Brit may be a staunchly pro-London insurer, but with its Bermuda sidecar and new Gibraltar venture it is broadening its horizons. Emma Jones looks at the progress of an ambitious player.
It will not have escaped the attentions of those who have graced the Brit CEO Dane Douetil’s office with their presence that he has an inspirational, yet little-known quote placed purposefully on his desk. The words of Calvin Coolidge, the 30th president of the United States, ring loudly in his ears:
“Nothing in the world can take the place of persistence,” he reads. “Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘press on’ has solved and always will solve the problems of the human race.”
Brit Insurance has got its finger in almost every insurance pie. Lloyd’s, London, Bermuda and now Gibraltar. Its interest in a raft of disciplines, business lines and market-led initiatives, is by no means a handicap. On the contrary, the company’s business profile is, as rating agency AM Best puts it, “strong”. Brit is diverse, dynamic and driven.
Setting the standards
That ambitious attitude is no more evident than at its helm. Douetil has been in charge of Brit Insurance Holdings since 2005. Prior to becoming chief executive officer of the £180m profit making company he was CEO of the group’s subsidiary, Brit Insurance Limited (BIL).
For nine years, the former Willis Faber broker has immersed himself in the company’s ethos and unsurprisingly is well-versed in the Brit methodology. Douetil is clear and concise about the insurer’s aims – and so too are his employees, stakeholders and customers.
The reason for keeping the Coolidge quote on his desk is strikingly clear in the way Douetil chooses to run his business. “As the quote says, you can be the brightest person in the world, you can be clever, you can be a genius, but ultimately it is hard work that gets you where you want to be,” says Douetil. “In my view, it’s a case of putting one foot in front of the other and having a clear view of where you want to go.”
“The restructure has sent out a clear message to Brit's competitors that it is intent on manipulating the market to its advantage
He says it is important to have a very clear strategy about what you want to accomplish and that you should make it clear to everyone concerned. Douetil did just that earlier this year when he openly announced plans to restructure the group, ensuring it is well positioned to capitalise on successes thus far. The restructure has sent out a clear message to Brit’s competitors that it is intent on manipulating the market to its advantage.
Been there, done that
Tweaks have been made to the company’s formation with the introduction of an independent underwriting advisory forum; two dedicated claims functions for the UK division and the global markets/reinsurance divisions have also been created. Leadership has been instilled in every portion of the group with the appointment of a CEO for each strategic business unit. The advisory forum has taken on two key non-executive directors whose sole purpose is to advise on underwriting and the underwriting cycle. “They have almost become non-partisan wicketkeepers,” says Douetil.
“Brit Insurance has undergone a sustained period of growth and transformation in the last five years,” Douetil announced in July. “We are entering a new phase in our evolution and these measures will help us better to meet the needs of our broking partners, customers and employees.”
Three months on and the new face of Brit is bedding in nicely. “It’s early days, but we’ve been very happy with some of the behavioural changes and things that we wanted to achieve,” reveals Douetil, adding that the restructure has given the three heads of business [Mike Sibthorpe – Global Markets; Jonathan Turner – Brit Reinsurance; and Peter Burrows – Brit UK] “more focus on ownership and accountability”.
The group’s realignment has not been the only change communicated by Brit this year. 2007 has, for many reasons, proved to be a significant juncture for the UK-domiciled general insurance and reinsurance group, which has grown from being a £4m standalone reinsurer to a multimillion pound company.
The company has divested its interest in fund manager, Epic Investment Partners and sold the group’s majority stake in technology company, RI3K. Douetil is keen to point out, however, that it remains unwaveringly committed to business efficiency and the progression of technology.
“The tactic of retaining premiums, which have previously been placed into the market, is intriguing at a time when reinsurance is being traded at such a reasonable rate
In addition, it has performed a £50m buyback programme of ordinary shares, entered a three-year catastrophe swap contract with Freemantle Limited and last has set up a protective cell captive in Gibraltar. “Perhaps the most important moment in the group’s history was two years ago when we clearly set out our strategy for 2010,” explains Douetil on the origins of such an industrious 12 months. “2007 has been the year that we’ve been able to say, ‘we’ve been there, got the t-shirt and achieved what we said we wanted to do’,” he adds.
That is not where it ends. Douetil aims to beef up its gross written premiums, which officially stand at £1.2bn, to £2bn by 2010. “While the achievements made in 2007 are satisfying, it doesn’t stop there,” insists Douetil. “We operate in a very competitive world. The key is to keep adapting, keep changing, we don’t have the opportunity to rest on our laurels and nor should we.”
Steady as a rock
By shedding a number of none-core business interests it has freed the insurer up to concentrate on more insurance-led ventures. In September, Brit announced plans to put in place a small team of senior underwriters to work in Gibraltar. They will be tasked with developing the reinsurance business of a dedicated cell in a newly-formed and independently-owned protected cell company – Rockhampton Insurance PCC Limited.
Brit will use Rockhampton within its overall risk management framework to retain a selected part of the outwards reinsurance programmes of its two principal insurance operations, Brit Insurance Limited and Syndicate 2987. From 2008, it will also be able to participate – if it so chooses – in the group’s purchased quota share and excess of loss reinsurance programmes alongside its panel of external reinsurers and on equivalent terms.
“In the light of the increasing scale, diversity and maturity of our underwriting portfolio, there is scope to increase our retention of non-catastrophe risk without compromising our overall risk appetite and without the need for additional capital,” explains Douetil. “Gibraltar is an attractive location with numerous advantages, including the availability of PCC legislation, EU licensing, a favourable taxation regime and good access to London. Rockhampton will become a valuable addition to our asset and liability management toolkit.”
The tactic of retaining premiums, which have previously been placed into the market, is intriguing at a time when reinsurance is being traded at such a reasonable rate. Douetil is quick to defend the move: “Rockhampton is not about the next six, 12 or even 18 months. It is about the long-term strategy of Brit Insurance Holdings. It doesn’t matter what the current pricing of reinsurance is, the fact of the matter is it does not make commercial sense to see that amount being cast away.”
“For the time being Douetil does not intend to grow geographically, he is content with growing the business through three platforms
Experimenting so freely in the reinsurance market should come as no surprise to those familiar with Brit’s history. It is no stranger to the risk discipline. Reinsurance stands at the very core of the company. Previously known as Benfield Reinsurance Company, before being relaunched in 1999 as Brit Insurance Limited, the insurer has a strong history of reinsurance expertise. The creation of a protective cell captive, therefore, is yet another example of its confidence in the demanding market.
Rockhampton is also not the first offshore operation to send the company straying out of its comfort zone. Norton Re, a retrocession sidecar launched in Bermuda at the end of 2006, signalled the company’s intention to spread its wings beyond the confines of the UK. According to Douetil, however, Norton Re poses a very different prospect for the insurer.
“We had very different reasons for establishing operations in Gibraltar and launching Norton Re,” explains Douetil. “Following the hurricanes in 2005, we, like everybody else, had to reassess the way in which we quantified risk and… we realised we had more risk and more volatility on our balance sheet than we cared to have so we cut our aggregate.” Because the company liked the retrocession business, the most obvious solution was to become an investor in an off-balance sheet sidecar. Rockhampton [unlike Norton Re] is consolidated at a group level and will remain within the company’s balance sheet.
To date, Brit is having a profitable year. In the first six months profit before tax was £106.8m, up slightly on 2006 by £800,000. Its Lloyd’s business, Syndicate 2987, remains the ninth largest Lloyd’s syndicate with £525m capacity for 2007. The range of products includes: financial risks, aviation, casualty, marine, motor, and North American professional indemnity. “It’s critical for an insurance group to be diversified,” says Douetil, rather predictably. “By being diversified you have the ability to shrink and grow different areas of your business in different geographical areas while at the same time maintaining a less volatile balance sheet.”
For the time being Douetil does not intend to grow geographically, he is content with growing the business through three platforms, Lloyd’s, London and Gibraltar, with additional investment in Norton Re. “We have grown from a very eclectic mix of businesses, where we wrote part shares on four different syndicates, managed three others and wrote through 16 corporate vehicles and through 100 different syndicates. We were an investment trust, now we’re absolutely a focused insurance group,” he concludes.
Brit: Dane Douetil
Dane was appointed chief executive officer of Brit Insurance in April 2005 having been deputy chief executive officer since March 2004 and an executive director since 1999. He joined the company in August 1998 and was appointed chief executive officer of Brit Insurance Ltd (BIL) in December 1998. Douetilâ€™s career began at Willis Faber Group in 1982, when he was appointed executive director of the political and financial risk division in 1988. He was a founder shareholder and director of insurance broker, Special Risk Services, from 1989 to 1994. Between 1994 and 1998 he acted as a consultant on the sale of a number of mortgage operations and as a risk consultant for several financial institutions. He was appointed a full time consultant to the Benfield Group in July 1997 prior to joining BIL. Douetil was on the board of the Lloydâ€™s Market Association from 2004 to 2006, is chairman of the Market Reform Group and chairâ€™s the industryâ€™s Contract Certainty Steering Group. Dane was appointed a CBE in 2007 for services to business.
Emma Jones is a freelance journalist.