1st Nov 2018 08:57
LONDON (Alliance News) - Lancashire Holdings Ltd on Thursday reported a narrowed third-quarter loss after paying out for a number of "natural catastrophes", none of which individually stood out but together resulted in the negative return.
Despite the quarterly setback, the insurer declared a special dividend.
For the three months ended September, the FTSE 250-listed insurer recorded a pretax loss of USD25.3 million, narrowed from the previous year's loss of USD136.4 million.
Lancashire Holdings' gross premiums written in the quarter decreased to USD115.2 million from USD143.0 million the year before.
The main driver behind the loss is a 31% reduction in property premiums written to USD32.4 million from USD46.8 million.
The segment's premiums were down due to a USD7.0 million reinstatement of premiums in connection with hurricanes Harvey, Irma and Maria in 2017 and political risk classes not yet due for renewal.
Lancashire's Energy segment's gross premium were down 17% to USD20.3 million from USD24.4 million due to multi-year contracts written off in the offshore energy class in 2017 that are not yet due for renewal.
The insurer's Lloyds of London written premiums increased 7.0% to USD54.8 million from USD51.2 million.
The increase was driven by its property direct and facultative, marine and aviation books experiencing improved rates and increases in exposure on prior underwriting year risk-attaching business, Lancashire said.
"The third quarter of 2018 was at least as active as 2017 in terms of the number of events to impact the industry. The magnitude of insured loss, however, has been much smaller," said Alex Maloney, chief executive officer.
"We have, nonetheless, produced a small loss for the quarter as a result of these events. While it's always disappointing to lose money in any quarter, we remain in positive territory for the year to date. The loss events during the quarter are a well understood part of our business model; we are prepared for such events and they lie within our risk expectations."
Lancashire has a pretax profit of USD49.6 million in the nine months to September 30 compared to a USD69.7 million loss in the same period a year before.
Lancashire declared a special dividend of USD0.20 per share for the quarter, versus no such pay out last year.
The insurer's combined ratio of the period came in at 135.2%, improved from 213.3% last year, though still loss-making. For the year-to-date, Lancashire's combined ratio is 86.9%, down from 126.4% in the first nine months of 2017. A score below 100% indicates underwriting profitability.
Lancashire's return on tangible equity in the third quarter was negative 2.2%, better than last year's negative 11.9% return.
Chief Financial Officer Elaine Whelan said: "In an active quarter for both risk losses and natural catastrophes, we experienced a number of losses - none individually material, but the accumulation of loss events resulted in a negative return on equity for the group.
Looking ahead, Lancashire believes the risk exposure to is property catastrophe line to remain at similar levels for the rest of 2018.
The insurer will also look to expand its specialty insurance lines, where it sees the opportunity for growth in 2019.
Whelan added: "Our outlook for 2019 is a continuation of current market trends. We expect to maintain our core book of business and continue to expand our specialty insurance lines of business. While we will take advantage of any opportunities we see in the reinsurance lines, due to further enhancements in our reinsurance program, we do not anticipate needing any more capital for those."
Shares in Lancashire Holdings were up 2.5% Thursday at 606.50 pence each.
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