FTSE 250 insurer Lancashire Holdings posted a 48% rise in first-quarter pre-tax profit on Thursday as gross written premiums and its return on equity rose.
In the three months to 31 March, pre-tax profit increased to $42.4m from $28.7m in the same period a year ago, as gross written premiums came in at $215.8m versus $196.5m and the return on equity edged up to 2.9% from 2.7%.

Meanwhile, the combined ratio - which measures whether the company is earning more revenues from its collected premiums relative to the claims it pays out - improved to 65.2% from 85.6% in the first quarter of last year.

RBC Capital Markets said pre-tax profit was well ahead of its estimate of $33.8m and consensus of $34.4m, while the combined ratio was a full 10 percentage points stronger than its expectations and well ahead of consensus expectations of 77%.

Chief executive officer Alex Maloney said the higher return on equity was a product of a strong underwriting result, helped by a relatively benign loss quarter.

"We have also seen an improved rating environment following the major catastrophe losses of 2017 with rate increases across a high proportion of our product lines, so we are in a slightly more interesting trading environment than we have been for a number of years. Whilst that is pleasing, the demand supply dynamic has not shifted sufficiently to bring about fundamental rate change across the board.

"In this environment the group has continued to focus on the underwriting discipline of matching risk and return. The group has written new business where the risk reward dynamics make sense; there were opportunities to do this during the first quarter with both existing and new clients. The rate improvements are very much in line with our communicated expectations following the experience of 1 January renewals. Although moving in the right direction, the rates have not yet improved enough to warrant a material increase in the group's level of overall risk which currently remains broadly similar to that of 2017."

At 0803 BST, the shares were up 4.4% to 624.85p.

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