Lancashire Holdings has estimated it will see COVID-19 claims of approximately $35 million in Q1 2020, predominantly in its property segment, including the impact of reinsurance and reinstatement premiums.
The re/insurer generated gross written premiums of $242.8 million for Q1, up from $2.17.2 million in the same period the previous year, an increase of 11.8 percent.
Meanwhile, its investment portfolio made a negative return of 1.9 percent in Q1, with the majority of its unrealised losses driven by bank loan and hedge fund portfolios, given the significant spread widening in credit and volatility in equities.
Alex Maloney, Lancashire’s chief executive officer, said: “In the face of this real world stress test I have been impressed by the resilience of our business model and the professionalism of our people. The group retains a robust solvency buffer and we stand ready to meet the challenges and opportunities that lie ahead.”
He warned that while the world is focused on COVID-19, other risks remain. “We therefore continue to work with our brokers and clients to deliver our insurance and reinsurance products in all our areas of specialism, including swift payment of valid claims.” Demand in many of its sectors of expertise, including aviation, marine and energy, has so far held up, he added.
Maloney warned the COVID-19 pandemic will remain a considerable challenge going forward. “Given the ongoing nature of the pandemic our final COVID-19-related losses may be materially different from those booked to date,” he said.
However, he noted Lancashire does not write travel insurance, trade credit, accident and health, directors’ and officers’ liability, medical malpractice or long-term life business. With minimal exposure to mortgage business and event cancellation contracts, he said the group has “more than adequate liquidity and solvency headroom.”
Lancashire, Alex Maloney, COVID-19