Lancashire sees limited war claims; eyes opportunity in ensuing hardening

Lancashire estimates that its losses related to the war in Ukraine could amount to as little as $20 million to 30 million in claims – but the resultant higher rates in some lines will also represent an opportunity, officials told its Q1 investor call.

Lancashire put the $20-30 million range into its Q1 trading statement as a best-guess final impact, while acknowledging the many unknowns associated with a "complex and evolving situation". Payments to date have been marginal, it said.

But “"even on a worst-case scenario basis, we expect to deliver on our growth plans for this year and beyond,” CEO Alex Maloney (pictured) said.

Those growth plans include benefiting from rate increases in loss-ridden specialty segments where Lancashire believes the war will drive "material rate changes".

Lancashire considers itself positioned "to benefit from the further hardening of the specialty markets driven by this conflict which we expect to materialize during 2022 and beyond."

Analysts challenged management on their confidence over the loss estimate.

But Maloney claimed his team has gone “policy by policy, line by line" at a company small enough to be “very aware of our exposures.” Every scenario lands well within Lancashire limits, he says. He also stressed that Lancashire is not an insurer of aircraft lessor AirCap, author of a notable $3.5 billion claim for lost aircraft.

“Even in worst case scenario that we can think of today, it's very manageable for our business, very akin to any other kind of specialty-type claim we could have,” he said with comparison to any “very large” claim in energy lines.

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