Lancashire Holdings Limited (Lancashire Holdings), with operating subsidiaries in the UK and Bermuda, has released its latest financial results.
For the year ended December 31, 2022 (FY22), Lancashire Holdings’ gross written premiums (GWPs) increased by 35% year-on-year to $1.65 billion, with 108% group RPI.
“I’m very pleased to report that Lancashire continued its strong growth trajectory during 2022, increasing gross premiums written year-on-year by 35% to $1.7 billion and delivering a combined ratio of 97.7%. In the five years since 2017, our gross premiums written have increased by almost 280%,” Lancashire Holdings Group CEO Alex Maloney said, emphasising that the company’s robust underwriting performance came against a backdrop of high industry losses and a volatile macroeconomic environment.
In line with its “underwriting comes first” principle, Lancashire Holdings expanded its footprint and focused on organic growth opportunities and rate increases across most of its product lines.
Lancashire Holdings revealed that its catastrophe and weather-related losses for FY22, excluding the impacts of reinstated premiums, totalled $218.4 million. The total included the impact of Hurricane Ian, which was at the lower end of the $160 million to $190 million range provided by the company in Q3 2022.
Previously, Lancashire Holdings set aside $22 million for direct claims resulting from the Ukraine conflict. In Q4 2022, the company revised the amount to include an additional management margin for any potential indirect claims related to the conflict across several classes, now totalling $65.8 million.
“From a capital perspective, we held a very strong position throughout the year, and we have the necessary headroom to continue to write profitable business and deliver returns during what we expect to be a harder market in 2023,” Maloney said.
Lancashire kickstarted 2023 with strong renewals on January 1, which saw a market-wide reassessment of property catastrophe risk. Pricing, coverage, and terms and conditions responded positively, substantially improving expected returns.
Increased demand for Lancashire Holdings products due to recent industry loss experience and broader inflation was not met by an increase in the supply of capacity as investors repriced the cost of capital.
“Overall, this gave considerable momentum to the current favourable market dynamics, which we expect to continue at least at the current level as we go into the mid-year renewals,” Maloney said.
“In other lines, the pricing environment remains supportive, albeit rate rises were not as high as in property catastrophe lines of business. Our specialty book has seen five years of rate increases, and this looks set to continue in 2023, while our casualty business is more stable, with rates remaining close to historical peaks.”
Lancashire Holdings expects wider capacity constraints due to the increasing cost of capital and historic loss activity.
“I very much look forward to the opportunities for further profitable growth that the next 12 months may bring, and I’d like to thank all of our colleagues for their hard work and our investors, clients, and their brokers for their support during the past year,” Maloney said.
