Bermuda-based re/insurer Lancashire Holdings Ltd. said yesterday its net loss from the sunken oil rig in the Gulf of Mexico is likely to be around $25 million.

The comment came as the company announced its first-quarter profit fell almost 80 percent, after February's earthquake in Chile cost the insurer more than $90 million.

Lancashire's chief executive officer Richard Brindle said: "As would be expected given our book of business, Lancashire was impacted by the total loss of the Deepwater Horizon drilling unit in April. Total industry losses may end up well over $1 billion, making this one of the largest energy claims in recent history.

"Although Lancashire is one of the major underwriters of deep water Gulf of Mexico energy insurance, our net loss for this event is within normal loss expectations."

Lancashire made net profit of $8.2 million, or four cents per diluted share, compared to $40.7 million, or 22 cents per share in the first three months of last year.

Earnings were heavily impacted by a net loss of $94.5 million from the earthquake that caused widespread damage in central Chile. The loss fell in the middle of the $65 million to $125 million range that the company had previously announced. Lancashire significantly increased the amount of insurance it sold, as gross premiums written rose to $228 million compared to $142.8 million last year.

Mr. Brindle said the 60 percent increase was due to efforts to build out the company's property-catastrophe portfolio in the first quarter, but that this would be balanced by a reduction in risk appetite for other classes in the second quarter and the reaminder of the year.

He added that insurance rates were still falling, despite industry losses, and that the company might write less business if the downward trend persists.

Lancashire's board of directors declared a dividend of 10 cents per share, amounting to a total payout of $20.8 million. The company also made share repurchases totalling $12.9 million during the three months.

Neil McConachie, the company's president and group chief financial officer, said: "Since the start of the year, we have continued to repurchase shares both privately and on the public market. Should Lancashire's share price remain attractive for repurchases, we expect to continue our repurchase programme. At the same time, in the run-up to hurricane season, we will monitor opportunities, balancing share repurchases and underwriting exposure to achieve the best possible return on equity."