Lancashire H1 profit jumps by 29%

Specialty insurer Lancashire Holdings made a profit after tax of $134.1m (£87.3m) in the first half of 2013, up 29% on the $103.7m the firm made in the same period of 2012.

The insurer’s combined operating ratio fell by 8.4 percentage points to 58.8% in H1 2013, from 67.2% in H1 2012, as the firm’s loss ratio improved to 26.2% from 46.5%

The company attributed the improvement to prudent underwriting and added that it would expand its core business where possible.

Gross written premium fell by $90.9m to $423.9m from $514.8m.

Lancashire Holdings group chief executive Richard Brindle said: “While a lot of the discussion this year about the insurance business has been focused on the influx of new capital into the property reinsurance market, it is important to remember that the bulk of Lancashire’s business is in the direct specialty lines where barriers to entry are much higher.

“Our specialty lines in terror and political risk, energy, aviation and marine account for around two-thirds of our portfolio in 2013. These are niche markets where the experience and reputation of our underwriters and claims staff, the relationships we have built with clients and brokers over decades in the business and the ability to offer market-leading capacity with an efficient decision-making process make Lancashire a preferred partner.

“All in all, Lancashire continues to produce excellent underwriting results and we thank all our clients and brokers for their support. We often say that a soft market is a better test of underwriting approach and ability than a hard market, and we’re well placed to negotiate the current market conditions.”

Lancashire Holdings group chief financial officer Elaine Whelan added: “With no improvement in our trading outlook, we have substantial excess capital. This obviously affords us maximum flexibility to take advantage of any opportunities that may arise but, in the absence of those, we would expect to return our earnings to our shareholders later in the year.”