Lancashire Holdings profits jump, combined ratio improves
Lancashire Holdings posted a jump in full-year profit on Thursday and an improvement in its combined ratio.
In the year to the end of December, pre-tax profit surged to $119.5m from $33.6m the year before, while the combined ratio - which measures an insurer’s profitability - improved to 80.9% from 92.2%. Analysts had been expecting pre-tax profit of $76m and a combined ratio of 89.9%.
Broker Peel Hunt said higher-than-expected reserve releases and lower-than-expected catastrophe losses explain most of the underwriting beat.
The company delivered a return on equity of 14.1%, up from 2.4% in 2018 and a total investment return of 4.9% versus 0.8% the year before.
Lancashire said 2019 was hit by catastrophe activity in the form of hurricane Dorian and typhoons Faxai and Hagibis. The company’s net losses recorded for these events was $52.1.m.
Chief executive Alex Maloney said: "Our results reflect the measured pricing improvement that we have witnessed during the course of the year and our disciplined underwriting approach, with top line premium growth and a strong contribution from our investment portfolio.
"These are pleasing results and are early evidence of the transition to the harder stage of the cycle within insurance markets. However, whilst Lancashire has achieved a profitable underwriting performance with a combined ratio of 80.9% for the full year, we are still of the belief that further pricing improvement is needed in many lines of business before the market returns to a more sustainable environment."
At 0840 GMT, the shares were up 6.2% at 819.50p.