Lancashire has released its update on current trading conditions, stating that, with the exception of marine, the favourable pricing and terms of 2006 are anticipated to remain healthy through 2007, particularly in cat-exposed zones.
The Bermudan insurer believes however that outside these zones, there may be some modest weakening but pricing is expected but to remain broadly acceptable in most classes.
Describing the year so far as a very successful one for Lancashire, Richard Brindle, chief executive and chief underwriting officer said: “As 2006 has progressed we have made large strides in broadening our underwriting team, creating a sophisticated risk management toolkit and in building support functions to efficiently service the workflow.”
While confident in the overall performance of Lancashire's property and energy segments, Brindle raised concerns about developments on the marine side. “We have consistently been disappointed with pricing. As such, we have declined to write a large proportion of what has been presented and premiums are less than expected as a result."
Drilling down into the company's financial predictions, Neil McConachie, CFO said: “GAAP gross written premium for 2006 is expected to be in the range of $615m to $625m depending on market conditions through the end of the year. This is based on projected bound premium of $675m to $700m. The marine segment has remained largely unattractive and we have declined a higher than expected number of deals in the second half of the year. AV52 aviation, where a large number of deals are written in the fourth quarter, has also seen somewhat weaker pricing than we anticipated earlier in the year.”
