Bermuda-based Lancashire saw profits slip 15% and gross written premiums dive 4.3% in the second quarter of 2018.
Lancashire shares took a hit as markets opened on Thursday as the specialty insurer reported a $32.5m profit for the second quarter 2018, down 15% from the $38m posted in the same period last year.
Gross premiums written fell 4.3% to $176.7m in the second quarter of 2018 compared to the $184.7m reported in the same period in 2017. The insurers combined ratio fell from 69.8% to 69.2% in the quarter.
The insurer saw pre-tax profit rise from $68.5m to $75.8m in the six months ended 30 June 2018.
For the first six months gross premiums written increased by 3%, from $381.2m in 2017 to $392.5m. However, net premiums fell to $234m from $239.8m.
The insurers combined ratio also fell from 78.4% to 67.1% in H2.
In the Lloyd’s segment gross premiums written increased by 12.3% for the second quarter of 2018 compared to the same period in 2017 and increased by 15.6% in the first six months of 2018 compared to the first six months of 2017.
While there were increases across most lines of business for both the quarter and the six months the majority of the increase was driven by the property and marine books thanks to improved rates, new business and exposure increases on prior underwriting year risk-attaching business.
Alex Maloney, Group CEO, said: “With a strong underwriting result and a decent investment performance, despite the volatility in the investment market, the Group has delivered a solid set of results for the year to date.
“Our earlier predictions of how the insurance market would respond following the 2017 loss events are proving to be accurate. Pricing peaked at the January renewals and we are now experiencing a decline from those levels, although we remain in positive territory for the year to date. We have still been able to take advantage of rate increases across most of our lines of business.”
Commenting on the decline in Q2 premiums written Maloney said: “While it may appear that our second quarter premiums don’t support that statement, with a year on year reduction of 4.3%, the rate increases and growth we saw in the quarter are masked by the impact of the timing of renewal of some multi-year deals and some prior underwriting year premium that came through in the second quarter of 2017.”
The group reduced its total estimated net loss for the 2017 catastrophe losses Hurricanes Harvey, Irma and Maria plus the Californian Wildfires.
The insurer pegged losses at $160.3m at 30 June 2018 compared to $171.5m at 31 December 2017 and $163.6m at 31 March 2018.
“We will watch this year’s wind season with interest,” Maloney said. “While we believe that there is still too much capital in the market, another year of losses may serve to dampen appetites.”
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