Lloyd's insurer takes $94.5m hit on Chile earthquake
Lancashire’s net profits plunged 80% in the first quarter of this year.
Net profits declined from $40.7m in the same period last year to $8.2m in this year’s quarter.
The Lloyd’s insurer said it suffered a $94.5m net loss from the Chile Maule earthquake.
Chief executive Richard Brindle said: ““It has been a challenging start to 2010. We have witnessed a number of significant industry losses, including losses from the major earthquake in Chile in February, and from severe weather around the world. Despite exposure to these events, we are pleased to report both a respectable combined ratio of 99.1% and return on equity of 0.9% for the quarter. This has been the sixteenth out of seventeen quarters since inception that we have delivered a positive return on equity.
“Building out our property catastrophe portfolio in the first quarter was the driving factor behind the 60% increase in our gross premiums written when compared with the same period in 2009. The increase in our property catastrophe class will be balanced by a tactical reduction in risk appetite for other classes in the second quarter and the remainder of the year.
“As would be expected given our book of business, Lancashire was impacted by the total loss of the Deepwater Horizon drilling unit in April. Total industry losses may end up well over one billion dollars, making this one of the largest energy claims in recent history. Although Lancashire is one of the major underwriters of deep water Gulf of Mexico energy insurance, our net loss for this event is within normal loss expectations.
“We previously expressed our view that rates in most classes Lancashire writes would be at their hardest at the start of the year. Despite the succession of catastrophes in 2010 so far, we remain concerned that the losses have only succeeded in slowing down the general decline in prices across many areas of our portfolio, with the exception of specific parts of the energy sector. If the downward trend in pricing continues, we would expect to write less business during the rest of 2010, maintaining our focus on underwriting discipline.”
