Global specialty insurer and reinsurer Brit says first-half net profit fell 18% to £56.6 million ($101.5 million) as foreign exchange movements and initial public offering costs hit earnings.

Gross written premium (GWP) grew 4.5% to £701.2 million ($1.26 billion), investment returns increased to £56.3 million ($100.9 million) from £9 million ($16.13 million) and underlying operating earnings gained 71% to £96 million ($172.1 million).

The combined operating ratio deteriorated to 88.3%, compared with 86.2% in the corresponding period last year.

CEO Mark Cloutier says Brit is focused on underwriting profitability, while new business initiatives that started last year are lifting earnings.

“The addition of underwriting teams in London, the opening of Bermuda and growth in the US has driven significant profitable business into our company,” he said.

Brit acquired renewal rights to QBE Underwriting’s London-based Lloyd’s aviation business at the start of June.

“With aviation being the largest single segment of the Lloyd’s market in which Brit did not participate, this was a unique opportunity to acquire a market-leading aviation team that was a strategic fit for the group,” the company said.

GWP from direct grew 10.8% to £520.7 million ($933.4 million) in the half-year, while reinsurance fell 9.8% to £180.5 million ($323.6 million).

“Looking ahead, the underwriting environment is undeniably becoming increasingly challenging,” Mr Cloutier said.

He says Brit’s underwriting discipline, opportunistic growth and financial strength mean the company is “well positioned to face off against current market conditions”.