Insurer Lancashire shares jump as it sees Russia-Ukraine losses as manageable

By Carolyn Cohn

LONDON (Reuters) -Shares in Lloyd's of London insurer Lancashire jumped nearly 10% on Thursday as it estimated net losses in Ukraine at around $20-30 million and said further potential losses in the region were within its risk tolerance levels.

Lancashire was continuing to monitor the situation in Russia and Ukraine and the impact on its political violence, aviation war and marine insurance businesses, as well as on its aviation and specialty reinsurance lines, it said in a first-quarter update.

Lancashire's shares fell to their lowest in more than 11 years following Russia's invasion of Ukraine, as the firm is seen as one of the insurers most exposed to losses in aviation insurance, with hundreds of leased planes stranded in Russia following sanctions.

S&P Global sees global aviation insured losses of up to $15 billion following the invasion, and analysts were predicting a large hit for Lancashire.

"While we continue to analyse our potential exposure scenarios in Russia, we consider that any potential losses would be within our risk tolerances, and would not impact our ability to deliver on our ambitious growth plans for 2022," chief executive Alex Maloney said.

"We remain confident that our strong balance sheet, robust capital position and talented underwriting teams will give us further opportunities for profitable growth during 2022."

Lancashire reported a pretax loss of $56.8 million for 2021.

KBW analysts said that Lancashire's initial loss estimate for Ukraine was "reassuring" though they pointed out that the size of further losses in Russia remained uncertain. The analysts reiterated their outperform rating.

Lancashire's shares rose 9.6% to 435 pence at 0732 GMT, making it the best performer in the FTSE mid-cap index.

Lancashire's gross written premiums rose by 34.7% year-on-year to $477.9 million in the first quarter.

Fellow Lloyd's insurers Beazley and Hiscox report first-quareer results next week.

(Reporting by Carolyn Cohn, editing by Sinead Cruise and Tomasz Janowski)