February 13, 2014 / 9:16 AM / 4 years ago

Lancashire full-year profit falls as European flood claims hurt

Feb 13 (Reuters) - Property and casualty insurer Lancashire Holdings reported an almost 8 percent fall in full-year profit, battered by claims against storms and floods that devastated Europe late last year.

The British company, which writes policies for heavy-duty assets such as oil rigs, ships and aircraft, said total claims rose 8 percent to $188.1 million.

Pretax profit declined to $218.1 million in the year ended Dec. 31 from $236.8 million a year earlier.

“Overall the results are in line, but peers that have already reported including Beazley and Catlin outperformed expectations and rallied on results,” Espírito Santo analyst Shailesh Raikundlia wrote in a note.

Shares in the company were down 5 percent at 716.5 pence on Thursday, making the stock the top percentage loser on the FTSE-250 Midcap Index.

Net premiums written in the year ended Dec. 31 fell 3.2 percent to $557.6 million.

Net investment income fell 21.8 percent during the period as Lancashire, like many insurers, felt the sting of low interest rates in developed countries.

Central banks in developed countries, including Britain and the United States, had deliberately held interest rates at ultra-low levels since the financial crisis in the hope that cheaper money would bolster economic recovery.

Germany’s insurers in October warned that low interest rates threatened to push them into losses in the coming years.

However, the U.S. Fed last year began talks of unwinding measures to spur economic growth at home - including ultra-low interest rates.

Lancashire also said it would hand out a special dividend of 20 cents per share.

However, Raikundlia said the size of the special dividend may also disappoint investors.

Lancashire shares were down 5.4 percent at 714 pence at 0857 GMT on Thursday on the London Stock Exchange.

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