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Lancashire reports rosy results

TIP UPDATE: Lancashire still delivered a great underwriting result despite higher claims
August 6, 2010

Partly reflecting a $25m (£16m) hit from the Deepwater Horizon rig disaster, as well as expected Chilean earthquake losses of between $80m and $115m, Lancashire's half-year profit fell 36 per cent year-on-year to $94.6m.

IC TIP: Buy at 508p

But Lancashire's combined ratio (of claims to premiums) still reached an admirably profitable 51.5 per cent - most Lloyd's players report ratios at least 30 percentage points higher (ie, worse). And, while there was some modest premium-rate softening on most business lines, rates did rise for the Gulf of Mexico energy and the energy offshore worldwide accounts. Meanwhile the investment book - which is almost totally focused on cash and high quality bonds - managed a decent 5.2 per cent annualised investment return.

What we said:

When: 28 May 2009

Price: 495p

Tip performance to date: +3%