3rd May 2018 10:13
LONDON (Alliance News) - Lancashire Holdings Ltd said Thursday "strong" underwriting result and a relatively benign loss quarter led to a 48% jump in first quarter pretax profit.
For the three months to March-end, the Bermuda-based insurer reported a pretax profit of USD42.4 million, up from USD28.7 million recorded in the year ago period. Gross premiums grew to USD215.8 million from USD196.5 million.
Combined ratio - a key profit measure for insurers - stood at 65.2% at the period end versus 85.6% a year ago. A score under 100% indicates underwriting profitability.
Of the company's five main divisions, Aviation recorded the biggest increase in premiums. It was up 25% to USD4.0 million from USD3.2 million. Marine saw the biggest decline, down to USD14.9 million from USD20.3 million. Property premiums totaled USD79.9 million, up 8.1% from USD73.9 million.
Lancashire said the change in Marine gross premiums is down to "renewal timing" on non-annual contracts written in the first quarter of 2017. The property gross premiums increased due to rate increases together with "some" new business.
The company said this was offset "somewhat" by prior underwriting year adjustments on the property political risk class - where some contract terms "reduced due to loans that were re-structured".
Lancashire has seen an "improved" rating environment following the major catastrophe losses of 2017. The company believes it is in a "slightly more interesting" trading environment but the demand supply dynamic "has not shifted sufficiently" to change its underwriting discipline of "matching risk and return".
The company said its overall risk remain "broadly" similar to that of 2017.
As at March 31, Lancashire's total capital was USD1.45 billion, comprising shareholders' equity of USD1.12 billion and USD327.6 million of long-term debt.
Chief Executive Alex Maloney said: "Overall we are pleased with our first quarter: The underwriting result is strong; our 2017 catastrophe loss reserves remain robust; and our investment portfolio performed in line with expectations given the environment."
Shares were trading 4.5% higher at 625.50 pence each in morning trade.
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Lancashire Holdings