Lancashire Holdings Ltd’s net operating profit declined to $42.9 million in the first half of 2019, down more than $35 million year-on-year.

The Bermudian-based re/insurer’s profit after tax for the same period was $39.1 million, down from $75.8 million over the first six months of 2018.

The company reported gross premiums written of $429.6 million, up 9.5 per cent from $392.5 million for the first six months of 2018.

Combined ratio was 86.6 per cent, up from 67.1 per cent a year ago.

Return on equity for the year to date was 6.9 per cent as against 5.9 per cent for the first half of 2018.

Net investment income, excluding realised and unrealised gains and losses, was $19.6 million for the first six months of 2019, an increase of 23.3 per cent from the same period in 2018.

Total investment return, including net investment income, net other investment income, net realised gains and losses, impairments and net change in unrealised gains and losses, was a gain of $57.1 million for the first six months of 2019 compared to a gain of $5.4 million for the first six months of 2018.

The group’s investment portfolio earned 3.2 per cent for the first six months of 2019.

During the first quarter of 2019, Lancashire’s board of directors declared a final dividend in respect of 2018 of 10 cents per common share.

The dividend, totalling $20.1 million, was paid on March 27 to shareholders recorded on February 22.

Lancashire has declared an interim dividend for 2019 of five cents per common share, to be paid on September 6 to shareholders of record on August 9.

Alex Maloney, the group’s chief executive officer, said: “I am encouraged by the emerging evidence that the re/insurance market is now experiencing the long anticipated improvements in discipline and pricing in many of the group’s core business lines.

“We have seen good new business momentum in the first half of 2019, as we were able to benefit from our longstanding disciplined underwriting approach.”

He added: “In the face of a more cautious underwriting environment and evidence of market retrenchment in the specialty lines in which we write, we were able to take advantage of improving terms and demand.

“Looking ahead, the recent evidence of better market discipline and pricing will take time to feed through to our bottom line.”

Elaine Whelan, Lancashire’s chief financial officer, said: “Our investment strategy remains relatively conservative and our investment portfolio performed well with a net return of 3.2 per cent. With expectations of interest rate reductions going forward, we have removed some of our interest rate hedges and that has led to a natural increase in the duration of our investment portfolio.”

She added: “Our renewals went well and were in line with expectations. We have seen some growth across several lines of business, including the new lines that we added last year.”