Bermuda-based Lancashire Holdings Limited has reported a 26.2% rise in gross premiums written (GPW) for the first half of 2023 driven by growth in both its reinsurance and insurance segments, as the firm highlights a positive rate environment which it expects to persist through the remainder of the year.
Across its business, Lancashire’s H1 2023 GPW rose to roughly $1.2 billion from $938 million a year earlier, reporting a renewal price index (RPI) of 117%, up from 106%.
In reinsurance, the company’s premiums rose to $658 million from $549 million, which the firm attributes to the continued build out of its casualty reinsurance lines and new business written in specialty reinsurance.
In property reinsurance, notes Lancashire, it benefited from significant rate increases which contributed to growth, which helped the overall RPI for the reinsurance segment rise from 107% to 123%.
While Lancashire took advantage of rate increases in the reinsurance market, this also saw the cost of its outwards reinsurance rise, with the firm reporting a 15.7% increase in the allocation of reinsurance premiums to $212.7 million.
The company also notes a higher reinsurance spend on its political risk and casualty quota share as a result of growth in inwards business, and the entry into some new outwards reinsurance contracts on the back of continued growth and diversification in the inwards underwriting book.
The Bermuda re/insurer also saw robust GPW expansion in its insurance business during the first half of this year, from $389 million to $526 million. The growth here was driven by property insurance with substantial rate rises in property direct and facultative business, as well as the build out of its Australia and construction teams.
Lancashire also highlights the contribution from new business written across all of its energy and marine insurance lines, while it expanded its political risk book. Overall, the insurance segment RPI was 111%, compared with 105% a year earlier.
In terms of losses from catastrophes and large events, this fell slightly from $53.1 million in H1 2022 to $49.5 million in H1 2023. Prior year loss development was also favourable for the group at $46.3 million.
Group-wide, insurance revenue jumped from $580 million in H1 2022 to $721 million in H1 2023, as the insurance service result, or underwriting result, improved year-on-year from $142 million to $189 million. In reinsurance, the underwriting result increased to $93.2 million from $63.1 million, and the insurance segment underwriting performance strengthened to $95.6 million from $78.4 million.
The investment result also improved significantly in the period, up from a negative return of $85.8 million in H1 2022 to a gain of $63.2 million in H1 2023.
All in all, Lancashire has reported a H1 2023 discounted combined ratio of 71.4% compared with 72.6% a year earlier, and an undiscounted combined ratio of 79.2% for this year, against 77.1% a year earlier.
Profit after tax has risen considerably, from $31 million last year to $159.2 million this year.
Alex Maloney, Group Chief Executive Officer, commented: “We are very pleased with our performance in the first half of 2023. Our long-term strategy to develop a more diversified and capital-efficient product portfolio is delivering the expected benefits, with a half year change in diluted book value per share of 12.2%.
“Our philosophy has always been to grow when market conditions are favourable, while maintaining our approach to underwriting discipline. During the first six months of 2023 we continued to take advantage of the strong underwriting environment with gross premiums written increasing 26.2% year-on-year. The undiscounted combined ratio was a healthy 79.2%, or 71.4% on a discounted basis.
“The rating environment remains positive across our product lines and we do not see that changing during the remainder of the year.”
