Lancashire Holdings has reported after tax profits for the last three months of 2016 at $51.1 million and $153.8 million for the full year, both down on the same figures in 2015.

The fourth-quarter drop was about $3 million compared to the same period in 2015, while the full year figure was down $27.3 million.

The company noted that the insurance market remains challenging, although it is seizing opportunities when its find them.

One such area is the reinsurance market, which is similarly being squeezed. By purchasing additional reinsurance, and securing attachments at lower loss levels, Lancashire has reduced its risk levels to the lowest point in its history.

Lancashire Holdings CEO Alex Maloney said last year had proved to be a turbulent one for the global political and macroeconomic environment.

“Risk capital remains abundant, and there is continuing pressure upon pricing and terms and conditions,” he said.

“Against this background I am particularly pleased with the results for both the fourth quarter and the full year. The return on equity of 2.8 per cent for the quarter and 13.5 per cent for the year is an exceptional outcome in this environment and a tribute to the dedication and hard work of everyone across the business.”

Lancashire’s gross written premiums for the quarter were $95.1 million, a drop of $2 million on the same period the previous year, while for the full year they were $633.9 million, down from $641.1 million in 2015.

The company’s combined ratio for the year was 76.5 per cent, up from 72.1 per cent.

In an earnings statement, Mr Maloney said: “Our principal focus has been to balance risk and return whilst serving the needs of our clients and their brokers.

“These results prove that, even in the current difficult times, we have relevance, our model works and is resilient.

“At 1 January, in line with our expectations and previous communication, we successfully renewed our core book across the Group, including at our Lloyd’s platform.”

He said the company had been “rebuilding and reinvigorating” its Lloyd’s platform.

Looking ahead, he said: “Whilst we expect market conditions to remain difficult for the foreseeable future, which requires discipline and patience to navigate, our strategy has the ability to respond across the insurance cycle. We are well equipped to meet the needs of our clients and to generate acceptable returns for investors, whilst having the flexibility to capitalise quickly on new opportunities as they arise.”

Lancashire’s operating earnings per diluted share was 23 cents for the fourth-quarter, which was flat compared to the same period in 2015. For the full year it was 71 cents, down from 87 cents in 2015.

The company’s ceded reinsurance premiums increased by $15.8 million, or 9.9 per cent, during the year as Lancashire and its Lloyd’s member Cathedral Underwriting, bought more reinsurance limit. They added new layers, attaching at lower loss levels for around the same outlay, according to the company report.

Elaine Whelan, group chief financial officer, said: “Our outlook for 2017 is for a continuation of current market trends.

“At 1 January we have once again been able to further reduce our exposure levels with additional reinsurance purchases, and our risk levels are lower now than at any other point in our history.

“We are therefore carrying a bit more of a capital buffer than we typically would, which gives us the ability to take advantage of any opportunities that may materialise this year.”

Within the Lancashire group are Bermudian-based Lancashire Insurance Company and Kinesis Capital Management, together with Lancashire Insurance Company (UK), and Cathedral Underwriting Ltd.