The new US operations to be launched by specialty re/insurer Lancashire Holdings are likely to write less complex risks than those written at Lloyd’s of London.

Announcing its half-year result on Thursday, the Bermuda and London-based company announced plans to launch Lancashire Insurance US, which will operate under a delegated underwriting arrangement with Lancashire’s UK company platform.

Group chief executive Alex Maloney expected the new operations to begin underwriting after April 2024.

He considered the US “a natural extension” of the company’s business lines and that the firm was looking to write business “we are comfortable with, so similar to some of the products that we currently sell”. 

Depending on the size of the opportunity and the ultimate product mix, he said risks such as property, marine, energy and casualty are all under consideration. 

Apart from having a traditional platform for speciality, short-tail re/insurance risks, the company also owns Lancashire Syndicates Ltd, which gives the group access to Lloyd’s through Lancashire’s managed Syndicates 2010 and 3010.

However, Maloney told analysts that the risks for US business will be written outside of Lloyd's and that the risks written in the US are expected to be less complex. 

“There would be absolutely no point in us going to the US to write business that comes to Lloyd's or the Lancashire platform. This is solely about writing business that stays in the US,” he said in response to a question by an analyst about using the Lloyd’s platform to write US risks. 

He added: “Let's just go back to property. The more complex, large risks for the property market tend to find their way to the London market. In the US, you probably write more vanilla property business. It just doesn't need to leave the US. Our approach is very much setting up onshore US to write business that doesn't come to London. We're not setting up to compete ourselves.”

Maloney also provided details about recruitment preparations for Lancashire Insurance US: “We're very comfortable with someone internally that already works for us. [Someone that] has got a lot of experience is going to run that operation and access in a pool of risks that currently don't come to London.

“So that will require some capital. It will depend on who we ultimately hire. We have started hiring people ready.”

He said any guidance on the size of the business opportunity in the US will be provided at the end of this year. 

Lancashire’s gross premiums written in the six months to end of June increased by year-on-year by 26.2% to nearly $1.2bn (£945m). 

Both insurance and reinsurance segments contributed to premium growth. In the insurance segment, growth was primarily driven by property insurance with substantial rate increases in the property direct and facultative line of business. On the reinsurance side, a significant portion of the increase in premiums came from casualty reinsurance lines as well as new business written in the firm’s specialty reinsurance class.

Insurance revenue, a new measure introduced by IFRS 17, stood at $721m in H1, up from $580m at the same time last year.

The market factors driving the increase in GWP also drove the increase in insurance revenue. This new measure is comparable to IFRS 4 gross earned premium less reinstatements and commissions.