27 July 2016News

Lancashire experiences significant industry losses in Q2 2016 results

Lancashire has reported industry-wide losses across its areas of underwriting for the second quarter of 2016.

Lancashire reported its gross premiums written increasing by 11.4 percent to $199.8 million for the period ending June 30 2016, compared to 179.3 million for the same period in 2015.

Lancashire's pre-tax profit for this period decreased by 18.8 percent to $30.1 million from $37.1 million, the figure from the same period of 2015.

The profitability of Lancashire's underwriting has declined slightly, as its combined ratio increased by 2.4 percent to 80.6 percent for the period ending June 30.

Alex Maloney, group chief executive officer, commented: "At a time when premium rates and insurance policy terms and conditions are under pressure, our model has helped us not only to deliver the underwriting service which is expected of us but also to insulate our balance sheet against a string of small to medium sized natural catastrophe and specialty market losses.

"We are starting to see evidence of the insurance industry sustaining a series of net losses during the first half of 2016. Against this background it is reassuring to note that Lancashire’s reinsurance purchasing strategy has enabled the Group to reduce our net liabilities by about $20 million when compared to the reinsurance programme purchased in 2015."

Elaine Whelan, group chief financial officer, added: “While there were some significant industry losses this quarter in our areas of underwriting expertise, we have avoided most of these and produced a strong result with a return on equity of 3.2 percent.

“While we have exposure to the Fort McMurray wildfires and some of the major energy market losses, they were well contained in our reinsurance programme. We were also fortunate to have some further favourable development on our prior year reserves, giving us an overall net loss ratio of 28.6 percent."