We have a range of risk tolerances, and our balance sheet must be sufficient at all times to meet those requirements. We aim to meet policyholders’ claims promptly, accurately and completely. Our balance sheets should instill a high level of confidence in all stakeholders, including shareholders, regulators, rating agencies, counter-parties and employees.
Objective met: The insurance industry suffered a twin assault in 2008. Insurance losses were significant, from a myriad of sources. But the real story was the collapse of the financial markets. Our industry collectively forgot that risk exists on both sides of the balance sheet. Fortunately we didn’t. Our investment philosophy has remained the same since day 1: “Don’t lose your money.” We are proud to have turned in a positive investment return of 3.1 per cent, and equally proud to have produced an overall 7.5 per cent Return on Equity. Consequently, Lancashire heads into 2009 with a very strong balance sheet.
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