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Lancashire sees rate increases of up to 30% at June renewals

11th June 2020 - Author: Matt Sheehan

Specialty insurer and reinsurer Lancashire Holdings Limited has reported rate increases of 20%-30% for its Florida property catastrophe portfolio at the June 1 renewals.

lancashire-logoThe company expects the momentum of rising rates to continue in this and other classes of business across its portfolio during the rest of this year and throughout 2021.

These figures were included in a trading update that was released as part of Lancashire’s recent capital raising document, showing that since Q1 it has continued to trade in line with, or better than, its expectations, buoyed by pricing improvements.

This week, Lancashire successfully completed the placing of new common shares, raising gross proceeds of approximately £277 million as it looks to take advantage of the better pricing environment.

Lancashire’s loss estimate for COVID-19 remains unchanged from the $35 million it previously announced, net of reinsurance and reinstatement provision.

But since 31 March 2020, the unrealised investment losses in the firm’s investment portfolio have reversed and its total net investment return for the 2020 year to 29 May 2020 was 0.5%.

Lancashire’s final ordinary dividend for 2019 of $0.10 per Common Share, or $20.1 million, was approved by shareholders at its AGM on 29 April 2020 and was paid on 5 June 2020 to shareholders of record on 11 May 2020.

The dividend policy takes into account both ordinary and special dividends, with annual ordinary interim and final dividends intentionally being low so that they can be paid in the majority of circumstances. Absent extraordinary circumstances, the Board currently expects to approve the annual ordinary interim dividend of $0.05 per Common Share at its planned July 2020 Board meeting.

The Company has seen, to date, rate rises of 20%-30% for 1 June renewals in the Florida property catastrophe portfolio. Lancashire expects the momentum of rising rates to continue in this and other classes of business across its portfolio during the rest of this year and throughout 2021.

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