Forecasts & Results

Lancashire publishes 2021 Interim results

Posted 28/07/2021 – Quick takes

Lancashire has reported its interim results for 2021 this morning.

Gross premiums written increased by 40.7% year on year to $697.2m (vs. $495.5m in 1H20), with a renewal price index of +11%. The combined ratio was 80.7% (or 65.7% excluding Winter Storm Uri) which compares to 106.9% in 1H20. Lancashire reported an underwriting profit before tax of $54.1m (vs. a loss of $23.0m in 1H20). The investment return in 1H21 was 0.3% vs. 1.3% in 1H20.

Alex Maloney, Group CEO, said: “I am particularly pleased with the Group’s strong premium growth of 40.7% … It has always been our strategy to write more business and deploy more of our capital when market conditions dictate … The rating environment continues to be favourable for most of the products we sell, giving rise to a renewal price index of 111% and considerable organic growth. Importantly, we are starting to reap the benefit of the cumulative rate increases we have achieved over the past three years on our profitability. This is illustrated by our combined ratio of 80.7% for the half year … Looking ahead, we expect the rating environment to remain positive.”

Alpha comment

We welcome these improved results from Lancashire, in particular (i) the rate increases in the property catastrophe and property retrocession classes of business and (ii) the favourable development of the prior years during 1H21 of $53.6m vs. $(5.1)m in 1H20 which is primarily due to general IBNR releases across most lines of business due to a lack of reported claims. This compares with an unfavourable development during 1H20 had been primarily driven by a number of late reported losses from the 2019 accident year.

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