Barents Re celebrated its 20th anniversary in 2016 and I am delighted to announce a solid set of financial results to commemorate this auspicious occasion. We generated a net profit of USD 19.3 million which equates to a very healthy 31.5% net profit margin. Our total assets increased to USD 515 million (2015: USD 453 million) and Shareholders’ Equity rose to USD 430 million (2015: USD 382 million). We are very satisfied with our 2016 results as, once again, we achieved our primary financial objective of retaining a strong balance sheet with excellent capitalisation.
As has been the case for many years, the combination of slow economic growth, low interest rates and intense competition were the prevalent drivers of financial performance in the reinsurance sector in 2016. As evidenced across the reinsurance sector, financial performance in 2016 was in part driven by a higher loss burden and a reduced contribution from prior year development.
Despite these challenges, Barents Re maintained its strategic course to deliver superior client service and shareholder value. One of the constant features of our business is the focus on managing severity and remaining outside of high frequency business. Furthermore, we withdraw from inadequately priced accounts as we will not compromise on underwriting discipline.
This consistency of approach coupled with the experience gained from managing the peaks and troughs of the cycle, punctuated by financial crises and catastrophe events, means we have been able to steer a steady course through the prolonged soft market. Whilst others may have fallen by the wayside, Barents Re remains a resilient partner for our clients.
The strength of our relationships with clients and business partners instils huge confidence in our continued ability to deliver on our strategic objectives. Our track record allows us to obtain superior quality retro cover and the fact that we have worked with most of our retro partners for over 10 years is testament to the belief that they have in our business model and our ability to deliver on our strategy.
We were able to celebrate a number of achievements in our twentieth year. Foremost amongst them were the announcements from A.M. Best in November which affirmed our Financial Strength Rating of A (Excellent) Stable Outlook for Barents Re Reinsurance Company, Inc. and assigned the A (Excellent) Stable Outlook Financial Strength Rating to Barents Reinsurance S.A., our recently established Luxembourg subsidiary company. Barents Reinsurance S.A. is the vehicle to manage our international development and is now underwriting international new and renewal business. To achieve the A (Excellent) rating at the first time of asking is an outstanding achievement which is testament to the company’s financial management and our ability to provide substantial capacity for our clients’ benefit over the long term.
As well as reflecting on the achievements of the past year, this is also an opportune moment to look to our future. In 2017, we will bring on board experienced and highly regarded underwriters to expand into those business lines where we can build a niche-product strategy that is focused on profitability and not on market share. In keeping with this strategy, we will expand into Marine Cargo and Renewable Energy. Renewable Energy will complement our highly-regarded Energy business, notably for hydrocarbon exploration and production companies, which has gone from strength to strength in recent years. Our reputation means that we continue to attract top quality personnel from around the world.
I would like to close by stating my gratitude to our excellent staff without whom we would not be the success story that we are today. We have a clear and proven strategy of being a niche player that is responsive to the needs of its clients. Our people make the achievement of this strategy possible. I am enormously proud of the company we have built together over the past two decades and I am very confident about our future.
We look forward to working with our clients and business partners throughout the coming year.
President & CEO