Lancashire Holdings hit by run of natural catastrophes

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Lancashire Holdings Limited (LON:LRE) saw profits slide in 2020 as it was hit by a swathe of natural catastrophes.

The insurance underwriter took net losses amounting to US$149.5mln from events such as hurricanes Laura and Sally, the Midwest derecho storm and the wildfires in California.

Lancashire added that its Covid-19 exposure was limited to events and property-related claims as it does not write travel insurance; trade credit; and long-term life and prior to the pandemic did not write directors’ and officers’ liability or medical malpractice.

Underwriting profits in the year to end-December 2020 fell to US$77mln from US$186.5mln while pre-tax profits were US$5.9mln against US$119.5mln.

Alex Maloney, chief executive, said: “The COVID-19 pandemic has generated a level of dislocation and uncertainty in the global economy and markets which has demonstrably accelerated a pronounced re-rating and improvement in the pricing of many of the (re)insurance products which we sell.

Broker Peel Hunt noted that LRE states it is “beginning to take advantage of improving market conditions” and that the $340m of the equity capital raised last year will be deployed to grow the book in 2021.

This suggests capital has not been fully deployed yet at the 1 January renewals and the company is awaiting further rate hardening in the remainder of the year.

Hold with a 720p target price is the broker’s view.

Shares rose 0.9% to 751.5p

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