Lancashire Holdings Ltd reported a profit of $8.6 million during the first quarter of 2011 despite taking a $75 million hit from the Japanese earthquake and tsunami.This compared to a net income of $8.2 million for the same period in 2010.Lancashire' s gross written premiums declined 24.6 percent to $171.9 million in first quarter from $228 million a year prior, while net premiums written were down at $137.7 million from $203.5 million in 2010.Net premiums earned as a proportion of net premiums written were 105.4 percent in the first quarter of 2011 compared to 84.4 percent in the same period last year.Net operating profit was $6.9 million versus $7.9 million over the respective period, while diluted earnings per share were five cents and four cents respectively.The combination of the increased premium volume and a number of multi-year deals in the first quarter of 2010 compared to 2011 resulted in a lag in premium earnings into 2011, the insurer said.The group's net loss ratio for the first quarter of 2011 was 67 percent compared to 77.9 percent for the same period in 2010.Lancashire incurred total estimated net losses, after reinsurance and reinstatement premiums, of $116.5 million in relation to the Tohoku and Christchurch Lyttleton earthquakes and the Gryphon FPSO loss in the North Sea. This compares to an estimated net loss of $94.5 million in the first quarter of 2010 in relation to the Chilean earthquake.Richard Brindle, group CEO, said: “On Friday March 11, 2011 a massive earthquake measuring 9.0 in magnitude struck off the north-east coast of Japan. The earthquake was followed by a powerful tsunami that devastated towns and property in the coastal regions and resulted, tragically, in the loss of many thousands of lives. I would like to express the concern and sympathy of everyone at Lancashire to all those in Japan who have suffered injury and loss, and in particular our Japanese clients and business partners.“We have seen a series of significant catastrophe losses during the first quarter of 2011, including floods in Australia, the Christchurch Lyttleton earthquake in New Zealand, serious storm damage to a Floating Production Storage and Offloading (FPSO) vessel stationed in the North Sea Gryphon field, potential losses arising from the political unrest throughout North Africa and the Middle East, and the Tohoku earthquake and tsunami in Japan. Material losses have been sustained by the industry.“At the time of the release of Lancashire's 2010 year end results in February 2011, I reported that the group expected a tendency towards declining premiums during 2011. In the light of recent events, the picture for the insurance sector during 2011 is less clear but increasingly positive.“Another noteworthy development is the release of version 11 of the RMS model for US wind risks. RMS version 11 will lead to higher capital requirements across the industry, albeit many companies will be slow or unwilling to adjust to the new reality.“Industry losses and the impact of RMS version 11 are creating opportunities for companies that react in a nimble manner. The serious erosion of capital across the insurance and reinsurance market has halted declining premium rates in several classes we write, and is contributing to encouraging premium rate increases in certain business lines.“The strongest rate rises are being seen in the property catastrophe retrocession programmes, a class where Lancashire is a major market participant. Pricing in other lines we write is also generally holding firm. We continue to explore the possibilities for leveraging our underwriting expertise.“We are well positioned to ensure Lancashire can take full advantage of favourable risk pricing opportunities and to provide the coverage required by our clients, whilst ensuring that the capital available for our underwriting is managed flexibly and productively.”At March 31, 2011, the company's total capital was $1.413 billion, comprising shareholders' equity of $1.282 billion and $130.8 million of long-term debt. Leverage was 9.3 percent, while total capital at March 31, 2010 was $1.489 billion.There were no shares repurchased during the first quarter of 2011 compared to $12.9 million of shares repurchased in the same period of 2010. The share repurchase programme had 7,841,826 shares of the authorised maximum of 18,250,306 remaining to be purchased at March 31, 2011.During the first quarter of 2011, the Lancashire board declared a final dividend for 2010 of 10 cents (6.2 pence) per common share. The dividend, totalling $18.9 million, was paid on April 20, 2011 to shareholders of record on 18 March 2011.Useful websites:www.lancashiregroup.com