Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity & Inclusion
• Sustainable Business Culture

Environmental Achievements

• Reduced GHG emissions by 79.3% compared to 2019; achieved carbon neutrality through offsetting 100% of market-based emissions.
• Sourced 100% renewable electricity for London operations.

Social Achievements

• Launched diversity and inclusion survey; 91% of employees reported feeling treated with fairness and respect.
• £159,000 provided by the Lancashire Foundation to UK and Bermuda charities for COVID-19 relief.
• Employee turnover reduced from 13.8% in 2019 to 6.8% in 2020.

Governance Achievements

• Enhanced formal oversight of climate change risks and opportunities; implemented steps to align with TCFD recommendations.
• Revised Terms of Reference for the Nomination Corporate Governance and Sustainability Committee to reflect focus on sustainability.
• Maintained A rating from A.M. Best.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impacting global economy and operations.
• Run of natural catastrophe losses.
• Series of medium-sized risk losses above usual expectations.
• Climate change increasing frequency and severity of weather-related events.

Mitigation Strategies

• Successfully adapted to remote working; no use of government relief schemes.
• Rigorous reserving process for COVID-19 losses.
• Strong risk management resulting in combined ratio of 107.8%.
• Use of vendor models to assess and price natural catastrophe risk.
• Regular reviews of third-party asset managers and asset allocation to manage climate change risks to investment portfolio.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Living Wage commitment for UK operations.

Climate-Related Risks & Opportunities

Physical Risks

• Natural catastrophes (hurricanes, windstorms, floods)

Transition Risks

• Changes in global energy demand; carbon pricing regimes.

Opportunities

• Growth in renewable energy insurance products.

Reporting Standards

Frameworks Used: UN Principles for Sustainable Insurance, TCFD

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Renewable energy insurance products

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• People and culture
• Sustainable insurance
• Responsible investment
• Operating responsibly

Environmental Achievements

• Offset 100% of calculated GHG emissions, including 15% via a carbon sequestration project.
• Procured 100% renewable electricity for London operations.

Social Achievements

• Lancashire Foundation donated around $700,000 to charities in 2021.
• Overall employee engagement score increased by 3% to 88% in 2021 employee survey.
• Lancashire Insurance Company Limited named a ‘Top 10 Employer’ in Bermuda in 2021.

Governance Achievements

• Established an ESG Committee and a Climate Change Working Group.
• Complied with the principles and provisions of the UK Corporate Governance Code.

Climate Goals & Targets

Environmental Challenges

• Navigating competing ESG reporting standards.
• Increased severity and frequency of weather-related losses.
• Potential impacts of transitional climate change risk on underwriting and investment portfolios.

Mitigation Strategies

• Developed internal underwriting guidelines focused on climate change and other ESG factors.
• Implemented a Climate Change at Risk metric aligned with the Paris Accord 1.5°C scenario.
• Enhanced ERM framework with the formation of a CCWG.
• Undertook stress and scenario tests, including climate-related scenarios.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Seek assurance that employers within the supply chain pay a living wage.

Climate-Related Risks & Opportunities

Physical Risks

• Increased severity of tropical cyclones
• Heightened storm surge
• Increased intensity of extratropical cyclones
• Increased intense rainfall
• Increased risk of wildfire

Transition Risks

• Declining premium environment in traditional oil and gas sector
• Exposure to climate change-related litigation

Opportunities

• Increased demand for environmental insurance products

Reporting Standards

Frameworks Used: UN Principles for Sustainable Insurance, TCFD

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Top 10 Employer in Bermuda (2021)

Environmental Metrics

ESG Focus Areas

• Lancashire Foundation
• People and culture
• Sustainable insurance
• Operating responsibly
• Responsible investment
• Developing the Group’s ESG principles

Environmental Achievements

• In the five years from 2015 up until the pandemic hit early in 2020, the Group’s emissions reduced by 16% per FTE.
• Fully offset calculated 2022 GHG market-based emissions by purchasing verified credits.

Social Achievements

• High level of diversity maintained (Senior management positions 53% male/47% female; Group executive 57% male/43% female).
• Accredited living wage employer, for our business and our supply chain.
• Hiring practices seek to remove bias through anonymisation of CVs and gender neutral language for role adverts.
• Training on diversity matters included in employee induction programme and unconscious bias training across the Group.
• More than $22.3 million donated to charitable organisations since 2007.

Governance Achievements

• 93.9% of the Group’s principal investment managers are signatories to the UN Principles for Responsible Investment.
• Our ESG investment guidelines embedded in external investment managers’ guidelines for 2022.
• The Group continues to operate in line with all relevant regulatory and legal requirements.

Climate Goals & Targets

Environmental Challenges

• Increased severity and frequency of weather-related losses which may be influenced by climate change.
• Potential impacts of transitional climate change risk on the Group’s underwriting and investment portfolios and associated strategies.
• The global energy transition is part of an ongoing debate. Fossil fuel based forms of energy remain a key component of global energy security while alternative lower carbon energy infrastructure is in a state of further development.

Mitigation Strategies

• Using stochastic models from third-party vendors which have a long history of quality data governance. Adapting these models based upon our views of climate risk, as well as our clients’ exposure data, to create aggregate loss scenarios.
• Implementing ESG and climate-related insurance underwriting guidelines, which have been articulated by reference to Lloyd’s market guidance across all underwriting platforms.
• Working with its external portfolio managers to further refine our analysis of ESG and climate change factors on our investment portfolio.
• Monitoring and reporting the PMLs related to the top perils on a monthly basis to the RRC and quarterly to the Board.

Supply Chain Management

Responsible Procurement

• Accredited living wage employer for our business and our supply chain

Climate-Related Risks & Opportunities

Physical Risks

• Increased severity and frequency of weather-related losses
• Increased severity of tropical cyclones
• Heightened storm surge
• Increased intensity of extratropical cyclones
• Increased intense rainfall
• Increased risk of wildfire
• Emergence of new natural catastrophe zones

Transition Risks

• Declining premium environment in traditional oil and gas sector
• Climate change-related litigation

Opportunities

• New products and services for clients undergoing energy transition
• Access to new markets requiring insurance coverage
• Increased demand for environmental insurance products
• Opportunities in renewable energy insurance

Reporting Standards

Frameworks Used: TCFD, UNEP FI Principles for Sustainable Insurance

Sustainable Products & Innovation

• Renewable energy insurance products

Environmental Metrics

ESG Focus Areas

• People and culture
• Sustainable insurance
• Responsible investment
• Operating responsibly

Environmental Achievements

• Group emissions reduced per FTE
• Fully offset calculated 2023 GHG market-based emissions by purchasing verified credits
• Sustainable lighting installed as part of London office refurbishment

Social Achievements

• 90% Group-wide engagement score
• Lancashire was named a Top Ten employer in Bermuda
• Lancashire Employee Network launched offering peer-to-peer information sessions and external speakers
• Increased use of social media to expand hiring pool for vacancies
• New employees continue to receive training on diversity matters in employee induction programme
• More than $23 million donated to charitable organisations since 2007
• 12 employees attended our Project Transform volunteering programme in Tanzania

Governance Achievements

• ESG insurance underwriting guidelines reviewed by Board to ensure they are appropriate
• ESG-related premium metrics and report to Board quarterly
• Published first public ClimateWise report
• Reported diversity aligned to FCA disclosure requirements
• Management Development Programme to continue to be rolled out in 2024 for new and existing managers

Climate Goals & Targets

Environmental Challenges

• Geopolitical risk and macro-economic risks
• Cyber security risk
• Climate change
• Operational strain (driven by growth)
• Inflation
• Tax and regulatory change
• OECD global minimum tax and Bermuda corporate income tax

Mitigation Strategies

• Expanded risk management function
• Published ClimateWise report
• Published TCFD report
• Thematic reviews performed on potential geopolitical areas of conflict and on the potential impact of the OECD minimum global tax and Bermuda corporate income tax
• Robust quarterly risk and control affirmation process
• IT availability risk is mitigated through disaster recovery and business continuity plans
• IT integrity risk is mitigated through independent penetration tests
• Cyber incident response plan
• ESG insurance underwriting guidelines
• Processes and controls to identify risks written outside predetermined criteria
• Engaging with clients to understand their net-zero transition pathways

Supply Chain Management

Responsible Procurement

• Strive to receive assurance that employers within the ancillary services and limited supply chains used by the Group pay a Living Wage
• Partnership with SCC for recycling services

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather (flooding, drought, rising sea levels, rising temperatures, wind, forest fires, convective storms)
• Wildfire
• Inland flood
• Tropical Cyclone
• Extratropical Cyclone

Transition Risks

• Declining energy premiums
• Declining transport premiums
• Litigation
• Capital constraints

Opportunities

• Investment in infrastructure for lower-carbon economy
• Demand for new environmental insurance products and services
• Decommissioning insurance
• Carbon capture
• Parametric insurance products

Reporting Standards

Frameworks Used: TCFD, ClimateWise, CDP

Certifications: ClimatePartner

Sustainable Products & Innovation

• Parametric insurance products

Awards & Recognition

• Five-star employer award from WorkBuzz