Shares in London-listed insurer Lancashire Holdings Ltd. fell sharply the morning of Oct. 8 after it forecast a third-quarter loss on the back of marine and natural catastrophe claims.
The company disclosed estimated net losses of about $30 million in its marine portfolio and forecast between $25 million and $45 million of so-called attritional losses — or accumulated smaller claims — related to Hurricane Florence in the U.S. and typhoons Jebi, Mangkhut and Trami in Asia-Pacific. It said both estimates are after anticipated recoveries from its own reinsurance program and include aggregate exposures through its Bermuda, U.K. and Lloyd's of London operations.
Shares in Lancashire opened down almost 10% in Oct. 8 trading and were off 6.2% as of just before 10 a.m. London time, representing the sharpest fall at that stage among companies traded on the London Stock Exchange.
The company, headquartered in London with a registered office in Bermuda, said it expects to remain profitable for the nine-month period ended Sept. 30, and said that absent the events it disclosed, it would have been profitable in the third quarter. Its first-half after-tax profit attributable to the company was $75.8 million.
Lancashire also said its preliminary loss estimates were derived from a combination of market data and assumptions, limited provisional loss advice and client loss data, and modeled loss projections. It noted, therefore, that its actual ultimate loss may vary from its preliminary estimates, and added that the settlement of all claims is likely to occur "over a considerable period of time."
Lancashire's exposure to hurricane and typhoon risks falls within its property retrocession, property reinsurance and property direct and facultative lines, and its cargo, marine and energy classes.