Catastrophes send Lancashire to third-quarter loss
Lancashire Holdings Limited
593.00p
16:35 05/07/24
Lancashire Holdings scrapped its special dividend after hurricanes and earthquakes sent the insurer to a loss in the third quarter and the first nine months of the year.
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The company swung to a net operating loss of $139m (£105m) in the three months to the end of September from a $40.1m profit a year earlier. That drove it to a loss of $82.9m for the first nine months of the year from a $98.1m profit a year earlier.
Lancashire sells insurance and reinsurance for the property, energy, marine and aviation industries. Hurricanes Harvey, Irma and Maria and the Mexican earthquakes wreaked damage that affected Lancashire's customers, causing losses for the company.
Alex Maloney, Lancashire's chief executive, said: "The last couple of months have witnessed a series of damaging hurricanes in the Caribbean, the Gulf of Mexico and US coastal regions and two significant earthquakes in Mexico. These have tragically devastated and disrupted lives and livelihoods, wreaking havoc in communities and businesses. At such times Lancashire expects to pay losses, and this is reflected in our results for the third quarter and the year to date."
The company said it would not declare a special dividend, which was 75 cents a share last year, to conserve capital but it will pay a standard ordinary dividend.
Maloney said Lancashire's estimated net losses are in the range the company would expect for such catastrophes. He said pricing for risk had become too lax across the industry in the absence of major catastrophes and that pricing would now return to more sustainable levels.
He said: "The likely change in underwriting conditions affords us an opportunity to deploy the capital which we hold more advantageously, both to service the needs of our clients and their brokers and to continue creating long term value for our shareholders.
The company's shares fell 5.3% to 719p at 09:00 GMT.