Lancashire Holdings is reporting an increase in marine premium income last year as builder’s risk and other marine lines continue to improve.
The Bermuda-registered insurance provider operates in the marine sector both as a syndicate in the Lloyd’s of London market and in the company market.
It reported a 19.9% increase in its company market marine premium income to $37.3m for the full year in 2019 compared with the previous year. Lancashire said that improved builder’s risk rates contributed to its increasing income.
Chief financial officer Elaine Whelan said: “The growth reflects rate and exposure increases and favourable prior underwriting year premium adjustments in the marine builder's risk class.”
Lancashire was one of the cover providers for a luxury yacht being built at the Lurssen shipyard in Germany which was destroyed by a fire in 2018. The accident ran up about $500m in losses for insurers.
Since then, builder’s risk rates have shown the strongest recovery in the marine sector.
The company appears to have done equally well at its Lloyd’s syndicates where it has been targeting new business.
Lancashire’s Lloyd’s syndicates marine income increased from $31.1m to $37.3m and marine cargo increased from $31.9m to $39.6m.
“This increase was primarily due to new business in the energy, aviation, marine and terrorism classes of business, offset slightly by lower premiums in the property classes,” Whelan said.
Lancashire’s results add to the evidence that the marine market is improving due mainly to a concerted effort by the Lloyd’s market managers to improve results in the sector by driving out unprofitable providers.
The Lancashire Group as a whole also improved its financial performance last year.
Lancashire said its net operating profit had improved from $39.8m in 2018 to $111.5m in 2019.
Like many insurers, Lancashire's earnings have benefited from a strong investment market. However, chief executive Alex Maloney cautioned that his company needs to keep a strong underwriting performance.
“Over the last few quarters, stronger investment performance has helped smooth earnings across the insurance market. Investment returns are part of our overall return for our shareholders. But our market must always insist on the right price for the underwriting risk which we take on,” he said.
