Hurricanes Gustav and Ike hit insurer’s pocket.
Lancashire Holdings Limited has seen its loss ratio deteriorate to 152.5% in the third quarter of 2008, due largely to Hurricanes Gustav and Ike.
Its investments also suffered in the third quarter, with a total annualised investment loss of 1.7%.
In the third quarter the fully converted book value per share stood at $6.33 at 30 September 2008, compared to $6.91 at 30 June 2008, a reduction of 8.4%; gross written premiums were $124.6 million and net written premiums $120.3 million.
The insurer had a net operating loss of $105.7 million, or $0.61 diluted operating loss per share; and net loss after tax of $119.4 million, or $0.69 diluted loss per share.
For the nine months to 30 September 2008, it had a fully converted book value per share of $6.33 at 30 September 2008, compared to $6.38 at 31 December 2007, a reduction of 0.8%. Compound annual return on equity since inception was16.2%; gross written premiums were $508.0 million and net written premiums of $444.6 million;
Group chief executive Richard Brindle said: “As a result of summer hurricanes and financial market turmoil, Lancashire has experienced its first quarterly loss since inception. The total impact on our results from the hurricanes is approximately $150 million. While this has negatively impacted our return on equity in the short-term, we believe these market events will better help us achieve our long-term aim of generating a strong return for shareholders. The financial fallout from the credit crisis in particular is having a very significant impact on capacity in the industry as a whole. If the current malaise afflicting all financial markets continues throughout the fourth quarter, we can expect a sea of red ink for the industry’s full year results.
“There is now no question that the market has turned. In many areas of our portfolio, conditions could be similar, or even better, than what would have been in place in 2002 due in part to large improvements in terms and condition since that time. Our balance sheet is strong and we look forward with optimism.”
