Bermuda-based Lancashire Holdings has shut down its property, facultative and onshore energy businesses due to “volatile” loss ratios.The insurer, which moved its head office and tax base to Britain this year but continues to employ a team in Bermuda, yesterday reported a 33 percent drop in quarterly profit, blaming bigger payouts related to the Costa Concordia disaster and a drop in investment returns.Lancashire, which insures heavy-duty assets like oil rigs, ships and aircraft, said it made a pretax profit of $60.6 million in the second quarter. That was down from $91 million a year earlier.The combined ratio, which divides payouts by premium income came in at 60.7 percent during the quarter.The investment return in the second quarter was 0.6 percent although Lancashire said it expects volatility over the course of the next six months and may choose to return capital rather than invest it.Lancashire CEO Richard Brindle commented: “I am pleased to report another profitable quarter for Lancashire. We have increased book value per share with a return on equity of 3.6 percent for the second quarter, and 7.1 percent for the year to date.“As we enter the US wind season we are comfortable with current capital levels, and an interim dividend of five cents per common share has been declared by the Board.”He added: “It is with some sadness that I have to report that Lancashire decided during the quarter to withdraw progressively from its property direct and facultative lines, as well as onshore energy.“The loss ratios in these classes were proving volatile, and the risk pricing was consistently depressed, making it inefficient for Lancashire to continue to deploy capital in supporting these lines, particularly in view of other more attractive underwriting opportunities. I would like to thank the members of Lancashire’s direct and facultative underwriting team and to wish them well for the future.”It was not immediately clear whether the team, said to number about a dozen, was let go, or if any of them work in the Bermuda office.Lancashire said it revised upwards by $24.6 million its exposure to the Costa Concordia, the cruise liner that ran aground off the Italian coast in January, taking its total estimated hit from the shipwreck to $58.7 million.But the increase in claims was outweighed by a bigger-than-expected 35 percent increase in premium revenues as Lancashire took advantage of rising property insurance prices in Asia following last year’s Japanese earthquake and Thai floods.The company, which has distributed $1.3 billion to investors since inception in 2005, also said it would return more capital this year unless a big increase in insurance prices opened up attractive trading opportunities.Lancashire shares were up three percent, or $22.18 to close at $780.18 yesterday.Reuters said the widening Costa Concordia loss was driven largely by a $20 million payout on an industry loss warranty, a reinsurance contract that entitles the buyer to a payout if total insured losses from a claims event exceed an agreed threshold.The ILW was triggered when estimated overall losses from the Concordia disaster exceeded $1 billion, forcing Lancashire to pay an unnamed reinsurance counterparty $20 million, said Jonny Creagh-Cohen, Lancashire’s head of investor relations.Lancashire was also hit by a 31 percent drop in its net investment income as bond yields fell during the second quarter.