Bermuda-based reinsurer Lancashire Holdings Ltd. said yesterday first-quarter profit gained after the company saw premiums jump while it paid out less money to clients.

Net income for the three months ended March 31 rose to $87.9 million, or $0.43 a share, from $9.3 million, or $0.05, a year earlier, the company said yesterday.

Gross written premium increased 61 percent to $180.7 million.

“The company’s first quarter results benefited from light loss activity in the majority of classes,” Lancashire said. The period was “the company’s first operational quarter after its formation in late 2005 and, as such, year on year comparisons should be viewed in that context”.

The Hamilton, Bermuda-based company raised about $1 billion through the sale of stock and other securities in an initial public offering in December 2005.

Group chief executive officer Richard Brindle said: “We are very pleased with the results that Lancashire achieved in the first quarter of 2007. Since our launch in December 2005, we have become a major player in the insurance industry by maintaining clear operating principles, executing a sound business strategy, exploiting competitive advantages, and actively managing the cycle.

“Our UK underwriting platform, which was launched in the fourth quarter of 2006, has made a notable contribution to our growing market position over the past several months.

“The increase in submissions in the first quarter of 2007 compared to the same period in 2006 has been very strong, resulting in 60 percent growth in our gross written premiums year on year.

“As always, we will remain committed to strong underwriting discipline.

“Substantial premium growth, combined with better than expected loss experience, was the primary driver behind Lancashire’s return on equity of 7.2 percent for the first quarter.

“Year on year premium growth in subsequent quarters will likely be lower than 60 percent; however, our previously stated 2007 ROE estimate of between 20 percent and 25 percent, assuming a normal level of losses, and premium growth estimate of at least 20 percent, based on anticipated pricing and terms, remain unchanged.

“In the majority of classes of risks written by Lancashire, with the exception of marine, favourable 2006 pricing and terms are largely expected to continue throughout 2007.”