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Apr 30, 2020

Lancashire Group Trading Statement

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The Lancashire Group which is based in Bermuda has released its Trading Statement for the first quarter of 2020. Some extracts below:

Trading statement highlights

• Resilient business model and operational capabilities despite COVID-19 global disruption;

• Approximately $35.0 million of COVID-19 claims estimated for the quarter, including the impact of reinsurance and reinstatement premiums;

• Gross premiums written increased by 11.8% year on year to $242.8 million;

• Group Renewal Price Index of 108%;

• Total net investment return, including unrealised gains and losses, of negative 1.9% in the quarter.


31 March 2020

31 March 2019

Gross premiums written

$242.8m

$217.2m

Renewal Price Index

108 %

103 %

Total net investment return (including unrealised gains and losses)

(1.9 %)

1.8 %

Some extracts from the comments made by Alex Maloney, Group Chief Executive Officer:

“Looking at the developments during the first quarter, the January 2020 renewal season saw an increase in our year on year premium income of about 12% and an RPI of 108%. This is evidence of improved market discipline and, with the recent stress to many insurance industry balance sheets, we consider that the need for improved risk pricing will continue during 2020.

"In terms of the impact of the current pandemic on Lancashire’s own business and capital resources, we have established provisional reserves for pandemic related liabilities of approximately $35.0 million. In line with the broader market, our investment portfolio delivered a negative total net investment return of 1.9% for the first quarter, which is to a large degree, driven by unrealised losses. This was in line with our expectations of performance given the stressed market conditions.

"The COVID-19 pandemic is an ongoing situation making it exceptionally difficult to predict what the ultimate impact for the Group or the industry will be. We have established a reserve of approximately $35.0 million of losses, net of reinsurance and reinstatement premiums, in the first quarter of 2020 based on a review of our book and potential COVID-19 exposures arising in the first quarter of the year. This is principally in relation to our property segment. Given the ongoing nature of the pandemic our final COVID-19-related losses may be materially different from those booked to date.

"We do not write the following lines of insurance business: travel insurance; trade credit; accident and health; Directors’ and Officers’ liability; medical malpractice; and long-term life. We have minimal exposure to mortgage business and are exposed to a small number of event cancellation contracts.”

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Lancashire manages Syndicate 2010.