REG-Lancashire Hld Ltd: Q1 Trading Statement

Lancashire HoldingsAnnouncement

28/04/2022 07:15

LANCASHIRE HOLDINGS LIMITED

28 April 2022

Hamilton, Bermuda

Lancashire Holdings Limited (“Lancashire” or “the Group”) today
announces its trading statement for the three  months ended 31 March 2022.

Trading statement highlights
* Gross premiums written increased by 34.7% year-on-year to $477.9 million.
* Group Renewal Price Index (RPI) of 106%.
* Net loss estimates from the conflict incurred within Ukraine in the range of
$20-30 million.
* Regulatory ECR ratio of approximately 255% as at 31 December 2021.
* Total net investment return of negative 2.3%, primarily driven by unrealised
losses.
Alex Maloney, Group Chief Executive Officer, commented:

“Lancashire continues to be shocked and saddened by the tragic human costs
and wider destructive impacts of the conflict in Ukraine. In response to the
developing humanitarian crisis, Lancashire is supporting UNICEF and the Red
Cross through direct contributions from the Lancashire Foundation as well as
matching employee donations.

From a business perspective, we continue to monitor events across Ukraine and
Russia with respect to potential exposure to losses in our political violence,
aviation war and marine insurance classes, as well as our aviation and
specialty reinsurance classes.

We estimate that our ultimate net losses incurred within Ukraine are in the
range of $20 million to $30 million.

This continues to be a complex and evolving situation and we will give an
update at the announcement of our half year results in July. 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.

Against this backdrop, underlying trading conditions remain favourable and
Lancashire has continued to deliver strong premium growth in the first
quarter, with a 34.7% increase in gross premiums written year-on-year. In
light of the potential for broader market dislocation, 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.”

Business update

Gross premiums written

                                                 Three months ended                    
                                     31 March 2022  31 March 2021  Change  Change  RPI 
                                                $m             $m      $m       %    % 
 Property and casualty reinsurance           310.1          223.0    87.1    39.1  108 
 Property and casualty insurance              56.2           39.2    17.0    43.4  104 
 Aviation                                     23.7           25.6   (1.9)   (7.4)  103 
 Energy                                       52.2           45.2     7.0    15.5  104 
 Marine                                       35.7           21.8    13.9    63.8  106 
 Total                                       477.9          354.8   123.1    34.7  106 

The increase in gross premiums written of 34.7% for the first three months of
2022 compared to the same period in 2021 was primarily due to growth in the
property and casualty reinsurance segment driven by new business in the new
casualty reinsurance classes of business. Overall the RPI for this segment
remained strong at 108%.

The growth in the property and casualty insurance segment, was primarily due
to the continued build out of the property direct and facultative book of
business as well as new business in property political risk and property
construction classes.

Growth in the marine class was driven by a combination of new business, the
renewal of a large multi-year contract and the marine liability class of
business having a very strong RPI.

The increase in the energy segment was primarily driven by new business in the
energy liabilities class, where the Group has added new underwriting teams and
expanded its offering.

The first quarter is not a major renewal period for the aviation segment and
the gross premium written has remained comparable to the prior year.

Loss environment

We estimate that our ultimate net losses incurred within Ukraine are in the
range of $20 million to $30 million, excluding the impact of reinstatement
premiums. Our loss estimates for Ukraine and potential losses in Russia will
continue to be assessed as the conflict and the implications of sanctions
evolve.

Investments

                            31 March 2022  31 March 2021 
 Duration                       2.0 years      1.8 years 
 Credit quality                        A+             A+ 
 Book yield                          1.5%           1.5% 
 Market yield                        2.3%           0.9% 
 Managed investments ($m)        $2,303.8       $2,141.2 

All sectors of the fixed income and equity markets suffered negative returns
during the quarter, which saw a significant increase in interest rates, a
widening of credit spreads and market volatility in the wake of the conflict
in Ukraine. Our investment portfolio produced a negative return of 2.3%,
primarily driven by unrealised losses.

Intention to purchase own shares

Pursuant to and in accordance with the general authority granted by
shareholders at Lancashire's Annual General Meeting held on 27 April 2022,
Lancashire intends to purchase up to 3,000,000 of its common shares of $0.50
each in order to satisfy a number of future exercises of awards under its
Restricted Share Scheme. A further announcement in accordance with Listing
Rule 12.4 will be made in due course.

Analyst and Investor Conference Call

There will be an analyst and investor conference call on the trading statement
at 1:00pm UK time / 9:00am Bermuda time / 8:00am EDT on Thursday 28 April
2022. The conference call will be hosted by Lancashire management and a
presentation will be made available on the Group’s website prior to the
call.

Participant Access

Dial in 5-10 minutes prior to the start time using the number / confirmation
code below:

 United Kingdom - Toll free:  08003589473      
 United Kingdom - Local:      +443333000804    
 United States - Toll free:   +1 855 85 70686  
 United States - Local:       +1 6319131422    
 PIN Code                     90460598#        

URL for additional international dial in numbers:

https://events-ftp.arkadin.com/ev/docs/NE_W2_TF_Events_International_Access_List.pdf

The call can also be accessed via webcast, for registration and access:
https://onlinexperiences.com/scripts/Server.nxp?LASCmd=AI:4;F:QS!10100&ShowUUID=6C5C8259-D436-4C24-AF99-F4DEA563758F

A webcast replay facility will be available for 12 months and accessible at:
https://www.lancashiregroup.com/en/investors/results-reports-and-presentations.html

For further information, please contact:

 Lancashire Holdings Limited                                                           
 Christopher Head             +44 20 7264 4145 chris.head@lancashiregroup.com          
 Jelena Bjelanovic            +44 20 7264 4066  jelena.bjelanovic@lancashiregroup.com  
                                                                                       
 FTI Consulting               +44 20 37271046                                          
 Edward Berry                 Edward.Berry@FTIConsulting.com                           
 Tom Blackwell                Tom.Blackwell@FTIConsulting.com                          

About Lancashire

Lancashire, through its UK and Bermuda-based operating subsidiaries, is a
provider of global specialty insurance and reinsurance products.

Lancashire has capital of approximately $1.8 billion and its common shares
trade on the premium segment of the Main Market of the London Stock Exchange
under the ticker symbol LRE. Lancashire has its head office and registered
office at Power House, 7 Par-la-Ville Road, Hamilton HM 11, Bermuda.

The Bermuda Monetary Authority is the Group Supervisor of the Lancashire
Group.

For more information, please visit Lancashire’s website at
www.lancashiregroup.com.

This release contains information, which may be of a price sensitive nature
that Lancashire is making public in a manner consistent with the UK Market
Abuse Regulation and other regulatory obligations. The information was
submitted for publication, through the agency of the contact persons set out
above, at 07:00 BST on 28 April 2022.

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 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 OR,
FOR EXAMPLE, NEW BUSINESS LINES WITHIN A SEGMENT. 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 2021.

NOTE REGARDING FORWARD-LOOKING STATEMENTS:

CERTAIN STATEMENTS AND INDICATIVE PROJECTIONS (WHICH MAY INCLUDE MODELLED LOSS
SCENARIOS) MADE IN THIS TRADING STATEMENT 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 UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT
FACTORS THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
THE GROUP TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. FOR A
DESCRIPTION OF SOME OF THESE FACTORS, SEE THE GROUP’S ANNUAL REPORT AND
ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2021. IN ADDITION TO THOSE FACTORS
CONTAINED IN THE GROUP’S ANNUAL REPORT AND ACCOUNTS, ANY FORWARD-LOOKING
STATEMENTS CONTAINED IN THIS TRADING STATEMENT MAY BE AFFECTED BY THE IMPACT
OF THE CONFLICT IN UKRAINE, INCLUDING ANY ESCALATION OR EXPANSION THEREOF, ON
THE GROUP’S CLIENTS, THE SECURITIES IN OUR INVESTMENT PORTFOLIO AND ON
GLOBAL FINANCIAL MARKETS GENERALLY AS WELL AS ANY GOVERNMENTAL OR REGULATORY
CHANGES INCLUDING POLICY COVERAGE ISSUES ARISING THEREFROM. ALL
FORWARD-LOOKING STATEMENTS IN THIS TRADING STATEMENT OR OTHERWISE SPEAK ONLY
AS AT THE DATE OF PUBLICATION. LANCASHIRE EXPRESSLY DISCLAIMS ANY OBLIGATION
OR UNDERTAKING (SAVE AS REQUIRED TO COMPLY WITH ANY LEGAL OR REGULATORY
OBLIGATIONS INCLUDING THE RULES OF THE LONDON STOCK EXCHANGE) TO DISSEMINATE
ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENT TO REFLECT ANY
CHANGES IN THE GROUP’S EXPECTATIONS OR CIRCUMSTANCES ON WHICH ANY SUCH
STATEMENT IS BASED. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE GROUP OR INDIVIDUALS ACTING ON BEHALF OF THE GROUP ARE
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THIS NOTE. PROSPECTIVE INVESTORS
SHOULD SPECIFICALLY CONSIDER THE FACTORS IDENTIFIED IN THIS TRADING STATEMENT
AND THE REPORT AND ACCOUNTS NOTED ABOVE WHICH COULD CAUSE ACTUAL RESULTS TO
DIFFER BEFORE MAKING AN INVESTMENT DECISION.



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