Lancashire reveals first IFRS 17 insurance revenue
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Specialty re/insurer Lancashire earned 31.6% more revenues in the first three months of the year under the new accounting standard IFRS 17.
IFRS 17 insurance revenue increased by 31.6% year-on-year to $338.7m (£271.6m) in Q1, said the Bermuda-based firm, after price increases in a number of business lines.
Consolidated financial statements for the six months ending 30 June 2023 will be reported under these new accounting standards, it said.
The new IFRS 17 metric – insurance revenue – replaces gross written premiums because the latter, as a cash-based measure, is not consistent with the concept of ‘revenue’ in IFRS standards. However, several insurers intend to include GWPs in their future results, given its importance to measure the volume of business.
Lancashire is no exception, as the company reported an increase in GWP of 22.7% to $586.2m, “the highest the group has delivered in a first quarter”.
The positive figures in the first quarter were attributed to price increases for both insurance and reinsurance segments.
Chief executive Alex Maloney said: “Strong rate rises in a number of product lines have persisted, particularly in property catastrophe business where the supply and demand gap for capacity which we saw at the 1 January renewals remains.”
He continued: “For most other lines, 2023 is the sixth year of consecutive rate increases and we will continue to grow, where it makes sense, in this positive underwriting environment.”
For its reinsurance segment, Lancashire said casualty reinsurance classes were the most significant contributor to growth. Within property reinsurance, the company also reported “significant rate increases in property catastrophe treaty whilst new business drove increases in specialty reinsurance”.
For the firm’s insurance segment, growth was primarily driven by property insurance, where the group saw substantial rate rises in the property direct and facultative class. In addition, Lancashire said there was a “strong growth in energy and marine insurance” driven by exposure increases in energy liabilities and new business in cargo and specie.
The group did not provide details of natural catastrophe losses in the first quarter, but said losses covered a number of events including US convective storms, the Turkey earthquake and flooding in New Zealand.
The company also incurred some risk losses, particularly in its energy classes, but said these losses, both individually and in aggregate, “were not sufficiently material to exceed our normal disclosure threshold”.
For the group’s investments, it said in a quarter of continued volatility, the investment portfolio generated a positive return of 1.5%, driven primarily by the fixed maturity securities that benefited from falling interest rates resulting in an unrealised investment gain for the quarter.
Lancashire management will host an analyst and investor conference call on the trading statement at 1:00pm UK time / 9:00am Bermuda time / 8:00am EDT today.
Will you continue to report GWP in your financial statements?
