5th Nov 2014 11:26
LONDON (Alliance News) - Lancashire Holdings Ltd Wednesday said it will pay a special dividend of USD1.20 a share for the current financial year due to its strong capital position, as it reported a rise in pretax profit in the third quarter.
"With no meaningful change in our outlook for the coming renewal season, we don't need as much capital as we are currently carrying. The announcement of our special dividend and dividend equivalent payments of approximately USD250 million brings our total capital return since inception to just under USD2.2 billion, or 99.5% of total comprehensive income since inception," Chief Financial Officer Elaine Whelan said in a statement.
The special dividend represents a return of 173.3% of comprehensive income for the year to date, according to Whelan.
The news came as the specialty insurer reported a rise in pretax profit to USD36.1 million in the three months ended September 30, from USD25.7 million in the corresponding period last year. Pretax profit for the first nine months of the year rose to USD135.0 million from USD162.9 million.
Third-quarter gross premiums written rose to USD152.1 million, from USD125.0 million, primarily a result of the new Lloyd's of London book following the acquisition of Cathedral last year, which more than offset drops in property, energy and aviation. Lancashire also saw a rise in marine gross written premium.
While there were no "significant" losses in the third quarter or in the first nine months of the year as a whole, Lancashire said it experienced higher attritional losses in its aviation and Lloyd's of London segments.
Net investment income rose to USD6.7 million, a 9.8% increase from the third quarter of 2013, mainly due to the increased size of the investment portfolio resulting from the acquisition of Cathedral.
Shore Capital's Eamonn Flanagan, who has a 'Buy' on the stock, said Lancashire's nine monthly results were a "mixed bag".
Flanagan said profits were below its expectations and at the bottom of company-sourced market consensus, but that the special dividend was "materially ahead" of both what he and the market had been expecting. The analyst expects another special dividend at the end of the year.
Lancashire shares were down 1.6% at 641.00 pence on Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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