Lancashire reports profit dip but 61% COR

London-listed (re)insurer Lancashire made a net profit of $173.2m in the first none months of 2011, down 13% on the $199m it made in the same period last year.

However the company posted a combined ratio of 60.7% for the period, improving on the already impressive 65.1% it reported for the first nine months of 2010.

For the third quarter alone, net profits were down 29% to $75.5m (Q3 2010: $106m). The combined ratio was 43.5% (Q3 2010: 39.2%).

“Lancashire has delivered another solid performance this quarter,” Lancashire  chief executive Richard Brindle said. “The Atlantic wind season threatened serious losses with the US landfall of Hurricane Irene, but a fall in the intensity of the wind speeds resulted in thankfully lower losses to life and property than might have been anticipated.”

He added: “ More importantly, the quarter saw very challenging financial markets, where global uncertainty led to rapid fluctuations in the asset side of our balance sheet. We believe we have taken the appropriate actions to protect our assets through these very difficult times.”

Despite the underwriting performance, investment income dropped 16% to $34.3m in the first nine months of 2011 (9M 2010: 40.7m) and by 20% to $10.5m in the third quarter alone (Q3 2010: $13.1m).

“With shades of history repeating itself, strong underwriting performance in the third quarter was dampened by investment results,” Lancashire chief financial officer Elaine Whelan said. “In a quarter where, once again, there were a number of industry losses, our underwriting produced a strong combined ratio of 43.5%. Investments unfortunately suffered a loss of 0.6%.”