Specialist insurer’s results hit by lower GWP, investment income and reserve releases
Specialist London-listed insurer Lancashire made a profit after tax of $222.5m (£134.8m) in 2013, down 5.3% on the $234.9m it made in 2012.
The combined ratio increased by 6.3 percentage points to 70.2% (2012: 63.9%).
The company suffered several losses during the year, including energy losses, the European hailstorms and floods and larger than expected claims from the Costa Concordia cruise ship disaster.
Gross written premium (GWP) fell 6% to $679.7m (2012: $724.3m).
Lancashire chief executive Richard Brindle described the results as good and issued an upbeat outlook for Lancashire for the coming year despite softening rates.
The company completed its acquisition of Lloyd’s insurer cathedral in November, which has established Lancashire in the Lloyd’s market.
He noted other commentators’ concerns about pricing and the influx of competition from capital markets investors, but he added: “We don’t share the gloomy outlook.
“With our three platforms comprising our permanent reinsurance asset management business in Kinesis, our top-performing Lloyd’s business in Cathedral and our leading specialist insurance and reinsurance businesses in Lancashire, together with our sound business model and outstanding team, we believe that we can navigate a course through this market, and, indeed, the next hard market when that comes.”
Investments and reserves
In addition to falling GWP, Lancashire’s result was also hit by lower investment returns and reserve releases.
Investment income dropped 21.8% to $25.4m (2012: $32.5m). Lancashire was able to release $15.9m of reserves in 2013, down 42% on the $27.4m it released in 2012.