Lancashire Holdings Limited has reported its Gross written premiums (GWP) increased by 40.7% year on year to $697.2 million for the first half of 2021.
The increased GWP was driven by new business and rate increases within the property catastrophe and property retrocession classes of business.
The insurer also reported a profitable underwriting performance, with a combined ratio of 80.7%, which would have been at or 65.7% excluding Winter Storm Uri.
Its net losses recorded for Winter Storm Uri, including the impact of reinsurance and inwards and outwards reinstatement premiums, totalled to $44.8 million, which landed within the previously guided range.
The company also reported an underwriting profit of $127.1 million compared to $39.4 million for the same prior year period.
Its new underwriting teams in the specialty reinsurance and accident and health classes of business have also contributed to the growth in the first half of 2021 and the group has added casualty reinsurance to its underwriting portfolio during this period.
Alex Maloney, Group Chief Executive Officer, commented: “I am particularly pleased with the Group’s strong premium growth of 40.7% in the first half of the year. It has always been our strategy to write more business and deploy more of our capital when market conditions dictate, and these results amply demonstrate our persistent focus on delivering on our strategic aims.
“The Group achieved a growth in FCBVS of 2.4% for the half year, absent the one off debt redemption costs, the growth in FCBVS would have been 3.5%. The rating environment continues to be favourable for most of the products we sell, giving rise to a renewal price index of 111% and considerable organic growth. Importantly, we are starting to reap the benefit of the cumulative rate increases we have achieved over the past three years on our profitability.
“This is illustrated by our combined ratio of 80.7% for the half year. My thanks go to our colleagues, who during this last year have demonstrated their ability to work flexibly at home and in the office. We are currently able to operate a flexible working model, with many of our people having returned to a “COVID secure” office environment in both London and Bermuda.
“Looking ahead, we expect the rating environment to remain positive. In addition, the new teams that we have recently hired are expected to contribute to the group’s growth in the future. Our continued commitment to underwriting discipline will be central to our success.”
Natalie Kershaw, Group Chief Financial Officer, added: “For the first half of 2021, we were very pleased to generate an underwriting profit of $127.1 million despite the impact of Winter Storm Uri in the first quarter of 2021. We did not incur any other significant losses and had positive reserve releases of $53.6 million in the period. Furthermore, the Group’s loss reserves for COVID-19 remain stable.
“Our overall profits were impacted by one-off costs of $18.7 million due to the successful Tier 2 debt issuance and related refinancing in the period, which has improved the capital efficiency of our balance sheet. The investment portfolio remains relatively conservative, with a significant weighting to fixed income assets.
“As a result, our investment returns, including unrealised gains and losses, were negatively impacted by the yield curve steepening in the first quarter of the year, resulting in a total investment return of 0.3% for the first six months of 2021.
“We started the year in a strong capital position following the successful $340 million equity raise in 2020. This, together with our recent debt refinancing, has enabled us to grow our premium base substantially.
“Given premium pricing is still improving across the majority of our book, we would expect to retain any profits from 2021, over and above the payment of an ordinary dividend, to fund further growth. In line with our stated ordinary dividend policy, on 27 July 2021 the Board declared an ordinary interim dividend of $0.05 per share.”