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Feb 10, 2021

Lancashire Group

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Lancashire Holdings Ltd has reported its 2020 year-end results today to the London Stock Market.

The key numbers are:

· Profit before tax of $5.9m (2019: $119.5m)

· Gross premiums written increased by 15% to $814.1m (2019: $706.7m)

· Combined ratio of 107.8% (2019: 80.9%)

· Rate increase on renewal portfolio of 12%

· Prior year reserve releases of $52.0m (2019: $88.0m) across property, aviation, energy, (not marine) 2017 to 2019 years;

· Net investment income of $69.1m (2019: $83.2m)

The full Press Release is available here from Lancashire's website

Renewal Price Index

Property (reinsurance) +8%.

Aviation +21%.

Energy + 13%.

Marine +16%.

Outlook

"Our outlook for 2021 is one of further rate hardening and 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."

Lancashire comments on Covid impact

"Our net losses, excluding the impact of inwards and outwards reinstatement premiums, from COVID-19 related losses, natural catastrophe and large risk loss events, amounted to $149.5 million for the year ended 31 December 2020.

[Covid on its own stands at US$42m net - unchanged, mainly IBNR].

"In light of the UK Supreme Court ruling, the Group has performed a detailed review of the business interruption clauses in its insurance and reinsurance contracts and concluded that there is no material impact on the COVID-19 best estimate loss booked for the year ended 31 December 2020.

For the full detail please refer to the Press Release and Lancashire website.

Comment

The earnings conference call with analysts mentioned the following: The majority of the new capital raised last year of US$340m was used for the renewals (but there is spare for the forthcoming renewals) writing business (including in the new areas of accident & health, specialty reinsurance and casualty reinsurance) as the rates where they expected but the volumes exceeded their expectations.

They pointed out that there is still a large degree of uncertainty remaining with estimating Covid losses as it is still ongoing.

No information on Syndicate 2010's results published at this time.

Membership, underwriting at Lloyd's