Lancashire to set up US operation in 2024

Bermuda-based insurer Lancashire Holdings plans to launch a US subsidiary to take advantage of rising rates, the company said yesterday.

Lancashire, which released its first half earnings today, said it expects the US unit to begin underwriting early in 2024.

Lancashire chief executive officer Alex Maloney said: “Lancashire has long been recognised as a business that actively manages the underwriting cycle and, when it makes sense to do so, seeks new areas for disciplined growth.

“With that in mind, subject to all necessary approvals, we intend to expand our international footprint and launch Lancashire Insurance US, which will operate under a delegated underwriting arrangement with Lancashire’s UK company platform.”

He said Lancashire US would be complementary to the company’s existing capabilities “and will give us the ability to write business that is within our appetite and that we currently do not have access to”.

He added: “This is another positive development for Lancashire and, with our reputation for underwriting excellence and service to our clients, we believe there are significant long-term prospects for us in the US.”

Maloney said Lancashire had as strong first half performance, with net income of $159.2 million compared to $31 million in the same period in 2022.

Insurance revenue was $720.9 million compared to $579.8 million, and the insurance service result was $63.2 million compared to a loss of $85.5 million.

The company’s net investment return was $63.2 million compared to a loss of $85.8 million.

Maloney added: “Our long-term strategy to develop a more diversified and capital-efficient product portfolio is delivering the expected benefits, with a half year change in diluted book value per share of 12.2%.

“Our philosophy has always been to grow when market conditions are favourable, while maintaining our approach to underwriting discipline. During the first six months of 2023 we continued to take advantage of the strong underwriting environment with gross premiums written increasing 26.2% year-on-year. The undiscounted combined ratio was a healthy 79.2%, or 71.4% on a discounted basis.

“The rating environment remains positive across our product lines and we do not see that changing during the remainder of the year.”

Lancashire has gross premiums written of $1.18 billion, up from $938 million, with reinsurance GWP contributing $658 million compared to $548.8 million.

Lancashire said the increase was due to a rise in its casualty build out while it benefited from rate rises in property.

Ceded reinsurance increased by $28.7 million or 15.7% due to higher reinsurance rates and the company also increased its political risk and casualty quota share spend.