Lancashire Holdings made after-tax profits of $31.5 million for the second quarter of the year — down $7.4 million on the same quarter last year.

Gross premiums written for the period totalled $199.8 million, an increase of $20.5 million on the $179.3 million recorded for the second quarter of 2015.

Alex Maloney, group chief executive officer of the Bermudian-domiciled company with its head office in London, said: “Our return on equity of 3.2 per cent for the second quarter and 7.1 per cent for the half-year represent an excellent result achieved during challenging times.

“I have previously talked about our commitment to maintain a strong core book of business serving the needs of our valued clients and their brokers, whilst also bringing down overall risk levels in line with our view of the underwriting opportunities.

“These results are clear evidence that our stated model is working.”

Diluted earnings per share totalled 16 cents for the quarter, compared to 19 cents for the second quarter of 2015, while total investment return was 0.9 per cent.

Mr Maloney said: “At a time when premium rates and insurance policy terms and conditions are under pressure, our model has helped not only to deliver the underwriting service which is expected of us but also to insulate our balance sheet against a string of small to medium-sized natural catastrophe and specialty market losses.

“We are starting to see evidence of the insurance industry sustaining a series of net losses during the first half of 2016.

“Against this background, it is reassuring to note that Lancashire’s reinsurance purchasing strategy has enabled the group to reduce our net liabilities by about $20 million when compared to the reinsurance programme purchased in 2015.”

Mr Maloney added: “On the investment side, the return of 0.9 per cent for the quarter is a strong return, proving our strategy remains appropriate for our business.

“Our conservative approach to our investments allows us to maintain our focus on the fundamentals of good underwriting and risk management.”

Total investment return, including net investment income, net other investment income, net realised gains and losses, impairments and net changes in unrealised gains and losses was a gain of $17 million for the second quarter, compared to a lost of $0.3 million for the same period in 2015.