Lancashire Holdings Ltd Q3 Trading Statement
November 09 2023 - 1:00AM
UK Regulatory
TIDMLRE
LANCASHIRE HOLDINGS LIMITED
9 November 2023
Hamilton, Bermuda
Lancashire Holdings Limited ("Lancashire" or "the Group") today announces its
trading statement for the nine months ended 30 September 2023.
Trading statement highlights
· Gross premiums written increased by 23.2% year-on-year to $1.6 billion.
· IFRS 17 insurance revenue increased by 22.1% year-on-year to $1.1 billion.
· Group Renewal Price Index (RPI) of 117%.
· Total net investment return, including unrealised gains and losses, of 2.8%.
· Capital return of up to $169 million ($119 million in special dividend and
up to $50 million in buy-backs of Lancashire's Common Shares) following strong
operating performance year-to-date.
Alex Maloney, Group Chief Executive Officer, commented:
"During the first nine months of 2023, we have continued to successfully
implement our long-term strategy to manage the market cycle and deliver strong
profitable growth through a portfolio of diversified products.
Gross premiums written increased by 23.2% to $1.6 billion in the year to date,
with rates remaining extremely attractive across our product lines. We continue
to expect a positive environment into 2024, with further opportunities for
Lancashire.
Our investment returns have also continued to benefit from the higher interest
rate environment and the short duration of our portfolio, with a total net
investment return, including unrealised gains and losses, of 2.8% for the
period.
Capital management and balancing risk and return have for a long time been at
the heart of our strategy, and we continue to hold an extremely robust capital
position.
Our disciplined underwriting, and successful diversification strategy, mean that
we are in a position to pay out some of the capital generated to date, and still
have the flexibility to fund further growth and realise our ambitions for this
phase of the market cycle.
Following the strong operating performance in the year-to-date, I am pleased to
report that the Board has approved a capital return of up to $169 million,
including $119 million in special dividend and up to $50 million in buy-backs.
Our previously announced plans to expand our international footprint further
through Lancashire Insurance U.S. continue, and we are pleased with the progress
we are making towards an underwriting launch in early 2024.
I am always impressed by the talent, hard work and dedication of our people
across the Lancashire Group and I would like to thank them for their ongoing
commitment to the business.
I would also like to thank our clients, brokers and shareholders for their
continued support."
Business update
Gross premiums written and IFRS 17 insurance revenue
Nine months
ended
30 September 30 September Change Change RPI
2023 2022
$m $m $m % %
Reinsurance 19.2 % 123 %
837.7 702.9 134.8
Insurance 28.3 % 112 %
722.2 562.8 159.4
Gross 23.2 % 117 %
premiums 1,559.9 1,265.7 294.2
written
Reinsurance 24.9 %
521.7 417.6 104.1
Insurance 19.6 %
589.5 492.7 96.8
IFRS 17 22.1 %
insurance 1,111.2 910.3 200.9
revenue
Gross premiums written
Gross premiums written increased by $294.2 million or 23.2% in the first nine
months of 2023 compared to the same period in 2022. The Group's two segments,
and the key market factors impacting them, are discussed below.
Reinsurance segment
The build out of our casualty reinsurance lines continued to be the most
significant contributor to growth in the reinsurance segment. Our specialty
reinsurance class also continued to add new business in a positive rating
environment, with the property reinsurance class also benefiting from
significant rate increases. Overall the RPI was 123% for the segment.
Insurance segment
The growth in the insurance segment is primarily driven by property insurance,
with significant rate increases in the property direct and facultative class and
the continued build out of the property construction book of business. In
specialty insurance more premium was written in the political risk class, and
energy and marine continued to grow across our underwriting platforms taking
advantage of positive market conditions across most classes. Aviation insurance
benefited from exceptionally strong RPIs, albeit the major renewal period is in
the fourth quarter. Overall the RPI was 112% for the segment.
IFRS 17 insurance revenue
Insurance revenue is a new measure introduced by IFRS 17 and is comparable to
IFRS 4 gross premiums earned less inwards reinstatement premium and is net of
commission costs. Insurance revenue increased by $200.9 million or 22.1%, in the
first nine months of 2023 compared to the same period in 2022. The market
factors driving the increase in gross premiums written also drove the increase
in insurance revenue.
Loss environment
The first nine months of 2023 has seen natural catastrophe loss activity across
a number of events including U.S. wind and convective storms, the Hawaiian
wildfires, the Turkey earthquake, hurricane Idalia, and cyclones and flooding in
New Zealand. We also incurred some risk losses, particularly in our energy
classes. These losses were not individually material.
Investments
As at 30 September 2023 30 September 2022
Duration 1.6 years 1.7 years
Credit quality AA- AA-
Book yield 3.9% 2.3%
Market yield 5.8% 4.6%
Managed investments ($m) $2,661.4 $2,291.9
The Group's investment portfolio, including unrealised gains and losses,
returned 2.8% for the first nine months of 2023. The positive returns were
driven by $79.6 million of investment income as our portfolio benefited from
higher yields.
The Group's investment portfolio, including unrealised gains and losses,
returned negative 5.0% for the first nine months of 2022. The majority of the
losses were driven by significant increases in treasury rates.
Dividends
Lancashire's Board of Directors has declared a special dividend of $0.50 per
common share (approximately £0.41 per common share at the current exchange
rate), which will result in an aggregate payment of approximately $119 million.
The dividend will be paid in Pounds Sterling on 15 December 2023 (the "Dividend
Payment Date") to shareholders of record on 17 November 2023 (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.
Intention to purchase own shares
At Lancashire's Annual General Meeting held on 26 April 2023, Lancashire's
shareholders granted a general authority for Lancashire to make market purchases
of up to 24,401,000 of its own common shares of $0.50 each
("Common Shares"). Pursuant to and in accordance with that authority, Lancashire
intends to purchase its own Common Shares within certain parameters at an
aggregate price not exceeding $50 million. 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 EST on Thursday 9 November
2023. 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.
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://register.vevent.com/register/BIff9dde6ecbf3496ebfbe9f58cb884ec
access: 5 (https://protect-eu.mimecast.com/s/_
-oPCj2Bncy9GOvIWuZb5?domain=register.vevent.com)
Please register to obtain your personal audio conference pin and call
details.
Webcast https://onlinexperiences.com/Launch/QReg/ShowUUID=4FB61DDF-AA7E-4605
access: -B287-CAAD2798E2CE (https://protect
-eu.mimecast.com/s/FIgbCk5goiqNXwpTVkpFP?domain=onlinexperiences.com)
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
Investor Day 2023
Lancashire will be holding an Investor Day on 14 November 2023 at 20 Fenchurch
Street, London. For further information please contact
jelena.bjelanovic@lancashiregroup.com.
Contact information
Lancashire
Holdings
Limited
Christopher +44 20 7264
Head
4145chris.head@lancashiregroup.com (chris.head%40lancashiregroup.com)
Jelena +44 20 7264 4066jelena.bjelanovic@lancashiregroup.com
Bjelanovic
FTI +44 20 37271046
Consulting
Edward Edward.Berry@FTIConsulting.com
Berry
Tom Tom.Blackwell@FTIConsulting.com
Blackwell
About Lancashire
Lancashire, through its UK and Bermuda-based operating subsidiaries, is a
provider of global specialty insurance and reinsurance products.
Lancashire 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
GMT on 9 November 2023.
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 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 2022 AND THE GROUP'S UNAUDITED CONDENSED INTERIM
CONSOLIDATED FINANCIAL
STATEMENTS FOR THE SIX MONTHS ENDING 30 JUNE 2023.
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 2022 AND THE GROUP'S UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS FOR THE SIX MONTHS ENDING 30 JUNE 2023. IN ADDITION TO THOSE FACTORS
CONTAINED IN THE GROUP'S 2022 ANNUAL REPORT AND ACCOUNTS AND THE GROUP'S
UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDING 30 JUNE 2023, ANY FORWARD-LOOKING STATEMENTS CONTAINED IN THIS RELEASE
MAY BE AFFECTED BY: THE IMPACT OF THE ONGOING CONFLICTS IN UKRAINE AND THE
MIDDLE EAST, INCLUDING ANY ESCALATION OR EXPANSION THEREOF, ON THE GROUP'S
BUSINESS, RESERVES OR CLIENTS, THE CONTINUED UNCERTAINTY OF THE SITUATION IN
RUSSIA, INCLUDING ISSUES RELATING TO POLICY COVERAGE AND THE IMPACT OF
GOVERNMENT SANCTIONS, THE IMPACT ON SECURITIES IN OUR INVESTMENT PORTFOLIO AND
ON GLOBAL FINANCIAL MARKETS GENERALLY, AS WELL AS ANY GOVERNMENTAL OR REGULATORY
CHANGES, ARISING THEREFROM; THE NUMBER AND TYPE OF INSURANCE AND REINSURANCE
CONTRACTS THAT THE GROUP WRITES OR MAY WRITE; THE GROUP'S ABILITY TO
SUCCESSFULLY IMPLEMENT ITS BUSINESS STRATEGY DURING `SOFT' AS WELL AS `HARD'
MARKETS; THE CONTINUATION OF INCREASED PREMIUM RATES THAT ARE AVAILABLE AT
POLICY INCEPTION FOR LINES WITHIN ITS TARGETED BUSINESS; INCREASED COMPETITION
ON THE BASIS OF PRICING, CAPACITY, COVERAGE TERMS OR RELATED FACTORS; AND
CYCLICAL DOWNTURNS OF THE INDUSTRY. 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 AND THE UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS NOTED ABOVE WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
BEFORE MAKING AN INVESTMENT DECISION.
This information was brought to you by Cision http://news.cision.com
https://news.cision.com/lancashire-holdings-ltd/r/q3-trading-statement,c3872104
END
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