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Feb 11, 2022

Lancashire Holdings issues 2021 group results

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Lancashire Holdings has released to the LSE its 2021 results statement available here in full.

We have extracted the following financial key points:

  • Gross premiums written increased by 50% year-on-year to a record $1.2 billion
  • Group RPI (Renewal Price Index) of 109%.
  • 2021 Comprehensive loss of US$92.9m (2020: +24.3m)
  • Expansion into new classes of business and the addition of three new teams.
  • Combined ratio of 107.3%, driven by significant weather and large loss events of $306.4 million
  • Reserve releases ahead of guidance - prior year favourable development of $86.5 million.

We hope the following extracts from the Statement make interesting reading for Members.

Extracts from Group Chief Executive Officer 's (Alex Maloney) Statement:

“2021 saw Lancashire successfully continue the long-term build-out of its franchise and expand into a number of new classes, with gross premiums written increasing by 50%. Much of this premium will continue to earn through in 2022 and is expected to provide earnings resilience in future years. Delivery against this aspect of our strategy means we are well-positioned for profitable growth in the most attractive market conditions of recent years.

“However, 2021 was also a poor one for returns. With Winter Storm Uri, hurricane Ida, European storms and floods, and Midwest U.S. tornadoes, among others, industry-wide estimates place insured losses from natural catastrophes between $105 billion and $130 billion making it one of the costliest years on record.”

“Financial losses are always disappointing but 2021 was only the second full financial year that Lancashire made an overall loss since its inception. Strong underlying profitability after nearly four years of rate increases, as illustrated by improvement in our attritional loss ratio, was offset by weather and large risk events during the year.”

Lancashire anticipates a fifth year of positive rate momentum and expects to grow ahead of rate increases in 2022 with “more growth coming from capital-light products.”

Prior year reserves

Releases of $86.5 million, (2020: $52.0 million). “The favourable development in 2021 was primarily driven by general IBNR releases on the 2020 accident year across most lines of business due to a lack of reported claims.”

Covid-19 and other losses

The Group’s COVID-19 related losses remained stable during 2021. During 2021, Lancashire experienced net losses from significant weather and large loss events of $306.4 million including Winter Storm Uri, Hurricane Ida and European storms and floods, and the Q4 Midwest tornadoes in the U.S. and the Australian storms.

Conclusion

Premiums were at a record US$1.2bn for the Group. The bottom line loss (only the second in Lancashire's history) reflects the magnitude and frequency of 2021 catastrophe losses. The presentation given during this morning's earnings call is available here.