Profits and growth down at Lancashire
Re/insurer Lancashire posted a drop in profits and growth for the first quarter of 2015, although its chief executive officer said he remains optimistic.
Its profits fell to $53.7 million in the first quarter of 2015, compared with $60.1 million in the first quarter of 2014, while its combined ratio deteriorated to 72 percent in the quarter, compared with 66.4 percent in the first quarter of 2014.
Lancashire’s gross written premiums (GWP) decreased 22.9 percent in the first quarter to $244.3 million, compared with $316.7 million in the prior year quarter. This was mainly driven by the re/insurer’s property segment where a number of multi-year deals written in the first quarter of 2014 were not yet due to renew.
Property GWP decreased by 34.6 percent, aviation GWP fell by 26.7 percent, marine by 16.5 percent and aviation by 23.6 percent.
Lancashire’s Lloyd’s segment, Cathedral, posted a fall in GWP of 9.8 percent, driven by pricing pressures throughout property reinsurance, aviation reinsurance and marine cargo lines of business.
The re/insurer added that these classes of business and the direct and facultative line of business have been affected by the timing of renewals. It added that the fall in premiums was partly offset by an increase in the energy, terrorism and aviation lines of business which Cathedral began writing in 2014.
Alex Maloney, chief executive officer, said: “With relatively benign loss experience and no significant insured catastrophe activity, I am pleased with our first quarter performance in the context of a difficult market environment, with pricing under pressure across almost all lines of business.
“Whilst there is some evidence of a floor being reached in catastrophe bond and ILW pricing, there continues to be a glut of capacity with significant over-supply in every area. As an incumbent market on our core portfolio with significant and well-recognised leadership capabilities, we believe Lancashire is better positioned than many of our competitors. However we are not complacent and are working hard to stay close to our clients and brokers.
“We are alive to the possibilities to bring in new underwriters or teams as the effects of M&A displace or displease talented people. But in general we are biding our time and sticking to the lines and classes we know best. Benign loss environments do not persist forever and we feel well prepared for any change in the market.”