Lancashire hit by $30m in marine losses
Lancashire Holdings has posted a pre-tax loss of $25.3 million in the third quarter of 2018, an improvement on the pre-tax loss of 136.4 million it in the same period of 2017.
Gross premiums written decreased by 19.4 percent in the third quarter of 2018 compared to the same period in 2017. For the first nine months of 2018, gross premiums written decreased by 3.1 percent compared to the first nine months of 2017.
The company said the reduction reflects the higher level of reinstatement premiums in 2017 arising from the 2017 catastrophe events, in addition to multi-year deals written in its property and energy segments in 2017 that were not yet due to renew.
Specifically, property gross premiums written decreased by 30.8 percent for the third quarter of 2018. The third quarter of 2017 included $7 million of reinstatement premiums in connection with hurricanes Harvey, Irma and Maria and also included multi-year deals in the property catastrophe and political risk classes that were not yet due to renew.
Energy gross premiums written decreased by 16.8 percent for the third quarter of 2018. It said the dollar movement for the quarter was small and mainly due to multi-year contracts written in the offshore energy class in 2017 that were not yet due to renew.
Its marine gross premiums written decreased by 90.8 percent for the third quarter of 2018 compared to the same period in 2017. Its aviation gross premiums written increased by 18.9 percent for the third quarter of 2018.
In the Lloyd’s segment gross premiums written increased by 7 percent for the third quarter of 2018 compared to the same period in 2017 and increased by 13.2 percent in the first nine months of 2018 compared to the first nine months of 2017. It said there were increases across most lines of business for both the quarter and the first nine months of 2018, the majority of the increase was driven by the property direct and facultative, marine and aviation books due to improved rates, new business and exposure increases on prior underwriting year risk-attaching business. These were partly offset by lower reinstatement premiums.
“The third quarter of 2018 was at least as active as 2017 in terms of the number of events to impact the industry,” said Alex Maloney, group chief executive officer. “The magnitude of insured loss, however, has been much smaller. We have, nonetheless, produced a small loss for the quarter as a result of these events. While it’s always disappointing to lose money in any quarter, we remain in positive territory for the year to date. The loss events during the quarter are a well understood part of our business model; we are prepared for such events and they lie within our risk expectations.
“Overall, rates are directionally up on last year and, pleasingly, we continue to see rates improving across our specialty lines of business. In our property catastrophe lines, recent loss events may stimulate that market to maintain more discipline over pricing in the run up to the January 1 renewals. While optically our gross premiums written have declined in the third quarter, rate increases and growth in the quarter are masked by the impact of quarter on quarter reinstatement premiums plus the impact of the timing of renewal of some multi-year deals in addition to exposure adjustments on prior underwriting year contracts. We have again added new business in the quarter, including across the new teams we have recruited into the Group this year.
“With the market in a state of flux, and as others in the market exit lines of business that are underperforming, we are well positioned to build out our offering by attracting high-calibre underwriters to our team where we see opportunities. We have also recently seen Lloyd’s take a tougher stance on the need for market underwriting discipline and for a return to pricing levels which are fundamentally profitable. The Group’s philosophy has, for many years, stressed the central importance of disciplined underwriting and we have a record of tailoring our income levels and our exposures accordingly and therefore welcome these actions.
“I believe we will have a growth opportunity in 2019 in our specialty lines. The risk exposures in our property catastrophe lines are likely to remain at similar levels as for 2018, although we remain open to opportunities in these classes too.”
Lancashire Holdings, Q3 results, loss, nat cats, premiums