10 February 2021News

Lancashire sees profits slide to $6m in 2020

Lancashire Holdings has reported a sharp year on year fall in profit for 2020, but noted the dislocation and uncertainty caused by the COVID pandemic had increased the value of re/insurance to its clients.

Lancashire reported a pre tax profit of $5.9 million for 2020, down from $119.5 million in 2019.

It reported gross written premiums of $814 million for 2020, up from $706.7 million in 2019. Its combined ratio expanded dramatically to 107.8 percent, from 80.9 percent in 2019.

Alex Maloney, group chief executive officer, said the year had demonstrated the value of its strategic planning in preparing for challenges and opportunities, both expected and unexpected.

“The COVID-19 pandemic has generated a level of dislocation and uncertainty in the global economy and markets which has demonstrably accelerated a pronounced re-rating and improvement in the pricing of many of the re/insurance products which we sell,” Maloney said. “In these times of heightened uncertainty, insurance has retained its value as an important risk management tool which remains central in the strategic planning of many of our clients.”

Maloney noted that Lancashire has generally avoided the retail and SME classes that have been most heavily impacted by COVID, including travel insurance, trade credit and long-term life. Prior to the COVID-19 pandemic it did not write directors’ and officers’ liability or medical malpractice.

It has grown the business in other areas, Maloney noted. “As we enter 2021 we have added to our underwriting  portfolio a casualty reinsurance book of business underwritten from our Bermuda office, which we intend to build out cautiously over the coming years,” he said.

Natalie Kershaw, group chief financial officer, said the outlook for 2021 is one of further rate hardening. “We expect to utilise the $340.3 million of capital raised in our equity placing in June 2020 to fund further growth in our business during 2021,” she said. “In line with our stated dividend policy we are declaring our standard final ordinary dividend of $0.10 per share.”