Bermuda-based carrier Lancashire Holdings Ltd. reported strong growth in its property reinsurance portfolio during the first six months of 2024, and recent comments from Chief Underwriting Officer (CUO), Paul Gregory, suggest the firm will continue to take advantage of favourable market conditions.
For the first half of this year, Lancashire’s reinsurance gross premiums written (GPW) rose 11.6% year-on-year to an impressive $734.6 million, with property and specialty lines the significant drivers.
Alongside more rate throughout 2023 and during 2024, albeit with some moderation this year, reinsurers worked to secure improved terms and conditions last year, and with insurers now retaining more risk as attachment points rose, the property reinsurance market has become more attractive and served as a boost to earnings for some, including Lancashire.
Speaking during Lancashire’s H1’24 earnings call earlier today, CUO Gregory said that within reinsurance, “It’s very pleasing that underwriting discipline is being maintained.”
“Whilst it’s fair to say there’s more appetite from existing carriers to deploy, we did not see new capacity in the market, and we continue to see increased demand, particularly from our existing clients,” he continued.
Gregory emphasised that for the majority of reinsurance products the markets are extremely healthy, notably property.
“In property reinsurance, there was no material changes to attachment points or rating levels. Instead, as we saw at the mid-year renewals, if aggressive orders were sought, the market held firm with sensible underwriting prevailing. This is encouraging,” he said.
While Gregory noted an increased willingness to deploy capacity by existing property market players, he explained that greater demand for property reinsurance helped to offset this.
“We see the property reinsurance market as a great place to be, with ample opportunity to write well priced and structured business,” said Gregory.
Lancashire has consistently said that it would look to grow in areas while the opportunity persists in an attractive rating environment, and given the expectation is that reinsurance market conditions will remain strong heading into 2025, including in property, further growth seems extremely likely.
During the call, Lancashire’s Chief Executive Officer (CEO), Alex Maloney, was questioned on the opportunity to deploy capital at attractive rates into next year.
“We think we’re in a great place. We think the market is in a great place,” said Maloney. “Rating has been strong… So, we believe whatever happens in the next year to 18 months, that’s still going to be in a great place. When you’re at the top of the cycle you don’t go from a great market to a market where you’re struggling to find opportunity in a year, that doesn’t happen.”
“So, yes, we definitely think there’s opportunity through ’25, whatever happens this year,” he added.
For Lancashire, continued Maloney, the US platform also provides a nice growth opportunity, as does M&A.
“M&A will start at some point, and M&A for us has generally been good. And what I mean by that is it disrupts people, and that tends to mean we’ve had good opportunity out of M&A, whether that’s people or product. So, that’s another benefit for us,” he said.
“The outlook is strong whatever happens to rate. We’re positive. We think there’s opportunity next year, but we are generating more capital as a business as well, so we just think we’re in a really good place,” concluded Maloney.
