Lancashire's wings clipped in 2015 results

Lancashire's wings were clipped significantly as it flew through a rather rough 2015, with the company reporting some significantly depressed returns and earnings for the year on Thursday, the same day its chairman announced his intention to step down.

The FTSE 250 insurer's fully converted book value per share dipped to $6.08 (£4.25) in the year to 31 December, from $6.96 a year earlier.

Its return on equity for the year was 10.9%, down from 13.9%, with its return on tangible equity down to 11.8% from 17.1%.

Lancashire announced a special dividend per common share of $0.95, down from $1.70 for the 2014 year.

When it came to the figures, Lancashire's gross premiums written was clipped significantly during the year, down 29.4% to $641.1m, from $907.6m. Its profit before tax was down 24.2% to $171.7m, from $226.5m.

The company's net operating profit was $173.4m, down 25.2% from $231.9m. Diluted earnings per share were $0.91, from $1.16 a year earlier.

Lancashire's CEO, Alex Maloney, described the results as 'excellent' amid one of the most difficult trading environments of the last 20 years.

"As a business, we pride ourselves on our underwriting expertise and our ability to react nimbly to the challenges of the market so as to moderate our risk appetite and adjust our capital base to provide a good risk-adjusted return to our shareholders," he said.

"The last year has witnessed a dramatic fall in the oil price, which severely shocked the whole energy sector, as well as volatility in the investment markets."

Maloney said the company had been particularly active during the year in managing its overall risk levels through the purchase of well-priced reinsurance.

"Our excellent combined ratio of 72.1% for the full year is testament to the discipline and hard work carried out in this very challenging market to moderate our overall risk exposures," he said.

Maloney also warned of 'dangerous distractions', saying: "We do not consider top line premium growth to be a prudent objective for its own sake and we have endeavoured to avoid involvement in both broker underwriting facilities and the rapid growth in certain untried and untested lines of coverage."