Lancashire Holdings closes property business, COR remains strong

Lancashire Holdings, the Bermuda-based insurance company, has closed its property and onshore energy businesses after loss ratios proved troubling.

The decision to close these lines, along with the "facultative" operation will mean Lancashire can put capital into more profitable areas of the business.

In the three months to the end June the company achieved a return on equity of 3.6% against 6.1% at the same point of last year. The company blames this on a "slight uptick" in claims. Over the last six months however Lancashire RoE is 7.1%, ahead of the 6.5% in 2011.

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The combined ratio, which divides payouts by premium income came in at 60.7% during the quarter, anything below 100% implies profit on the core business of underwriting risk.

The investment return in the second quarter was 0.6% although Lancashire says it expects volatility over the course of the next six months and may choose to return capital rather than invest it.

Richard Brindle, Lancashire's Chief Executive Officer, commented: "I am pleased to report another profitable quarter for Lancashire. We have increased book value per share with a return on equity of 3.6% for the second quarter, and 7.1% for the year to date.

"As we enter the US wind season we are comfortable with current capital levels, and an interim dividend of 5 cents per common share has been declared by the Board."

At 11:32 the shares had gained 2.8%.

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