MESSAGE FROM THE CHAIRMAN
I am happy to announce that Barents Re continued to deliver excellent financial results in 2018. We generated a net profit of USD 15.4 million which equates to a 16% net profit margin* In a similar vein, our total assets grew to USD 641.0 million (2017: USD 622.1 million) and Shareholder’s Equity rose to USD 471.2 million (USD 2017: USD 463.3 million). Barents Re’s performance was especially pleasing given the difficult trading conditions in 2018. Our strong balance sheet and capitalization enables Barents Re to offer superior financial security.
Strategy, Challenges & Market Environment
From the well-established lines of Bonds, Energy and Property, to those more recently created such as Life, Marine and Financial Lines, we have a diversified portfolio designed to withstand the vagaries of the re/insurance cycles in the world’s developed and growth markets. Our line of business pillars are underpinned by the discipline and resilience to walk away from opportunities which do not satisfy our stringent underwriting criteria. A further essential ingredient for our success is our ability to obtain superior quality retro cover through trusted business partners, many of whom we have been working with for over a decade. Enduring relationships which are testament to the high regard in which Barents is held in the re/insurance market.
As we look back on 2018 in our Line of Business Overviews, one such vagary with which we had to contend was that rates in certain lines and geographies did not increase across the market at the pace required to produce sustainable technical results. Barents dealt admirably with this challenge in delivering another strong set of profitable results, once again proving the value of our niche underwriting strategy. Looking ahead, we are always alive to opportunities to broaden our offering where we can build a niche-product strategy that is focused on profitability and not on market share. If such an opportunity presents itself then we will seek to capitalise by bringing on board highly experienced and well-renowned underwriters.
A major development for the company in 2018 was the redomestication to the Cayman Islands; a jurisdiction which offers a strong legislative framework, a positive long-term credit outlook and political stability. In considering our options for a new home for the company, we always maintained our focus on our core aim: our choice of new jurisdiction must have a positive reputation and credibility with our clients, business partners, regulators and rating agencies. The Cayman Islands ticked all the boxes. Clients and business believe that our move to the Cayman Islands, with its positive reputation as a financial services jurisdiction, will provide even greater reassurance for their own stakeholders.
As I write, we are still awaiting clarity on the nature of the UK’s future economic and trading relationships with the EU and the wider world. Whilst I believe that Brexit presents businesses with both challenges and opportunities, the uncertainty surrounding its outcome is a destabilising factor in companies’ long-term planning. A distinct advantage of the Cayman Islands is that it is an autonomous British overseas territory which may prove to be very beneficial as part of our Brexit planning. The Cayman Islands operates a similar legal and financial framework to the United Kingdom, and indeed Europe, a region that continues to form an important part of our growth strategy.
Rated: A (Excellent)
Just six months after we completed the move to the Cayman Islands, we were delighted to receive affirmation in December 2018 from A.M. Best of our A (Excellent) Stable Outlook financial ratings for Barents Re Reinsurance Company, Inc. and Barents Reinsurance S.A. Looking to the future, the Cayman Islands’ long-term outlook is seen as a positive benefit in favour of the A.M. Best ratings because the rating of a company is influenced by
the jurisdiction where the company is established.
Aa a fitting conclusion to a summary of another successful year for Barents Re, I would like to take this opportunity to thank all our fantastic staff who deliver the superior service to which we aspire each and every day. We look forward to working with all our clients and business partners in the year ahead.