Gulf of Mexico product offered to new clients

Lancashire Holdings has extended its Gulf of Mexico energy product, Octopus, to new clients.

The insurer said the Gulf of Mexico energy market was in disarray, with insufficient capacity and spiralling rates.

Octopus offers clients a minimum commitment of $25m (£17m), with no requirement to share cover with other insureds.

Richard Brindle, Lancashire’s chief executive, said: “Octopus is focused on deep water assets – that’s where we want to play. In a market starved of capacity, we think it’s more important than ever to offer flexibility and work closely with clients.”

The development follows the postponement of a Berkshire Hathaway-backed product run by Marsh that would have required clients to share cover.

In 2008, Gulf of Mexico energy risks accounted for 12% of Lancashire’s premium income. The insurer said it expected this figure to rise significantly over 2009.

After the launch, Numis rating agency said: “Octopus typifies the group’s ability to develop innovative products in order to capture underwriting opportunities. The extension of Octopus to new clients at a time of turmoil in the Gulf of Mexico energy sector should strengthen Lancashire’s franchise and earnings potential.”