Join our community of smart investors

Brit heading for Canada

Brit's board and major shareholders all recommend acceptance of a bid from Fairfax Financial.
February 26, 2015

The return of Lloyd's insurer Brit (BRIT) to the listed market could prove little more than a one-year stand after the recommended acceptance of a 305p a share offer from Canadian property insurer Fairfax Financial. While retail shareholders contemplate the merits of the offer, they have been rewarded with a 12.5p a share special dividend. Together with the regular dividend, this equates to a yield of over 10 per cent.

IC TIP: Await documents at 304p

Left to its own devices - which given the recommendation is unlikely to continue - Brit is performing very well. Underwriting, investment and operational performance together delivered a near 21 per cent return on net tangible assets last year. In addition, a benign claims environment led to a combined ratio (of claims to premium income) of 89.5 per cent. The total investment return rose 38 per cent to £75.7m - representing an impressive return of 2.9 per cent - as falling government bond yields and tightening credit spreads increased unrealised gains within the bond-heavy investment portfolio.

This is subscriber only content
Start your trial to keep reading
PRINT AND DIGITAL trial

Get 12 weeks for £12
  • Essential access to the website and app
  • Magazine delivered every week
  • Investment ideas, tools and analysis
Have an account? Sign in