Insurer Lancashire Holdings Ltd saw its full-year profit slide, as losses related to Covid-19 and natural catastrophes took their toll.

The Bermudian-based company said pretax profit fell to $5.9 million in 2020, down from $119.5 million in 2019.

Net losses related to Covid-19, natural catastrophes including California wildfires and hurricanes Laura and Sally, and large risk loss events, amounted to $149.5 million, the company said.

Lancashire estimates that its ultimate net losses related to the pandemic will amount to $42 million. However it stressed that there was great uncertainty over this and the final tally could be materially different.

Lancashire added: “The final settlement of all of these claims is likely to take place over a considerable period of time.”

Lancashire saw improvements in reinsurance pricing as gross written premiums climbed 15.2 per cent to $814.1 million last year, up from $706.7 million in 2019.

The group’s combined ratio was 107.8 per cent, indicating an underwriting loss, while total investment return was 3.9 per cent.

Alex Maloney, group chief executive officer, said: “As we entered 2020 I believed that we were then in the early stages of a necessary market correction.

“Since then the Covid-19 pandemic has generated a level of dislocation and uncertainty in the global economy and markets which has demonstrably accelerated a pronounced re-rating and improvement in the pricing of many of the re/insurance products which we sell.

“In these times of heightened uncertainty, insurance has retained its value as an important risk management tool which remains central in the strategic planning of many of our clients.”

Mr Maloney added: “Across our business we have been active during 2020 in recruiting new employees both to our underwriting teams and within the wider business. As we enter 2021 we have added to our underwriting portfolio a casualty reinsurance book of business underwritten from our Bermuda office, which we intend to build out cautiously over the coming years.”

Natalie Kershaw, group chief financial officer, said the company considered a $4.2 million after-tax profit as “a very positive result” in such a challenging 2020.

She added: “Our outlook for 2021 is one of further rate hardening and we expect to utilise the $340.3 million of capital raised in our equity placing in June 2020 to fund further growth in our business during 2021.”

Lancashire declared a standard final ordinary dividend of ten cents per share.