Hurricane Ian loss “within expectations” at $160m-$190m: Lancashire CEO

Specialty insurance and reinsurance group Lancashire Holdings has reported another period of strong growth through the year-to-date, while disclosing that its hurricane Ian losses are expected to be in a range from $160 million to $190 million, a range that falls within expectations, according to CEO Alex Maloney.

Lancashire announced this morning that its gross premiums written for 2022 so far have increased by 34.3% year-on-year to $1.3 billion.

Perhaps more importantly, the re/insurers Renewal Price Index across the Group stood at 107%, 108% in P&C reinsurance and 111% in aviation, reflecting the strong price rises achieved.

The property and casualty reinsurance segment was the main source of premium growth, with new casualty reinsurance and financial lines classes of business, as well as the continued hardening in property reinsurance classes all seen as drivers.

On hurricane Ian, which was the biggest loss of the year so far, Lancashire said that its estimated ultimate net loss, excluding the impact of reinstatement premiums and effects from its collateralized reinsurance specialist capital manager Lancashire Capital Management, are in the range of $160 million to $190 million.

Group CEO Alex Maloney explained, “During the quarter we witnessed a number of catastrophe events and we extend our sympathies to the many people impacted. Insurers play a vital role in offering protection to vulnerable communities and we are reminded of both the potential destructive power of nature and the value of the risk solutions we offer.”

He added that, on the estimated loss from hurricane Ian, “This is within our expectations for an event of this type.”

Looking ahead, Maloney said market conditions are anticipated to continue improving.

Earlier this year, Maloney had explained that hardening of property catastrophe reinsurance rates was expected to continue through this year and into 2023, even if the hurricane season proved benign.

Now, hurricane Ian has certainly resulted in an impactful hurricane season, so the expectation is hardening will be firmer and faster, which Maloney agrees with.

“We expect the broader positive conditions to continue into 2023 and our strategy is to take advantage of attractive market opportunities.

“We believe we could see significant increases in rates and improving terms and conditions due to recent events and the fact that capacity had already been tightened in the wider market,” he explained.

Further stating that, “Even allowing for the impact of hurricane Ian, and unrealised investment losses, our capital position remains strong and we will drive forward with our growth strategy and capitalise on the strong rate environment through our diversified product portfolio.”