Specialist insurer Lancashire reported 213% COR in Q3
Specialist insurer Lancashire has been pushed to a $69.7m (£52.5m) loss before tax in the first nine months of 2017 because of claims from the string of natural catastrophes that hit in the third quarter.
The London-listed insurer, which underwrites globally, had made a profit before tax of $99.5m in the same period last year.
Lancashire’s nine-month combined operating ratio (COR) jumped to 126.4% from 75.6%, and its isolated third quarter COR was 213.3% (Q3 2016: 73.8%).
The natural catastrophes included a series of hurricanes hitting the US and the Caribbean, along with two large earthquakes in Mexico.
Lancashire put its claims bill for the events at $165m. It had been expecting losses of between $106m and $212m.
Lancashire chief executive Alex Maloney said: “These [events] have tragically devastated and disrupted lives and livelihoods, wreaking havoc in communities and businesses.
“These events have been a stark reminder that we operate in the risk business. We offer insurance and reinsurance products which respond to catastrophic loss events which are irregular and unpredictable in their short term frequency and severity. At such times Lancashire expects to pay losses, and this is reflected in our results for the third quarter and the year to date.”
Maloney said that while it is too early to put a precise figures on market losses from catastrophes, it is clear that catastrophe underwriters industry wide will have suffered “losses of many billions of dollars”.
He added: “For Lancashire our estimated net losses fall comfortably within our expectations for such catastrophe events, serving as further evidence of our disciplined approach to underwriting.”
On a positive note Maloney said that rate increases could be on the way following the catastrophes. He said: “After many years of soft pricing conditions we are at last seeing some evidence of an increase in pricing, particularly in catastrophe exposed lines.”
Lancashire chief financial officer Elaine Whelan added: “While we have incurred a loss in the quarter and for the year to date, we anticipate an improvement in rates following these events. Our outlook for 2018 is more positive than it has been for some time.”