Lancashire Holdings Ltd - Final Results
EXCELLENT 2024 PERFORMANCE, DRIVEN BY STRONG UNDERWRITING AND INVESTMENT RETURNS
Highlights:
-- Profit after tax of$321.3 million , resulting in a change in DBVS of 23.4%.
-- Gross premiums written increased 11.3% year-on-year to$2,149.6 million . Insurance revenue increased 16.1% year-on-year to$1,765.1 million .
-- Insurance service result of$379.9 million , discounted combined ratio of 80.0%, undiscounted combined ratio of 89.1%.
-- Total investment return of 5.0%, including unrealised gains and losses.
-- Total dividends with respect to 2024 of$294.3 million , including final ordinary dividend of$0.15 per share, subject to shareholder approval, and additional special dividend of$0.25 per share.
For the year ended 31 December 2024 31 December 2023 $m $m Highlights Gross premiums written1 2,149.6 1,931.7 Insurance revenue 1,765.1 1,519.9 Insurance service result 379.9 382.1 Net investment return 162.2 160.5 Profit after tax 321.3 321.5 Financial ratios Net insurance ratio1 71.3% 65.1% Combined ratio (discounted)1 80.0% 74.9% Combined ratio (undiscounted)1 89.1% 82.6% Total investment return1 5.0% 5.7% Per Share data Diluted book value per share1$6.03 $6.17 Change in diluted book value per share 23.4% 24.7% ("ROE")1 Dividends per common share paid in the$1.475 $0.65 financial year Diluted earnings per share$1.30 $1.32
1. Please refer to the end of this release for details of how these Alternative Performance Measures (APMs) are calculated.
“2024 was another superb year for Lancashire with an excellent profit after tax of $321.3 million delivering a strong return on equity of 23.4%.
In a year of high industry losses this is an outstanding result. It shows the continued successful execution of our strategy to grow materially at the right time in the underwriting cycle, utilise our capital more efficiently, diversify our portfolio to reduce volatility, and retain and attract the best talent.
Throughout 2024, we continued to take advantage of the healthy margin environment. Gross premiums written increased by 11.3% to more than $2.1 billion and insurance revenue was $1.7 billion, an increase of 16.1% on 2023.
As a result, we delivered an excellent underwriting return, with an insurance service result of $379.9 million and a combined ratio of 89.1% (80.0% discounted), underpinned by our robust and disciplined underwriting approach.
Also contributing to our strong performance was our investment portfolio, which returned a very healthy 5% for the year.
Our overall performance enabled us to deliver increased returns for our investors with total capital returned of $354.2 million during the year.
Additionally, the Board has declared a total year-end dividend of
Returning excess capital generated to our shareholders has always been a core part of Lancashire’s DNA and, importantly, we remain extremely well capitalised to fund future growth opportunities.
In 2024, we continued to deploy our strategy that has seen us more than double the number of product classes that we write since 2018 giving us access to more of these opportunities in a compelling market where margins remain strong.
Demand also remains resilient as 2024 was another year of high industry losses and our clients and business partners continue to see value in our specialised (re)insurance solutions.
Lancashire experienced net losses (undiscounted, including reinstatement premiums) from catastrophe, weather and large loss events totalling $214.1 million. This included the impacts of hurricanes Milton, Helene, and Debby, storm Boris and the Calgary hailstorms. The MV
We have achieved the results we are reporting today due to the hard work of everybody in the Group and their belief in our strategy and vision. I would like to thank them all for their commitment to the business and for playing their part in driving forward our strong and positive culture.
Early in 2025, we have seen the terrible devastation wrought by the wildfires in
With a similar level of catastrophe and large losses as 2024, in addition to the wildfire loss, we would anticipate delivering an RoE in the mid-teens in 2025. Whilst this assumes a significantly above average loss environment, our guidance clearly demonstrates the continued delivery of our strategy of more predictable returns for investors.
As always, I would like to thank our clients, their brokers, our shareholders and other stakeholders for their support.
In 2025, Lancashire is celebrating its 20th anniversary and, while we look back with pride on our achievements and how the business has evolved, we also look forward with confidence to the opportunities to develop this fantastic company further."
Underwriting results
For the year 31 December 2024 31 December 2023 ended Reinsurance Insurance Total Reinsurance Insurance Total $m $m $m $m $m $m Gross premiums 1,097.8 1,051.8 2,149.6 967.5 964.2 1,931.7 written RPI 101% 101% 101% 122% 110% 115% Insurance revenue 855.1 910.0 1,765.1 714.9 805.0 1,519.9 Insurance service (420.0) (766.1) (1,186.1) (254.2) (442.0) (696.2) expenses Insurance service result before 435.1 143.9 579.0 460.7 363.0 823.7 reinsurance contracts held Allocation of reinsurance (168.2) (271.2) (439.4) (174.6) (250.2) (424.8) premium Amounts recoverable from (2.8) 243.1 240.3 (78.2) 61.4 (16.8) reinsurers Net expense from reinsurance (171.0) (28.1) (199.1) (252.8) (188.8) (441.6) contracts held Insurance service 264.1 115.8 379.9 207.9 174.2 382.1 result Net insurance 61.6% 81.9% 71.3% 61.5% 68.6% 65.1% ratio
Gross premiums written
Gross premiums written increased by
Reinsurance segment
Gross premiums written for 2024 increased by
Insurance segment
Gross premiums written for 2024 increased by
Insurance revenue
Insurance revenue increased by
Allocation of reinsurance premiums
Allocation of reinsurance premiums increased by
Net claims
During 2024, the Group experienced net losses (undiscounted, including reinstatement premiums) from catastrophe, weather and large loss events totalling
In comparison, during 2023 the Group experienced net losses (undiscounted, including reinstatement premiums) from catastrophe, weather and large loss events totalling
Favourable prior accident year loss development, including the undiscounted net movement in loss reserves, reinstatement premiums and expense provisions, was
In comparison, favourable prior accident year development during 2023 of
The prior accident year loss development for both 2024 and 2023 also benefited from the net release of expense provisions and reductions in outwards reinstatement premiums. This reduction was slightly more pronounced in 2024.
Net discounting benefit
The table below shows the total net impact of discounting in respect of both insurance contracts issued, and reinsurance contracts held, by financial statement line item.
31 December 2024 31 December 2023 Insurance Insurance contracts Reinsurancecontractsheld$m Total$m contracts Reinsurancecontractsheld$m Total$m issued$m issued$m Initial discount included in 144.4 (24.1) 120.3 101.9 (17.2) 84.7 insurance service result Unwind of (95.5) 26.9 (68.6) (84.2) 28.4 (55.8) discount Impact of change in 17.6 (2.9) 14.7 (14.1) 3.3 (10.8) assumptions Finance (expense) (77.9) 24.0 (53.9) (98.3) 31.7 (66.6) income Total net discounting 66.5 (0.1) 66.4 3.6 14.5 18.1 income (expense)
The total impact of discounting for 2024 was a net benefit of
The majority of the Group's net insurance contract liabilities are denominated in US dollars, and this has driven a positive impact from the change in discount assumptions, primarily due to the increase in the
In 2023, discount rates across all the Group's major currencies were at a relatively high level throughout the year, with a small decrease in the fourth quarter. This drove the relatively high initial discount and low change in assumption impact.
Investments
For the year ended 31 December 2024$m 31 December 2023$m Total net investment return 162.2 160.5
Net investment income, excluding realised and unrealised gains and losses, was
The investment portfolio generated a total investment return of 5.0% during 2024. The returns were driven primarily from investment income given the higher yields throughout most of the year. In addition to positive returns from the fixed income portfolio, the risk assets, notably the bank loans and the private credit funds, contributed positively to the overall investment return.
In 2023, the investment portfolio generated a positive return of 5.7%. The returns were driven primarily from elevated interest rates and the tighter credit spreads, in addition to positive return contributions from risk assets, resulting in positive returns in all asset classes.
The managed portfolio was invested as follows:
As at 31 December 2024$m 31 December 2023$m Fixed maturity securities 2,603.8 2,280.1 Managed cash and cash equivalents 294.4 263.8 Private investment funds 253.1 165.6 Hedge funds 7.9 9.9 Other investments 0.1 (0.1) Total 3,159.3 2,719.3
Key investment portfolio statistics for our fixed maturity securities and managed cash and cash equivalents were:
As at 31 December 2024$m 31 December 2023$m Duration 2.0 years 1.6 years Credit quality AA- AA- Book yield 4.7% 4.0% Market yield 5.0% 5.3%
Other operating expenses
For the year ended 31 December 2024$m 31 December 2023$m Operating expenses - fixed 184.8 147.9 Operating expenses - variable 36.4 41.7 Total operating expenses 221.2 189.6 Directly attributable expenses allocated (105.3) (82.2) to insurance service expenses Other operating expenses 115.9 107.4
The most significant driver of the increase in operating expenses for 2024, compared to 2023, was an increase in fixed costs of
In 2024,
Capital
As at
Dividends
On
Lancashire's Board of Directors has declared a special dividend of
Financial Information
The Audited Consolidated Financial Statements for the year ended
The 2024 Annual Report and Accounts is expected to be circulated to shareholders from
and will also be made available on Lancashire’s website.
Analyst and Investor Earnings Conference Call
There will be an analyst and investor conference call on the results at
Participant Registration and Access Information:
Audio conference call access:
Please register at this link to obtain your personal audio conference pin and call details.
Webcast access:
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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
For further information, please contact:
Lancashire Holdings Limited Christopher Head chris.head@lancashiregroup.comJelena Bjelanovic jelena.bjelanovic@lancashiregroup.comFTI Consulting 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. The Group companies carry the following ratings:
FinancialStrengthRating1 FinancialStrengthOutlook1 Long Term IssuerRating2 A.M. Best A (Excellent) Stable bbb+ S&P Global A- Positive BBB Ratings Moody’s A3 Stable Baa2
1. Financial Strength Rating and Financial Strength Outlook apply to
2. Long Term Issuer Rating applies to
Lancashire’s 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 .
This release contains information, which may be of a price sensitive nature that Lancashire is making public in a manner consistent with the
Alternative Performance Measures (APMs)
As is common practice within the insurance industry, the Group also utilises certain non-GAAP measures to evaluate, monitor and manage the business and to aid users’ understanding of the Group. Management believes that APMs are important for understanding the Group’s overall results of operations and may be helpful to investors and other interested parties who may benefit from having a consistent basis for comparison with other companies within the industry. However, these measures may not be comparable to similarly labelled measures used by companies inside or outside the insurance industry. In addition, the information contained herein should not be viewed as superior to, or a substitute for, the measures determined in accordance with the accounting principles used by the Group for its Consolidated financial statements or in accordance with GAAP.
In compliance with the Guidelines on APMs of the
All amounts, excluding share data, ratios, percentages, or where otherwise stated, are in millions of US dollars.
Net insurance ratio:
Ratio, in per cent, of net insurance expenses to net insurance revenue. Net insurance expenses represent the insurance service expenses less amounts recoverable from reinsurers. Net insurance revenue represents insurance revenue less allocation of reinsurance premium.
For the year ended 31 December 2024 2023 Insurance service expenses 1,186.1 696.2 Amounts recoverable from reinsurers (240.3) 16.8 Net insurance expenses 945.8 713.0 Insurance revenue 1,765.1 1,519.9 Allocation of reinsurance premium (439.4) (424.8) Net insurance revenue 1,325.7 1,095.1 Net insurance ratio 71.3% 65.1%
Operating expense ratio:
Ratio, in per cent, of other operating expenses, excluding equity based compensation expense, to net insurance revenue.
For the year ended 31 December 2024 2023 Other operating expenses 115.9 107.4 Net insurance revenue 1,325.7 1,095.1 Operating expense ratio 8.7% 9.8%
Combined ratio (discounted):
Ratio, in per cent, of the sum of net insurance expenses plus other operating expenses to net insurance revenue.
For the year ended31 December 2024 2023 Net insurance ratio 71.3% 65.1% Net operating expense ratio 8.7% 9.8% Combined ratio (discounted) 80.0% 74.9%
Combined ratio (undiscounted) (KPI):
Ratio, in per cent, of the sum of net insurance expenses plus other operating expenses to net insurance revenue. This ratio excludes the impact of the discounting recognised within net insurance expenses.
For the year ended 31 December 2024 2023 Combined ratio (discounted) 80.0% 74.9% Discount included in net insurance expenses 120.3 84.7 Net insurance revenue 1,325.7 1,095.1 Discounting impact on combined ratio 9.1% 7.7% Combined ratio (undiscounted) 89.1% 82.6%
Diluted book value per share ('DBVS') attributable to the Group:
Calculated based on the value of the total shareholders’ equity attributable to the Group, divided by the sum of all shares and dilutive restricted stock units (as calculated under the treasury method), assuming all are exercised.
As at 31 December 2024 2023 Shareholders’ equity attributable to the Group 1,493.3 1,507.9 Common voting shares outstanding* 240,584,795 239,037,977 Shares relating to dilutive restricted stock 6,877,762 5,355,909 Fully converted book value denominator 247,462,557 244,393,886 Diluted book value per share$6.03 $6.17
*Common voting shares outstanding comprise issued share capital less amounts held in trust.
Change in DBVS (KPI):
The internal rate of return of the change in DBVS in the period plus accrued dividends. Sometimes referred to as RoE.
As at 31 December 2024 2023 Opening DBVS$6.17 $5.48 Q1 dividend per share$0.50 — Q2 dividend per share$0.15 $0.10 Q3 dividend per share$0.075 $0.05 Q4 dividend per share$0.75 $0.50 Closing DBVS$6.03 $6.17 Change in DBVS 23.4% 24.7%
Total investment return (KPI):
Total investment return in percentage terms is calculated by dividing the total net investment return excluding interest income on non-managed cash and cash equivalents, by the investment portfolio net asset value including managed cash and cash equivalents, on a daily basis. These daily returns are then geometrically linked to provide a total return for the period. The total investment return can be approximated by dividing the total net investment return excluding interest on non-managed cash and cash equivalents by the average portfolio net asset value, including managed cash and cash equivalents.
For the year ended 31 December 2024 2023 Net investment return 162.2 160.5 Less interest income on non-managed cash and cash equivalents (13.6) (12.5) Net investment return excluding interest on non-managed cash and 148.6 148.0 cash equivalents Average invested assets including managed cash and cash 2,939.3 2,592.6 equivalents* Approximate total investment return 5.1% 5.7% Reported total investment return 5.0% 5.7%
*Calculated as the average between the opening and closing investments and our managed cash and cash equivalents.
Total shareholder return (KPI) :
Determined using the simple method of calculating the increase/(decrease) in the Group’s share price, adjusted for dividends (included at the ex-dividend date) as recalculated below. This measurement basis will generally approximate the increase/(decrease) in share price in the period measured on a total return basis, which assumes the reinvestment of dividends.
As at 31 December 2024 2023 Opening share price$7.96 $7.86 Q1 dividend per share$0.50 — Q2 dividend per share$0.15 $0.10 Q3 dividend per share$0.075 $0.05 Q4 dividend per share$0.75 $0.50 Q4 closing share price$8.25 $7.96 Total shareholder return 22.1% 9.5%
Gross premiums written:
The Group adopted IFRS 17 on
The table below reconciles gross premiums written on an IFRS 4 basis to insurance revenue on an IFRS 17 basis.
For the year ended 31 December 2024 2023 Gross premiums written 2,149.6 1,931.7 Change in unearned premiums (105.9) (207.7) Gross earned premium 2,043.7 1,724.0 Adjust for reinstatement premiums (5.3) (7.1) Less commission and non-distinct investment components (273.3) (197.0) Total insurance revenue 1,765.1 1,519.9
Gross premiums written under management (KPI):
The gross premiums written under management equals the total of the Group’s consolidated gross premiums written, plus the external Names portion of the gross premiums written in Syndicate 2010.
For the year ended 31 December 2024 2023 Gross premiums written by the Group 2,149.61,931.7 LSL Syndicate 2010 - external Names portion of gross premiums 120.5 140.5 written (unconsolidated) Total gross premiums written under management 2,270.1 2,072.2
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 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”, “POLICY”, “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
Consolidated statement of comprehensive income
For the year ended 31 December 2024$m 2023$m Insurance revenue 1,765.1 1,519.9 Insurance service expenses (1,186.1) (696.2) Insurance service result before reinsurance contracts held 579.0 823.7 Allocation of reinsurance premium (439.4) (424.8) Amounts recoverable from reinsurers 240.3 (16.8) Net expense from reinsurance contracts held (199.1) (441.6) Insurance service result 379.9 382.1 Net investment return 162.2 160.5 Finance expense from insurance contracts issued (77.9) (98.3) Finance income from reinsurance contracts held 24.0 31.7 Net insurance and investment result 488.2 476.0 Share of profit of associate 8.6 12.1 Other income 10.4 2.9 Net foreign exchange losses (2.6) (4.1) Other operating expenses (115.9) (107.4) Equity based compensation (19.0) (15.2) Financing costs (33.0) (31.6) Profit before tax 336.7 332.7 Tax charge (15.4) (11.2) Profit after tax 321.3 321.5 Earnings per share Basic$1.34 $1.35 Diluted$1.30 $1.32
Consolidated statement of financial position
As at 31 December 2024$m 2023$m Assets Cash and cash equivalents 684.3 756.9 Accrued interest receivable 22.0 16.7 Investments 2,864.9 2,455.5 Reinsurance contract assets 557.2 387.8 Other receivables 20.5 58.4 Investment in associate 9.1 16.2 Right-of-use assets 16.2 19.3 Property, plant and equipment 8.7 9.8 Intangible assets 197.0 181.1 Total assets 4,379.9 3,901.7 Liabilities Insurance contract liabilities 2,300.4 1,823.7 Other payables 91.9 80.6 Corporation tax payable 2.7 2.0 Deferred tax liability 22.3 16.2 Lease liabilities 22.3 24.7 Long-term debt 447.0 446.6 Total liabilities 2,886.6 2,393.8 Shareholders' equity Share capital 122.0 122.0 Own shares (20.5) (29.7) Other reserves 1,242.3 1,233.2 Retained earnings 149.5 182.4 Total shareholders’ equity 1,493.3 1,507.9 Total liabilities and shareholders’ equity 4,379.9 3,901.7
Consolidated statement of cash flows
For the year ended 31 December 2024$m 2023$m Cash flows from operating activities Profit before tax 336.7 332.7 Adjustments for: Tax paid (7.7) (1.9) Depreciation 6.3 4.3 Amortisation on intangible assets 1.2 0.2 Impairment of intangible assets — 1.4 Interest expense on long-term debt 25.8 25.8 Interest expense on lease liabilities 1.3 1.5 Interest income (131.5) (95.4) Dividend income (16.6) (11.3) Net unrealised gains on investments (20.4) (53.4) Net realised gains on investments (2.7) (3.9) Equity based compensation 19.0 15.2 Foreign exchange losses 1.2 3.9 Share of profit of associate (8.6) (12.1) Changes in operational assets and liabilities Insurance and reinsurance contracts 316.9 220.4 Other assets and liabilities 52.9 14.5 Net cash flows from operating activities 573.8 441.9 Cash flows used in investing activities Interest income received 126.2 90.0 Dividend income received 16.6 11.3 Purchase of property, plant and equipment (1.5) (9.6) Purchase of syndicate participation rights (11.2) (3.3) Internally generated intangible assets (5.9) (7.0) Investment in associate 15.7 55.6 Purchase of investments (1,785.8) (1,057.4) Proceeds on sale of investments 1,394.0 866.1 Net cash flows used in investing activities (251.9) (54.3) Cash flows used in financing activities Interest paid (25.8) (25.8) Lease liabilities paid (4.0) (3.8) Dividends paid (354.2) (155.3) Distributions by trust (2.1) (0.5) Net cash flows used in financing activities (386.1) (185.4) Net (decrease) increase in cash and cash equivalents (64.2) 202.2 Cash and cash equivalents at beginning of year 756.9 548.8 Effect of exchange rate movements on cash and cash (8.4) 5.9 equivalents Cash and cash equivalents at end of year 684.3 756.9
