Are you a cup half full or a cup half empty, person? Whether you are an optimist might reflect on your views of the latest earnings results from Lancashire Holdings, published this morning.
For example, the firm’s gross written premiums for the quarter ending on September 30, 2017 were up to $143.0 million – a leap from $108.2 million during the same period last year. However, for the nine months ending on the same date, GWP had actually fallen – slipping from $538.8 million during the same period in 2016 to $524.2 million this time around.
Breaking it down segment by segment, the company fared particularly well in its property portfolio during the third quarter with underwriting GWP up 17.9% compared to 2016, however it is still down 7.0% over nine months. According to its statement, the increase was largely due to $7.0 million of reinstatement premiums in relation to hurricanes Irma, Harvey and Maria, while the fall in the year to date is largely due to multi-year contracts written in 2016 and relating to property catastrophe, terrorism and political risk, that are not yet due to renew.
Energy GWP was up 73.0% over the quarter, but down 5.5% over the nine-month period – the increase in the quarter “was due to exposure increases on prior underwriting year risk-attaching business and some non-annual deals renewing in the worldwide offshore book,” the company said.
Meanwhile, marine GWP climbed 212.7% over the quarter and has also increased 80.2% in the nine months to date. The company attributed its marine growth to the timing of non-annual renewals.
The third quarter of 2017 was, of course, characterised by significant catastrophe activity, in the form of hurricanes Harvey, Irma and Maria, as well as two earthquakes in Mexico. As a result, the Group’s net loss ratio for the third quarter of 2017 was 175.4% compared to 25.3% for the same period in 2016 and 79.2% for the nine months ended September 30 compared to 28.0% for the same period in 2016.
In a release, Elaine Whelan, the company’s chief financial officer, remarked on the “extraordinary level of loss activity,” but remained positive about the future.
“With the occurrence of hurricanes Harvey, Irma and Maria and the Mexican earthquakes, the industry has incurred substantial losses,” she said.
“While we have incurred a loss in the quarter and for the year to date, we anticipate an improvement in rates following these events. Our outlook for 2018 is more positive than it has been for some time. We therefore do not intend to declare a special dividend this year; we expect to put all of our capital to work to take advantage of improving market conditions.”
Group CEO Alex Maloney was also bullish about the future, noting that “we are at last seeing some evidence of an increase in pricing.”
“The first major test of the market dynamics will be the year-end insurance and reinsurance renewal round,” he said. “Many product lines will be loss-affected and I would expect to see a return across the sector to more disciplined underwriting standards and pricing which reflects the true risks and exposures.”
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