Lancashire Holdings Ltd. reported a 64 percent increase in profits for the second quarter, despite having to pay out for the floods which hit the UK and Australia and the earthquakes in Japan.

Net income after tax was $82.5 million or 40 cents per diluted share, comparing favourably to $30m and 15 cents respectively in 2006.

Despite a backdrop of significant industry insurance losses and challenging investment markets, Lancashire has continued to produce strong growth in book value with a 5.4 percent increase in fully converted value per share, up from 3.1 percent last year.

Gross written premiums were also on the rise from $203.9m in 2006 to $270.8m this year, representing an increase of 32.8 percent, while net premiums shot up by 56.6 percent. Total annualised investment return rose by 3.8 percent for the second quarter, including net investment income, realised gains and losses and unrealised gains and losses.

Group chief executive officer Richard Brindle said his company's results were excellent considering the natural disasters which had struck so far this year.

"In both relative and absolute terms, Lancashire has enjoyed an excellent first half of 2007," he said.

"A 13 percent return on equity to date is evidence that our underwriting judgment is sound and our risk management is robust.

"In addition to events in Australia and Japan, we were tested by the June UK flooding; a loss which, on current estimates ranks in the top 10 of non-US catastrophe events in the quarter and year to date, respectively.

"Our investment portfolio also stood up well, reflecting our strategy to keep duration short and credit quality high.

"We maintain a low risk tolerance on investments, and do not currently hold any sub-prime or CDO securities."

He said that Lancashire deliberately took a different path to other post Hurricane Katrina companies when it started up and it is already starting to reap the rewards.

"It was assumed we would be a mono-line property cat reinsurer," he said.

"In fact, the Lancashire strategy is entirely different. Our approach is to write a diversified book of direct speciality insurance.

"We have built an excellent team, broadened our platform beyond Bermuda within nine months and established a sophisticated framework of operations thoroughly grounded in enterprise-wide risk management principles.

"Today we're very pleased to have completed our transition to an established major speciality insurer. Our start-up days are well and truly over."

The company has also announced that it is to join the London-based International Underwriting Association through its Financial Services Authority-authorised insurance company Lancashire Insurance Company (UK) Ltd.

In a statement, the company said that the reasons behind this decision were support for the IUA's priorities of developing business process reform and ensuring effective communication with the Financial Services Authority.