Lancashire Holdings braves fire and wind to deliver strong result
Shares in Lancashire Holdings were up nearly five per cent today on strong financial results, despite a natural disaster-triggered fourth quarter loss.
The Ftse 250 insurer boosted profit before tax to £33.6m, compared to a loss of £72.9m the previous year, and increased gross written premiums eight per cent to £638.5m, up from £591.6m the previous year.
Its combined ratio – a measure of underwriting profitability – was 92.2 per cent, a significant improvement on last year’s 124.9 per cent.
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The positive results came despite a tough fourth quarter which saw Lancashire’s combined ratio jump to 107.4 per cent with a loss before tax of £16m on a significant impact from natural disasters.
Chief executive Alex Maloney said: "The fourth quarter of 2018 once again witnessed higher levels of loss activity than average, with the occurrence of hurricane Michael in October and a further series of catastrophic wildfires in California causing a tragic loss of life.
“When considered with the other major loss events during the year, 2018 ranks amongst the four largest loss years of the last couple of decades. Following 2017, this is the second year in succession of well above average global insured catastrophe losses. Against this backdrop, the group has generated a positive return on equity for the full year of 2.4 per cent. Overall, I am pleased at the resilience of our portfolio and our reinsurance programme, given the loss environment.”
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Peel Hunt analyst Andreas van Embden said: "The outlook is encouraging as specialty insurance rates recover and the company starts rebuilding its portfolio, which had been shrinking in a disciplined way during the soft cycle."
Lancashire's share price rose 4.7 per cent to 623p today.