Lancashire CEO bemoans ‘poor’ returns in 2021 as profit plunges into red

Lancashire Holdings reported “disappointing” results blaming “poor returns” and catastrophes as it swung to a huge loss in 2021 - the second full financial year that the company made an overall loss since its inception.

The re/insurer made a loss of $56.8 million in 2021, against a profit of $5.9 million in 2020.

The company experienced net losses from significant weather and large loss events of $306.4 million, excluding the impact of reinstatement premiums. Within this, catastrophe losses for the full year, excluding the impact of reinstatement premiums, were $237.6 million due to the impacts of Winter Storm Uri, Hurricane Ida and European storms and floods, and Q4 weather events including the Midwest tornadoes in the US, and the Australian storms.

Despite that, the Bermuda-based and London-listed company's gross premiums written increased to a record $1.2 billion, from $814.1 million a year ago.

GWP in the property/casualty reinsurance segment doubled since 2020, due to increases in existing lines of business and the addition of new lines.

However, heavy weather-related and large losses meant its combined ratio of 107.3% was little better than last year's 107.8.

Lancashire group chief executive Alex Maloney called the results “disappointing” but expressed optimism about the prospects for 2022 stating “profitable growth remains our main goal”.

“2021 was also a poor one for returns,” Maloney admitted.

“Financial losses are always disappointing but 2021 was only the second full financial year that Lancashire made an overall loss since its inception,” he said.

The CEO, however, noted that “2021 saw Lancashire successfully continue the long-term build-out of its franchise and expand into a number of new classes, with gross premiums written increasing by 50%.

“Much of this premium will continue to earn through in 2022 and is expected to provide earnings resilience in future years.

“Delivery against this aspect of our strategy means we are well-positioned for profitable growth in the most attractive market conditions of recent years.”

“Our strong capital position allows us to execute our ambitious business plans in which we expect further rate increases on our existing portfolio, with new underwriting teams delivering additional premiums and new business growth within both our catastrophe and non-catastrophe lines,” he concluded.

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