Lancashire CEO not convinced by mergers
Insurance and reinsurance firm Lancashire has rejected the idea of a merger with another firm as a way to boost business.
Company CEO Alex Maloney said: “I don’t really buy the bigger is better thing.
“I see no evidence of any of the companies that have got together to be super-companies with a bigger market share on the back of it.”
Mr Maloney was speaking in a conference call after the firm posted a 10 per cent drop in first-half profits, pointing to “pricing pressure” in the Lloyd’s of London market.
Lancashire was touted as a takeover prospect by analysts earlier this year after Catlin agreed to a takeover by XL.
On Wednesday, Lancashire posted after-tax profits of $38.9 million for the second quarter of the year — down nearly $6 million on the $44.8 million recorded for the same period last year.
Gross premiums written for the second quarter fell $139.1 million, from $318.4 million to $179.3 million, in the same timeframe.
Diluted earnings per share for the three months to June were 19 cents, compared to 23 cents in the same three months of 2014.
Lancashire group chief underwriting officer Paul Gregory said: “Our response to the tough conditions has been to maintain underwriting discipline, focusing on bottom line rather than top.
“This may not be particularly fashionable at the moment, but we remain convinced that our strategy remains correct.”
Mr Maloney added: “The whole insurance community will sit and moan about the current market, and it is the worst it’s been in 10 years, but we’re still confident that we can work our way through it.
“We’re much better the way we are.”
And he said: ‘‘It is not all one-way traffic but there’s no hiding the fact that this is a difficult market.
“We have to work hard and, if necessary, decline inadequately priced business.”
Lancashire gained access to the world’s oldest insurance market in 2013 with its takeover of Cathedral Capital, which provides coverage ranging from terrorism to aviation risks.
The firm said the acquisition “slightly offset” a decline in premiums across other lines of business.