Lancashire falls to Q3 loss with 213% combined ratio
Specialty re/insurer Lancashire Holdings reported a net loss of $139.0 million for the third quarter compared to a net profit of $40.1 million in the same period a year ago.
“The last couple of months have witnessed a series of damaging hurricanes in the Caribbean, the Gulf of Mexico and US coastal regions and two significant earthquakes in Mexico,” CEO Alex Maloney explained.
“At such times, Lancashire expects to pay losses, and this is reflected in our results for the third quarter and the year to date,” Maloney said.
The combined ratio deteriorated significantly to 213.3 percent in the third quarter from 73.8 percent in the same period a year ago.
“Catastrophe underwriters industry-wide have experienced losses of many billions of dollars, which will have depleted capital and stressed balance sheets across the global insurance sector,” Maloney said.
“After many years of soft pricing conditions, we are at last seeing some evidence of an increase in pricing, particularly in catastrophe exposed lines. The first major test of the market dynamics will be the year-end insurance and reinsurance renewal round. Many product lines will be loss-affected and I would expect to see a return across the sector to more disciplined underwriting standards and pricing which reflects the true risks and exposures,” Maloney added.
Overall, gross premiums written increased to $143.0 million in the third quarter of 2017 compared to $108.2 million in the same period of 2016. Aviation was the only line that saw a reduction, with gross premiums written falling 51.8 percent year on year to $5.3 million in the third quarter. Gross premiums written at Lloyd’s grew 33.0 percent to $51.2 million over the period. The increase for the quarter was primarily due to $10.0 million of reinstatement premiums in connection with hurricanes Harvey, Irma and Maria plus the Mexican earthquakes. In the first nine months of the year, gross premiums written at Lloyd’s decreased, driven by the property, energy and terrorism books as rates remained under pressure due to overcapacity in the market, partially offset by the increase in reinstatement premiums during the quarter.
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