Specialty insurance and reinsurance group Lancashire Holdings experienced some of the strongest growth in the firms history in the first-quarter of 2021, nearly doubling its P&C reinsurance premiums written during the period.
At the same time, the company has reported that its renewal price index was up at 112% across the business, reflecting much firmer pricing for insurance and reinsurance business renewed in Q1.
Overall, Lancashire’s gross premiums written rose by 46.1% in the first three months of 2021 compared to the same period in 2020.
This growth was largely in the property and casualty reinsurance segment, which saw premiums rise by 97.2%, as the company said it “deployed further capital into the hardening market.”
Nnew business as well as rate increases, especially in the property reinsurance and property retrocession classes of business were the main drivers, Lancashire said.
This bodes well for Lancashire Capital Management Limited, the third-party capital collateralised reinsurance underwriting arm of the company, which will likely also have been able to take advantage of demand and rates in these core areas of its portfolio at the renewals.
In fact, property retrocessional reinsurance business experienced some of the best price gains, with Lancashire reporting the renewal price index being at 115% for that segment of its book.
Again, that should have benefited the Lancashire Capital Management business unit and its third-party investors, given it specialises in writing a fully collateralised and multi-class reinsurance product, that combines catastrophe and certain specialty covers and is utilised by some of the largest reinsurers as retrocession.
Of course, Lancashire was not immune to the impacts of the winter storms in the United States, reporting net losses after reinsurance and reinstatements in the range of $35 million to $45 million from these events.
Lancashire Group CEO Alex Maloney commented on the quarter, “I am very pleased to report that the Lancashire Group has grown its Q1 gross premium written significantly by 46.1% to $354.8 million (in Q1 2021) from $242.8 million (in Q1 2020). This increase in our top line premium income represents our strongest ever first quarter premium and has been supported by the equity capital which we raised in June 2020. Our growth was driven by the improved market conditions. We have increased revenue across many of our core lines as well as achieving faster than expected momentum in some of our newer business lines.
“Absent the estimated impact of Winter Storm Uri, our underlying financial performance was strong. We look forward to the exciting opportunities that are expected to develop throughout the year as we are able to more flexibly combine the benefits of remote interaction with a return to the office environment. This will provide the opportunity for greater engagement amongst ourselves, our clients and our broader stakeholders. Furthermore, our strong balance sheet, boosted by our recent debt raise, stands us in good stead to fund the opportunities we see ahead.”