Lancashire Holdings Ltd reported a third-quarter pretax loss after what looks set to be the costliest quarter ever for insurers and reinsurers due to natural catastrophes, but said it was seeing some evidence of an increase in pricing.
The property and casualty insurer, which writes policies for heavy-duty assets such as oil rigs, ships and aircraft, reported a pretax loss of $136.4 million for the quarter ended Sept. 30, compared with a pretax profit of $42.9 million a year earlier.
Lancashire recorded a net loss from hurricanes Harvey, Irma and Maria, and earthquakes in Mexico, of $165 million, which it called an “extraordinary level of loss activity”.
Hurricanes Irma and Maria alone caused as much as $135 billion in insured losses, according to estimates. Earthquakes in Mexico could cost billions more.
As insurers report the full extent of the damage in their third-quarter results in coming weeks, investors will be looking for signs they can claw back some of those losses by raising premiums for customers.
“After many years of soft pricing conditions, we are at last seeing some evidence of an increase in pricing, particularly in catastrophe exposed lines,” Chief Executive Officer Alex Maloney said.
A turnaround in prices would be the first major reversal since Hurricane Katrina in 2005, the costliest natural disaster in U.S. history.
Lancashire, which has distributed excess capital to shareholders in previous years, said it would not pay a special dividend this year.
The insurer’s gross written premiums rose to $143 million in the period from $108.2 million a year earlier.
Lancashire’s combined ratio jumped to 213.3 percent from 73.8 percent in the previous year. A ratio below 100 percent means an insurer earns more in premiums than it pays out in claims.
(Reporting by Noor Zainab Hussain in Bengaluru; editing by Mark Potter and Jason Neely)
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