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Lancashire Holdings sees profits nearly double as it begins recovery from 2017 losses

The FTSE 250 insurance group reported pre-tax profits of US$42.4mln in the first quarter, up from US$28.7mln in the same period last year

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A litany of natural disasters caused a swing to losses in its 2017 results

Lancashire Holdings Limited (LON:LRE) has seen its pre-tax profits nearly double in the first quarter as it began a recovery from a massive swing to losses in 2017.

The FTSE 250 insurance group reported pre-tax profits of US$42.4mln in the first quarter, up from US$28.7mln in the same period last year, on gross premiums of US$215.8mln, rising from US$196.5mln the year before.

READ: Lancashire shares fall as 2017 results bear weight of natural disasters

The company’s combined ratio also improved to 65.2% from 85.6% (a score under 100% indicates underwriting profitability).

However, the positive financials were slightly dented by Lancashire’s investment portfolio, which declined by 14 basis points because of “volatile equity markets, and a further rate increase by the [US] Federal Reserve”.

Despite this, the company reported a return on equity (ROE) of 2.9% in the period. 

In a separate announcement, the firm also said that over 98% of shareholder votes cast at its annual general meeting had given authority in principle to issue up to 15% of its share capital on a non-pre-emptive basis. 

Alex Maloney, group chief executive for Lancashire, said: "I am pleased with an ROE of 2.9% for the first quarter which is a product of a strong underwriting result, helped by a relatively benign loss quarter, whilst successfully limiting the impact of a challenging investment environment.

He added: “Overall we are pleased with our first quarter: The underwriting result is strong; our 2017 catastrophe loss reserves remain robust; and our investment portfolio performed in line with expectations given the environment."

In 2017 the group swung to a US$72.9mln loss from a US$150.4mln profit in 2016 as California wildfires and a litany of other natural disasters weighed heavily on its finances.

In early trading Thursday, Lancashire Holdings shares were up 6.3% at 636.5p.

Quick facts: Lancashire Holdings Limited

Price: 694.5 GBX

AIM:LRE
Market: AIM
Market Cap: £1.4 billion
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