Lancashire issues Q3 profit warning after marine, cat losses

Lancashire Holdings has issued a profit warning for its third quarter 2018 results due to losses in its marine and catastrophe re/insurance portfolios.

The specialty insurance and reinsurance provider estimated net losses for events that impacted its marine portfolio at approximately $30 million.

In addition, Lancashire has suffered an accumulation of attritional losses as a result of exposures to a number of recent natural catastrophe events, including hurricane Florence, and typhoons Jebi, Mangkhut and Trami. The aggregate estimated net ultimate losses for these events are expected to be in a range of $25 million to $45 million, according to a corporate statement.

These estimates are after anticipated recoveries from Lancashire’s outwards reinsurance programme and the impact of outwards and inwards reinstatement premiums.

The loss estimates include Lancashire’s aggregate exposures through its Bermuda, UK and Lloyd’s operations. Lancashire operates at Lloyd’s via its subsidiary Cathedral Capital.

Lancashire has exposure to hurricane and typhoon risks in property retrocession, property direct and facultative, property reinsurance, cargo, marine and energy. Lancashire’s preliminary estimates for the loss events have been derived from a combination of market data and assumptions, a limited number of provisional loss advices, limited client loss data and modelled loss projections.

Given these loss estimates, the company expects that it will produce a negative return on equity for the third quarter of 2018.  Absent these events, the company would have been profitable for the third quarter.  Lancashire also expects to remain profitable for the first 9 months of 2018.

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