Leading legal expenses insurance operator Elite Insurance Company is expecting a solvent run-off in the wake of its surprise announcement last month to cease writing new business, it has told its Gibraltar regulator.
In its solvency and financial condition report, for the year to 31 March 2017, Elite held surplus capital over its minimum capital requirement of £22.2m, while there was a shortfall of £9.7m against its solvency capital requirement.
Elite launched in 2005 to write legal expenses insurance in the UK. In the following years, it diversified into other lines of general insurance business and other countries in Europe, establishing branches in the UK, France, Spain and Italy.
At the time of the report, prepared for the Gibraltar Financial Services Commission, it employed around 90 employees, split between the insurance business, Elite Business Development Limited and alternative business structure Elite Legal Services, located across the company’s UK branch offices in London, Grantham and Warrington.
Other group businesses are Litcomp, Cox Associates, Legal Reports and Services, and Torridon Capital.
It is owned by well-known businessman and investor Nigel Wray (30%), the management team of chief executive Jason Smart, chief operating officer Russell Smart and finance director Paul Lavender (30%), and private equity firm Maven Capital Partners (40%).
During the year, Elite made a technical underwriting loss of £15.1m, compared to a £17.4m profit in the previous 12 months.
“Underwriting performance has been affected by the large reserve strengthening exercise carried out prior to 31 March 2017, affecting the UK legal expenses business where reserves were increased to reflect actuarial valuations and an increase to cancellation provisions; and French ‘decennial’ construction lines of business where reserves were increased in line with a revised actuarial methodology.”
The report revealed what Elite’s had been thinking about the impact of Brexit.
“The company has been exploring the establishment of another insurance company in Luxembourg, with the Luxembourg insurer writing Elite’s European and Euro denominated business, with the UK GBP denominated business remaining within the Gibraltar insurance company.”