Insurer announces fall in premiums in second quarter of 2008.
Lancashire Holdings Limited has announced a profit before tax of $49.8m for the second quarter of 2008, down 40% on the same period last year.
The insurer posted gross written premiums of $196.7 million, down 27.4% on the same period last year, and a combined ratio of 72.3%, for the second quarter of 2008.
For the first six months of 2008, it posted gross written premiums of $383.4 and a combined ratio of 66.4%.
Group chief executive Richard Brindle said: ““I am delighted to report another very strong performance by Lancashire. Following our 5.0% growth in book value per share in the first quarter of 2008 we have followed with a further 3.1% in the second quarter, compounding to a total of 8.3% for the first half of a very difficult year for the property and casualty sector. We are very proud that our cautious approach in a softening market has produced a combined ratio of 72.3% in the second quarter, and 66.4% for the year to date.
“As expected, and as previously advised, premiums in the second quarter were significantly lower than the prior year as we took a disciplined stance on renewals. While a significant proportion of deals renewed at acceptable rates, we stuck to the Lancashire strategy of turning away business which doesn’t meet our return requirements. Much of the catastrophe exposed energy accounts renew in the second quarter and pricing was materially lower than in 2007. Despite this, we are still finding plenty of attractive deals.
“The three months to 30 June 2008 saw a continuation of the higher than normal frequency and severity of industry losses experienced in the first quarter, most notably in the property risk and property catastrophe classes. Notable industry losses in the second quarter were the fire at Universal Studios in California, with an estimated loss of over half a billion dollars and a string of property catastrophe losses estimated at over six billion dollars in total. There were also a number of significant energy losses totaling approximately one billion dollars. As was the case in the first quarter, Lancashire successfully avoided most of the material events in Q2, restricting exposure to a modest participation on the Universal loss and to a small number of other property and energy events. Our net loss ratio in the second quarter was 45.7% or 47.9% excluding the small impact of prior year positive development. It is worth noting that our reported loss ratio reflects a strong accident year performance which is not significantly Impacted by prior period reserve releases.
“We constantly examine sectors on a micro level and adjust our tactics accordingly. Between a combination of underwriting discipline, nimble repositioning of our focus, and a relatively normal loss environment, we are confident Lancashire can continue to produce healthy profits in a softening market.”
