A series of natural calamities hit Lancashire Holdings Ltd hard this past quarter.
Announcing its interim results for the nine-month period to September 30, the insurer estimated its catastrophe losses in the third quarter to be in the range of US$65 million to US$75 million (around £50 million to £58 million). The losses were primarily attributed to hurricanes Laura and Sally, the Midwest derecho, and the wildfires across the west coast of the US. Its expectation for coronavirus-linked losses, however, remained unchanged.
Lancashire’s specialty lines business was also dealt a blow in the past quarter, with single risk losses expected to be around US$30 million (around £23 million), which was above the insurer’s usual attritional guidance.
Despite these losses, Lancashire is seeing positive signs with gross premiums written posting a 14% year-on-year increase to US$658.7 million (around £506 million). The insurer also revealed strengthening premium rate increases across its business portfolio, with RPIs of 117% for the quarter and 112% for the year.
“Since we reported in July, the insurance industry has experienced a mix of both natural catastrophe losses, which are always a threat to communities and livelihoods during wind season, and an unusually frequent run of nonnatural catastrophe risk losses,” said Alex Maloney, Lancashire’s chief executive officer.
“These losses come on top of the COVID-19 pandemic, which has been a stress to individuals, societies and economies and a material loss event for the (re)insurance industry. Within this difficult context, I am pleased to report that the group’s COVID-19 loss estimate of approximately US$42 million (around £32 million) (net of reinsurance and reinstatement premiums) has remained unchanged.”
“As insurers, we expect to support our clients and to pay covered losses when they occur, and the sequence of both natural catastrophe and risk loss events during the year so far has impacted our, and the industry’s, profitability for the year to date,” he added. “I would expect this to put further impetus on the industry to charge an adequate and sustainable price per unit of risk. Pricing, particularly in capital intensive lines of business, has increased significantly and I expect rates and terms of coverage to improve throughout 2021 in most of our core business lines.”