Lancashire profit plummets 95% in 2020; CFO praises 'very positive result'
Bermuda-based re/insurer Lancashire Holdings is "pleased" to have generated a small profit despite seeing a sharp decline of nearly 95 percent in what its CEO described as "a uniquely challenging year".
The company's chief financial officer Natalie Kershaw noted that having navigated 2020 with a large number of natural catastrophes and risk losses in addition to the financial impacts of COVID-19, it considers making an overall profit "a very positive result".
Lancashire reported a pre tax profit of $5.9 million for 2020, down from $119.5 million in 2019.
It reported gross written premiums of $814 million for 2020, up from $706.7 million in 2019.
The re/insurer's combined ratio ballooned to 107.8 percent, from 80.9 percent in 2019.
Alex Maloney, group chief executive officer, said the year had demonstrated the value of its strategic planning in preparing for challenges and opportunities, both expected and unexpected.
“The COVID-19 pandemic has generated a level of dislocation and uncertainty in the global economy and markets which has demonstrably accelerated a pronounced re-rating and improvement in the pricing of many of the re/insurance products which we sell,” Maloney said. “In these times of heightened uncertainty, insurance has retained its value as an important risk management tool which remains central in the strategic planning of many of our clients.”
He noted that Lancashire has generally avoided the retail and SME classes that have been most heavily impacted by COVID, including travel insurance, trade credit and long-term life. Prior to the COVID-19 pandemic it did not write directors’ and officers’ liability or medical malpractice.
Maloney added: “As we enter 2021 we have added to our underwriting portfolio a casualty reinsurance book of business underwritten from our Bermuda office, which we intend to build out cautiously over the coming years.”
Kershaw said: “We are pleased to have navigated 2020 relatively unscathed given the number of catastrophe and risk losses incurred in addition to the financial impacts of COVID-19. In such a difficult year we consider making an overall profit after tax of $4.2 million and comprehensive income of $24.3 million a very positive result."
She said the outlook for 2021 is one of further rate hardening. “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. In line with our stated dividend policy we are declaring our standard final ordinary dividend of $0.10 per share.”
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
