3 November 2016 Insurance

Lancashire's improves profits, shrinks book, stresses cycle management

Lancashire Holdings enjoyed improved profits in the third quarter of 2016, however, its business shrunk slightly as it stressed the need to manage the cycle through tough market conditions.

Lancashire's pre-tax profits were $42.9 million, up 30.4 percent compared with $32.9 million in the same period a year earlier.

The company's combined ratio was 73.8 percent, up 3.6 percentage points year on year.

Lancashire's gross premiums written for the three-month period ending September 30 were $108.2 million, down from $120.4 million for the same period in 2015.

Specifically, gross premiums written for its property segment were 39.7 million, a decrease of 2.7 percent.

Alex Maloney, group chief executive, said: “The Group’s results for the third quarter have once again been strong. Our RoE of 3.1 percent for the quarter and 10.5 percent for the year to date demonstrate our ability to deliver excellent results through the insurance cycle and during challenging market conditions. These results are a tribute to the quality of our people throughout the Group and an illustration of the fruits of disciplined underwriting and prudent risk selection.”

He also noted that while the recent hurricane activity in the US will not be enough move the market, the losses represent “timely reminder of the volatility and unpredictability of loss events in our industry and will contribute to the further erosion of margins and profitability across the sector”.

He added: “These results and the salutary lesson of Matthew demonstrate the value of our strategy of managing the insurance cycle, which during the current soft market phase demands that we maintain a core book of business. Our strategy is unchanged as we are working to maintain our long term profitable underwriting relationships whilst managing our outwards exposure through the purchase of well-priced targeted reinsurance.”

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