Lancashire profit rises after “minimal” cat hit

London-listed (re)insurer Lancashire made a profit after tax of $97.5m in the first half of 2011, up 5% on the $93m it made in the same period last year.

The company’s combined ratio came in at 69.5%, down from 77.4% in the first half of 2010. In the second quarter of 2011 alone, Lancashire’s combined ratio was just 41.2%.

The improvement comes when many of Lancashire’s peers are expected to post losses or greatly reduced profits for the first half as a result of losses from catastrophes in Japan, Australia, New Zealand and the US.

Lloyd’s insurer Beazley posted an after-tax loss of $14.2m in the first half, while Brit announced a 90% reduction in profit to £6.4m from £67.4m. Both firms posted combined ratios higher than the break-even point of 100%.

“After the considerable losses in Japan, Australia and New Zealand, the second quarter saw further industry losses arising from a series of US tornadoes, which caused significant but localised damage,” said Lancashire chief executive Richard Brindle. “We are pleased to report that these have had a minimal effect on Lancashire.”

He added: “We were also one of the few companies to avoid reserve strengthening for recent natural catastrophes.”

The improvements in underwriting and overall profitability come despite a 17.5% reduction in gross written premium to $379.8m in H1 2011 from $460.1m in the same period last year.

Lancashire also revealed that it is switching its tax residency to the UK from Bermuda.

Lancashire’s H1 2011 results in $m (compared with H1 2010)

• Gross written premium: 379.8 (460.1)
• Profit after tax: 97.5 (93)
• Combined ratio: 69.5% (77.4%)
• Return on equity: 6.5% (7.5%)