Chief executive acknowledges ‘threats and opportunities’ from third party capital
Lancashire has reported a net profit of $77.9m for the first quarter of 2013, up from $45.2m in the first quarter of 2012. The Bermuda reinsurer’s combined ratio was 51.2%, an improvement on 74% for the first quarter of 2012.
But gross written premium was down slightly at $214.9m for the first quarter of 2013, from $234m in the first quarter of 2012.
“I’m delighted to report another strong quarter for Lancashire with solid ROE and a very healthy combined ratio,” said Lancashire group chief executive Richard Brindle. “We’re still seeing adequate rating in much of our core business, and while there are competitive threats, the strength of our business model allows us to outperform in both hard and soft markets.
“In reinsurance the advent of third-party capital has provided both threats and opportunities. There is undoubtedly rate pressure from additional capacity, and this has been seen very dramatically in the cat bond and ILW (industry loss warrant) markets, with supply increasing and pricing decreasing.
“In contrast we saw a very orderly and sensible renewal season in Japan, which is now a major market for Lancashire,” he added. “Rather than bemoan the advent of new capital, Lancashire is reacting creatively with new products that leverage our unique knowledge of non-catastrophe business and combine this with our leading catastrophe and capital modelling capabilities.”
“While the much-vaunted Aon/Berkshire Hathaway deal does increase the competitive pressure, we have already seen one major client decline to accept their offer,” he continued. “We value and work hard at our client relationships and are vigilant in protecting our participations.”