as held for sale as at 31 December 2023.
Following this classification, the Group ceased equity accounting for Sutton.
Sutton was disposed of as an associated undertaking on 8 March 2024. The sale proceeds for Brit’s 49% holding were $31.0m.
Sutton will continue to be a strategic business partner of Brit. The profit from the disposal of Sutton was $15.2m.
The following table sets out details of the disposal of Sutton:
8 March
2024
$m
Consideration received or receivable:
Cash
15.2
Deferred consideration
15.8
Total disposal consideration
31.0
Carrying amount of investment in an associated undertaking
(15.7)
Gain on disposal of Investment in an associated undertaking
15.3
Reclassification of foreign currency translation reserve
(0.1)
Gain on sale after reclassification of foreign currency translation reserve
15.2
132
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
17
Investment in associated undertaking (continued)
The summarised statement of financial position of Sutton at 31 December 2023 and a reconciliation to the carrying amount in the
Group's statement of financial position at that date is as follows:
Statement of financial position
31 December
2023
$m
Current assets
46.6
Non-current assets
5.0
Total assets
51.6
Current liabilities
(42.8)
Non-current liabilities
(1.5)
Total liabilities
(44.3)
Net assets
7.3
51% not owned by Brit
(3.7)
Acquisition fair value, result since acquisition and other adjustments
12.2
Carrying value
15.8
The summarised income statement of Sutton for the year ended 31 December 2023 is as follows:
Income statement
Year ended
31 December
2023
$m
Commission revenue
9.9
Operating expenses
(6.6)
Net profit
3.3
51% not owned by Brit
(1.7)
Share of net profit of associate
1.6
18
Non-controlling interests
This Note provides summarised financial information for each subsidiary that has non-controlling interests (‘NCI’) that are material
to the Group. The amounts disclosed are before inter-company eliminations.
Ki Financial Limited was incorporated in 2020 and received initial funding from investors, including Brit Limited, to support the initial
underwriting activities of Ki Syndicate 1618. During 2021 and 2022 additional funding from investors, including Brit Limited, was
received to support Ki Syndicate 1618's continued underwriting. The Group’s shareholding has remained consistent throughout 2023
and 2024, and as at 31 December 2024 the Group continues to hold 20% of the share capital but a majority (51%) of the voting rights
in Ki Financial Limited.
No dividends were paid to non-controlling interests in 2024 (2023: $nil).
There were no transactions with non-controlling interests in 2024 (2023: none).
Brit Limited Annual Report 2024
133
financial statements
18
Non-controlling interests (continued)
The summarised financial information of Ki Financial Limited, before inter-company eliminations, is as follows:
Statement of financial position
31 December
2024
$m
31 December
2023
$m
Current assets
70.0
26.1
Non-current assets
512.5
502.4
Total assets
582.5
528.5
Current liabilities
(5.9)
(4.0)
Non-current liabilities
(89.4)
(33.5)
Total liabilities
(95.3)
(37.5)
Net assets
487.2
491.0
Accumulated NCI attributable to Ki Financial Limited standalone entity2
419.3
411.7
Adjustment in respect of Ki Financial Limited sub-group
113.3
54.6
Accumulated NCI as presented on the consolidated statement of financial position
532.6
466.3
Comprehensive income statement
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Income1
2.6
3.4
Profit for the period
(4.9)
1.7
Total comprehensive income
(4.9)
1.7
NCI profit attributable to Ki Financial Limited standalone entity2
(2.9)
1.0
Adjustment in respect of Ki Financial Limited sub-group
69.2
58.2
Profit allocated to NCI as presented on the consolidated income statement
66.3
59.2
1. Income for Ki Financial Limited relates to ‘interest revenue from financial assets not measured at FVTPL’, ‘other investment return’, ‘other income’ and ‘net foreign exchange gains/(losses)’.
2. The movement in accumulated NCI attributable to Ki Financial Limited standalone entity is a function of NCI profit or loss attributable to Ki Financial Limited standalone entity and other
movements reflecting the contractual agreements pertaining to the NCI shareholding.
Statement of cash flows
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Cash flows from operating activities
4.3
33.3
Cash flows from investing activities
(1.3)
(67.2)
Cash flows from financing activities
–
–
Net increase/(decrease) in cash and cash equivalents
3.0
(33.9)
134
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
19
Tax (expense)/credit
Income tax is tax charged on trading activities during the year. This Note shows the breakdown of tax payable in the current period
(current tax) and also tax that may become payable sometime in the future (deferred tax).
(a) Tax (charged)/credited to the income statement
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Current tax:
Current taxes on income for the year
(0.4)
–
Overseas tax on income for the year
(6.2)
(4.3)
Adjustments in respect of prior years
(6.7)
(13.1)
Total current tax
(13.3)
(17.4)
Deferred tax:
Relating to the origination and reversal of temporary differences
(68.2)
8.4
Adjustments in respect of prior years
(3.3)
13.8
Total deferred tax
(71.5)
22.2
Total tax (charged)/credited to the income statement
(84.8)
4.8
Tax (charged)/credited to the income statement is attributable to:
Profit or loss from continuing operations
(84.8)
5.3
Profit or loss from discontinued operations
–
(0.5)
(84.8)
4.8
A tax rate of 25% (2023: 23.5%) has been used in the calculation of the UK current tax.
Overseas taxes arise in respect of the Group’s subsidiaries in the US, India and South Africa and as a result of the Group’s
operations at Lloyd’s. Double tax relief principally arises from taxes suffered as a result of the Group’s operations at Lloyd’s. Double
tax relief is effectively limited to an amount equal to the tax due at the UK tax rate on the same source of income. The double tax
relief amount is included within deferred tax on the basis that the amount will be recovered against future liabilities within the Group.
(b) Tax (charged)/credited to other comprehensive income
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Deferred tax (charge)/credit on actuarial (losses)/gains on defined benefit pension scheme
(5.2)
8.4
Tax (charged)/credited to other comprehensive income in the current and prior years is attributable to continuing operations.
Brit Limited Annual Report 2024
135
financial statements
19
Tax (expense)/credit (continued)
(c) Tax reconciliation
The tax on the Group’s profit before tax differs from the theoretical amount that would arise based on the weighted average rate
of tax as follows:
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Profit before tax (see below)
657.9
890.6
Tax calculated at weighted average rate of tax on income
(69.9)
(119.6)
Non-deductible and non-taxable items
(0.8)
1.6
Profit on disposal of subsidiaries and associates
3.8
60.7
Taxes on income at rates in excess of the domestic rate and where credit is unavailable
(1.1)
(1.2)
Effect of temporary differences not recognised
(15.6)
64.7
Effect of revaluation of deferred tax following change in rate of tax
8.8
(2.1)
Adjustments to tax charge in respect of prior years
(10.0)
0.7
Total tax (charged)/credited to income statement
(84.8)
4.8
Profit before tax includes profits arising from both continuing and, for the prior period, discontinued operations:
Profit before tax
Continuing
operations
$m
Discontinued
operations
$m
Total
$m
Year ended 31 December 2024
661.0
(3.1)
657.9
Year ended 31 December 2023
623.9
266.7
890.6
The weighted average rate of tax is based on the geographic split of profit across Group entities in jurisdictions with differing tax
rates. As the mix of taxable profits changes, so will the weighted average rate of tax.
(d) OECD ‘Pillar Two’ rules
Brit Limited and its subsidiaries fall within the scope of the Organisation for Economic Co-operation and Development’s (OECD) new
global minimum tax framework known as the Pillar Two Model Rules.
Fairfax Financial Holdings Limited (Fairfax), a Canadian entity, is the Ultimate Parent Entity of the Brit Group for the purpose of the
Pillar Two Model Rules. Canada has enacted legislation which is effective from 1 January 2024 to implement the global minimum tax
in the form of the Income Inclusion Rule (IIR) and Domestic Minimum Top-Up Tax (DMT). As a result of this implementation, Fairfax
is liable for any top-up tax levied via the IIR on undertaxed profits arising in the Group's non-UK subsidiaries, such that any such top-
up tax would not be expected to result in a liability being recognised in the Group's financial statements.
The UK has also enacted legislation to implement its own IIR and DMT. As a result, to the extent that a UK DMT liability arises
on undertaxed profits arising in the Group's UK subsidiaries, this will be recognised in the Group's financial statements. No UK DMT
liability has been provided for by the Group in 2024.
The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the UK IIR and DMT and will
account for it as a current tax if it is incurred in future.
The UK and Canada are expected to implement the secondary collection mechanism for global minimum tax, known as the Undertaxed
Profits Rule (‘UTPR’) from 1 January 2025. Neither jurisdiction has yet substantively enacted the relevant domestic legislation
implementing the UTPR. Given the inherent complexity of the UTPR rule’s allocation mechanism and the current lack of enacted
legislation, it is not yet possible to accurately estimate the impact of UTPR, if any, on the Group.
The implementation of a 15% corporate income tax regime in Bermuda effective from 1 January 2025 has been enacted.
136
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
20
Intangible assets
An intangible asset is an asset without any physical substance but which has long-term value to the business. With the exception
of goodwill, syndicate participation rights at Lloyd’s, and trade names, which are classified as indefinite life assets, the values
of these assets are reduced according to their useful life by way of amortisation. Amortisation is included as an expense in the
income statement.
Goodwill
$m
Trade
names
$m
Distribution
channels
$m
Syndicate
participations
$m
Software
$m
Total
$m
Cost:
At 1 January 2023
14.4
0.8
16.3
70.8
48.1
150.4
Additions
–
–
–
–
12.4
12.4
Disposals
–
–
–
–
(0.3)
(0.3)
Foreign exchange effect
(1.0)
(0.1)
(0.5)
–
2.7
1.1
At 31 December 2023
13.4
0.7
15.8
70.8
62.9
163.6
At 1 January 2024
13.4
0.7
15.8
70.8
62.9
163.6
Additions
–
–
–
–
27.3
27.3
Foreign exchange effect
(0.4)
–
(0.2)
–
(1.0)
(1.6)
At 31 December 2024
13.0
0.7
15.6
70.8
89.2
189.3
Amortisation:
At 1 January 2023
–
–
8.3
–
22.1
30.4
Charge for the year
–
–
1.0
–
8.2
9.2
Impairment
–
–
–
–
0.2
0.2
Disposals
–
–
–
–
(0.3)
(0.3)
Foreign exchange effect
–
–
–
–
1.4
1.4
At 31 December 2023
–
–
9.3
–
31.6
40.9
At 1 January 2024
–
–
9.3
–
31.6
40.9
Charge for the year
–
–
1.1
–
9.3
10.4
Foreign exchange effect
–
–
–
–
(0.8)
(0.8)
At 31 December 2024
–
–
10.4
–
40.1
50.5
Carrying amount:
At 31 December 2023
13.4
0.7
6.5
70.8
31.3
122.7
At 31 December 2024
13.0
0.7
5.2
70.8
49.1
138.8
Additional information
The gross cost of software fully amortised but still in use is $17.6m (2023: $11.9m). All software additions in 2024 and 2023 were
internally developed. The software amortisation charge for the year of $9.3m (2023: $8.2m) is included in the ‘Other operating
expenses’ and, for the prior period, ‘Profit from discontinued operation, net of tax’ lines in the Income Statement. There were
impairments to software in 2024 of $nil (2023: $0.2m). Assets not yet in use with a total cost of $16.8m (2023: $5.2m) are included
in the software.
Brit Limited Annual Report 2024
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financial statements
20
Intangible assets (continued)
Impairment testing
Intangible assets with indefinite useful lives (goodwill, syndicate participations and trade names) are reviewed annually for
impairment. This impairment review is performed at the level of cash-generating units (CGUs), which are based on operating
segments which earn revenues and incur expenses and whose results are regularly reviewed by management.
Goodwill and the trade names intangible asset arose from the Group’s acquisition of Camargue in 2021, therefore these intangibles
are fully allocated to the Camargue CGU for the purpose of the annual impairment review.
Syndicate participation intangible assets have been allocated to CGUs as follows:
31 December
2024
$m
31 December
2023
$m
Global Specialty Direct
52.7
52.7
Global Specialty Reinsurance
18.1
18.1
Total
70.8
70.8
Within the annual impairment review the recoverable amount of the CGUs is determined using a value in use calculation.
For the Global Speciality Direct and Global Speciality Reinsurance CGUs the value in use calculation is based on business plans
covering a three-year period approved by senior management, with the year three estimated cash flows then assumed to continue
in perpetuity.
For the Camargue CGU the value in use calculation is based on business plans covering a five-year period approved by senior
management, with the year five estimated cash flow then assumed to grow by 4.7% per year in perpetuity. This growth rate
is determined by considering actual growth experienced by Camargue since it was acquired by the Group and expected growth
during the five-year forecast period.
In the value in use calculations for all CGUs:
• The business plans on which the calculations are based reflect senior management’s best estimates based on historical
experience, growth rates for the respective insurance industry sector, the insurance pricing cycle, and expected results from
ongoing and future strategic business unit product and distribution strategies.
• The estimated cash flows are post-tax and have been discounted using a risk-adjusted discount rate of 11.35% (2023: 11.85%).
For all three CGUs the recoverable amounts at both 31 December 2024 and 31 December 2023 exceed the carrying value of the CGU
(including allocated intangible assets).
For the Global Speciality Direct and Global Speciality Reinsurance CGUs, to which the most material intangible assets are allocated
(the syndicate participation intangibles), a sensitivity analysis is performed to understand the impact that a reasonably possible
change in key assumptions would have on the outcome of the impairment review. For the Global Speciality Direct CGU, an increase
in the average forecast net loss ratio for all future years from 54.6% to 56.3% (an increase of 1.7 percentage points) would eliminate
the $246.6m surplus that arose in the base case impairment review. Management consider that such an increase is reasonably
possible. The sensitivity analysis indicated that a reasonably possible change in other key assumptions would not cause the carrying
value of the Global Speciality Direct and Global Speciality Reinsurance CGUs to exceed the recoverable amount.
138
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notes to the consolidated financial statements
21
Property, plant and equipment
This Note gives a breakdown of the type of property, plant and equipment asset classes in use. The value of these assets are
reduced according to their useful life by way of depreciation. Depreciation is included as an expense in the income statement.
An annual assessment of the carrying value of these assets is carried out and, if necessary, an impairment charge to the income
statement is made.
Office
refurbishment
$m
Computers, office
machinery,
furniture and
equipment
$m
Land
$m
Buildings
$m
Right of
use assets
$m
Total
$m
Cost:
At 1 January 2023
20.0
4.1
0.3
0.7
44.2
69.3
Additions
1.0
1.4
–
–
0.8
3.2
Disposals
(1.9)
(0.5)
–
–
(9.2)
(11.6)
Foreign exchange effect
1.1
0.2
–
(0.1)
2.3
3.5
At 31 December 2023
20.2
5.2
0.3
0.6
38.1
64.4
At 1 January 2024
20.2
5.2
0.3
0.6
38.1
64.4
Additions
0.6
0.4
–
–
0.7
1.7
Disposals
(1.4)
–
–
–
–
(1.4)
Foreign exchange effect
(0.4)
(0.1)
–
–
(0.7)
(1.2)
At 31 December 2024
19.0
5.5
0.3
0.6
38.1
63.5
Depreciation:
At 1 January 2023
10.3
1.4
–
–
15.8
27.5
Charge for the year
1.7
0.8
–
–
3.8
6.3
Impairment
1.1
0.3
–
–
–
1.4
Disposals
(1.9)
(0.5)
–
–
(2.9)
(5.3)
Foreign exchange effect
0.6
(0.1)
–
–
1.2
1.7
At 31 December 2023
11.8
1.9
–
–
17.9
31.6
At 1 January 2024
11.8
1.9
–
–
17.9
31.6
Charge for the year
1.1
0.7
–
–
3.3
5.1
Impairment
1.5
–
–
–
–
1.5
Disposals
(1.4)
–
–
–
–
(1.4)
Foreign exchange effect
(0.3)
–
–
–
(0.4)
(0.7)
At 31 December 2024
12.7
2.6
–
–
20.8
36.1
Carrying amount:
At 31 December 2023
8.4
3.3
0.3
0.6
20.2
32.8
At 31 December 2024
6.3
2.9
0.3
0.6
17.3
27.4
The gross cost of property, plant and equipment fully depreciated but still in use is $0.8m (2023: $0.3m). The depreciation charge
for the year of $5.1m (2023: $6.3m) is included in the ‘Acquisition costs’, ‘Other operating expenses’ and ‘Profit from discontinued
operation, net of tax’ lines in the Income Statement. An impairment charge was recognised in 2024 of $1.5m (2023: $1.4m).
A dilapidations provision of $2.8m (2023: $2.5m) has been set up in respect of the refurbishment of rented property.
Brit Limited Annual Report 2024
139
financial statements
22
Deferred tax
This Note describes the tax that may have to be paid in the future. Deferred tax arises from differences in the way that tax
is calculated for accounting purposes and tax purposes.
The rate used in the calculation of the UK deferred tax assets and liabilities as at 31 December 2024 is 25%. At 31 December 2023 the rate used
was also 25% for all UK deferred tax assets and liabilities with the exception of the deferred tax liability (DTL) in respect of pension surpluses.
For the pension surplus DTL a rate of 35% was used at 31 December 2023 as this was the applicable UK tax rate on pension surpluses before
a reduction to 25% under The Authorised Surplus Payments Charge Order 2024 which was substantively enacted on 11 March 2024.
The deferred tax asset (DTA) is attributable to temporary differences arising on the following:
Intangible
assets
$m
Underwriting
$m
Losses
$m
Other
$m
Total
$m
At 1 January 2023
6.2
(4.2)
89.6
10.8
102.4
Movements in the year:
(Charged)/credited to income statement
–
(0.1)
12.1
19.5
31.5
Disposal of subsidiaries
(6.2)
4.3
–
(1.4)
(3.3)
Foreign exchange effect
–
–
–
1.9
1.9
At 31 December 2023
–
–
101.7
30.8
132.5
Deferred tax assets presented within deferred tax liabilities
(see table below)
(132.5)
Net deferred tax asset at 31 December 2023
–
At 1 January 2024
–
–
101.7
30.8
132.5
Movements in the year:
(Charged)/credited to income statement
–
5.3
12.2
(13.9)
3.6
Disposal of subsidiaries
–
–
–
–
–
Foreign exchange effect
–
–
–
1.9
1.9
At 31 December 2024
–
5.3
113.9
18.8
138.0
Deferred tax assets presented within deferred tax liabilities
(see table below)
(134.4)
Net deferred tax asset at 31 December 2024
3.6
The net deferred tax asset of $3.6m (2023: $nil) relates to deferred tax assets arising in the United States which are not available
for offset against the Group’s deferred tax liabilities, which arise in the United Kingdom and South Africa.
Deferred tax assets are considered recoverable where it is expected that there will be future taxable profits based on the
approved business plans and budgets of the Group, adjusted as appropriate to reflect the latest circumstances and supplemented
by scenario modelling. As described in Note 3.3.4, this estimate of future taxable profits is significant to the Group’s statement
of financial position.
Based on this estimate of future taxable profits:
• Management concluded that $138.0m (2023: $132.5m) of deferred tax assets are recoverable, including $113.9m
(2023: $101.7m) in respect of carried forward losses which arose due to significant catastrophe-related claims incurred
in previous years. These carried forward losses can be carried forward indefinitely and have no expiry date.
• A further deferred tax asset of $30.9m (2023: $20.6m) relating to carried forward losses of $123.6m (2023: $82.4m) has not
been recognised as an asset as it is not considered probable that the losses can be utilised in the foreseeable future. These
unused losses can also be carried forward indefinitely and have no expiry date.
140
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financial statements
notes to the consolidated financial statements
22
Deferred tax (continued)
The DTL is attributable to temporary differences arising on the following:
Pensions
$m
Intangible
assets
$m
Underwriting
$m
Other
$m
Total
$m
At 1 January 2023
(22.3)
(26.8)
(124.5)
(3.7)
(177.3)
Movements in the year:
(Charged)/credited to income statement
2.0
(1.1)
(10.4)
0.7
(8.8)
Tax relating to components of other comprehensive
income (Note 19(b))
8.4
–
–
–
8.4
Disposal of subsidiaries
–
6.2
(3.9)
1.3
3.6
Foreign exchange effect
(0.6)
0.2
(0.2)
–
(0.6)
At 31 December 2023
(12.5)
(21.5)
(139.0)
(1.7)
(174.7)
Deferred tax assets presented within deferred tax liabilities
(see table above)
132.4
Net deferred tax liability at 31 December 2023
(42.3)
At 1 January 2024
(12.5)
(21.5)
(139.0)
(1.7)
(174.7)
Movements in the year:
(Charged)/credited to income statement
9.2
(0.8)
(74.2)
(9.3)
(75.1)
Tax relating to components of other comprehensive
income (Note 19(b))
(5.2)
–
–
–
(5.2)
Disposal of subsidiaries
–
–
–
–
–
Foreign exchange effect
(0.2)
–
–
(0.4)
(0.6)
At 31 December 2024
(8.7)
(22.3)
(213.2)
(11.4)
(255.6)
Deferred tax assets presented within deferred tax
liabilities (see table above)
134.4
Net deferred tax liability at 31 December 2024
(121.2)
Brit Limited Annual Report 2024
141
financial statements
23
Insurance and reinsurance contracts
This Note presents an analysis of the current and non-current portions of insurance contract and reinsurance contract balances.
This Note also analyses the movement in insurance contract and reinsurance contract balances during the year, splitting them
into their component parts. It also examines the in-year movement in insurance and reinsurance contract balances applying the
general measurement model (GMM), the impact of GMM contracts recognised during the year, the movement in assets for insurance
acquisition cash flows, and the expected recognition of the CSM in future periods. On transition to IFRS 17, the Group measured all
insurance contracts issued and reinsurance contracts held using the fully retrospective approach.
The Note also shows how claims have developed over a period (before and after the effects of reinsurance) of time by setting out
the cumulative development at the end of each calendar year in respect of claims arising from business written in a particular
underwriting year.
Composition of the consolidated statement of financial position
An analysis of the amounts presented on the consolidated statement of financial position for insurance and reinsurance contracts
is included in the table below, along with the presentation of current and non-current portions of the balances:
Year ended 31 December 2024
Year ended 31 December 2023
$m
Current
portion
Non-current
portion
Total
Current
portion
Non-current
portion
Total
Reinsurance contract assets1
599.9
1,273.5
1,873.4
708.3
1,234.5
1,942.8
Insurance contract liabilities:
Insurance contract liabilities excluding
assets for insurance acquisition
cash flows
1,635.3
4,725.7
6,361.0
1,554.2
4,336.5
5,890.7
Assets for insurance acquisition cash flows
(24.1)
–
(24.1)
(21.0)
–
(21.0)
Insurance contract liabilities1
1,611.2
4,725.7
6,336.9
1,533.2
4,336.5
5,869.7
1. The Group does not have other pre-recognition cash flows included in either its insurance contract liabilities or reinsurance contract assets.
142
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financial statements
notes to the consolidated financial statements
23
Insurance and reinsurance contracts (continued)
Movement in insurance contract balances
Insurance contracts
31 December 2024
Analysis by remaining coverage and incurred claims
Remaining coverage2
Incurred claims
Total
Contracts
not under PAA
Contracts under PAA
$m
Estimates
of present
value of
future cash
flows
Risk
adjustment for
non-financial
risk
Net opening balance1
(23.3)
(317.0)
(5,275.7)
(274.7)
(5,890.7)
Changes in the consolidated income statement
Insurance revenue
3,465.5
–
–
–
3,465.5
Incurred claims and other insurance service
expenses
–
(672.2)
(1,231.6)
(82.6)
(1,986.4)
Amortisation of insurance acquisition cash flows
(664.8)
–
–
–
(664.8)
Prior year development
–
18.7
(19.6)
73.1
72.2
Insurance service expenses
(664.8)
(653.5)
(1,251.2)
(9.5)
(2,579.0)
Insurance service result3
2,800.7
(653.5)
(1,251.2)
(9.5)
886.5
Net finance expense from insurance contracts
(6.8)
(36.2)
(228.6)
–
(271.6)
Effect of movements in exchange rates
(3.2)
8.9
45.3
2.3
53.3
Total changes in the consolidated income statement
2,790.7
(680.8)
(1,434.5)
(7.2)
668.2
Investment components
18.5
–
(18.5)
–
–
Cash flows
Premiums received
(3,719.7)
–
–
–
(3,719.7)
Claims and other insurance service expenses paid
–
123.5
1,544.6
–
1,668.1
Insurance acquisition cash flows
913.1
–
–
–
913.1
Total cash flows
(2,806.6)
123.5
1,544.6
–
(1,138.5)
Net closing balance1
(20.7)
(874.3)
(5,184.1)
(281.9)
(6,361.0)
1. Opening and closing insurance contract balances exclude assets for insurance acquisition cash flows.
2. The Group has no items of loss component included within Remaining coverage.
3. The insurance service result presented in this disclosure note excludes ‘net expenses from reinsurance contract’ held'.
Brit Limited Annual Report 2024
143
financial statements
23
Insurance and reinsurance contracts (continued)
Movement in insurance contract balances (continued)
Insurance contracts
31 December 2023
Analysis by remaining coverage and incurred claims
Remaining coverage2
Incurred claims
Total
Contracts
not under PAA
Contracts under PAA
$m
Estimates
of present
value of
future cash
flows
Risk
adjustment for
non-financial
risk
Net opening balance1
(76.9)
–
(5,089.5)
(263.7)
(5,430.1)
Changes in the consolidated income statement
Insurance revenue
3,517.1
–
–
–
3,517.1
Incurred claims and other insurance service
expenses
–
(352.5)
(1,465.3)
(88.4)
(1,906.2)
Amortisation of insurance acquisition cash flows
(638.0)
–
–
–
(638.0)
Prior year development
–
–
(131.1)
79.9
(51.2)
Insurance service expenses3
(638.0)
(352.5)
(1,596.4)
(8.5)
(2,595.4)
Insurance service result4
2,879.1
(352.5)
(1,596.4)
(8.5)
921.7
Net finance expense from insurance contracts
(8.5)
(12.7)
(301.5)
–
(322.7)
Effect of movements in exchange rates
6.0
(2.4)
(46.5)
(2.5)
(45.4)
Total changes in the consolidated income statement
2,876.6
(367.6)
(1,944.4)
(11.0)
553.6
Investment components
10.6
–
(10.6)
–
–
Cash flows
Premiums received
(3,603.1)
–
–
–
(3,603.1)
Claims and other insurance service expenses paid
–
50.6
1,768.8
–
1,819.4
Insurance acquisition cash flows
769.5
–
–
–
769.5
Total cash flows
(2,833.6)
50.6
1,768.8
–
(1,014.2)
Net closing balance1
(23.3)
(317.0)
(5,275.7)
(274.7)
(5,890.7)
1. Opening and closing insurance contract balances exclude assets for insurance acquisition cash flows.
2. The Group has no items of loss component included within Remaining coverage.
3. Insurance service expenses include amounts attributed to the discontinued operation (see Note 10).
4. The insurance service result presented in this disclosure note excludes ‘net expenses from reinsurance contract’ held'.
144
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financial statements
notes to the consolidated financial statements
23
Insurance and reinsurance contracts (continued)
Movement in reinsurance contract balances
Reinsurance contracts
31 December 2024
Analysis by remaining coverage and incurred claims
Remaining coverage1
Incurred claims
Total
Contracts
not under PAA
Contracts under PAA
$m
Estimates
of present
value of
future cash
flows
Risk
adjustment for
non-financial
risk
Net opening balance
260.3
36.1
1,548.2
98.2
1,942.8
Changes in the consolidated income statement
Allocation of reinsurance premium
(693.7)
–
–
–
(693.7)
Recoveries on incurred claims and other insurance
service expenses
–
96.1
310.7
24.4
431.2
Prior year development
–
(0.1)
68.9
(18.0)
50.8
Recoveries from reinsurers
–
96.0
379.6
6.4
482.0
Net (expense)/income from reinsurance
contracts held
(693.7)
96.0
379.6
6.4
(211.7)
Net finance (expense)/income from reinsurance
contracts held
(0.8)
0.2
64.9
–
64.3
Effect of movements in exchange rates
–
(0.1)
(16.1)
(1.0)
(17.2)
Total changes in the consolidated income statement
(694.5)
96.1
428.4
5.4
(164.6)
Investment components
(4.7)
–
4.7
–
–
Cash flows
Premiums paid
559.6
–
–
–
559.6
Claims and other insurance service expenses recovered
–
(130.0)
(334.4)
–
(464.4)
Total cash flows
559.6
(130.0)
(334.4)
–
95.2
Net closing balance
120.7
2.2
1,646.9
103.6
1,873.4
1. The Group has no items of loss-recovery component included within Remaining coverage.
Brit Limited Annual Report 2024
145
financial statements
23
Insurance and reinsurance contracts (continued)
Movement in reinsurance contract balances (continued)
Reinsurance contracts
31 December 2023
Analysis by remaining coverage and incurred claims
Remaining coverage1
Incurred claims
Total
Contracts
not under PAA
Contracts under PAA
$m
Estimates
of present
value of
future cash
flows
Risk
adjustment for
non-financial
risk
Net opening balance
237.7
33.7
1,471.8
80.9
1,824.1
Changes in the consolidated income statement
Allocation of reinsurance premium
(785.9)
–
–
–
(785.9)
Recoveries on incurred claims and other insurance
service expenses
–
92.6
314.2
38.3
445.1
Prior year development
–
(0.1)
89.5
(21.9)
67.5
Recoveries from reinsurers
–
92.5
403.7
16.4
512.6
Net (expense)/income from reinsurance
contracts held
(785.9)
92.5
403.7
16.4
(273.3)
Net finance (expense)/income from reinsurance
contracts held
(0.4)
0.1
97.2
–
96.9
Effect of movements in exchange rates
(0.4)
0.1
8.5
0.9
9.1
Total changes in the consolidated income statement
(786.7)
92.7
509.4
17.3
(167.3)
Investment components
(6.5)
–
6.5
–
–
Cash flows
Premiums paid
815.8
–
–
–
815.8
Claims and other insurance service expenses recovered
–
(90.3)
(439.5)
–
(529.8)
Total cash flows
815.8
(90.3)
(439.5)
–
286.0
Net closing balance
260.3
36.1
1,548.2
98.2
1,942.8
1. The Group has no items of loss-recovery component included within Remaining coverage.
146
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financial statements
notes to the consolidated financial statements
23
Insurance and reinsurance contracts (continued)
Movement in insurance contract balances applying GMM
Insurance contracts
31 December 2024
Analysis by measurement component
$m
Estimates of
present value
of future
cash flows
Risk
adjustment for
non-financial risk
CSM
Total
Net opening balance
(264.8)
(33.7)
(98.6)
(397.1)
Changes in the consolidated income statement
Changes that relate to current service
CSM recognised for the services provided
–
–
180.1
180.1
Changes in the risk adjustment for non-financial risk expired
–
(1.6)
–
(1.6)
Experience adjustments
90.5
–
–
90.5
90.5
(1.6)
180.1
269.0
Changes that relate to future service
Contracts initially recognised in the period
265.9
(32.6)
(233.3)
–
Changes in estimates that adjust the CSM
(56.7)
0.1
56.6
–
209.2
(32.5)
(176.7)
–
Changes that relate to past service
Prior year development
15.7
2.8
–
18.5
Net income/(expense) from insurance contracts issued
315.4
(31.3)
3.4
287.5
Finance expense from insurance contracts issued
(32.2)
–
(10.8)
(43.0)
Effect of movements in exchange rates
6.2
0.6
0.3
7.1
Total amounts recognised in comprehensive income
289.4
(30.7)
(7.1)
251.6
Cash flows
Premiums received
(1,192.5)
–
–
(1,192.5)
Claims and other insurance service expenses paid
123.5
–
–
123.5
Insurance acquisition cash flows
273.2
–
–
273.2
Total cash flows
(795.8)
–
–
(795.8)
Net closing balance
(771.2)
(64.4)
(105.7)
(941.3)
Brit Limited Annual Report 2024
147
financial statements
23
Insurance and reinsurance contracts (continued)
Movement in insurance contract balances applying GMM (continued)
The comparative disclosures for 2023 have been adjusted to be consistent with the Group’s updated methodology for analysing
movements in (re)insurance contract balances. This updated methodology has no impact on the measurement of insurance
contracts or on the presentation of related amounts in the income statement and statement of financial position.
Insurance contracts
31 December 2023 (restated)
Analysis by measurement component
$m
Estimates of
present value
of future
cash flows
Risk
adjustment for
non-financial risk
CSM
Total
Net opening balance1
–
–
–
–
Changes in the consolidated income statement
Changes that relate to current service
CSM recognised for the services provided
–
–
103.3
103.3
Changes in the risk adjustment for non-financial risk expired
–
1.6
–
1.6
Experience adjustments
63.2
–
–
63.2
63.2
1.6
103.3
168.1
Changes that relate to future service
Contracts initially recognised in the period
249.8
(33.8)
(216.0)
–
Changes in estimates that adjust the CSM
(19.9)
(1.3)
21.2
–
229.9
(35.1)
(194.8)
–
Net income/(expense) from insurance contracts issued
293.1
(33.5)
(91.5)
168.1
Finance expense from insurance contracts issued
(14.3)
–
(6.9)
(21.2)
Effect of movements in exchange rates
(1.1)
(0.2)
(0.2)
(1.5)
Total amounts recognised in comprehensive income
277.7
(33.7)
(98.6)
145.4
Cash flows
Premiums received
(773.0)
–
–
(773.0)
Claims and other insurance service expenses paid
50.6
–
–
50.6
Insurance acquisition cash flows
179.9
–
–
179.9
Total cash flows
(542.5)
–
–
(542.5)
Net closing balance
(264.8)
(33.7)
(98.6)
(397.1)
1. In 2022, none of the Group’s insurance contracts were measured under GMM
148
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
23
Insurance and reinsurance contracts (continued)
Movement in reinsurance contract balances applying GMM
Reinsurance contracts
31 December 2024
Analysis by measurement component
$m
Estimates of
present value
of future
cash flows
Risk
adjustment for
non-financial risk
CSM
Total
Net opening balance
316.5
1.2
3.7
321.4
Changes in the consolidated income statement
Changes that relate to current service
CSM recognised for the services received
–
–
(65.8)
(65.8)
Changes in the risk adjustment for non-financial risk expired
–
(2.1)
–
(2.1)
Experience adjustments
37.7
–
–
37.7
37.7
(2.1)
(65.8)
(30.2)
Changes that relate to future service
Contracts initially recognised in the period
(64.2)
1.6
62.6
–
Changes in estimates that adjust the CSM
3.0
–
(3.0)
–
(61.2)
1.6
59.6
–
Changes that relate to past service
Prior year development
0.1
(0.1)
–
–
Net (expense)/income from reinsurance contracts held
(23.4)
(0.6)
(6.2)
(30.2)
Finance (expense)/income from reinsurance contracts held
(3.4)
–
2.8
(0.6)
Effect of movements in exchange rates
(1.9)
–
–
(1.9)
Total amounts recognised in comprehensive income
(28.7)
(0.6)
(3.4)
(32.7)
Cash flows
Premiums paid net of ceding commissions and
other directly attributable expenses paid
102.0
–
–
102.0
Recoveries from reinsurance
(129.4)
–
–
(129.4)
Total cash flows
(27.4)
–
–
(27.4)
Net closing balance
260.4
0.6
0.3
261.3
Brit Limited Annual Report 2024
149
financial statements
23
Insurance and reinsurance contracts (continued)
Movement in reinsurance contract balances applying GMM (continued)
The comparative disclosures for 2023 have been adjusted to be consistent with the Group’s updated methodology for analysing
movements in (re)insurance contract balances. This updated methodology has no impact on the measurement of reinsurance
contracts or on the presentation of related amounts in the income statement and statement of financial position.
Reinsurance contracts
31 December 2023 (restated)
Analysis by measurement component
$m
Estimates of
present value
of future
cash flows
Risk
adjustment for
non-financial risk
CSM
Total
Net opening balance
351.4
17.2
(14.9)
353.7
Changes in the consolidated income statement
Changes that relate to current service
CSM recognised for the services received
–
–
(51.4)
(51.4)
Changes in the risk adjustment for non-financial risk expired
–
(21.9)
–
(21.9)
Experience adjustments
(43.5)
–
–
(43.5)
(43.5)
(21.9)
(51.4)
(116.8)
Changes that relate to future service
Contracts initially recognised in the period
(74.4)
4.6
69.8
–
Changes in estimates that adjust the CSM
1.6
0.2
(1.8)
–
(72.8)
4.8
68.0
–
Net (expense)/income from reinsurance contracts held
(116.3)
(17.1)
16.6
(116.8)
Finance (expense)/income from reinsurance contracts held
(2.3)
–
2.0
(0.3)
Effect of movements in exchange rates
2.7
1.0
–
3.7
Total amounts recognised in comprehensive income
(115.9)
(16.1)
18.6
(113.4)
Cash flows
Premiums paid net of ceding commissions and
other directly attributable expenses paid
139.8
–
–
139.8
Recoveries from reinsurance
(58.7)
–
–
(58.7)
Total cash flows
81.1
–
–
81.1
Net closing balance
316.6
1.1
3.7
321.4
150
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
23
Insurance and reinsurance contracts (continued)
Impact of GMM contracts recognised in the year
$m
2024
2023
Insurance contracts (profitable contracts issued1)
Claims and other insurance service expenses payable
(697.5)
(682.2)
Insurance acquisition cash flows
(276.0)
(266.0)
Estimates of present value of cash outflows
(973.5)
(948.2)
Estimates of present value of cash inflows
1,239.4
1,198.0
Risk adjustment for non-financial risk
(32.6)
(33.8)
CSM
(233.3)
(216.0)
Increase in insurance contract liabilities from contracts recognised in the year
–
–
1. The Group did not acquire any profitable contracts or issue any onerous contracts in either year presented.
$m
2024
2023
(restated)
Reinsurance contracts held (initiated without a loss-recovery component1)
Estimates of present value of cash outflows
(81.7)
(125.0)
Estimates of present value of cash inflows
17.5
50.6
Risk adjustment for non-financial risk
1.6
4.6
CSM
62.6
69.8
Increase in reinsurance contract assets from contracts recognised in the year
–
–
1. The Group did not initiate any reinsurance contracts with loss-recovery components in either year presented.
Movement in assets for insurance acquisition cash flows
$m
31 December
2024
31 December
2023
Opening balance
21.0
18.6
Cash flows recognised as an asset during the year
24.1
21.0
Amounts derecognised on initial recognition of groups of insurance contracts
(21.0)
(18.6)
Closing balance
24.1
21.0
Presented in insurance contract liabilities
24.1
21.0
Closing balance
24.1
21.0
As insurance acquisition cash flows are not allocated to renewals, all assets for insurance acquisition cash flows are expected to be
derecognised within one year.
Brit Limited Annual Report 2024
151
financial statements
23
Insurance and reinsurance contracts (continued)
Expected recognition of the CSM
Duration
1 year or less
$m
1 to 2 years
$m
2 to 3 years
$m
3 to 4 years
$m
4 to 5 years
$m
5 to 10 years1
$m
Total2
$m
31 December 2024
Insurance contracts
103.0
2.7
–
–
–
–
105.7
Reinsurance contracts held
(6.3)
1.3
1.1
0.9
0.7
2.0
(0.3)
31 December 2023
Insurance contracts
95.6
3.0
–
–
–
–
98.6
Reinsurance contracts held
(11.6)
1.5
1.5
1.1
1.0
2.8
(3.7)
1. The Group does not hold any insurance or reinsurance contracts where the CSM has an expected recognition of more than 10 years.
2. A CSM presented as a positive in this table is expected to release as an income to the consolidated income statement in future periods. A CSM presented as a negative in this table
is expected to release as an expense to the consolidated income statement in future periods.
Insurance and reinsurance contracts – assumptions and changes in assumptions
Process used to decide on assumptions required
The risks associated with these insurance liabilities and in particular with casualty insurance liabilities are complex and subject
to a number of variables that complicate quantitative analysis.
The Group uses several statistical methods to incorporate the various assumptions made in order to estimate the ultimate costs
of claims. It is typical to consider the attritional claims separately from the large claims, separately from the catastrophe losses.
The two methods more commonly used are the chain-ladder and the Bornhuetter-Ferguson methods.
Chain-ladder methods may be applied to premiums, paid claims or incurred claims (i.e. paid claims plus case reserve estimates).
The basic technique involves the analysis of historical claims development factors and the selection of estimated development
factors based on these historical patterns. The selected development factors are then applied to cumulative claims data for each
underwriting year, that is not yet fully developed, to produce an estimated ultimate claims cost for each underwriting year.
Chain-ladder techniques are most appropriate for mature classes of business that have a relatively stable development pattern.
Chain-ladder techniques are less suitable in cases in which the insurer does not have a developed claims history for a particular
class of business or for underwriting years at early stages of development where the outcome is still highly uncertain.
The Bornhuetter-Ferguson method uses a combination of a benchmark or market-based estimate and an estimate based on claims
experience. The former is based on a measure of exposure such as premiums; the latter is based on the paid or incurred claims
to date. The two estimates are combined using a formula that gives more weight to the experience-based estimate as time passes.
This technique is used in situations in which developed claims experience is not available for the projection (recent underwriting
years or new classes of business).
The choice of selected results for each year of each class of business depends on an assessment of the technique that has been
most appropriate to observed historical developments. In certain instances, this has meant that different techniques or combination
of techniques have been selected for the individual underwriting year, or groups of underwriting years within the same
class of business.
In addition to the above statistical techniques, alternative approaches are often considered for a number of classes of business
(e.g. Casualty Treaty) and particular events (e.g. natural catastrophes), therefore alternative methodologies may be employed to add
additional rigour to the process. For example, losses from a catastrophe are typically formed from reviewing potential exposure
on a policy by policy basis and taking account of market intelligence to determine Brit’s share of the loss. An estimate of the large
claims ultimate will typically be formed from estimating the number of unreported large claims, using the standard statistical
techniques described above, and multiplying this with the expected severity of such losses.
152
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
23
Insurance and reinsurance contracts (continued)
Insurance and reinsurance contracts – assumptions and changes in assumptions (continued)
Changes in assumptions
The Group did not change its estimation techniques from those disclosed in this Note in 2023.
Claims development tables
The tables show the estimate of ultimate claim costs, inclusive of catastrophe losses, for each successive underwriting year at the
end of each year, together with cumulative paid claims at the end of the current year.
The tables reconcile the cumulative claims to the amount included in the statement of financial position, with balances in foreign
currencies converted into US dollars applying the 31 December 2024 exchange rates.
The claims development triangles include 100% of the estimate of ultimate claim costs rather than the estimate of ultimate claim
costs that reflect the Group’s proportionate share of each syndicate's underwriting capacity during the respective underwriting
years. An adjustment to reflect the Group’s consolidated share of Syndicate 2988 is included below the claims development triangle
in the ‘elimination of intercompany’ row.
The 2020 and prior years of account are impacted by the loss portfolio reinsurance contracts entered into in 2018 and 2021 with
RiverStone Managing Agency Limited (for and on behalf of Lloyd’s Syndicate 3500).
Brit Limited Annual Report 2024
153
financial statements
23
Insurance and reinsurance contracts (continued)
Ultimate gross claims
Underwriting year
$m
2015 and
prior years
2016
2017
2018
2019
2020
2021
2022
2023
2024
Estimate of ultimate claims costs
(gross of reinsurance):
At end of underwriting year
14,105.4
1,099.7
1,622.3
1,489.9
1,331.4
1,533.7
1,945.8
2,521.2
2,173.5
2,262.6
One year later
14,083.4
1,269.7
1,797.8
1,623.0
1,506.1
1,588.7
2,062.9
2,392.6
2,018.8
Two years later
14,137.4
1,350.1
1,830.7
1,735.6
1,544.4
1,633.1
2,040.3
2,325.8
Three years later
14,090.7
1,340.2
1,868.7
1,712.8
1,553.0
1,677.1
2,031.7
Four years later
13,983.6
1,363.8
1,856.5
1,738.8
1,626.0
1,693.9
Five years later
13,932.4
1,400.4
1,882.1
1,791.9
1,616.2
Six years later
13,908.9
1,439.3
1,906.4
1,875.3
Seven years later
13,906.6
1,472.0
1,938.2
Eight years later
13,903.7
1,495.3
Nine years later
13,946.5
$m
2015 and
prior years
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
Total ultimate gross claims at
31 December 2024
13,946.5
1,495.3
1,938.2
1,875.3
1,616.2
1,693.9
2,031.7
2,325.8
2,018.8
2,262.6
31,204.3
Less cumulative gross paid claims (13,632.0) (1,309.9) (1,692.5) (1,490.9) (1,180.4) (1,136.8) (1,077.9)
(994.6)
(343.1)
(88.6) (22,946.7)
Unearned portion of gross
ultimate claims
171.1
0.1
–
–
–
0.3
–
–
(56.5) (1,091.3)
(976.3)
Elimination of intercompany
(323.0)
Claims handling provision and
other corporate adjustments
87.1
Impact of reinstatement premiums
(137.2)
Impact of profit commissions
26.9
Effect of discounting
(1,022.6)
Risk adjustment for
non-financial risk
417.3
Other
10.5
Total gross liability for incurred
claims at 31 December 2024
6,340.3
154
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
23
Insurance and reinsurance contracts (continued)
Ultimate net claims
Underwriting year
$m
2015 and
prior years
2016
2017
2018
2019
2020
2021
2022
2023
2024
Estimate of ultimate claims costs
(net of reinsurance):
At end of underwriting year
10,840.9
822.2
1,084.3
1,070.8
930.0
1,170.9
1,531.1
1,970.4
1,780.9
2,008.4
One year later
10,859.4
916.5
1,128.1
1,158.3
1,077.4
1,129.8
1,583.2
1,881.8
1,672.9
Two years later
10,823.0
937.4
1,149.4
1,234.2
1,090.9
1,151.8
1,555.3
1,829.2
Three years later
10,599.3
940.6
1,184.0
1,121.4
1,111.6
1,179.3
1,548.1
Four years later
10,530.4
950.4
1,100.6
1,125.4
1,159.7
1,185.4
Five years later
10,484.3
914.0
1,101.1
1,145.3
1,144.5
Six years later
10,384.3
937.8
1,114.2
1,162.0
Seven years later
10,386.6
952.9
1,122.3
Eight years later
10,392.0
957.3
Nine years later
10,398.8
$m
2015 and
prior years
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
Total ultimate net claims at
31 December 2024
10,398.8
957.3
1,122.3
1,162.0
1,144.5
1,185.4
1,548.1
1,829.2
1,672.9
2,008.4
23,028.9
Less cumulative net paid claims
(10,075.0)
(879.4) (1,015.0)
(959.6)
(824.2)
(820.6)
(830.5)
(783.8)
(286.9)
(87.5) (16,562.5)
Unearned portion of net ultimate
claims
(28.6)
0.1
–
–
–
0.3
(34.9)
(78.0)
(167.8) (1,043.8)
(1,352.7)
Elimination of intercompany
(241.7)
Claims handling provision and
other corporate adjustments
98.2
Impact of reinstatement premiums
(101.7)
Impact of profit commissions
22.7
Effect of discounting
(776.4)
Risk adjustment for non-financial
risk
294.6
Other
178.2
Total net liability for incurred
claims at 31 December 2024
4,587.6
Brit Limited Annual Report 2024
155
financial statements
24
Employee benefits
This Note explains the pension schemes operated by the Group for its employees. For the Group’s defined benefit schemes (in which
no further benefits are being accrued), it sets out the amounts carried on the Group statement of financial position, gains and losses
incurred during the year, amounts paid into the schemes, together with further information about the schemes. For the Group’s
defined contribution schemes, it sets out the costs incurred during the year.
(a) Defined benefit pension schemes
The Group has two funded defined benefit pension schemes providing pensions benefits to its members: the Brit Group Services
Limited Retirement Benefits Scheme (the ‘Scheme’) and the RiverStone Holdings Management Pension and Life Assurance
Plan (the ‘Plan’).
The schemes are subject to UK regulations overseen by the Pensions Regulator, and both schemes are approved by HMRC for tax
purposes. The schemes are operated from separate trusts, which have assets that are held separately from the Group. The trusts
are managed by Trustees, who are responsible for payment of the benefits and management of the schemes’ assets.
The Scheme closed to new entrants on 4 October 2001 and closed to future accrual of benefits on 31 December 2011. The Plan only
has deferred members and is closed to new entrants. Following closure to future accrual, benefits now increase broadly in line with
inflation. The weighted average duration to payment of the Scheme’s expected cash flows is 11 years (2023: 12 years) and 14 years
for the Plan (2023: 14 years).
With effect from 18 August 2021 Brit Insurance Holdings Limited and the trustees of the Plan (plus other parties) entered
into an agreement where Brit Insurance Holdings Limited became the Principal Company and assumed the full liabilities and
assets of the Plan.
The Scheme and the Plan purchased bulk-annuity policies which match the benefits due to members in December 2022 and October
2023 respectively. These ‘buy-ins’ are reflected in the figures below.
On 28 March 2024, in accordance with the Trust Deed and Rules of the Scheme, Brit Group Services Limited served notice on the
Trustee informing it that it intended to cease to pay contributions to the Scheme and that the Scheme would be terminated
on 28 June 2024 and subsequently would be wound up. This winding up, during which the bulk annuity contract will be replaced
with a separate annuity contract for each member, is expected to complete in 2025. After completion of the wind up, the surplus
is expected to be returned to the employer, as per the Scheme rules.
In accordance with the requirements set by the Pensions Regulator, every three years the Group and Trustees are required
to agree a funding strategy and contribution schedule for the Plan. A triennial review of the Plan performed during 2024 is, at the
time of writing, in the process of being reviewed by the Trustees. The previous triennial review for the Plan was undertaken
as at 31 August 2021 and identified a funding surplus of £11.9m.
Following the 2021 valuation of the Plan the Group agreed to no longer pay deficit reduction contributions and pay £75,000 per
quarter in respect of administrative expenses. In light of the continued surplus in the Plan, the Group and the Trustee agreed
to defer the quarterly expense payments subject to certain trigger events and a new Schedule of Contributions was signed in March
2024. There is a risk that adverse experience could lead to the Group being required to make contributions in future, although this
risk is significantly mitigated by the bulk-annuity policy.
In June 2023, the UK High Court (Virgin Media Limited v NTL Pension Trustees II Limited) ruled that certain historical amendments for
contracted out defined benefit schemes were invalid if they were not accompanied by the correct actuarial confirmation. Following
a hearing in late June 2024, the UK Court of Appeal issued judgment on 25 July 2024 upholding this ruling. Following this ruling, the
Trustees of the Plan have taken legal advice and concluded that no further action is necessary. The Trustees of the Scheme are
currently taking legal advice to determine the most appropriate course of action. As any new information emerges management will
assess any potential impact of the precedent set by that case on the Group’s financial statements.
Net amount recognised in the statement of financial position:
31 December
2024
$m
Scheme
31 December
2024
$m
Plan
31 December
2023
$m
Scheme
31 December
2023
$m
Plan
Present value of defined benefit obligation
(111.4)
(99.4)
(127.5)
(109.4)
Fair value of scheme assets
136.6
109.2
153.9
120.1
Net pension asset
25.2
9.8
26.4
10.7
156
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
24
Employee benefits (continued)
(a) Defined benefit pension schemes (continued)
Changes in the net pension asset recognised in the statement of financial position:
31 December
2024
$m
Scheme
31 December
2024
$m
Plan
31 December
2023
$m
Scheme
31 December
2023
$m
Plan
Opening statement of financial position
26.4
10.7
24.8
37.6
(Expense)/credit to income statement
(0.4)
(1.5)
1.3
(6.2)
Foreign exchange effect
(0.4)
(0.1)
1.5
1.5
Amount recognised outside income statement
(0.4)
0.5
(1.2)
(22.5)
Contributions paid
–
0.2
–
0.3
Closing statement of financial position
25.2
9.8
26.4
10.7
A net pension asset is recognised on the statement of financial position as there is an unconditional right of the Group to be refunded
the surplus in the schemes.
Net (expense)/credit recognised in the income statement comprised:
31 December
2024
$m
Scheme
31 December
2024
$m
Plan
31 December
2023
$m
Scheme
31 December
2023
$m
Plan
Net interest on net defined benefit asset
0.1
0.5
1.9
1.8
Past service cost
–
–
(0.3)
(7.0)
Running costs
(0.5)
(2.0)
(0.3)
(1.0)
Net credit/(expense)
(0.4)
(1.5)
1.3
(6.2)
For the Scheme, there is no past service cost in 2024. The past service cost in 2023 is an estimate for the cost of the
Trustee’s decision to award a one-off discretionary pension increase of 0.5% in February 2024 (in addition to the 5% increase
under the Rules).
For the Plan, there is no past service cost in 2024. The past service cost in 2023 is an estimate for the cost of the Trustee’s decision
to award a total pension increase on excess pension of 9% in April 2023 and the Trustee decision to augment benefits to provide full
RPI pension increases as part of the buy-in of the Plan in October 2023.
This net (expense)/credit has been recognised in the ‘Other operating expenses’ line in the Income Statement. Contributions to the
Group’s defined contribution pension arrangements are in addition to those set out in this note and are charged directly to the
Income Statement.
The allocation of the Scheme’s and Plan’s assets were as follows:
31 December
2024
$m
Scheme
31 December
2024
$m
Plan
31 December
2023
$m
Scheme
31 December
2023
$m
Plan
Liability Driven Investment (LDI) funds
22.7
8.8
22.3
10.2
Cash and net current assets
5.1
0.7
6.8
0.7
Annuity policy
108.8
99.7
124.8
109.2
Fair value of scheme assets
136.6
109.2
153.9
120.1
The cash and net current assets of the Scheme at 31 December 2023 included a debtor of $1.2m, which was an unrecovered amount
from a fraud that the Scheme was a victim of in 2022. In 2024 this debtor was derecognised from the Scheme’s assets as the
Scheme’s Trustee concluded that its recovery is unlikely.
Brit Limited Annual Report 2024
157
financial statements
24
Employee benefits (continued)
(a) Defined benefit pension schemes (continued)
The schemes’ Liability Driven Investment funds have quoted prices in active markets. The schemes do not invest directly in property
occupied by the Group or in financial securities issued by the Group.
Investment strategy
The Trustee of each scheme determines the scheme’s investment strategy after taking appropriate advice from their investment
consultants. Both the Scheme and the Plan have now completed full buy-ins meaning the majority of the assets of each scheme
are in respect of the buy-in policy. The management of the surplus assets is delegated to the investment managers. The Trustee’s
investment objectives are to ensure that the scheme has adequate resources to meet the members’ entitlements under the Trust
Deed and Rules as they fall due, and thereafter to minimise long-term costs of the scheme by maximising the return on the assets.
As both schemes have a full buy-in there is very little investment risk.
Movements in the present value of the defined benefit obligation were as follows:
31 December
2024
$m
Scheme
31 December
2024
$m
Plan
31 December
2023
$m
Scheme
31 December
2023
$m
Plan
Opening defined benefit obligation
127.5
109.4
119.0
102.2
Interest on defined benefit obligation
5.6
4.9
5.8
5.0
Past service cost
–
–
0.3
7.0
Remeasurements due to:
Changes in financial assumptions
(12.7)
(11.8)
2.0
0.7
Changes in demographic assumptions
0.1
–
(1.9)
(1.3)
Experience on benefit obligations
0.4
3.6
2.0
(6.6)
Foreign exchange effect
(1.9)
(1.8)
7.1
6.1
Benefits paid
(7.6)
(4.9)
(6.8)
(3.7)
Closing defined benefit obligation
111.4
99.4
127.5
109.4
Movements in the fair value of the schemes’ assets were as follows:
31 December
2024
$m
Scheme
31 December
2024
$m
Plan
31 December
2023
$m
Scheme
31 December
2023
$m
Plan
Opening fair value of scheme assets
153.9
120.1
143.8
139.8
Interest income
5.7
5.4
7.7
6.8
Actual return excluding interest income
(12.6)
(7.7)
0.9
(29.7)
Running costs
(0.5)
(2.0)
(0.3)
(1.0)
Foreign exchange effect
(2.3)
(1.9)
8.6
7.6
Contributions by the employer
–
0.2
–
0.3
Benefits paid
(7.6)
(4.9)
(6.8)
(3.7)
Closing fair value of scheme assets
136.6
109.2
153.9
120.1
158
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
24
Employee benefits (continued)
(a) Defined benefit pension schemes (continued)
The principal actuarial assumptions at the year-end were:
31 December
2024
Scheme
31 December
2024
Plan
31 December
2023
Scheme
31 December
2023
Plan
Discount rate
5.46% pa
5.52% pa
4.53% pa
4.55% pa
Retail Prices Index (RPI) inflation
3.18% pa
3.15% pa
3.08% pa
3.05% pa
Consumer Prices Index (CPI) inflation
2.42% pa
2.63% pa
2.28% pa
2.54% pa
Pension increases in payment
3.05% pa
3.18% pa
2.97% pa
3.09% pa
Mortality assumptions:
Life expectancy of male aged 60 at statement of financial position date
27.3 years
27.3 years
27.3 years
27.3 years
Life expectancy of female aged 60 at statement of financial position date
30.2 years
29.8 years
30.1 years
29.7 years
Life expectancy of male aged 60 retiring in 20 years' time
28.8 years
28.8 years
28.8 years
28.8 years
Life expectancy of female aged 60 retiring in 20 years' time
31.6 years
31.2 years
31.5 years
31.1 years
The assumptions used to determine end-of-year benefit obligations are also used to calculate the following year’s cost.
Sensitivity analysis:
Change in defined benefit obligation at end of the year
Assumption
Change in assumption
Scheme
Plan
Discount rate
Decrease by 0.5% pa
Increase by $6.1m
Increase by $6.4m
Future RPI inflation increases
Increase by 0.5% pa
Increase by $4.5m
Increase by $5.8m
Future CPI inflation increases
Increase by 0.5% pa
Increase by $0.6m
Increase by $0.7m
Assumed life expectancy at age 60
Increase by 1 year
Increase by $4.5m
Increase by $2.4m
The calculations in this section have been carried out using the same method and data as the Group’s pensions and accounting
figures with each assumption adjusted as shown above. Each assumption has been varied individually and a combination of changes
in assumptions could produce a different result. Note that as both schemes are now insured any change to the liability would result
in a materially equal and opposite change in the annuity asset.
Risks:
The Group is exposed to a number of risks in relation to its defined benefit schemes, the most significant of which are detailed below:
Risk
Counterparty risk
Most of the liabilities are insured, which gives rise to counterparty risk
(the risk of the insurer defaulting on its contractual obligations).
Regulatory
In future the schemes may have backdated claims or liabilities arising from
future legislation, emerging practice or court judgements.
(b) Brit Group Services Limited – Defined Contribution Personal Pension Plan
Brit Group Services Limited operates a defined contribution group personal pension plan. The assets of the scheme are held
separately from those of the Group in an independently administered fund.
The pension cost charge represents contributions payable by Brit Group Services Limited to the fund and amounted to $10.17m
(2023: $9.4m). At 31 December 2024 no contributions were payable to the fund (2023: $nil).
(c) BGS Services (Bermuda) Limited – Registered plan
BGS Services (Bermuda) Limited operates a registered plan for Bermudan employees. The assets of the scheme are held separately
from those of the Group in an independently administered fund.
The pension cost charge represents contributions payable by BGS Services (Bermuda) Limited to the fund and amounted to $124.0k
(2023: $93.0k). At 31 December 2024 no contributions were payable to the fund (2023: $nil).
Brit Limited Annual Report 2024
159
financial statements
24
Employee benefits (continued)
(d) BGS Services (Bermuda) Limited – Unregistered plan
BGS Services (Bermuda) Limited operates an unregistered plan for non-Bermudan employees. The assets of the scheme are held
separately from those of the Group in an independently administered fund.
The pension cost charge represents contributions payable by BGS Services (Bermuda) Limited to the fund and amounted to $nil
(2023: $nil). At 31 December 2024 no contributions were payable to the fund (2023: $nil).
(e) Sussex Capital Management Limited – Unregistered plan
Sussex Capital Management Limited operates a registered plan for non-Bermudan employees. The assets of the scheme are held
separately from those of the Group in an independently administered fund.
The pension cost charge represents contributions payable by Sussex Capital Management Limited to the fund and amounted
to $17.0k (2023: $77.0k). At 31 December 2024 no contributions were payable to the fund (2023: $nil).
(f) Sussex Capital Management Limited – Registered plan
Sussex Capital Management Limited operates a registered plan for non-Bermudan employees. The assets of the scheme are held
separately from those of the Group in an independently administered fund.
The pension cost charge represents contributions payable by Sussex Capital Management Limited to the fund and amounted to $nil
(2023: $37.0k). At 31 December 2024 no contributions were payable to the fund (2023: $nil).
(g) Brit Reinsurance (Bermuda) Limited (Brit Re) – Registered plan
Brit Reinsurance (Bermuda) Limited operates a registered plan for Bermudan employees. The assets of the scheme are held
separately from those of the Group in an independently administered fund.
The pension cost charge represents contributions payable by Brit Reinsurance (Bermuda) Limited to the fund and amounted
to $21.0k (2023: $30.0k).
At 31 December 2024 no contributions were payable to the fund (2023: $nil).
(h) Camargue Underwriting Managers Proprietary Limited – Defined Contribution Personal Pension Plan
Camargue Underwriting Managers Proprietary Limited participates in a defined contribution umbrella pension fund for employees.
The assets of the scheme are held separately from those of the Group in an independently administered fund.
The pension cost charge represents contributions paid by Camargue Underwriting Managers Proprietary Limited to the fund and
amounted to $132.2k (2023: $131.5k). At 31 December 2024, no contributions were payable to the fund (2023: $nil).
160
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
25
Financial assets and liabilities
The Group holds a number of different financial instruments. This Note disaggregates the different classes of the Group’s financial
assets and liabilities and provides additional information in relation to them, including how financial assets are categorised under
three different levels of hierarchy and the valuation methods adopted.
The carrying amounts of the financial assets and liabilities held by the Group are as follows:
31 December 2024
Note
Amortised Cost
$m
FVTPL
Mandatory
$m
FVTPL
Designated
$m
Outside scope
of IFRS 9
$m
Equity securities
–
620.3
–
–
Debt securities
–
5,141.9
–
–
Mortgages and loans
–
83.0
–
–
Specialised investment funds
–
615.6
–
–
Financial investments
–
6,460.8
–
–
Trade and other receivables1
572.4
–
–
–
Other assets (Fairfax shares purchased for LTIPs)1
–
153.8
–
–
Derivative contracts
26
–
15.6
–
–
Cash and cash equivalents
29
750.4
–
–
–
Other
1,322.8
169.4
–
–
Total financial assets
1,322.8
6,630.2
–
–
Derivative contracts
26
–
13.8
–
–
Borrowings
159.0
–
–
–
Other financial liabilities
–
–
–
–
Trade and other payables2
268.1
–
–
–
Lease liabilities2
–
–
–
26.1
Total financial liabilities
427.1
13.8
–
26.1
31 December 2023
Note
Amortised Cost
$m
FVTPL
Mandatory
$m
FVTPL
Designated
$m
Outside scope
of IFRS 9
$m
Equity securities
–
509.2
–
–
Debt securities
–
4,804.4
–
–
Mortgages and loans
–
82.2
–
–
Specialised investment funds
–
479.6
–
–
Financial investments
–
5,875.4
–
–
Trade and other receivables1
788.8
–
–
–
Other assets (Fairfax shares purchased for LTIPs)1
–
118.7
–
–
Derivative contracts
26
–
20.2
–
–
Cash and cash equivalents
29
853.8
–
–
–
Other
1,642.6
138.9
–
–
Total financial assets
1,642.6
6,014.3
–
–
Derivative contracts
25
–
23.7
–
–
Borrowings
161.9
–
–
–
Other financial liabilities
–
–
104.0
–
Trade and other payables2
463.4
–
–
–
Lease liabilities2
–
–
–
27.8
Total financial liabilities
625.3
23.7
104.0
27.8
1. Reconciliation to the financial statements for ‘trade and other receivables’ and ‘other assets’ is performed below.
2. Reconciliation to the financial statements for ‘trade and other payables’ and ‘lease liabilities’ is performed below.
Brit Limited Annual Report 2024
161
financial statements
25
Financial assets and liabilities (continued)
Reconciliation to the financial statements for Trade and other receivables and Other assets
31 December
2024
$m
31 December
2023
$m
As presented in the statement of financial position:
Assets
Insurance and other receivables
743.4
923.6
Assets classified as held for sale
–
15.8
Less:
Investment in associate classified as held for sale
–
(15.8)
Balances not in scope of IFRS 7
(17.2)
(16.1)
726.2
907.5
As presented earlier in Note 25:
Trade and other receivables
572.4
788.8
Other assets (Fairfax shares purchased for LTIPs)
153.8
118.7
726.2
907.5
Reconciliation to the financial statements for Trade and other payables and Lease liabilities
31 December
2024
$m
31 December
2023
$m
As presented in the statement of financial position:
Liabilities
Insurance and other payables
372.5
539.3
Less:
Balances not in scope of IFRS 7
(78.3)
(48.1)
294.2
491.2
As presented in earlier Note 25:
Trade and other payables
268.1
463.4
Lease liabilities
26.1
27.8
294.2
491.2
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets
mentioned above.
Other financial liabilities designated as fair value through profit or loss (FVTPL)
The Group's other financial liabilities at 31 December 2023 entirely related to investments by independent third parties
in collateralised reinsurance arrangements that are consolidated by the Group as structured entities.
These financial liabilities have been designated as held at fair value through profit or loss. The amount due to the investors
is contractually determined based on the performance of the underlying assets. The effect of this feature is that the fair value of the
liability is wholly related to asset-specific performance risk, not credit risk of the liability; accordingly, no amount of fair value gain
or loss is required to be allocated to other comprehensive income.
The fair value of these liabilities was determined by reference to the underlying net assets of the vehicles and was therefore
categorised as level three in the fair value hierarchy. Further information relating to the Group’s approach to fair value measurement
is included below.
162
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
25
Financial assets and liabilities (continued)
Offsetting financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position where Brit Group
currently has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise
the asset and settle the liability simultaneously.
No amounts were offset in either financial assets or financial liabilities as at 31 December 2024 and as at 31 December 2023.
Impact of financial instruments on profit or loss
Note
31 December
2024
$m
31 December
2023
$m
Financial investments
7
303.2
370.6
Derivative contracts
9
16.5
(9.4)
Other assets
11
65.8
44.3
Net fair value gains on financial assets and liabilities at FVTPL (mandatory)
385.5
405.5
Net fair value losses on financial liabilities at FVTPL (designated)
11
(4.6)
(20.8)
Trade and other receivables
0.3
0.3
Net gains on financial assets at amortised cost
0.3
0.3
Trade and other receivables
7
–
2.1
Cash and cash equivalents
7
52.8
46.9
Interest revenue on financial assets at amortised cost
52.8
49.0
Lease liabilities
15
(0.9)
(1.1)
Borrowings
15
(6.0)
(6.2)
Interest expense on lease liabilities and financial liabilities at amortised cost
(6.9)
(7.3)
Net gains on financial liabilities at amortised cost
–
2.7
Fair value measurement – items not measured at fair value
‘Trade and other receivables’ and ‘trade and other payables’ are short-term in nature where carrying amounts are deemed
a reasonable approximation of fair value.
For the fair value of borrowings, please refer to Note 30.
Fair value measurement – fair value hierarchy for financial investments
The Group has classified the fair value measurements of its financial investments using a hierarchy that reflects the significance
of the inputs used in making those measurements. The fair value hierarchy comprises the following levels:
(a) Level one – Valuations based on quoted prices (unadjusted) in active markets for identical assets;
(b) Level two – Valuations based on inputs other than quoted prices included within level one that are observable for the asset, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); and
(c) Level three – Valuations based on inputs for the assets that are not based on observable market data (unobservable inputs).
Assets are categorised as level one where fair values determined in whole directly by reference to an active market relate to prices
which are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and
those prices represent actual and regularly occurring market transactions on an arm’s-length basis, i.e. the market is still active.
For assets and liabilities that are recognised at fair value on a recurring basis, the Group determines whether transfers have
occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level of input that is significant to the
fair value measurement as a whole) at the end of each reporting period. Fair values for level two and level three assets include:
• Values provided at the request of the Group by pricing services and which are not publicly available or values provided
by external parties which are readily available but relate to assets for which the market is not always active; and
• Assets measured on the basis of valuation techniques including a varying degree of assumptions supported by market
transactions and observable data.
Brit Limited Annual Report 2024
163
financial statements
25
Financial assets and liabilities (continued)
Fair value measurement – fair value hierarchy for financial investments (continued)
For all assets not quoted in an active market or for which there is no active market, the availability of financial data can vary and
is affected by a wide variety of factors, including the type of financial instrument, whether it is new and not yet established in the
marketplace, and other characteristics specific to each transaction. To the extent that valuation is based on the models or inputs
that are unobservable in the market, the determination of fair value requires more judgement. Accordingly, the degree of judgement
exercised is higher for instruments classified in level three and the classification between level two and level three depends highly
on the proportion of assumptions used, supported by market transactions and observable data.
Valuation techniques
Level one
Inputs represent unadjusted quoted prices for identical instruments exchanged in active markets (where transactions occur
with sufficient frequency and volume). The fair values of securities sold short and the majority of the Group’s equities are based
on published quotes in active markets. These also include government bonds and treasury bills issued in the US and in the UK.
Level two
Inputs include directly or indirectly observable inputs (other than level one inputs) such as quoted prices for similar financial
instruments exchanged in active markets, quoted prices for identical or similar financial instruments exchanged in inactive markets
and other market observable inputs.
Level two securities contain certain investments in US and non-US government agency securities, US and non-US corporate debt
securities and specialised investment funds. US government agency securities are priced using valuations from independent pricing
vendors who use discounted cash flow models supplemented with market and credit research to gather specific information. Market
observable inputs for these investments may include broker-dealer quotes, reported trades, issuer spreads and available bids.
Non-US government agency securities are priced with OTC quotes or broker-dealer quotes. Other market observable inputs include
benchmark yields and reported trades. Issuer spreads are also available for these types of investments.
Level two common stocks are priced using a combination of independent pricing service providers and internal valuation models that
rely on directly or indirectly observable inputs.
Level three
Level three equities include investments in limited partnerships where the fund’s underlying investments are not traded/quoted
in an active market. In some instances, limited partnerships are classified as level three because they may require at least three
months’ notice to liquidate. This requirement results in an adjustment to the reported value for illiquidity which is unobservable.
Level three debt instruments include corporate loans with unobservable inputs used in the measurement of financial instruments.
Management is required to use its own assumptions regarding unobservable inputs as there is little, if any, market activity in these
instruments or related observable inputs that can be corroborated at the measurement date.
Level three specialised investment funds include securities that are valued using techniques appropriate to each specific investment.
The valuation techniques include fair value by reference to net asset values (NAVs) adjusted and issued by fund managers based
on their knowledge of underlying investments and credit spreads of counterparties. In some instances, certain investment
funds are classified as level three because they may require at least three months’ notice to liquidate. This requirement results
in an adjustment to the reported value for illiquidity which is unobservable.
164
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
25
Financial assets and liabilities (continued)
Disclosures of fair values in accordance with the fair value hierarchy
Level one
$m
Level two
$m
Level three
$m
Total
$m
31 December 2024
Equity securities
222.5
–
397.8
620.3
Debt securities
2,832.0
2,296.8
13.1
5,141.9
Mortgages and loans
–
–
83.0
83.0
Specialised investment funds
–
571.5
44.1
615.6
3,054.5
2,868.3
538.0
6,460.8
31 December 2023
Equity securities
220.8
–
288.4
509.2
Debt securities
2,709.0
2,068.7
26.7
4,804.4
Mortgages and loans
–
–
82.2
82.2
Specialised investment funds
–
423.3
56.3
479.6
2,929.8
2,492.0
453.6
5,875.4
Transfers between fair value levels
Fair values are classified as level one when the financial instrument or derivative is actively traded and a quoted price is available.
In accordance with the Group’s policy if an instrument classified as level one subsequently ceases to be actively traded,
it is immediately transferred out of level one. In such cases, instruments are classified into level two, unless the measurement of its
fair value requires the use of significant unobservable inputs, in which case it is classified as level three. All fair value measurements
above are recurring as they are required to be measured and recognised at the end of each reporting period.
During the year, there were $0.1m (2023: $109.6m) of equity transfers from level one to level three. In 2023, Poseidon Acquisition
Corp (Poseidon) acquired all outstanding common shares of Atlas Corp (Atlas) which was previously a public company. Accordingly,
Brit’s investment in Atlas common shares has now been converted to a holding in Poseidon common shares. As a result of the
privatisation transaction, Brit’s original investment was transferred from level one to level three.
There were no transfers into or out of level two during the period (2023: no transfers).
Brit Limited Annual Report 2024
165
financial statements
25
Financial assets and liabilities (continued)
Reconciliation of movements in level three financial investments measured at fair value
Equity
securities
$m
Debt securities
$m
Mortgages
and loans
$m
Specialised
investment funds
$m
Total
$m
At 1 January 2023
192.6
32.4
34.6
59.9
319.5
Transfers from level one to level three
109.6
–
–
–
109.6
Total gains/(losses) recognised in the income statement
20.3
(7.5)
1.5
(9.1)
5.2
Purchases
45.6
118.9
74.7
3.2
242.4
Sales
(80.9)
(117.8)
(30.5)
–
(229.2)
Foreign exchange gains
1.2
0.7
1.9
2.3
6.1
At 31 December 2023
288.4
26.7
82.2
56.3
453.6
Transfers from level one to level three
0.1
–
–
–
0.1
Total gains/(losses) recognised in the income statement
32.5
(21.8)
1.4
(10.6)
1.5
Purchases
266.7
11.0
0.6
–
278.3
Sales
(182.0)
–
–
–
(182.0)
Foreign exchange losses
(7.9)
(2.8)
(1.2)
(1.6)
(13.5)
At 31 December 2024
397.8
13.1
83.0
44.1
538.0
Total net gains recognised in the Income Statement under ‘Other investment return’ in respect of level three financial investments
for the period amounted to $1.5m (2023: gains of $5.2m). Included in this balance are $73.3m of unrealised losses (2023: losses
of $6.9m) attributable to assets still held at the end of the year.
Sensitivity of level three financial investments measured at fair value to changes in key assumptions
The following table shows the sensitivity of the fair value of level three financial investments to changes in key assumptions.
31 December 2024
31 December 2023
Carrying amount
$m
Effect of possible
alternative
assumptions (+/-)
$m
Carrying amount
$m
Effect of possible
alternative
assumptions (+/-)
$m
Equity securities
397.8
1.3
288.4
6.2
Debt securities
13.1
1.2
26.7
1.9
Mortgages and loans
83.0
0.6
82.2
0.6
Specialised investment funds
44.1
2.1
56.3
0.9
538.0
453.6
In order to determine reasonably possible alternative assumptions, the Group has monitored the price movements of the securities
invested on a month by month basis during 2024, or since acquisition if acquired during the year. This has resulted in an average
expected percentage change in the securities pricing, which forms the basis of this analysis.
166
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
26
Derivative contracts
This Note summarises the total value of the derivative contracts of the Group. It also explains how each derivative contract
is categorised under three different levels of hierarchy, the valuation methods used to value derivative contracts and amounts
transferred between levels. For the current and prior year, the options formed part of the investment management strategy, while
the currency forwards formed part of the foreign exchange management strategy.
The disclosure provided in the tables below include derivatives recorded in the Group’s statement of financial position.
Derivative contract assets
Gross amounts
of receivables on
derivative
contract
assets
$m
Gross amounts
of payables on
derivative
contract
assets
$m
Derivative
contract assets
presented in the
statement of
financial position
$m
31 December 2024
Currency forwards
580.4
(571.8)
8.6
Options
2.4
–
2.4
Contingent consideration receivable
2.4
–
2.4
Interest rate swaps
0.3
–
0.3
Equity warrants
1.9
–
1.9
Total
587.4
(571.8)
15.6
31 December 2023
Currency forwards
392.6
(379.2)
13.4
Options
2.4
–
2.4
Contingent consideration receivable
2.4
–
2.4
Interest rate swaps
0.3
–
0.3
Equity warrants
1.7
–
1.7
Total
399.4
(379.2)
20.2
Derivative contract liabilities
Gross amounts
of payables on
derivative
contract
liabilities
$m
Gross amounts
of receivables
on derivative
contract
liabilities
$m
Derivative
contract liabilities
presented in the
statement of
financial position
$m
31 December 2024
Currency forwards
(435.6)
429.4
(6.2)
Credit default swaps
(7.6)
–
(7.6)
Interest rate swaps
–
–
–
Total
(443.2)
429.4
(13.8)
31 December 2023
Currency forwards
(564.6)
547.9
(16.7)
Credit default swaps
(6.6)
–
(6.6)
Interest rate swaps
(0.4)
–
(0.4)
Total
(571.6)
547.9
(23.7)
Disclosures of fair values in accordance with the fair value hierarchy
Level two
$m
Level three
$m
Total
$m
31 December 2024
Derivative contract assets
11.3
4.3
15.6
Derivative contract liabilities
(13.8)
–
(13.8)
31 December 2023
Derivative contract assets
16.1
4.1
20.2
Derivative contract liabilities
(23.7)
–
(23.7)
Brit Limited Annual Report 2024
167
financial statements
26
Derivative contracts (continued)
Valuation techniques
Level two
The fair value of the vast majority of the Group’s derivative contracts are based primarily on non-binding third-party broker-dealer
quotes that are prepared using level two inputs. Where third-party broker-dealer quotes are used, typically one quote is obtained
from a broker-dealer with particular expertise in the instrument being priced.
The valuation technique used to determine the fair value of currency forwards is derived from observable inputs such as active
foreign-exchange and interest-rate markets that may require adjustments for certain unobservable inputs.
Level three
Consumer price index (CPI)-linked derivatives are classified as level three and valued using broker-dealer quotes which management
has determined utilise market observable inputs except for the inflation volatility input which is not market observable. The
reasonableness of the fair values of CPI-linked derivative contracts are assessed by comparing the fair values received from
third-party broker-dealers to recent market transactions where available and values determined using third-party pricing software
based on the Black-Scholes option pricing model for European-style options that incorporates market observable and unobservable
inputs such as the current value of the relevant CPI underlying the derivative, the inflation swap rate, nominal swap rate and inflation
volatility. The fair values of CPI-linked derivative contracts are sensitive to assumptions such as market expectations of future rates
of inflation and related inflation volatilities.
The forward contract that the Group has in respect of its associated undertaking has been classified as level three as the valuation
of this derivative is derived from unobservable inputs that are linked to EBITDA calculations.
Reconciliation of movements in level three derivative contracts measured at fair value
Level three
derivatives
$m
At 1 January 2023
4.3
Purchases
10.3
Total losses recognised in the income statement
(5.4)
Sales
(5.9)
Foreign exchange gains
0.8
At 31 December 2023
4.1
Purchases
–
Total gains recognised in the income statement
1.6
Sales
–
Foreign exchange losses
(1.4)
At 31 December 2024
4.3
Sensitivity of level three derivatives measured at fair value to changes in key assumptions
The following table shows the sensitivity of the fair value of level three derivatives to changes in key assumptions.
31 December 2024
31 December 2023
Carrying amount
$m
Effect of possible
alternative
assumptions (+/-)
$m
Carrying amount
$m
Effect of possible
alternative
assumptions (+/-)
$m
Equity warrants
1.9
0.3
1.7
0.3
Contingent consideration receivable
2.4
–
2.4
–
4.3
0.3
4.1
0.3
In order to determine reasonably possible alternative assumptions, the Group adjusted key unobservable model inputs, including
inflation volatility inputs and credit risk inputs.
168
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
27
Insurance and other receivables
This Note sets out the various categories of amounts which are owed to the Group.
31 December
2024
$m
31 December
2023
$m
Arising out of direct insurance operations and reinsurance operations
428.8
615.7
Receivables from contracts with customers
30.5
21.0
Prepayments
17.3
16.2
Accrued income
48.7
44.9
Outstanding settlements on investments
1.1
44.4
Other assets
153.8
118.7
Other debtors
63.2
62.7
Total
743.4
923.6
Other assets relate to shares purchased to settle share-based payment awards. For further information, refer to Note 35.
The carrying amounts disclosed above reasonably approximate fair values as all amounts are receivable within one year of the date
of the statement of financial position.
28
Leases where the Group acts as a lessor
This Note analyses the amounts recorded in respect of leases where the Group acts as a lessor. Additional commentary provides
qualitative and quantitative information on such activities. Further analysis reconciles undiscounted annual lease payments to the
finance lease receivable balance at year-end.
There were no leases where the Group acted as a lessor in 2024.
On 10 May 2023 the disposal of Ambridge was completed, and a sublease (and related lease) was derecognised. For further
information, please refer to Note 28 of the Group's 2023 Annual Report.
29
Cash and cash equivalents
This Note analyses the amounts of cash and cash equivalents. Cash equivalents are investment instruments with less than 90 days
left to maturity when purchased by the Group. Additional analysis which explains where cash and cash equivalents are held and why
they are being held is also provided.
31 December
2024
$m
31 December
2023
$m
Cash at bank and on deposit
298.8
194.2
Cash equivalents
451.6
659.6
Total
750.4
853.8
The carrying amounts disclosed above reasonably approximate fair values.
The source of these amounts can be further analysed as follows:
Classification
Definition
31 December
2024
$m
31 December
2023
$m
Cash within segregated fund mandates Short-term investment funds, money market funds, treasury
bills or cash held within segregated mandates.
180.3
147.0
Lloyd's trust funds
Cash within the Lloyd's Overseas Deposits trust funds held to
meet regulatory requirements.
51.1
63.2
Self-managed cash
Highly liquid instruments held to meet ongoing working
capital requirements.
519.0
643.6
Total
750.4
853.8
Brit Limited Annual Report 2024
169
financial statements
30
Borrowings
This Note describes the main sources of borrowing available to the Group and the amounts currently borrowed from each
of those sources.
31 December 2024
31 December 2023
Maturity
Effective
interest rate
Amortised
cost
$m
Fair value
$m
Amortised
cost
$m
(Restated1)
Fair value
$m
Non-current
Subordinated debt
2030
3.7%
159.0
135.9
161.9
119.4
Revolving credit facility
2027
Daily non-cumulative
RFR rate +1.45%
–
–
–
–
159.0
135.9
161.9
119.4
1. The fair value of the subordinated debt as at 31 December 2023 has been restated to be based on the ask price, consistent with the approach taken in 2024 and going forward. The fair
value disclosed in the 2023 financial statement was $118.3m, which was based on the bid price.
Subordinated debt
As at 31 December 2024 and 31 December 2023, the fair value of the subordinated debt was determined by reference to trading
market values on recognised exchanges and was therefore categorised as a level one measurement in the fair value hierarchy.
The fair value of the subordinated debt, which is denominated in GBP and has a fixed coupon, has risen during the reporting period
as a result of a fall in credit spreads and the strengthening of the US Dollar against Sterling. For further information relating to the
fair value hierarchy, refer to Note 25.
On 14 December 2023 £8.0m ($10.0m) of the notional value of the subordinated debt was repurchased by the Group for £5.9m
($7.3m) and was cancelled.
Refer to Note 39 for details of a change to the subordinated debt that took place after 31 December 2024.
Revolving credit facility
The Group has a $550.0m (2023: $550.0m) revolving credit facility which expires on 31 December 2027. In respect of this facility,
at 31 December 2024 there was no letter of credit outstanding (2023: $10.0m utilised and uncollateralised) and there were cash
drawings of $nil (2023: $nil).
Other borrowings
As at 31 December 2024, the letter of credit facility to support the business written in Ki Syndicate 1618 was $230.0m, of which
$150.0m was utilised, and $63.0m was collateralised (2023: $180.0m, of which $150.0m was utilised, and $63.0m was collateralised).
The facility, which is structured to support Ki Syndicate 1618 as Ki grows, is linked to the ESG rating of Ki’s ‘Funds at Lloyd’s’
investment portfolios and Ki Syndicate 1618’s assets, with its pricing depending on the compliance of Ki’s investment portfolios
with ESG targets. This builds on the investment guidelines Ki has established for its third-party managers, which incorporate ESG
principles and targets, and will help Ki build a sustainable footprint.
As at 31 December 2024, the letter of credit facility to support Brit Reinsurance (Bermuda) Limited was $25.0m, of which
$17.6m was utilised (2023: credit facility was $25.0m, of which $14.1m was utilised). Of this amount, $18.0m (2023: $15.2m) was
collateralised. This is an ongoing facility with no fixed expiry date.
170
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
31
Insurance and other payables
This Note sets out the various categories of amounts which are owed by the Group.
31 December
2024
$m
31 December
2023
$m
Arising out of direct insurance operations and reinsurance operations
150.8
324.4
Other taxes and social security costs
8.9
11.1
Accruals and deferred income
74.8
82.0
Lease liabilities
26.1
27.8
Other creditors
111.9
94.0
Total
372.5
539.3
With the exception of lease liabilities, the carrying amounts disclosed above reasonably approximate fair values as all amounts are
payable within one year of the date of the statement of financial position.
Of the total lease liabilities recognised above, $3.4m is payable within one year (2023: $1.9m). A maturity analysis of the contractual
undiscounted cash flows is shown below:
31 December
2024
$m
31 December
2023
$m
Maturity analysis for lease liabilities – contractual undiscounted cash flows
Less than one year
4.2
2.7
One to five years
22.0
20.6
More than five years
2.2
7.5
Total undiscounted lease liabilities
28.4
30.8
Total lease liabilities included in ‘Insurance and other payables’
26.1
27.8
Current
3.4
1.9
Non-current
22.7
25.9
32
Called up share capital
This Note sets out the number of shares the Company has in issue and their nominal value.
31 December
2024
$m
31 December
2023
$m
31 December
2024
1p each
Number
31 December
2023
1p each
Number
Ordinary shares:
Allotted, issued and fully paid
10.0
10.0 669,502,094
669,502,094
At both 31 December 2024 and 31 December 2023, 92,364,532 of the shares are class A shares and the remainder are class B
shares. The class A and B shares rank pari passu except that on a distribution of profits by the Company, the class A shareholders
are entitled to a cumulative annual dividend which must be settled ahead of any equivalent distribution to class B shareholders.
The number of shares reported is for Brit Limited, the immediate parent of the Brit Group.
During the current year, no share issuances took place.
On 13 December 2024 Fairfax acquired the 13.8% of Brit Limited that was previously owned by OMERS. Following this transaction,
as at 31 December 2024 Fairfax owns 100.0% of Brit Limited (2023: 86.2%).
Brit Limited Annual Report 2024
171
financial statements
33
Dividends
This Note gives details of the amounts paid to shareholders during 2024 and 2023 by way of dividends.
2024
$/share
2023
$/share
2024
$m
2023
$m
Dividend paid
0.90
0.62
605.4
413.6
A $12.9m dividend (2023: $28.6m) was paid to the class A shareholders on 21 March 2024 in accordance with the Brit Limited
shareholders’ agreement at an amount equal to $0.14 per share (2023: $0.31). A further dividend of $20.4m (2023: $12.0m) was
paid to the class A shareholders on 11 December 2024 in accordance with the Brit Limited shareholders’ agreement at an amount
equal to $0.22 per share (2023: $0.13).
A $175.0m dividend (2023: $275.0m) was paid to the class B shareholders on 21 March 2024 in accordance with the Brit Limited
shareholders’ agreement at an amount equal to $0.30 per share (2023: $0.48). A further dividend of $397.1m (2023: $98.0m) was
paid to the class B shareholders on 11 December 2024 in accordance with the Brit Limited shareholders’ agreement at an amount
equal to $0.69 per share (2023: $0.17).
34
Cash flows provided by operating activities
The tables below show how the profit for the year translates into cash flows generated from operating activities and provide
a reconciliation of the liabilities arising from financing activities.
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Profit before tax
657.9
890.6
Adjustments for:
Realised and unrealised gains on investments
(71.7)
(185.2)
Realised and unrealised (gains)/losses on derivatives
(16.5)
9.4
Amortisation of intangible assets
7.6
9.1
Depreciation and impairment of property, plant and equipment
6.4
9.5
Profit on disposal of property, plant and equipment
–
(1.2)
Foreign exchange losses/(gains) on cash and cash equivalents
5.9
(6.9)
Share of profit after tax of associated undertakings
–
(1.4)
Profit on disposal of subsidiaries
–
(259.1)
Profit on disposal of an associate
(15.3)
–
Unrealised gains on shares held for share-based payments
(65.8)
(44.3)
Charges in respect of share-based payment schemes
69.8
43.2
Interest income
(274.5)
(225.4)
Dividend income
(9.8)
(9.0)
Finance income
–
(2.7)
Finance costs on borrowings
14.6
17.5
Changes in working capital:
Insurance and other receivables excluding accrued income
236.2
(278.7)
Insurance and reinsurance contracts
536.6
357.9
Financial investments
(474.5)
(625.1)
Derivative contracts
11.2
(5.2)
Other financial liabilities
(104.0)
11.3
Insurance and other payables
(200.9)
207.2
Employee benefits
1.5
28.3
Provisions
(0.3)
0.7
Cash provided by/(used in) operations
314.4
(59.5)
172
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
34
Cash flows provided by operating activities (continued)
Profit before tax includes profits arising from both continuing and discontinued operations:
Profit before tax
Continuing
operations
$m
Discontinued
operation
$m
Total
$m
Year ended 31 December 2024
661.0
(3.1)
657.9
Year ended 31 December 2023
623.9
266.7
890.6
Reconciliation of liabilities arising from financing activities
31 December 2024
Non-cash changes
1 January 2024
$m
Cash flows
$m
Foreign exchange
movement
$m
Other changes
$m
31 December 2024
$m
Long-term borrowings
Subordinated debt
161.9
(6.0)
(2.8)
5.9
159.0
Short-term borrowings
Revolving credit facility
–
(2.9)
–
2.9
–
Total liabilities from financing activities
161.9
(8.9)
(2.8)
8.8
159.0
Non-cash changes
31 December 2023
1 January 2023
$m
Cash flows
$m
Foreign exchange
movement
$m
Other changes
$m
31 December 2023
$m
Long-term borrowings
Subordinated debt
162.4
(13.6)
9.7
3.4
161.9
Short-term borrowings
Revolving credit facility
10.0
(15.4)
–
5.4
–
Total liabilities from financing activities
172.4
(29.0)
9.7
8.8
161.9
Brit Limited Annual Report 2024
173
financial statements
35
Share-based payments
The Group rewards its employees through various share-based incentive schemes. This Note explains the different schemes
used to facilitate those share-based payments and the charge recognised in the consolidated income statement in respect
of these schemes.
The compensation cost recognised in the income statement under IFRS 2 ‘Share-based Payments’ for the Group’s share-based
payments arrangements are shown below:
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Equity-settled plans
Employee Share Ownership Plan
1.8
1.6
Cash-settled plans
Long Term Incentive Plan
68.0
41.6
Total
69.8
43.2
The $1.8m (2023: $1.6m) of charges relating to the Employee Share Ownership Plan are equity-settled in nature but physically-
settled in cash and so were not recorded in the consolidated statement of changes in equity.
The total liability in respect of cash-settled plans at 31 December 2024 was $76.1m (2023: $46.0m). $10.7m (2023: $6.3m)
is included within ‘Other creditors’ in respect of national insurance contributions on the share schemes.
(a) Long Term Incentive Plan (Performance Share Plan replacement)
On the Fairfax acquisition of Brit Limited, the 65% of performance share plan (PSP) awards that did not immediately vest were
converted by Fairfax into awards under this scheme. The cost of the awards was recorded over the vesting period. The options
vested in November 2018 and there are a further seven years to exercise the options.
Reconciliation of movement in the number of awards
Year ended
31 December
2024
Number of awards
Year ended
31 December
2023
Number of awards
Outstanding at 1 January
239
340
Exercised
(55)
(101)
Outstanding at 31 December
184
239
In order to settle share-based payment awards, in 2015 the Group purchased $10.7m of preference shares in FFHL Share Option
1 Corp. Of the purchase, $3.9m related to this scheme and was recorded within equity so as to offset the share-based payment
charges recorded in equity on exercise of the awards. There were no additional shares purchased for this scheme in 2023 and
2024. The remaining 184 shares were exercisable at the year end.
174
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
35
Share-based payments (continued)
(b) Long Term Incentive Plan
The Group awards selected employees options to acquire shares in Fairfax at a nil exercise price. Subject to continued service, the
options vest between two and ten years after the grant date and there are a further five years to exercise the options.
The fair value of the awards are determined by the market price of the underlying shares at the valuation date. The calculation of the
compensation cost recognised in the income statement in respect of these awards assumes forfeitures due to employee turnover of
10% per annum (2023: 10%) prior to vesting, with subsequent adjustments to reflect actual experience.
Reconciliation of movement in the number of awards
Year ended
31 December
2024
Number of awards
Year ended
31 December
2023
Number of awards
Outstanding at 1 January
126,633
149,075
Granted
10,524
18,236
Transferred out
–
(628)
Exercised
(25,051)
(28,120)
Forfeited
(2,041)
(11,930)
Outstanding at 31 December
110,065
126,633
The total intrinsic value at the end of the period of liabilities for awards that have been vested, but not exercised, amounted
to $8.3m (2023: $5.9m). The weighted average share price at the date of exercise for share options exercised during the period
was $1,085.23 (2023: $791.41). The weighted average fair value at date of grant for awards granted during 2024 was $1,460.13
(2023: $905.84).
In order to settle share-based payment awards, in 2024 the Group purchased $8.6m (2023: $4.9m) of preference shares in FFHL
Share Option 1 Corp and that company has purchased shares in Fairfax. This has been recorded within ‘Other Assets’ so as to offset
the share-based payment recorded as a liability within ‘Other creditors’ that accrues over the vesting period of the awards.
(c) Employee Share Ownership Plan (ESOP)
Under the terms of the ESOP which was established in 2015, eligible employees are given the election to purchase common
shares in Fairfax in an amount up to 10% of their annual base salary. The Company purchases, on the employee’s behalf, a number
of Fairfax’s common shares equal in value to 30% of the employee’s contribution. In the event that the Company achieves certain
performance targets, additional shares are purchased by the Company for the employee’s benefit, to an amount equal in value
to 20% of the employee’s contribution during that year. In respect of both shares purchased by employees and matched by the
Company, during the year ended 31 December 2024, the Company purchased a total of 4,145 common shares in Fairfax (2023: 5,419)
at an average price of $1,185.50 (2023: $778.78).
Brit Limited Annual Report 2024
175
financial statements
36
Consolidated entities
This Note sets out all the entities which are members of the Brit Limited Group and whose results and financial positions are
consolidated to produce the Group result and financial position.
All subsidiaries of the Company are 100% owned apart from:
• Ki Financial Limited, of which the Company holds 20% of the share capital (see Note 18 for further details). Ki Financial Limited
owns 100% of the share capital of Ki Digital Services Limited, Risk Technology Solutions Limited, Ki Group Services Limited and
Ki Member Limited.
• Certain special purpose vehicles. The Group has consolidated all segregated accounts of Sussex Re Limited and protected
cells of Sussex Capital UK PCC Limited apart from those where the investment therein has been made directly by investors
that are external to the Brit Group.
As mentioned in Note 2.2, 67.98% of the 2022 year of account result and assets of Syndicate 2988 is included in these consolidated
financial statements. 75.86% of the 2023 year of account result and assets of Syndicate 2988 is included in these consolidated
financial statements. 51.28% of the 2024 year of account result and assets of Syndicate 2988 is included in these consolidated
financial statements.
As at 31 December 2024, the Group holds 20.0% (2023: 20.0%) of the share capital of Ki Financial Limited and 51.0% (2023: 51.0%)
of the voting rights. The entity is consolidated in full by the Group.
The following changes to the Group’s subsidiaries took place during the year:
• On 21 February 2024, RMSL Pension Trustee Limited was incorporated as a subsidiary.
• On 14 February 2024, voluntary wind up commenced for Brit Investment Holdings Limited.
• On 17 May 2024, BIGCC Services India Private Limited was incorporated as a subsidiary.
• On 7 August 2024, Brit Group Holdings Limited was incorporated as a subsidiary (see below for further details).
• On 13 November 2024, Ki Shelf Company Two Limited changed its name to Risk Technology Solutions Limited.
Additionally, the Group was restructured during 2024 to support the operational separation of Ki (refer to Note 4.9). That
restructure organises Ki entities (Ki Digital Services Limited, Ki Member Limited, Ki Group Services Limited and Risk Technology
Solutions Limited) under a Ki holding company (Ki Financial Limited) and places the remaining Brit structure under a new Brit
holding company (Brit Group Holdings Limited). Both Ki Financial Limited and Brit Group Holdings Limited are direct subsidiaries
of Brit Limited. The effect that this restructuring and related transactions are expected to have on the Group’s financial reporting
in future is described in Note 39.
The following changes to the Group’s subsidiaries took place during the prior year:
• On 10 May 2023, the Group sold its entire investment in Ambridge Group (‘Ambridge Group’ refers to the Ambridge US
(Brit Insurance USA Holdings Inc. and its subsidiaries) and Ambridge Europe sub-groups (Ambridge Europe Limited and its
subsidiaries)). At this point it was deconsolidated.
• On 13 October 2023, Brit Global Speciality Singapore Pte. Ltd. was dissolved and, as such, it was deconsolidated.
• On 6 November 2023, Ki Shelf Company Two Limited was incorporated as a subsidiary.
• On 20 November 2023, Brit Insurance Holdings B.V. was dissolved and, as such, it has been deconsolidated.
• On 18 December 2023, Ki Group Services Limited was incorporated as a subsidiary.
The subsidiaries of the Company at 31 December 2024, together with their main function, are listed below by country
of incorporation. The registered address and principal place of business of each entity is The Leadenhall Building, 122 Leadenhall
Street, London, EC3V 4AB unless otherwise stated.
176
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
36
Consolidated entities (continued)
Subsidiary
Principal activity
Registered address and principal place of business
United Kingdom
Brit Group Holdings Limited
(incorporated on 7 August 2024)
Intermediate holding company
The Leadenhall Building
Brit Insurance Holdings Limited
Intermediate holding company
The Leadenhall Building
Brit Syndicates Limited
Lloyd’s managing agent
The Leadenhall Building
Brit UW Limited
Lloyd’s corporate member
The Leadenhall Building
Brit Insurance Services Limited
Service company
The Leadenhall Building
Brit Investment Holdings Limited
(in liquidation)
Service company (Dormant)
The Leadenhall Building
Brit Group Services Limited
Group services company
The Leadenhall Building
Brit Group Finance Limited
Group services company
The Leadenhall Building
BGS Services (Bermuda) Limited
Service company
The Leadenhall Building
Brit Pension Trustee Limited
Corporate trustee (Dormant)
The Leadenhall Building
Brit Corporate Services Limited
Service company (Dormant)
The Leadenhall Building
Brit Corporate Secretaries Limited
Service company (Dormant)
The Leadenhall Building
Sussex Capital UK PCC Limited
Special purpose vehicle
The Leadenhall Building
Nameco (No. 1341) Limited
Lloyd’s corporate member
5th Floor, 40 Gracechurch Street, London, EC3V 0BT
Ki Member Limited
Lloyd’s corporate member
The Leadenhall Building
Ki Financial Limited
Intermediate holding company
The Leadenhall Building
Ki Capital Solutions Limited
Service company (Dormant)
The Leadenhall Building
Ki Technology Limited
Service company (Dormant)
The Leadenhall Building
Ki Risk Services Limited
Service company (Dormant)
The Leadenhall Building
Ki Shelf Company Limited
Service company (Dormant)
The Leadenhall Building
Ki Digital Services Limited
Service company (Dormant)
The Leadenhall Building
Ki Group Services Limited
Service company (Dormant)
The Leadenhall Building
Risk Technology Solutions Limited
(formerly Ki Shelf Company Two Limited)
Service company (Dormant)
The Leadenhall Building
Brit Syndicates Trustee Limited
Lloyd’s trustee (Dormant)
The Leadenhall Building
RMSL Pension Trustee Limited
(incorporated on 21 February 2024)
Corporate trustee (Dormant)
The Leadenhall Building
Bermuda
Sussex Capital Management Limited
Service company
Ground Floor Chesney House, The Waterfront,
96 Pitts Bay Road, Pembroke, HM 08
Sussex Capital Limited
Special purpose vehicle
Wessex House, 3rd Floor, 45 Reid Street, Hamilton HM 12
Sussex Re Limited
Special purpose vehicle
Wessex House, 3rd Floor, 45 Reid Street, Hamilton HM 12
Brit Reinsurance (Bermuda) Limited
Insurance company
Ground Floor Chesney House, The Waterfront,
96 Pitts Bay Road, Pembroke, HM 08
South Africa
Camargue Underwriting Managers
(Proprietary) Limited
Insurance intermediary
Camargue House, 33 Glenhove Road, Melrose Estate, 2196
Synergy XOL (Pty) Ltd.
Service company
Camargue House, 33 Glenhove Road, Melrose Estate, 2196
Phoenix Underwriting Managers (Pty) Ltd.
Service company (Dormant)
Camargue House, 33 Glenhove Road, Melrose Estate, 2196
India
BIGCC Services India Private Limited
Service company
J Block, 1st Floor, Outerring Rd, Manyata Embassy,
Arabic College, Bangalore-560045
Brit Limited Annual Report 2024
177
financial statements
37
Related party transactions and Ultimate Parent Company
The Group has a number of related parties which includes its principal investors and its Directors. Sometimes it transacts business
with these related parties. This Note sets out those transactions.
The Group carries out a number of transactions with related parties which include, paying management fees, carrying out insurance
and reinsurance activities with affiliates of the ultimate parent company, Fairfax Financial Holdings Limited, and trading with its
associates. All the transactions with related parties are undertaken on an arm’s-length basis.
(a) Ultimate Parent Company
The ultimate parent company and controlling entity, and the largest group of which the Group is a member, is Fairfax Financial
Holdings Limited (Fairfax) which is registered in Canada and listed on the Toronto Stock Exchange. The consolidated financial
statements for Fairfax are publicly available and can be obtained from the Corporate Secretary, 95 Wellington Street West,
Suite 800, Toronto, Ontario, Canada, M5J 2N7 or from the website at www.fairfax.ca.
(b) Fairfax Financial Holdings Limited
In June 2015, Hamblin Watsa Investment Counsel Limited (HWIC), an affiliate of Fairfax, was appointed as an investment manager
to a number of Group companies. During the year ended 31 December 2024, the Group incurred and paid investment management
fees to HWIC of $13.3m (2023: $12.7m).
The Group has historically entered into various reinsurance arrangements with affiliates of Fairfax.
In respect of insurance and ceded outwards reinsurance activity, the amounts included in the income statement relating to trading
with affiliates of Fairfax were as follows:
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Insurance revenue
18.2
21.7
Insurance service expenses (exclusive of commissions costs below)
(13.4)
(6.9)
Allocation of reinsurance premium (gross of ceding commissions below)
(12.5)
(16.7)
Reinsurance recoveries
8.7
9.5
Net finance expenses
(0.1)
0.4
Commission income
0.5
0.7
Commission expense
(2.1)
(5.5)
The amounts included in the statement of financial position outstanding with Fairfax and its affiliates as at 31 December 2024
were as follows:
31 December
2024
$m
31 December
2023
$m
Insurance and reinsurance balances
Insurance contract liabilities
(48.9)
(43.4)
Reinsurance contract assets
31.2
25.0
178
Brit Limited Annual Report 2024
financial statements
notes to the consolidated financial statements
37
Related party transactions and Ultimate Parent Company (continued)
(c) Associated undertaking
Sutton Special Risk Inc. ('Sutton')
On 2 January 2019, Brit Insurance Holding Limited, acquired 49% of the issued shares of Sutton and recorded it as an investment
in associated undertaking. For more information on Sutton see Note 17.
Trading with Sutton is undertaken on an arm’s-length basis and is settled in cash. The net expense in the income statement
relating to trading with Sutton for the period up to 8 March 2024 included commission for introducing insurance business of $1.9m
(2023: $6.2m).
Amounts recorded in the statement of financial position in respect of premium net of commissions due from, and fees payable to,
Sutton as at 31 December 2023 were not material.
(d) Bryte Insurance Limited agreement
Prior to the acquisition of Camargue Underwriting Managers Proprietary Limited (Camargue) on 4 October 2021, the entity had
already entered into an agreement with Bryte Insurance Limited (Bryte), another subsidiary of the Fairfax group. Camargue acts
as an underwriting managing agent for Bryte, administering insurance policies on their behalf and providing risk management
services over the lifetime of those policies.
The amounts in the income statement for the year ended 31 December 2024 related to trading with Bryte were $0.7m (2023: $0.6m)
in respect of administration fees and risk management fees. $0.2m was outstanding at year end (2023: $0.2m).
(e) Key management compensation
The amount of the emoluments granted in respect of the financial year to the members of the administrative, managerial and
supervisory bodies by reason of their responsibilities, and any commitments arising or entered into in respect of retirement pension
for former members of those bodies, are broken down as follows:
Year ended
31 December
2024
$m
Year ended
31 December
2023
$m
Salaries and other short-term employee benefits
16.0
11.9
Post-employment benefits
1.1
0.9
Share-based payments
65.8
16.2
Total compensation
82.9
29.0
For the purposes of IAS 24, ‘Related Party Disclosures’, key managers are defined as the Board of Directors and members of the
Executive Committee which is the primary vehicle for implementing Board decisions in respect of UK-managed operations.
As at 31 December 2024, $0.4m (2023: $0.4m) was recorded in the statement of financial position in respect of unsecured loans
to key management personnel. These loans incepted in 2020, are expected to be settled in cash, carry an annual interest charge
of 2.25%, and have no fixed maturity date.
Brit Limited Annual Report 2024
179
financial statements
38
Guarantees and contingent liabilities
This Note explains guarantees issued by Group companies and any contingent liabilities they may be exposed to.
(a) Lloyd’s
Assets have been pledged, as Funds at Lloyd’s, by way of deposits and fixed and floating charges for corporate member companies
within the Group that participate on Lloyd’s syndicates. The funds are held in trust and can be used to meet claims liabilities should
syndicates fail to meet their claim liabilities. Each corporate member has its own funds and can only use its funds to meet its own
claim liabilities.
As at 31 December 2024, the Group’s total Funds at Lloyd’s balance amounted to $1,114.2m (2023: $1,253.8m), of which $150.0m
(2023: $160.0m) was attributable to letters of credit placed as Funds at Lloyd’s.
(b) Credit facilities
The Group has in place a revolving credit facility and letters of credit. Refer to Note 30 for details of these facilities.
(c) Taxation
The Group operates in a wide variety of jurisdictions around the world through its Lloyd’s syndicate and uncertainties therefore exist
with respect to the interpretation of complex tax laws and practices of those territories. The Group establishes provisions for taxes
other than current and deferred income tax if there is a present obligation as a result of past events, it is probable that an outflow
of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the
obligation can be made. This assessment is made based upon various factors which are continually evaluated.
Income taxes are provided for as set out in accounting policy (Note 2.4.8).
39
Events occurring after the reporting date
This Note sets out how events occurring after the reporting date relate to the financial position and performance of the Group in the
reporting period.
Change to the issuer of the Group’s subordinated debt (Subordinated Notes due 2030 (‘the notes’))
With effect on and from 22 January 2025, Brit Group Holdings Limited was substituted in place of Brit Limited as issuer and principal
debtor under the notes. The notes continue to be guaranteed by Brit Insurance Holdings Limited. The substitution reflects changes
to the Brit Group structure during 2024 – see Note 36.
As Brit Group Holdings Limited is part of the Brit Limited Group this change has no direct effect on the Group’s consolidated financial
statements. However, because of this change Brit Limited no longer has securities in issue that are listed on the London Stock
Exchange and therefore is no longer required to produce consolidated financial statements. Therefore, the expectation is that
Brit Limited will not produce consolidated financial statements in future.
As Brit Group Holdings Limited is now the issuer of the subordinated debt notes it is required to produce consolidated financial
statements going forward. Brit Limited’s other subsidiary, Ki Financial Limited, will also produce consolidated financial statements
going forward.
California wildfires (January 2025)
The Group has potential exposures to claims resulting from the California wildfires of January 2025, which will be accounted for
in the period ending 31 December 2025. After taking into account potential reinsurance recoveries and reinstatement premiums,
the Brit Limited Group’s initial estimate, based on information available at the date of this report, is a net cost before tax of
between $130m and $160m.
180
financial statements
Brit Limited Annual Report 2024
181
financial statements
Index to the Parent Company
Financial Statements
Statement of Financial Position
182
Statement of Changes in Equity
183
Notes to the Parent Company Financial Statements
184
Note 1
Accounting policies and basis of preparation
184
Note 2
Auditors’ remuneration
185
Note 3
Shares in Group undertakings
185
Note 4
Loans to Group undertakings
186
Note 5
Debtors: Amounts falling due within one year
186
Note 6
Creditors: Amounts falling due within one year
186
Note 7
Creditors: Amounts falling due after more than
one year
187
Note 8
Called up share capital
187
Note 9
Directors’ emoluments
187
Note 10
Guarantees and contingent liabilities
188
Note 11
Dividends
188
Note 12
Share-based payments
188
Note 13
Disclosure exemptions
188
Note 14
Ultimate parent company and other
related undertakings
188
Note 15
Post balance sheet events
189
Introduction to the Parent Company
Financial Statements
Statement of Financial Position
The statement of financial position is a summary of assets and
how the assets have been funded through liabilities and equity
investment by shareholders.
Statement of Changes in Equity
The statement of changes in equity shows how the various
lines in the equity section of the Company’s statement
of financial position have moved during the year.
182
Brit Limited Annual Report 2024
financial statements
Note
31 December
2024
$m
31 December
2023
$m
Fixed assets
Investments:
Shares in Group undertakings
3
1,156.3
1,155.5
Loans to Group undertakings
4
159.0
131.4
1,315.3
1,286.9
Current assets
Debtors: Amounts falling due within one year
5
8.5
499.5
Cash at bank and in hand
6.0
0.3
14.5
499.8
Current liabilities
Creditors: Amounts falling due within one year
6
(7.6)
(0.9)
Net current assets
6.9
498.9
Total assets less current liabilities
1,322.2
1,785.8
Creditors: Amounts falling due after more than one year
7
(159.0)
(161.9)
Net assets
1,163.2
1,623.9
Capital and reserves
Called up share capital
8
10.0
10.0
Share premium
932.6
932.6
Capital redemption reserve
1.0
1.0
Capital contribution reserve
32.2
32.2
Retained earnings
187.4
648.1
Total equity
1,163.2
1,623.9
No individual income statement is presented for the Company, as permitted by Section 408 of the Act. The comprehensive income
in the financial statements of the Company was a $144.7m profit (2023: $394.8m profit).
The accompanying Notes on pages 184 to 189 are an integral part of these financial statements.
These financial statements were approved by the Board of Directors on 27 February 2025 and were signed on its behalf by:
Martin Thompson
Gavin Wilkinson
Group Chief Executive Officer
Group Chief Financial Officer
statement of financial position
At 31 December 2024
Brit Limited Annual Report 2024
183
financial statements
Note
Called up
share
capital
$m
Share
premium
$m
Capital
redemption
reserve
$m
Capital
contribution
reserve
$m
Retained
earnings
$m
Total
equity
$m
At 1 January 2023
10.0
1,432.6
1.0
32.2
166.9
1,642.7
Profit and total comprehensive
income for the year
–
–
–
–
394.8
394.8
Dividends
11
–
–
–
–
(413.6)
(413.6)
Capital reduction1
–
(500.0)
–
–
500.0
–
At 31 December 2023
10.0
932.6
1.0
32.2
648.1
1,623.9
Profit and total comprehensive
income for the year
–
–
–
–
144.7
144.7
Dividends
11
–
–
–
–
(605.4)
(605.4)
At 31 December 2024
10.0
932.6
1.0
32.2
187.4
1,163.2
1. On 1 November 2023, Brit Limited effected a capital reduction, without the cancellation of any shares, which resulted in a $500.0m reduction to share premium and a corresponding
increase in retained earnings. Accordingly, there was no impact on total equity.
The accompanying Notes on pages 184 to 189 are an integral part of these financial statements.
statement of changes in equity
184
Brit Limited Annual Report 2024
financial statements
1
Accounting policies and basis of preparation
This Note provides details of the basis of preparation and accounting policies applied in producing these parent company
financial statements.
1.1
Basis of preparation
The Company financial statements present the information about the Company as a separate entity. The Company is incorporated
and registered in England and Wales with registration number 08821629. The registered office of the Company at the date of this
report is The Leadenhall Building, 122 Leadenhall Street, London, EC3V 4AB.
The Company has prepared its financial statements in accordance with Financial Reporting Standard ‘FRS 102’, the Financial
Reporting Standard applicable in the United Kingdom and Republic of Ireland and provisions of Section 396 of the Companies Act
2006. The Company has applied accounting policies consistently to all the years presented, other than where new policies have
been adopted.
The financial statements have been compiled on a going concern basis and prepared on a historical cost basis, except for financial
investments and financial liabilities which have been measured initially at fair value. The Company financial statements are presented
in US dollars, which is also the functional currency of the Company, and all values are rounded to the nearest $0.1m except where
otherwise indicated.
1.2
Accounting policies
(a) Investments
Investments in subsidiary undertakings are stated at cost less provisions for any impairment.
(b) Income from fixed asset investments
Dividend income is recognised when the shareholders’ right to receive the payment is established.
(c) Long-term debt
Long-term debt is recognised initially at transaction price which is the fair value. It is subsequently measured at amortised cost using
the effective interest rate method, in accordance with section 11 of FRS 102 (Basic Financial Instruments).
Interest payable is recognised using the effective interest rate method.
Interest income is recognised on the de-recognition of sub-debt, arising from the difference between cash settled and the notional
amount derecognised.
(d) Loans to Group undertakings
Loans to Group undertakings are recognised initially at transaction price which is the fair value, (including transaction costs
incurred except in the initial measurement of financial liabilities that are measured at fair value through profit or loss) and
subsequently measured at amortised cost using effective interest rate method, in accordance with section 11 of FRS 102 (Basic
Financial Instruments).
Interest receivable is recognised using the effective interest rate method.
(e) Expenses
All expenses are accounted for on an accruals basis.
(f) Foreign currencies
Items included in the financial statements of the Company are measured using the functional currency which is the primary economic
environment in which the entity operates. The functional currency of the Company is US dollars.
Transactions in foreign currencies other than US dollars are converted at the rate of exchange ruling at the date the transaction
is processed. Unless otherwise stated, transactions are converted at the average exchange rates for the period. Assets and
liabilities in currencies other than Sterling are converted at the rate of exchange ruling at 31 December of each year. Exchange
differences arising on conversion are dealt with in the income statement.
notes to the parent company financial statements
Brit Limited Annual Report 2024
185
financial statements
1
Accounting policies and basis of preparation (continued)
(g) Deferred taxation
Deferred tax is recognised in respect of all timing differences which are differences between taxable profits and total
comprehensive income that arise from the inclusion of income and expenses in tax assessments in periods different from those
in which they are recognised in the financial statements, except that:
• provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries,
associates and joint ventures only to the extent that, at the statement of financial position date, dividends have been accrued
as receivable;
• where there are differences between amounts that can be deducted for tax for assets (other than goodwill) and liabilities
compared with the amounts that are recognised for those assets and liabilities in a business combination a deferred
tax asset/liability shall be recognised. The amount attributed to goodwill is adjusted by the amount of the deferred tax
recognised; and
• unrelieved tax losses and other deferred tax assets are recognised only to the extent that the Directors consider that
it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing
differences reverse, based on tax rates and laws enacted or substantively enacted at the statement of financial position date.
2
Auditors’ remuneration
This Note sets out the fees paid in respect of the annual audit performed on the Company.
Audit fees charged to the Company amounted to $18,044 (2023: $17,350).
3
Shares in Group undertakings
This Note explains the direct shareholdings of the Company in other Group entities.
31 December
2024
$m
31 December
2023
$m
Investment in Brit Insurance Holdings Limited
–
1,055.0
Investment in Brit Group Holdings Limited
1,055.2
–
Investment in Ki Financial Limited
101.1
100.0
Investment in Ki Member Limited
–
0.5
1,156.3
1,155.5
During 2024:
• On 7 August 2024 Brit Group Holdings Limited was incorporated as a subsidiary. Subsequently on 12 December 2024 the
Company’s investment in Brit Insurance Holdings Limited was transferred to Brit Group Holdings Limited. This transfer
reduced the carrying value of the Company’s investment in Brit Insurance Holdings Limited to nil, with a corresponding
increase in the carrying value of the Company’s investment in Brit Group Holdings Limited.
• On 20 November 2024 the Company’s investment in Ki Member Limited was transferred to Ki Financial Limited for
consideration of £1. This transfer reduced the carrying value of the Company’s investment in Ki Member Limited to nil, with
a corresponding increase ($0.5m) in the carrying value of the Company’s investment in Ki Financial Limited.
• On 5 November 2024 Ki Group Services Limited (a subsidiary of Brit Insurance Holdings Limited) was transferred to
Ki Financial Limited. This transfer increased the carrying value of the Company’s investment in Ki Financial Limited by $0.6m,
with the Company recognising a corresponding amount as dividend income (a distribution in specie from Brit Insurance
Holdings Limited).
During 2023, the Company invested a total of $0.3m into Brit Insurance Holdings Limited (31 March 2023: $0.1m,
30 June 2023: $0.1m, and 30 September 2023: $0.1m).
The subsidiaries of the Company as at 31 December 2024, and their principal activities, are disclosed in the Brit Limited consolidated
financial statements.
186
Brit Limited Annual Report 2024
financial statements
notes to the parent company financial statements
4
Loans to Group undertakings
This Note sets out moneys lent by the Company to other Group companies.
31 December
2024
$m
31 December
2023
$m
Loans to Group undertakings
159.0
131.4
On 8 September 2014, a long-term loan to another Group company was novated to Brit Limited at fair value. The loan carried
an annual interest rate of 7.05%, was unsecured, had no fixed date of repayment, and was repayable on demand. The loan was fully
repaid on 22 November 2024.
On 25 November 2024, the Company made a long-term loan to Brit Insurance Holdings Limited, a subsidiary of the Company. The
loan carries an annual interest rate of 3.7%, is unsecured, and is due to be repaid on 9 December 2030. On 22 January 2025 the
Company assigned this loan to another Group Company. Refer to Note 15 for further details.
5
Debtors: Amounts falling due within one year
This Note sets out moneys owed to the Company that are due within 12 months of the reporting date.
31 December
2024
$m
31 December
2023
$m
Interest receivable on loans to Group undertakings
0.5
15.7
Amounts owed by Group undertakings
7.0
481.6
Prepayments
1.0
0.9
Other debtors
–
1.3
Total
8.5
499.5
‘Amounts owed by Group undertakings’ are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
6
Creditors: Amounts falling due within one year
This Note sets out moneys owed by the Company that are due within 12 months of the reporting date.
31 December
2024
$m
31 December
2023
$m
Accruals and deferred income
0.9
0.9
Amounts owed to Group undertakings
6.7
–
Total
7.6
0.9
‘Amounts owed to Group undertakings’ are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
Brit Limited Annual Report 2024
187
financial statements
7
Creditors: Amounts falling due after more than one year
This Note sets out moneys owed by the Company that are due more than 12 months after the reporting date.
31 December 2024
31 December 2023
Maturity
Effective
interest rate
Amortised
cost
$m
Fair value
$m
Amortised
cost
$m
Fair value
$m
Subordinated debt
2030
3.7%
159.0
135.9
161.9
118.3
The fair value of the subordinated debt has been determined by reference to trading market values on recognised exchanges and
is categorised as level one in the fair value hierarchy.
The subordinated debt was novated to the Company from another Group company on 8 September 2014 at fair value. The subordinated
debt is listed and carries an interest rate of 3.7%.
On 14 December 2023 £8.0m ($10.0m) of the notional value of the subordinated debt was repurchased by the Group for £5.9m
($7.3m) and was cancelled.
On 22 January 2025 another Group company was substituted in place of the Company as issuer and principal debtor in relation
to the subordinated debt. Refer to Note 15 for further details.
8
Called up share capital
This Note sets out the number of shares in issue and their nominal value.
31 December
2024
$m
31 December
2023
$m
31 December
2024
1p each
Number
31 December
2023
1p each
Number
Ordinary shares:
Allotted, issued and fully paid
10.0
10.0 669,502,094
669,502,094
For further information in respect of shares currently in issue and related movements in called up share capital during the current
and prior period, please refer to Note 32 accompanying the Brit Limited Group financial statements.
9
Directors’ emoluments
This Note gives a breakdown of emoluments paid to Directors both in total and in respect of the highest paid Director.
31 December
2024
$m
31 December
2023
$m
Aggregate remuneration
6.5
3.8
Aggregate contributions to money purchase pension schemes
0.2
0.2
Total
6.7
4.0
The Directors’ remuneration disclosed above includes the following
amounts paid to the highest paid Director:
Aggregate remuneration
3.2
1.5
Number
Number
Number of Directors with benefits accruing under money purchase pension schemes
2
2
Number of Directors who exercised share options
1
1
Number of Directors in respect of whose qualifying services, shares were received or
receivable under long-term incentive schemes
3
2
Shares were received or receivable by the highest paid Director in respect of qualifying services under a long-term incentive scheme
during 2024 and 2023. There were no shares exercised by the highest paid Director in 2024. Shares were exercised by the highest
paid Director in 2023.
188
Brit Limited Annual Report 2024
financial statements
notes to the parent company financial statements
10
Guarantees and contingent liabilities
This Note explains guarantees issued by the Company. The Company has no contingent liabilities.
As at 31 December 2023 the Company had access to a $550.0m revolving credit facility which was due to expire
on 31 December 2027. At this date a $10.0m uncollateralised letter of credit had been utilised by the Company in respect of this
facility, and there was cash drawings of $nil.
During 2024 the Company was replaced as borrower and guarantor under this revolving credit facility by Brit Group Holdings
Limited, a subsidiary of the Company.
11
Dividends
This Note gives details of the amounts paid to shareholders during 2024 and 2023 by way of dividends.
Details of dividends paid by the Company to shareholders during 2024 and 2023 are included in Note 33 of the notes accompanying
the Brit Limited Group consolidated Financial Statements.
12
Share-based payments
The Company rewards its employees through various share-based incentive schemes. This Note explains the different schemes used
to facilitate those share-based payments.
Further detail in respect of the Group’s share-based incentive schemes can be found in Note 35 of the notes accompanying the
Brit Limited Group consolidated Financial Statements.
13
Disclosure exemptions
This Note explains the Company’s approach to qualifying exemptions available in FRS 102.
The Company has taken advantage of the disclosure exemptions provided by paragraph 1.12 of FRS 102. Accordingly, these financial
statements do not include the following:
• Statement of cash flows;
• A reconciliation of shares outstanding at the beginning and end of the period;
• Specific information relating to financial instruments that is included within equivalent disclosures for the Group;
• Specific information relating to share-based payments that is included within equivalent disclosures for the Group; and
• Disclosure of key management personnel compensation (included in Note 37 of the Group financial statements).
The Brit Limited consolidated financial statements and accompanying notes provide further detail in respect of these areas.
14
Ultimate parent company and other related undertakings
The ultimate parent company and controlling entity, and the largest group of which the Group is a member, is Fairfax Financial
Holdings Limited (Fairfax) which is registered in Canada and listed on the Toronto Stock Exchange. The consolidated financial
statements for Fairfax are publicly available and can be obtained from the Corporate Secretary, 95 Wellington Street West,
Suite 800, Toronto, Ontario, Canada, M5J 2N7 or from the website at www.fairfax.ca.
A subsidiary of the Company held a significant investment in Sutton Special Risk Inc (‘Sutton’), an associated undertaking, until
8 March 2024 and was reported within ‘Assets classified as held for sale’ on the consolidated statement of financial position
at 31 December 2023. Sutton is registered in Canada with offices at 3 Yonge Street, Suite 400, P.O. Box 311, Toronto, Ontario,
Canada, M5E 1G4.
Further information on other related undertakings of the Company can be found in Note 36 Consolidated Entities of the notes to the
consolidated financial statements.
Brit Limited Annual Report 2024
189
financial statements
15
Post balance sheet events
Change to the issuer of the Company’s subordinated debt (Subordinated Notes due 2030 (‘the notes’)) and assignment of loan
With effect on and from 22 January 2025, Brit Group Holdings Limited (another Group company) was substituted in place of the
Company as issuer and principal debtor under the notes. The notes continue to be guaranteed by Brit Insurance Holdings Limited
(another Group company). The substitution reflects changes to the Brit Group structure during 2024 – see Note 36. For further
details refer to Note 7 of these financial statements and Note 39 to the Brit Limited Group consolidated financial statements.
As consideration for this change, on 22 January the Company assigned the benefit of the Company’s loan to Brit Insurance Holdings
Limited (another Group company) to Brit Group Holdings Limited (another Group company). Refer to Note 4 of these financial
statements for further details.
The transactions described above had no net impact on the Company’s total equity.
190
Brit Limited Annual Report 2024
additional information
Return on net tangible assets (RoNTA)
Return on net tangible assets (RoNTA) shows the return being generated by our operations compared to the adjusted net tangible
assets deployed in our business.
(i) RoNTA from all operations
Comment/financial statements reference
2024
$m
2023
$m
Profit for the year after tax attributable to
the owners of the parent
Consolidated income statement
506.8
836.2
Add back: Tax adjusted amortisation
Amortisation of intangibles, adjusted by the tax rate
7.8
7.0
Add back: Tax adjusted pension charge in
income statement
Defined benefits schemes’ impact on income statement
1.4
3.7
Add back: Tax adjusted FX
FX effect for the year, adjusted by the tax rate
25.0
74.9
Return, as adjusted for RoNTA calculation
541.0
921.8
Adjusted NTA at start of year
See ‘(iii) Adjusted net tangible assets' section below
2,516.0
2,025.1
Less: Pension asset net of deferred tax at
start of year
‘Employee benefits’ per Consolidated Statement
of Financial Position less deferred tax
(24.6)
(40.1)
External distributions, share issuances and
capital contributions
Weighted adjustment to reflect distributions and
shares issued during the year
(171.3)
(210.5)
NTA, as adjusted for RoNTA calculation
2,320.1
1,774.5
RoNTA
Return, as adjusted for RoNTA calculation,
divided by NTA, as adjusted for RoNTA calculation.
23.3%
51.9%
(ii) RoNTA from continuing operations
Comment/financial statements reference
2024
$m
2023
$m
Profit for the year after tax attributable to the
owners of the parent, excluding discontinued
operation
Consolidated income statement
509.9
570.0
Add back: Tax adjusted amortisation
Amortisation of intangibles, adjusted by the tax rate
7.8
7.0
Add back: Tax adjusted pension charge in
income statement
Defined benefits schemes’ impact on income statement
1.4
3.7
Add back: Tax adjusted FX
FX effect for the year, adjusted by the tax rate
25.0
74.9
Return, as adjusted for RoNTA calculation
544.1
655.6
Adjusted NTA at start of year
See ‘(iii) Adjusted net tangible assets' section below
2,516.0
2,025.1
Less: NTA relating to discontinued operations
–
(203.7)
Less: Pension asset net of deferred tax at
start of year
‘Employee benefits’ per Consolidated Statement
of Financial Position less deferred tax
(24.6)
(40.1)
External distributions, share issuances and
capital contributions
Weighted adjustment to reflect distributions and
shares issued during the year
(171.3)
(210.5)
NTA, as adjusted for RoNTA calculation
2,320.1
1,570.8
RoNTA
Return, as adjusted for RoNTA calculation,
divided by NTA, as adjusted for RoNTA calculation.
23.5%
41.7%
key performance indicators and
alternative performance measures
Brit Limited Annual Report 2024
191
additional information
Return on net tangible assets (RoNTA) (continued)
(iii) Adjusted net tangible assets
Adjusted net tangible assets at the end of each year are calculated as follows:
Comment/financial statements reference
2024
$m
2023
$m
Total equity attributable to owners
of the parent
Consolidated statement of financial position
2,510.8
2,617.2
Less: Intangible assets
Consolidated statement of financial position
(138.8)
(122.7)
Net tangible assets
2,372.0
2,494.5
Add back deferred tax liability on
intangible assets
Note 22: Deferred taxation
22.3
21.5
Adjusted net tangible assets
2,394.3
2,516.0
192
Brit Limited Annual Report 2024
additional information
key performance indicators and alternative performance measures
Combined ratio, claims ratio and expense ratio
The combined ratio is our key underwriting metric and measures the profitability of our underwriting. It shows how much of every
$1 of premium is spent in the total costs of sourcing and underwriting the business and settling claims. A combined ratio under 100%
indicates underwriting profitability.
The component parts of the combined ratio are the claims ratio and the expense ratio. The calculations of each of the ratios are
set out below:
Comment/financial statements reference
2024
$m
2023
$m
Insurance revenue
Note 23: insurance and reinsurance contracts
3,465.5
3,517.1
Allocation of reinsurance premium
Note 23: insurance and reinsurance contracts
(693.7)
(785.9)
Net insurance revenue
2,771.8
2,731.2
Insurance service expense
Note 23: insurance and reinsurance contracts
2,579.0
2,594.3
Less directly attributable expenses
Includes insurance acquisition cash flows and all other
directly attributable expenses
(775.2)
(744.2)
Amounts recoverable from reinsurers
Note 23: insurance and reinsurance contracts
(482.0)
(512.6)
Net claims
1,321.8
1,337.5
Claim ratio
Net claims divided by net insurance revenue
47.7%
49.0%
Directly attributable expenses
Includes insurance acquisition cash flows and all other
directly attributable expenses
775.2
744.2
Expense ratio
Directly attributable expenses divided by net insurance revenue
28.0%
27.2%
Combined ratio
Claim ratio plus expense ratio
75.7%
76.2%
Effect of discounting
Initial discounting impact recognised in the insurance
service result
10.2%
9.1%
Combined ratio (undiscounted)
Combined ratio minus effect of discounting
85.9%
85.3%
Brit Limited Annual Report 2024
193
additional information
Insurance revenue and insurance premium written
Insurance revenue and insurance premium written are used by the Group to measure and monitor levels of incoming business.
Insurance revenue is a required measure of revenue under IFRS 17, while insurance premium written is equivalent to gross written
premium under the old insurance accounting standard, IFRS 4.
Comment/financial statements reference
2024
$m
2023
$m
Insurance revenue
Consolidated income statement
3,465.5
3,517.1
Commission expense
Reclassification of commissions expense on assumed
business to net off against insurance revenue
274.8
307.5
Profit commissions and reinstatement
premiums
Reclassification of profit commissions in relation to assumed
business and reinstatement premiums between insurance
revenue and insurance service expense
8.9
20.8
Non-distinct investment components
and other adjustments
Net down of non-distinct investment components; and
other GAAP adjustments
(11.0)
(37.0)
Gross earned premium
3,738.2
3,808.4
Change in gross unearned premiums
Movement in the gross unearned premium reserve
41.3
(54.9)
Insurance premium written
3,779.5
3,753.5
Investment return
We assess the performance of our investment portfolio by comparing the return generated by our invested assets, net of external
investment related expenses, against the value of those invested assets.
Comment/financial statements reference
2024
$m
2023
$m
Share of net profit of associates
Consolidated income statement
–
1.6
Return on financial investments and
cash and cash equivalents
Note 7: Investment return
338.9
400.0
Return on investment-related
derivatives
Note 9: Return on derivative contracts
(6.4)
(7.2)
Profit on disposal of associates
Note 17: Investment in associated undertaking
15.2
–
Return on invested assets
347.7
394.4
Investment in associated undertaking
Note 17: Investment in associated undertaking
–
15.8
Financial investments
Note 25: Financial assets and liabilities
6,460.8
5,875.4
Derivative contracts (investment
related)
Note 26: Derivative contracts
(0.6)
(0.2)
Cash and cash equivalents
Note 29: Cash and cash equivalents
750.4
853.8
Invested assets
7,210.6
6,744.8
Opening invested assets
6,744.8
6,011.3
Closing invested assets
7,210.6
6,744.8
Average invested assets
6,977.7
6,378.1
Investment return (%)
Return on invested assets divided by average
invested assets
5.0%
6.2%
194
Brit Limited Annual Report 2024
additional information
key performance indicators and alternative performance measures
Capital ratio
The capital ratio measures the strength of our statement of financial position by comparing our available capital resources to the
capital we need to hold to meet our management entity capital requirements.
Comment/financial statements reference
2024
$m
2023
$m
Adjusted net tangible assets
Calculated earlier in this section
2,394.3
2,516.0
Subordinated debt
Note 30: Borrowings
159.0
161.9
Letters of credit/contingent funding
Under our capital policy we have identified a maximum of
$300.0m (2023: $300.0m) of our revolving credit facility to
form part of our capital resources
300.0
300.0
Total available capital resources
2,853.3
2,977.9
Management entity capital
requirements
The capital required by an entity for business strategy and
regulatory requirements
(1,865.4)
(1,927.4)
Excess of resources over management
entity capital requirements
987.5
1,050.5
Capital ratio
Total available capital resources divided by management
entity capital requirements
153.0%
154.5%
Risk adjusted rate change
The risk adjusted rate change (RARC) shows whether premium rates are increasing, reflecting a hardening market, or decreasing,
reflecting a softening market. A hardening market is one indicator of increasing profitability.
The data reflects internal estimates by Brit’s underwriters, based on available year-on-year underlying renewal data after allowing
for changes to terms and conditions. Generally, no adjustment is made to the figures to reflect the impact of inflation beyond the level
of inflation in the underlying exposure measure used in pricing.
By its nature, this metric cannot be reconciled to the financial statements.
Brit Limited Annual Report 2024
195
additional information
Directors
Mr Gordon Campbell – Chair
Mr Martin Thompson – Group Chief Executive Officer
Mr Gavin Wilkinson – Group Chief Financial Officer
Mr Mark Allan – Executive Director
Mr Aviral Goel – Non-executive Director (appointed 1 January 2024, resigned 8 January 2025)
Mr Simon Lee – Non-executive Director
Mr Michael Wallace – Non-executive Director
Ms Andrea Welsch – Non-executive Director
Mr Ken Miner – Non-executive Director (resigned 1 January 2024)
Company Secretary
Mr Joe Marinelli
Registered Office
The Leadenhall Building
122 Leadenhall Street
London
England
EC3V 4AB
UK
Telephone: +44 (0) 20 3857 0000
Website
www.britinsurance.com
The Company website provides information about Brit Limited including information on the business,
annual reports, half yearly reports and announcements to the London Stock Exchange.
Registered Number
08821629
Independent Auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
company information
196
Brit Limited Annual Report 2024
glossary
A
Adjusted net tangible assets or adjusted NTA: Total equity,
less intangible assets net of the deferred tax liability on those
intangible assets, less non-controlling interest.
Amortised cost: Other than cash and cash equivalents, financial
assets measured at amortised cost.
Aggregate exposure: The expected maximum total
of claims that could be incurred by an insurer in respect
of any event or series of similar events. Also see ‘realistic
disaster scenarios’.
Asset allocation: The allocation of our investments across
different kinds of asset classes, such as equities, bonds, and
cash, in order to achieve a balance between return and risk.
Attritional claims or attritional losses: Common claims/losses,
as opposed to major or catastrophe losses, incurred from
ordinary insurance and/or reinsurance operations.
Available capital resources: Adjusted net tangible assets,
subordinated debt and letters of credit/contingent funding.
B
Business model (when referring to financial assets): Financial
assets are classified on the basis of the business model
within which they are held and their contractual cash flow
characteristics.
Brit View of Risk: An inhouse natural catastrophe specific load
used by Brit to overlap its view of natural catastrophe risk over
vendor models, with adjustment made to reflect expectations
for example increasing the US hurricane frequency
or incorporating a load for perils where vendor models are not
licensed (e.g. due to Brit considering these models to still be
in their infancy).
C
Capital ratio: Total available capital resources divided
by management entity capital requirements.
Capital resources: Total equity attributable to owners of the
parent, less intangible assets net of related plus subordinated
debt, plus deferred tax, plus a proportion (as agreed from time
to time) of our revolving credit facilities.
Captive: An entity that provides risk-mitigation services for
other entities within the same Group only.
Catastrophe or Cat: Perils including earthquakes, hurricanes,
hailstorms, severe winter weather, floods, fires, tornadoes,
explosions and other natural or man-made disasters.
Catastrophe losses may also arise from acts of war, acts
of terrorism and political instability.
Claims reserves: Outstanding claims and claims incurred
but not reported.
Combined ratio: Insurance service expenses net of recoveries
from reinsurers, divided by insurance revenue net of allocation
of reinsurance premium.
Constant FX rates: An increase or decrease in figures between
two years after eliminating the effect of foreign exchange
rate movements.
Corporate member: A company providing the capital to support
the underwriting activity of a syndicate at Lloyd’s. Brit’s
corporate members are Brit UW Limited, Nameco (No. 1341)
Limited and Ki Member Limited.
Coverholder: An entity authorised by an insurer to enter into
a contract of insurance on its behalf.
D
Delegated authority or binding authority: An authority granted
by an underwriter to an agent (known as a coverholder)
whereby that agent is entitled to accept, within certain
limits, insurance business on behalf of the underwriter. The
coverholder has full power to commit the underwriter within the
terms of the authority.
E
Events not in data (ENID): A loading in the claims and premium
provisions intended to cover the difference between a best
estimate of all possible outcomes and whatever the Group has
a best estimate on an accounting or other basis.
Energy Savings Opportunity Scheme (ESOS): A mandatory
government initiative to promote energy efficiency
in large businesses.
Excess and Surplus (E&S): A generic US regulatory
classification referring to insurance coverage not ordinarily
written by insurers fully admitted in various states. The E&S
lines of business is largely unregulated as to rate and form
but insurers must be authorised to write such business
in a state by the local regulator.
Excess of loss (XL): A type of reinsurance that covers
specified losses incurred by the reinsured party in excess
of a stated amount (the excess) up to a higher amount
of limit, for example $5m excess of $1m. Such coverage can
operate on a per loss basis or an aggregate basis.
Expected credit loss (ECL): The weighted average of credit
losses with the respective risks of a default occurring
as the weights.
F
Fair value through other comprehensive income (FVOCI):
For financial assets and liabilities measured at fair value
through other comprehensive income, some changes in fair
value are recognised in other comprehensive income.
Fair value through profit or loss (FVTPL): For financial
assets and liabilities measured at fair value through profit
or loss, changes in fair value are recognised in profit or loss
as part of net investment result.
Funds at Lloyd’s (FAL): Funds held in trust at Lloyd’s
to support a Lloyd’s underwriter’s underwriting activities.
glossary
Brit Limited Annual Report 2024
197
glossary
G
Gearing ratio: Calculated as total borrowings (subordinated
debt, revolving credit facility cash drawdowns and
uncollateralised drawn letters of credit) divided by adjusted
net tangible assets and subordinated debt.
H
Hardening or hard market: An insurance market where
prevalent prices are high, with more restrictive terms and
conditions offered by insurers.
I
Insurance-linked securities (ILS): ILSs are essentially financial
instruments which are sold to investors whose value is affected
by an insured loss event.
Incurred but not reported (IBNR): Claims incurred but
not reported, including claims which are incurred but not
enough reported (i.e. where the amount of the notification
is insufficient).
Insurance premium written: A measure used by the Group
to measure and monitor levels of incoming business.
It is equivalent to gross written premium under the old
insurance accounting standard, IFRS 4.
Invested assets: Financial investments, investment
in associated undertaking, cash and cash equivalents and
investment related derivatives.
Investment related derivatives: Includes options and interest
rate swaps. Excludes currency forwards.
Investment return percentage: Investment return expressed
as a percentage of average invested assets.
L
Letter of credit (LoC): A written undertaking by a financial
institution to provide funding if required.
Line size: The proportion of an insurance or reinsurance risk
that is accepted by an underwriter or which an underwriter
is willing to accept.
Lloyd’s of London: The Society of Lloyd’s and Corporation
of Lloyd’s created and governed by the Lloyd’s Acts 1871-1982,
including the Council of Lloyd’s (and its delegates and
other persons through whom the Council may act), as the
context may require.
Long-tail: The term used to describe business where the
difference between the timing of the average premium receipt
and the timing of the average claim payment is over three years.
Loss portfolio transfer (LPT): A financial reinsurance
transaction in which loss obligations that are already incurred
and will ultimately be paid are ceded to a reinsurer.
M
Major claims or Major losses: Major claims are defined
as claims which are initially assessed as having the potential
to exceed $15.0m (net of reinsurance and allowing for
reinstatements), incurred from natural or man-made
catastrophes, or from large single risk loss events.
Management entity capital requirement: The capital required
by an entity for business strategy and regulatory requirements.
N
Net tangible assets (NTA): The total assets of a company,
minus any intangible assets, less all liabilities.
Net financial result: The Group’s total investment return less
net finance income or expenses from insurance contracts
issued and reinsurance contracts held.
O
Outstanding claims: Claims which have been notified at the
reporting date but not settled.
Own risk and solvency assessment (ORSA): The name given
to the entirety of the processes and procedures employed
by an insurer to identify, assess, monitor, manage and report
the short and long-term risks it faces or may face and
to determine the capital necessary to ensure that the insurer’s
overall solvency needs are met at all times.
P
Protected cell company (PCC): A company that has been
separated into legally distinct portions or cells. The revenue
streams, assets and liabilities of each cell are kept separate
from all other cells. Each cell has its own separate portion of the
PCC’s overall share capital, allowing shareholders to maintain
sole ownership of an entire cell.
Q
Quota share (QS): A type of reinsurance which provides
that the reassured shall cede to the reinsurer a specified
percentage of all the premiums that it receives in respect
of a given section or of all of its underwriting account for
a given period in return for which the reinsurer is obliged
to pay the same percentage of any claims and specified
expenses arising on the reinsured business.
R
Realistic Disaster Scenarios (RDS): Specific scenarios which
the Group uses to test its ability to settle claims arising from
certain types of disaster.
Reinsurance to close (RITC): A reinsurance which closes a year
of account by transferring the responsibility for discharging all
the liabilities that attach to that year of account (and any year
of account closed into that year) plus the right to any income
due to the closing year of account into an open year of account
of the same or a different syndicate in return for a premium.
198
Brit Limited Annual Report 2024
glossary
glossary of terms
Risk adjusted rate change: Change in premium rates during the
year expressed as a percentage of opening premium rates. The
data reflects internal estimates by Brit’s underwriters, based
on available year-on-year underlying renewal data after allowing
for changes to terms and conditions. Generally, no adjustment
is made to the figures to reflect the impact of inflation beyond
the level of inflation in the underlying exposure measure
used in pricing.
Risk free rate (RFR): Theoretical rate of return
on an investment with zero risk.
Risk Management Framework (RMF): The Group’s own
internal framework for risk management.
Return on net tangible assets (RoNTA): Profit/(loss) for
the year after tax attributable to the owners of Brit Limited
(adjusted for amortisation net of tax, defined benefit pension
scheme’s charges/credits net of tax, and foreign exchange
movements net of tax), divided by total equity attributable to the
owners of Brit Limited at start of year (less intangible assets
net of deferred tax, and pension asset net of deferred tax),
adjusted on a time weighted basis for any distributions and
shares issued during the year.
Running yield: The income return, expressed either
as a percentage or a monetary amount, on invested assets.
S
Service companies: Subsidiary companies set up to operate
a binding authority on behalf of the Syndicate to write business
from non-Lloyd’s brokers or direct from policymakers.
Short-tail: The term used to describe business where the
difference between the timing of the average premium
receipt and the timing of the average claim payment
is under three years.
Softening or soft market: An insurance market where
prevalent prices are low, and terms and conditions offered
by insurers are less restrictive.
Solvency capital requirement (SCR): The higher of the two
capital levels required by Solvency II. The SCR is the prudent
amount of assets to be held in excess of liabilities and
functions as an early warning mechanism if it is breached.
The SCR is calculated using either the standard formula
or an approved internal model.
Solvency matched: The matching of the currencies of the
Group’s liabilities and management entity capital requirements
with the currencies of the assets held by the Group.
Solvency II: A combination of several EU Directives that codify
and harmonise EU insurance regulation, primarily concerning
the amount of capital that EU insurance companies must
hold to reduce the risk of insolvency. Principal components
are Directive 2009/138/EC on the taking-up and pursuit
of the business of insurance and reinsurance and Directive
2012/23/EU on the financial position of insurance undertakings.
Solvency II came into force in all EU member states
on 1 January 2016.
Strategic asset allocation (SAA): The Group’s strategic
asset allocation defines the overall Group investment
strategy and reflects entity-level considerations and
governance matters. See ‘asset allocation’.
Syndicate: A group of underwriting members of Lloyd’s
or a single corporate member managed as a unit to underwrite
insurance business at Lloyd’s to which a particular syndicate
number is assigned by or with the authority of Lloyd’s of London.
T
Technical price: The price for the risk which is expected
to produce the long-term required return on capital
for the Group.
Total operating expenses: These represent all expenses
incurred by the Group, excluding commission costs.
Treaty: A reinsurance contract pursuant to which the reinsurer
is obliged to accept, within agreed limits, all risks underwritten
by the reinsured within specified classes of business
in a given time period.
U
Ultimate claims: The total forecast claims expected to arise
from a policy or class of business. Ultimate claims include those
losses paid, those notified and IBNR.
Underwriting capacity: The maximum premium income which
a Lloyd’s syndicate is permitted to underwrite. A capacity
figure is assigned to each underwriting year and the relevant
premium income is defined as gross written premiums less
commission payable.
Brit Limited
The Leadenhall Building
122 Leadenhall Street
London
EC3V 4AB
UK
writing the future
britinsurance.com