Lancashire Holdings’ CEO Alex Maloney explained this morning that when the market is softening actively underwriting the portfolio is more important than ever, which is why he says broker follow facilities and trackers are not of interest to the company.
Speaking during Lancashire Holdings’ analyst call today after the release of its third-quarter trading statement, Maloney said that selectivity is key in underwriting a portfolio in a softened insurance and reinsurance market, something he doesn’t believe is possible on a passive basis.
Maloney stated, “There have been lots of changes in our industry in recent years, and people have very different strategies. We want to be an underwriter that has the best underwriters with great relationships with clients. So we want to be in the, sort of, alpha camp.
“We don’t write the follow-broker facilities, that’s not really something we’re interested in. Obviously, some people think that’s a great opportunity. But that’s not really what we’re trying to achieve here.
“Equally, you’re at the stage of the market that’s now softening. That’s no surprise to us, we are obsessed with the cycle so there’s no surprises there. But I think what it does tell you is, if you’re going to write some of these trackers, probably the time to write the trackers is when the market is rock hard. And then you’ve really got to start underwriting as the market softens.
“So, the market is obviously softening now in various classes of business. We just wouldn’t be comfortable writing a tracker of these kind of classes as the market gets more difficult. So we just think you’ve got to be more active when the market is softening, you definitely want to pick your trades. You’ve got to pick your way through the accounts.
“I don’t see how you do that on a passive basis, so it’s not for us. We know what we want to do. It’s why we talk about talent so much, that’s why we’re obsessed with trying to get and retain the best people. Other people have different strategies, but the follow tracker passive strategy is not for us.”
During the call, Maloney also highlighted the strengths Lancashire has to navigate a softening phase of the insurance and reinsurance market cycle.
He explained, “We are firm believers in the cycle, and we will always actively manage our capital to match the underwriting opportunities available. This has been our guiding principle, whatever stage of the market cycle we’re in. So, of course, you should expect to see us maintain a relentless focus on deploying capacity only where risk-adjusted returns meet our expectations, whilst remaining committed and relevant to our core clients. ”
Going on to say, “Although this means we may limit exposures in some parts of our portfolio, we have a number of levers to help us manage this cycle that were not available, or not to the same extent, in previous periods. For example, our diversified business has many more product lines, each presenting different opportunities and risk and return profiles, so we can be agile and quickly allocate capital where it makes most sense.
“As a larger and more diversified group, we can use reinsurance effectively to manage our net exposures whilst maintaining appropriate gross lines. And of course, a benefit of a softening market is that this tool can be used to make us more efficient.
“Our balance sheet is well capitalised, with prudent loss reserves and a conservative positioned investment portfolio that can make meaningful contributions to Lancashire’s financial performance. This ability to be agile and to maintain and to remain disciplined as we manage the cycle underpins our ability to deliver attractive returns to shareholders across the whole cycle.”
Paul Gregory, Group Chief Underwriting Officer at Lancashire, echoed this in explaining, “The benefit of a larger, more diversified portfolio and product offering is it gives us greater flexibility to manage the cycle. Not all products move at the same pace and are at varying levels of adequacy. Therefore, we have more options to reallocate between products, classes, and geographies, bringing lower volatility to both top and bottom line.
“We also have broader reinsurance options available, allowing us to manage the cycle appropriately, maintain relevance with clients through the cycle.
“This flexibility and willingness to be agile and disciplined in the face of changing market conditions is one of Lancashire’s key competitive advantages, and allows us to continue generating attractive, risk-adjusted returns even as the market transitions to softer phase of the cycle.”
Read our report on Lancashire’s Q3 2026 trading statement here.
