Underwriting opportunities and the risk they carry will drive capital levels, not the other way around. The world at large plays its part too. We plan to carry sufficient capital to support the risk we assume, and to take advantage of underwriting opportunities as and when they arise.
Objective met: As 2008 progressed, underwriting opportunities declined. As we said we would, we returned capital by repurchasing some of our own shares at prices which were accretive to book value. Whilst we will return capital when we don’t have good ideas for its use, right now we have lots of ideas. A hard market is upon us and underwriting opportunities have increased. But we are also cognisant of the current market environment. A vital use of capital is to provide a buffer above minimum requirements. More than ever, that buffer should be a healthy one. It is at Lancashire.