Lancashire Holdings Ltd - Q3 Trading Statement
6 November 2024
Trading statement highlights
-- Gross premiums written increased by 9.0% year-on-year to $1.7 billion ,
insurance revenue increased by 16.8% year-on-year to $1.3 billion .
-- Net losses relating to recent weather events expected to be between $110
million to $140 million .
-- Total investment return of 5.0%, including unrealised gains and losses.
-- Special dividend of 75 cents per common share, or $180 million ,
following a strong operating performance year-to-date.
-- Guidance: ROE for the year affirmed, combined ratio expected at higher
end of range.
“I am pleased to report that Lancashire is in excellent shape as we approach the final months of 2024.
Over the past few years, we have successfully made our business more resilient to withstand volatility and deliver more sustainable returns for investors. We expect to deliver in line with our ROE guidance for the year.
In terms of gross premiums written in the first nine months of 2024, Lancashire continued to grow ahead of rate increasing premiums by 9% to
The devastation caused by the recent weather events in the
In the year-to-date, the industry has seen an elevated catastrophe and risk loss environment, but we still expect our undiscounted combined ratio to be at the higher end of our range for the full year. This is testament to our diversification strategy, and the quality of the business we have written. Our estimated ultimate net losses incurred in relation to recent weather events including hurricanes Milton, which occurred in the fourth quarter, Helene, Debby and storm Boris, and the Calgary hailstorms, are expected to be in the range of
Our strong underwriting results during the period have continued to be supported by our growing investment portfolio, which has now reached
Following our strong operating performance, I am pleased to announce the approval of a special dividend of
Lancashire’s long-term strategy has always been to actively manage the market cycle and deliver strong profitability by taking advantage of opportunities in positive underwriting conditions. We will continue to do that during the remainder of 2024 and into 2025. We have talented and fully-committed teams across our Group and our strong balance sheet and capital base give us added confidence in our ability to drive the business forward.
I would like to thank all my colleagues at Lancashire for their hard work so far this year and all our stakeholders for their continued support.”
Business update
Gross premiums written and insurance revenue
Nine monthsended
30 September 2024 30 September 2023 Change Change RPI
$m $m $m % %
Reinsurance 941.2 837.7 103.5 12.4% 101%
Insurance 758.8 722.2 36.6 5.1% 102%
Gross premiums written 1,700.0 1,559.9 140.1 9.0% 102%
Reinsurance 629.3 521.7 107.6 20.6%
Insurance 668.7 589.5 79.2 13.4%
Insurance revenue 1,298.0 1,111.2 186.8 16.8%
Gross premiums written
Gross premiums written increased by
Insurance revenue
Insurance revenue increased by $186.8 million, or 16.8%, in the first nine months of 2024 compared to the same period in 2023. Growth was more significant for insurance revenue than for gross premiums written due to the recognition of earnings coming through from prior years.
Loss environment
During an active third quarter for catastrophe loss events, the Group had exposure to losses in respect of hurricanes Helene and Debby, the Calgary hailstorm, and storm Boris. These events were then followed by hurricane Milton in October. The estimated ultimate net losses incurred in respect of all these weather events (undiscounted, including reinstatement premiums) is expected to be within the range of
During the first nine months of 2024, the Group also experienced net losses (undiscounted, including reinstatement premiums) from large risk events totaling
Investments
As at 30 September 2024 30 September 2023 Duration 1.9 years 1.6 years Credit quality AA- AA- Book yield 4.8% 3.9% Market yield 4.7% 5.8% Managed investments ($m)$3,207.2 $2,661.4
The Group’s investment portfolio, including unrealised gains and losses, returned 5.0% for the first nine months of 2024. The positive returns were driven by investment income as our portfolio benefited from higher yields in conjunction with higher prices from falling treasury rates and modest tightening of investment grade credit spreads. Additionally, our bank loans and private investment funds had strong returns.
Dividends
Lancashire’s Board of Directors has declared a special dividend of
Analyst and Investor Conference Call
There will be an analyst and investor conference call on the trading statement at
Participant Access
Please note that conference call participants are required to register in advance to access either the audio conference call or webcast, the full registration and access details are set out below.
Audio https://pinconnect.conferenceconsole.com/PINConf?597807ca-0904-47f0-bcaa-97da20a8 access: 8925 Please register to obtain your personal audio conference pin and call details. Webcast https://onlinexperiences.com/scripts/Server.nxp?LASCmd=AI:4;F:QS!10100&ShowUUID=6 access: D975C29-0458-41DA-94CA-72041590C2B1 Please use this link to register and access the call via webcast.
A webcast replay facility will be available for 12 months and accessible at: https://www.lancashiregroup.com/en/investors/results-reports-and-presentations.html
Contact information
Lancashire Holdings Limited
+44 20 7264 4145
Christopher Head chris.head@lancashiregroup.com
+44 20 7264 4066
Jelena Bjelanovic jelena.bjelanovic@lancashiregroup.com
FTI Consulting +44 20 37271046
Edward Berry Edward.Berry@FTIConsulting.comTom Blackwell Tom.Blackwell@FTIConsulting.com
About Lancashire
Lancashire, through its operating subsidiaries, is a provider of global specialty insurance and reinsurance products.
Lancashire common shares trade in the equity shares (commercial companies) category of the Main Market of the
The
For more information, please visit Lancashire’s website at www.lancashiregroup.com .
NOTE REGARDING RPI METHODOLOGY:
THE RENEWAL PRICE INDEX (“RPI”) IS AN INTERNAL METHODOLOGY THAT MANAGEMENT USES TO TRACK TRENDS IN PREMIUM RATES OF A PORTFOLIO OF INSURANCE AND REINSURANCE CONTRACTS. THE RPI WRITTEN IN THE RESPECTIVE SEGMENTS IS CALCULATED ON A PER CONTRACT BASIS AND REFLECTS MANAGEMENT’S ASSESSMENT OF RELATIVE CHANGES IN PRICE, TERMS, CONDITIONS AND LIMITS AND IS WEIGHTED BY PREMIUM VOLUME. THE RPI DOES NOT INCLUDE NEW BUSINESS, TO OFFER A CONSISTENT BASIS FOR ANALYSIS. THE CALCULATION INVOLVES A DEGREE OF JUDGEMENT IN RELATION TO COMPARABILITY OF CONTRACTS AND THE ASSESSMENT NOTED ABOVE. TO ENHANCE THE RPI METHODOLOGY, MANAGEMENT MAY REVISE THE METHODOLOGY AND ASSUMPTIONS UNDERLYING THE RPI, SO THE TRENDS IN PREMIUM RATES REFLECTED IN THE RPI MAY NOT BE COMPARABLE OVER TIME. CONSIDERATION IS ONLY GIVEN TO RENEWALS OF A COMPARABLE NATURE SO IT DOES NOT REFLECT EVERY CONTRACT IN THE PORTFOLIO OF CONTRACTS. THE FUTURE PROFITABILITY OF THE PORTFOLIO OF CONTRACTS WITHIN THE RPI IS DEPENDENT UPON MANY FACTORS BESIDES THE TRENDS IN PREMIUM RATES.
NOTE REGARDING ALTERNATIVE PERFORMANCE MEASURES:
THE GROUP USES ALTERNATIVE PERFORMANCE MEASURES TO HELP EXPLAIN BUSINESS PERFORMANCE AND FINANCIAL POSITION. THESE MEASURES HAVE BEEN CALCULATED CONSISTENTLY WITH THOSE AS DISCLOSED IN THE GROUP’S ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2023 AND THE GROUP’S UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDING 30 JUNE 2024.
NOTE REGARDING FORWARD-LOOKING STATEMENTS:
CERTAIN STATEMENTS AND INDICATIVE PROJECTIONS (WHICH MAY INCLUDE MODELLED LOSS SCENARIOS) MADE IN THIS RELEASE OR OTHERWISE THAT ARE NOT BASED ON CURRENT OR HISTORICAL FACTS ARE FORWARD-LOOKING IN NATURE INCLUDING, WITHOUT LIMITATION, STATEMENTS CONTAINING THE WORDS “BELIEVES”, “AIMS”, “ANTICIPATES”, “PLANS”, “PROJECTS”, “FORECASTS”, “GUIDANCE”, “INTENDS”, “EXPECTS”, “ESTIMATES”, “PREDICTS”, “MAY”, “CAN”, “LIKELY”, “WILL”, “SEEKS”, “SHOULD”, OR, IN EACH CASE, THEIR NEGATIVE OR COMPARABLE TERMINOLOGY. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND
STATEMENTS FOR THE SIX MONTHS ENDING 30 JUNE 2024. IN ADDITION TO THOSE FACTORS CONTAINED IN THE GROUP’S 2023 ANNUAL REPORT AND ACCOUNTS AND THE GROUP’S UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDING 30 JUNE 2024, ANY FORWARD-LOOKING STATEMENTS CONTAINED IN THIS RELEASE MAY BE AFFECTED BY: THE ACTUAL DEVELOPMENT OF LOSSES AND EXPENSES IMPACTING ESTIMATES FOR CLAIMS WHICH ARISE AS A RESULT OF HURRICANE MILTON (WHICH OCCURRED IN
This release contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of
