INSURER Lancashire yesterday blew expectations out of the water with its third-quarter pre-tax profit of $107.6m (£67m) versus a consensus forecast of $82m.
On the back of its success it has decided to return £213m to investors in a special 86p per share dividend, making it the first major non-life insurance firm in London this year to return capital to shareholders.
Most insurance companies have instead been sitting on growing piles of cash as they mull their spending options. But in addition to issuing the dividend, Lancashire says it has been buying back shares. Its stock has risen 23 per cent since 1 June.
The insurance industry is in a period of intense competition due to a build-up of capital sparking aggressive pricing pressure.
However, Lancashire’s third-quarter gross written premiums growth also confounded expectations, coming in at $135m against $129m consensus. This was, however, a decline on last year of 2.8 per cent.
Investment returns were two per cent versus 1.6 per cent last year. The firm has also named its new chief financial officer as Elaine Whelan.
Lancashire shares closed up 1.4 per cent at 586p.