5th Nov 2015 08:30
LONDON (Alliance News) - Lancashire Holdings Ltd on Thursday questioned the wisdom of chasing top line growth as its third-quarter premiums fell amid pressure on reinsurance and insurance pricing, and the specialty insurer declared a special dividend enabled by the "excess" capital on its balance sheet.
Third-quarter pretax profit fell to USD32.9 million in the three months to September 30 from USD36.1 million in the corresponding quarter the prior year, as gross premiums written fell to USD120.4 million from USD152.1 million. Its combined ratio, a measure of underwriting profitability, improved to 70.2% from 82.4%.
Lancashire declared a special dividend of USD0.95 per share.
"Our outlook for 2016 is for a continuation of current market trends. While we expect to maintain our core book, with our current reinsurance programme we won't need as much capital as we are currently carrying. We are therefore returning more than earnings with a special dividend of USD188.0 million. That represents 151.0% of comprehensive income for the year to date," Chief Financial Officer Elaine Whelan said in a statement.
Eamonn Flanagan, an analyst at Shore Capital, said the results were ahead of his forecasts and comfortably beat consensus estimates.
"This performance was neatly complemented by a special dividend, of 95c, which was materially ahead of our 50c forecast and the consensus figure of 72c, and is another demonstration of the capital discipline that permeates this well run and highly focused business," Flanagan said in a note.
Shares in Lancashire were up 5.8% at 743.50 pence on Thursday morning in early trading.
By Samuel Agini; [email protected]; @samuelagini
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