Lancashire 2020 Annual Results

Lancashire Holdings Limited, the owner of Lancashire Syndicates Limited (managing agent of syndicate 2010), has announced its 2020 calendar year results.

Alex Maloney, Group Chief Executive Officer, commented:

“This last year has demonstrated the value of our strategic planning in preparing for challenges and opportunities, both expected and unexpected….We understand that the challenges of the current pandemic are ongoing. But it is with some optimism that we enter 2021 with the right skill-set and capital base to enable us to trade in a market which is materially improved from the soft market of recent years.”

A link to the full report can be found be clicking here.

Alpha comment

Lancashire produced a positive financial result only by virtue of contributions from investment income and prior year reserve releases. Its combined ratio of 108% reflects the challenges of COVID-19 related losses (even if the most recent reserve figures remains stable), a larger number of natural catastrophe events (including hurricanes Laura and Sally, the Midwest Derecho storm and the wildfires in California) and higher than expected risk losses. The frequency and severity of these claims in 2020 saw the Group post a net loss of 60%, almost double that of 2019 (31%) and somewhat higher than that of 2018 (40%). It is worth highlighting that the Group’s ultimate 2020 loss may vary, perhaps materially, from the current estimate given the ongoing nature of COVID-19, albeit on current figures the year appears to be in a stronger position to that of 2017, which posted a net loss ratio of 78% following hurricanes Harvey, Irma and Maria. The final settlement of COVID-19 is likely to take place over a considerable period of time, with the majority of reserves relating to exposures within its property reinsurance segment, an area of the market which has yet to determine how business interruption losses relating to pandemic will aggregate. For the meantime, 2020 saw premium income grow for all four principal divisions (Property, Aviation, Energy and Marine), which together recorded renewal rates rises of +12%, a positive development which prompted the group raise capital in the middle of last year to help fund further growth in the business during 2021 as rates continue to harden.