Lancashire hails progress in Q1 2018 figures
Lancashire Holdings has announced a pre-tax profit of $42.2 million for the first three months of 2018, a substantial rise on the $28.7 million it made on the same period of 2017.
In addition, gross premiums written for the first quarter of 2018 came to $215.8 million, a rise of 9.8 percent from the $196.5 million it recorded in the first quarter of 2017.
Alex Maloney, group chief executive officer, commented: “We have also seen an improved rating environment following the major catastrophe losses of 2017 with rate increases across a high proportion of our product lines, so we are in a slightly more interesting trading environment than we have been for a number of years. Whilst that is pleasing, the demand supply dynamic has not shifted sufficiently to bring about fundamental rate change across the board. In this environment the Group has continued to focus on the underwriting discipline of matching risk and return.
“The group has written new business where the risk reward dynamics make sense; there were opportunities to do this during the first quarter with both existing and new clients. The rate improvements are very much in line with our communicated expectations following the experience of 1 January renewals. Although moving in the right direction, the rates have not yet improved enough to warrant a material increase in the Group's level of overall risk which currently remains broadly similar to that of 2017.
“In addition to rate improvements the energy sector is starting to show the first green shoots of recovery thanks to a more sustained period of stable oil prices. This should help bring demand, and therefore premium, back to the energy insurance market through 2018 and into 2019; the Group is very well placed to benefit from this should recovery in the sector continue.
“Overall we are pleased with our first quarter: The underwriting result is strong; our 2017 catastrophe loss reserves remain robust; and our investment portfolio performed in line with expectations given the environment.”
Looking at its gross written premiums numbers in more detail, via the company’s five business segments, property gross premiums written increased by 8.1 percent for the first quarter of 2018 compared to the same period in 2017. With price increases across most of Lancashire’s property lines of business, the majority of the increase was due to those rate increases together with some new business. This was offset somewhat by prior underwriting year adjustments on the property political risk class where we saw some contract terms reduced due to loans that were re-structured.
Energy gross premiums written increased by 17.8 percent for the first quarter of 2018 compared to the same period in 2017. Lancashire pointed out that the first quarter is not a major renewal period for its energy book. The increase for the quarter was largely due to exposure increases on prior underwriting year risk-attaching business in the energy construction class.
Marine gross premiums written decreased by 26.6 percent for the first quarter of 2018 compared to the same period in 2017. The decrease was mainly due to renewal timing on non-annual contracts written in the first quarter of 2017.
Aviation gross premiums written increased by 25.0 percent for the first quarter of 2018 compared to the same period in 2017. The first quarter is not a major renewal period for the aviation segment and, although the percentage increase appears large, the dollar increase was small.
Finally, in Lancashire’s Lloyd’s segment gross premiums written increased by 18.1 percent for the first quarter of 2018 compared to the same period in 2017. While there were modest rate increases in the property book, together with some new business in both the property and aviation books, a large portion of the increase was due to exposure increases on prior underwriting year risk-attaching business.
