REG-Lancashire Holdings Ltd: Q3 Trading Statement

Lancashire HoldingsAnnouncement

06/11/2024 07:15

LANCASHIRE HOLDINGS LIMITED

6 November 2024

Hamilton, Bermuda

Lancashire Holdings Limited (“Lancashire” or “the Group”) today
announces its trading statement for the nine months ended 30 September 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.

Alex Maloney, Group Chief Executive Officer, commented:

“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 $1.7
billion.

The devastation caused by the recent weather events in the U.S. and other
catastrophes has been tragic and our thoughts are with all those affected.
Instances like these show the value of (re)insurance products in supporting
communities to help them rebuild after major catastrophe events.

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 $110 million to $140 million.

Our strong underwriting results during the period have continued to be
supported by our growing investment portfolio, which has now reached $3.2
billion, and has delivered a healthy return of 5% for the year to date.

Following our strong operating performance, I am pleased to announce the
approval of a special dividend of 75 cents per share, which will result in an
aggregate payment of approximately $180 million. We continue to hold an
extremely robust capital position to underwrite the growth opportunities we
expect to see in 2025.

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 months ended                                                                                                              
                         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 $140.1 million, or 9.0%, in the first nine
months of 2024 compared to the same period in 2023. The most significant
driver of growth in the reinsurance segment was new business in the property
reinsurance and specialty reinsurance classes. The property insurance
portfolio was the main driver of growth within the insurance segment with new
business coming through from the Lancashire U.S. and Lancashire Australia
distribution channels.

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 $110 million to $140 million. Loss
information after these types of events can take some time to emerge. As
additional information becomes available, the Group’s actual ultimate net
losses may vary, perhaps materially, from current estimates.

During the first nine months of 2024, the Group also experienced net losses
(undiscounted, including reinstatement premiums) from large risk events
totaling $72.8 million. None of these were individually material for the
Group, with the MV Dali Baltimore bridge collision loss being the most
significant.


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 75 cents
per common share (approximately 58 pence per common share at the current
exchange rate), which will result in an aggregate payment of approximately
$180 million. The dividend will be paid in Pounds Sterling on 13 December 2024
(the “Dividend Payment Date”) to shareholders of record on 15 November
2024 (the “Record Date”) using the £ / $ spot market exchange rate at 12
noon London time on the Record Date. Shareholders interested in participating
in the dividend reinvestment plan (“DRIP”), or other services including
international payment, are encouraged to contact the Group’s registrars,
Link Asset Services, for more details.


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 EST on Wednesday 6 November
2024. 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

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 access:    https://pinconnect.conferenceconsole.com/PINConf?597807ca-0904-47f0-bcaa-97da20a88925                                 
                  Please register to obtain your personal audio conference pin and call details.                                        
                                                                                                                                        
 Webcast access:  https://onlinexperiences.com/scripts/Server.nxp?LASCmd=AI:4;F:QS!10100&ShowUUID=6D975C29-0458-41DA-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                                                          
 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 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 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.


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 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 2023 AND THE GROUP’S UNAUDITED CONDENSED INTERIM
CONSOLIDATED FINANCIAL

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 OCTOBER 2024), HURRICANES DEBBY AND HELENE, THE
CALGARY HAILSTORMS AND EUROPEAN STORM BORIS (WHICH OCCURRED IN THE SECOND
QUARTER OF 2024), THE IMPACT OF THE COLLAPSE OF THE FRANCIS SCOTT KEY BRIDGE
IN BALTIMORE WHICH OCCURRED IN THE FIRST QUARTER OF 2024; AND THE FURTHER
ESCALATION OF HOSTILITIES IN THE MIDDLE EAST AND ITS IMPACT ON THE STABILITY
OF THE REGION, GLOBAL SUPPLY ROUTES AND INSURANCE AND FINANCIAL MARKETS. ALL
FORWARD-LOOKING STATEMENTS IN THIS RELEASE 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 RELEASE AND THE
REPORT AND ACCOUNTS NOTED ABOVE WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
BEFORE MAKING AN INVESTMENT DECISION.

This release contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed
in accordance with the Company's obligations under Article 17 of MAR. Upon the
publication of this release via the Regulatory Information Service, this
inside information will be considered to be in the public domain.



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