Lancashire posts 35% rise in first-half GWP
Lancashire Holdings recorded an almost 35% year-on-year increase in gross written premium to $938.1 million in the six months to 30 June. It reported and “excellent underwriting performance”, with a combined ratio of 78.2%. Its profit before tax was $78 million.
Alex Maloney, group chief executive officer, said: “We continue to see attractive rate increases across a number of business lines with a renewal price index for the first six months of 106%.”
Lancashire has successfully diversified its underwriting portfolio and is seeing a strong performance from a number of these newer classes of business whilst continuing to benefit from products where it has longer-standing expertise, he added.
The company had previously given a range of $20 million to $30 million for potential incurred losses within Ukraine. Its ultimate net losses incurred within Ukraine since the start of the conflict are towards the lower end of its initial range at $22.0 million (excluding the impact of reinstatement premiums).
“We continue to closely monitor our exposure with regards to Russia, which remains a complex and fluid situation,” Maloney said, adding, “We believe that any potential losses would be within our risk tolerances, and would not impact our strategy or our ability to deliver on our ambitious growth plans.”
Although broader macro-economic issues are impacting the outlook for the global economy, Lancashire believes that the strong rate environment for many of its products is “the best we have seen for more than a decade” and that it will continue through the second half of 2022 and into 2023. This includes risk-adjusted rate rises and attractive opportunities across lines impacted by the conflict in Ukraine, it added.
During the first half of 2022, the investment environment has proved volatile and the upwards trend in US interest rates has resulted in a negative investment performance of 3.8% or in dollar terms an investment loss of $85.8 million, the company noted. This includes $83 million of unrealised losses on its fixed maturity AFS portfolio due to market value changes. Overall, the company’s investment strategy remains conservative, it said, and the return to a higher interest rate environment should boost future earnings in its portfolio.
“We continue to be strongly capitalised giving us the firepower to execute our long-term strategy to grow premiums where we believe there are attractive returns while retaining our strict focus on underwriting discipline,” it concluded.
