Lancashire 2019 Interim Results

Lancashire Holdings Limited, the owner of Cathedral Underwriting Ltd (managing agent of syndicate 2010), has today (25 July) announced its half year 2019 annualised results.

Alex Maloney, Chief Executive Officer, said:

“I am pleased with our performance in the first half of 2019. I am also 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. 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. While the market overall was characterised by a number of attritional losses in the first half of 2019 and substantial loss creep on prior year events, it is worth noting that our ultimate net loss estimates for the 2018 and 2017 catastrophe events have remained largely stable, allowing us to deliver a solid combined ratio of 86.6% for the half year. Looking ahead, the recent evidence of better market discipline and pricing will take time to feed through to our bottom line. However, I believe that we have the talent and capability to capitalise on the next stage of the (re)insurance cycle, and our strategy has positioned us well to maximise the improving underwriting opportunity.”

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Alpha comment

These results show a deterioration in underwriting performance for the first half of 2019, driven by some late reported claims incurred in 2018 and increased level of attritional (i.e. routine and typically minor) claims in 2019. Nevertheless, Lancashire has reported that its overall prior year position has developed favourably, which allowed for an appreciably better combined ratio when compared to many of its competitors, some of whom have suffered marked loss creep from Typhoon Jebi. Within the group level figures, Cathedral has reported average rate rises of 7% across its book and income growth of 12%, much of which came from its energy and aviation divisions. A largely favourable reaction to these interim results has seen the Lancashire Holdings Limited share price increase today by 2% on yesterday’s closing.