Lancashire slumps to net loss for first half of 2020
Lancashire Holdings saw the impact of COVID-19 weigh on results in the first half of the year, but pointed to strengthening pricing trends as cause for optimism going forward.
Lancashire reported a $23 million loss for the first half of 2020. In the first half of 2019 the re/insurer had generated a profit of $40.5 million.
Gross written premiums were $495.5 million for the first half of 2020, up from $429.6 million in the same period of 2019. Its combined ratio ballooned to 106.9 percent for the half year, from 86.6 percent in the same period of 2019.
Alex Maloney, group chief executive officer, highlighted the impact of the COVID-19 pandemic. “In the face of the challenges generated by the COVID-19 pandemic to both sides of the balance sheet, there has been a retrenchment in re/insurance market risk capital and capacity,” he said.
“Our financial results were impacted by the COVID-19 losses, plus a number of late reported attritional claims from prior years,” said Natalie Kershaw, group chief financial officer. “Excluding COVID-19 we did not incur any new major losses in the first half of the year and we have seen significant premium growth across all our underwriting segments.”
Maloney noted the first half of the year saw double-digit percentage rate increases in many of Lancashire’s lines of business, and accelerated rating dislocation in the catastrophe exposed reinsurance lines. This resulted in rises in the range of 20-30 percent for June 1 renewals in Florida, he said.
“I believe that the economic fundamentals now dictate that this pricing trend is likely to strengthen throughout 2020 and into 2021 across a number of our business lines, and that current market conditions present an attractive opportunity for growth consistent with our strategy of deploying capital in line with the insurance market cycle,” Maloney added.
However, he admitted the impact of COVID-19 as a loss event to the re/insurance markets remains uncertain going forward.