Lancashire 2007 profits exceed $390 million

by David Masters

Story link: Lancashire 2007 profits exceed $390 million

Lancashire Holdings this week reported its results for the fourth quarter of 2007, and for the year as a whole.

The fourth quarter saw them achieve a return on equity of 7.9%. Gross written premiums (GWP) were $154.3 million, 22.5% lower compared to the same period in 2006. Their loss ratio was 15.7%, and their combined ratio was 38.1%. Their total annualised investment return for the fourth quarter was 7.4%. This figure includes net investment income, realised gains and losses, and unrealised gains and losses. Net income after tax for the quarter was $115.3 million, equivalent to $0.57 diluted earnings per share.

In 2007 they achieved a return on equity of 31.7%. This is measured as the growth in fully converted book value per share plus dividends. The GWP for the year was $753.1 million, up 20.3% compared to 2006. Net written premiums were up 21.8%.

The company’s loss ratio for 2007 was 23.9%, and their combined ratio was 46.3%. Their total investment return for the year was 6.4%. This figure includes net investment income, realised gains and losses, and unrealised gains and losses. Net income after tax was $390.9 million, equivalent to $1.91 diluted earnings per share.

CEO of Lancashire Holdings, Richard Brindle, said of the results: “In only our second year of operations, Lancashire has produced a remarkable set of results. To have achieved a return of 31.7% for our shareholders is testament to our people, our risk management and to our disciplined and diversified underwriting strategy. The success in 2007 was led by our exceptional underwriting result, evident in a combined ratio of 46.3%. Prior year reserve releases in 2007 were $4.4 million, benefiting the ratio by 0.7%.

“Lancashire’s investment approach will continue to be defensive. I am very pleased to say we believe we have zero insurance exposure from the credit crisis, a debacle that appears to have very serious financial implications for the insurance industry. Indeed, the full extent of the implications are yet to be revealed. Lancashire has positioned both its insurance and investment portfolios appropriately for the current environment and we are confident we can produce a good return for our shareholders in what may be more challenging times ahead.”