Forecasts & Results

Lancashire publishes 2022 interim results

Posted 27/07/2022 – Quick takes

Lancashire Holdings Limited has reported its group results for the six months to 30th June 2022

Lancashire plc has reported group results for the first half of (calendar) 2022. During the period, group Gross Written Premiums (GWP) rose +34.6% year-on-year to US$938.1m (1H21: US$697.2m) with a group Renewal Price Index (RPI) of 106% (vs. 111% in 1H21).

Ultimate net losses incurred within Ukraine are currently towards the lower end of the initial US$20-30m range at US$22m (excluding the impact of reinstatement premiums). Lancashire is monitoring its exposure to Russia (stranded leasehold aircraft), but in common with many of its peers has not provided an estimate of potential losses due to the complexity of the situation.

The first-half group combined ratio improved by 2.5 points to 78.2%  vs. 1H21:80.7%. The group’s net loss ratio for 1H22 improved to 37.9% vs. 38.4% in 1H21, despite losses from Ukraine and the Australian floods. 1H22 saw general IBNR releases on the 2021 accident year due to a lack of reported claims as well as favourable development on some large claims from the 2018 and 2017 accident years.

In common with its peers, total net investment returns during the period were negative (-3.8% in 1H22 vs. +0.3% in 1H21), primarily driven by unrealised losses.

Alex Maloney, Group CEO, commented: “The Group delivered strong premium growth in the first half of the year […] We continue to see attractive rate increases across a number of business lines with a renewal price index for the first six months of 106% […] We continue to closely monitor our exposure with regards to Russia, which remains a complex and fluid situation. We believe that any potential losses would be within our risk tolerances […] While broader macro-economic issues are impacting the outlook for the global economy, we believe that the strong rate environment for many of our products is the best we have seen for more than a decade and that it will continue through the second half of 2022 and into 2023 […] During the first half of 2022, the investment environment has proved volatile and the upwards trend in US interest rates has resulted in a negative investment performance of 3.8% […]”

Source: Lancashire Holdings Limited

Property and casualty reinsurance

The substantial growth in the property and casualty (P&C) reinsurance segment (GWP +45.4%) was mainly due to new business in the casualty reinsurance and financial lines classes of business.

Property and casualty insurance

The growth in the P&C insurance segment (GWP +40.5%) reflects the continued build-out of the property direct and facultative (D&F) book of business, including the recent expansion in Australia and a move into property construction insurance.


GWP was broadly flat year-on-year (most renewals take place in the second half of the year).


Energy saw growth via the addition of new underwriting teams and product expansion and came despite the group’s withdrawal from the Gulf of Mexico.


Growth in the marine segment was primarily driven by new business particularly in the marine cargo and marine liability classes of business.

Outwards reinsurance

Although the proportion of outwards reinsurance premiums to GWP has decreased year-on-year, spend increased by US$46.2 million (+17.2%).


Lancashire believes that they have a good track record of managing inflationary pressures. The group writes a predominantly short-tail book, with a bulk of the group’s policies renewing every year (and throughout the year rather than on a single date) and are based upon updated schedules of insured values. Where the group does not believe that declared values adequately cater for inflation, they manually load rates accordingly – and catastrophe modelling includes inflation loading. As such, Lancashire believes that they adequately price to take account of inflationary pressures.

Alpha comment

The year-on-year improvement in the group combined ratio is welcome and although the negative investment return during the period is disappointing, it was entirely expected. The Ukraine losses are at the lower end of the original forecast, which again is positive, but since there are still no reserves for potential aviation losses in Russia, it is a situation that will evolve over time. The historic reserve releases may potentially suggest positive future news for supporters of syndicate 2010, which represents around 25% of the Lancashire Group.

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