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Lancashire swings to Q4'17 loss due to series of catastrophes

Lancashire Holdings Ltd. will pay a lower dividend for 2017 than in 2016 as it swung to an after-tax loss attributable to the company of $5.4 million in the fourth quarter of 2017 from an attributable after-tax profit of $51.1 million a year earlier, mainly due to catastrophe losses.

Total net revenue for the quarter was $112.2 million, down from the year-ago $153.4 million, with net premiums earned falling year over year to $93.5 million from $128.2 million.

Total expenses for the period amounted to $111.5 million, compared to $101.8 million in the same quarter in 2016.

For full year 2017, the company reported an attributable after-tax loss of $71.1 million, compared to the year-ago attributable after-tax profit of $153.8 million.

Fourth-quarter 2017 combined ratio stood at 119.5%, compared to 79.0% in the fourth quarter of 2016, while full-year 2017 combined ratio was 124.9%, compared to 76.5% in 2016. A combined ratio above 100% indicates underwriting loss.

Return on equity for 2017 was negative 5.9%, compared to the year-ago 13.5%.

"In November, I reported on the series of damaging catastrophe losses which had occurred over the summer months in the Caribbean, the Gulf of Mexico and U.S. coastal regions and the two sizeable earthquakes in Mexico. Adding to what was already a significant loss year, the run of catastrophe losses continued in the fourth quarter with the occurrence of wildfires across California in essentially two separate sequences of loss activity," CEO Alex Maloney said.

"Whilst I am not pleased to lose money, this is always a possibility for such types of event in any single underwriting year," Maloney added, noting that he expects 2018 to be another challenging year for the industry.

Lancashire's board of directors declared a final dividend of 10 cents per common share for 2017. Combined with the interim dividend, total dividends per common share for 2017 will be 15 cents, down from 90 cents per share in 2016.

The company will pay the dividend in pounds sterling on March 21 to shareholders on record as of Feb. 23.

Lancashire also said that nonexecutive director Tom Milligan will leave the company's board, effective March 31.