Lancashire Holdings Ltd - Lancashire Holdings Limited's Half-Year 2025 Results
STRONG PROFIT AFTER TAX OF
Highlights:
•
Gross premiums written increased 5.8% year-on-year to
•
Insurance service result of
•
Profit after tax of
• Total investment return of 3.7%, including unrealised gains and losses.
• 2025 RoE expected to be high-teens, upgraded from mid-teens, assuming a similar H2 loss environment to 2024.
For the six months ended 30 June 2025 30 June 2024
$m $m
Highlights
Gross premiums written1 1,356.2 1,282.2
Insurance revenue 930.1 854.1
Insurance service result 155.7 222.8
Net investment return 108.2 75.2
Profit after tax 109.2 200.8
Financial ratios
Net insurance ratio1 78.6% 65.2%
Combined ratio (discounted)1 87.4% 73.0%
Combined ratio (undiscounted)1 97.8% 82.2%
Total investment return1 3.7% 2.3%
Per Share data
Diluted book value per share1 $6.08 $6.35
Change in diluted book value per share ("ROE")1 7.6% 14.0%
Dividends per common share paid in the financial year2 $0.40 $0.65
Diluted earnings per share $0.44 $0.82
1. Please refer to the end of this release for details of how these Alternative Performance Measures (APMs) are calculated.
2. Includes special dividend of
“Lancashire’s performance for the first six months of the year clearly demonstrates the increased resilience within our business model.
Our strategy to grow at the right time in the cycle means we are better positioned, across various classes and geographies, than ever before. We have developed a robust, diversified and capital-efficient underwriting portfolio that can absorb the impact of significant industry loss events whilst delivering more predictable returns.
The impact of the wildfires in
We have continued to grow our underwriting portfolio in line with the market opportunity in a disciplined way with gross premiums written increasing 5.8% year-on-year to
Our underwriting performance has been complemented by our investment portfolio, which returned 3.7% for the period and remains an important strategic lever for value creation. The relatively conservative, short duration, portfolio is well-positioned to limit downside risk, which is a prudent position in volatile markets.
So, overall, we approach the second half of the year with confidence, a very strong balance sheet and robust capital base, which is able to support growth and shareholder returns.
We outlined earlier in the year, in a severe loss year with a similar level of catastrophe and large risk losses as 2024, in addition to the
I am pleased to report that during the period, we made an offer for the remaining capacity on Syndicate 2010 (for the 2026 underwriting year), which is not already owned by the Group. Acceptances have been received such that we now have 99.4% of the capacity and an application has been made to Lloyd’s for permission to effect a minority buy-out in respect of the remaining capacity.
2025 is our 20
th
year of operations and I am proud that we remain a healthy, relevant and strong player in the sector. Our accomplishments during the first six months of the year have only been made possible by the talented and committed people that we have across the
In an unstable world, both geopolitically and economically, Lancashire continues to have the vision, resilience, and talent to maintain long and mutually beneficial relationships with our clients and brokers, and deliver sustainable returns for our investors.”
Underwriting results
For the six months 30 June 2025 30 June 2024
ended
Reinsurance Insurance Total Reinsurance Insurance Total
$m $m $m $m $m $m
Gross premiums 815.6 540.6 1,356.2 734.6 547.6 1,282.2
written
RPI 97% 96% 96% 101% 103% 102%
Insurance revenue 450.6 479.5 930.1 407.6 446.5 854.1
Insurance service 80.4 75.3 155.7 152.0 70.8 222.8
result
Net insurance ratio 78.3% 78.9% 78.6% 53.3% 77.5% 65.2%
Gross premiums written
Gross premiums written increased by
Insurance revenue
Insurance revenue increased by
Allocation of reinsurance premiums
Allocation of reinsurance premiums decreased by
Net loss environment
During the first six months of 2025, the Group experienced net losses (undiscounted, excluding reinstatement premiums) from catastrophe, weather and large loss events totalling
In comparison, during the first six months of 2024, the Group experienced net losses (undiscounted, excluding reinstatement premiums) from catastrophe, weather and large loss events totalling
Favourable prior accident year loss development for the undiscounted net movement in loss reserves was
In comparison, the favourable prior accident year undiscounted net movement in loss reserves during the first six months of 2024 was
This continues our track record of favourable reserve releases and the Group remains conservatively reserved at an 85% confidence interval.
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.
30 June 2025 30 June 2024
Insurance Reinsurance Insurance Reinsurance
For the six months contracts contracts Total contracts contracts Total
ended
issued held $m issued held $m
$m $m $m $m
Initial discount
included in insurance 102.0 (26.3) 75.7 73.6 (14.6) 59.0
service result
Unwind of discount (50.3) 11.5 (38.8) (47.1) 13.7 (33.4)
Impact of change in (22.7) 4.8 (17.9) 18.8 (4.4) 14.4
assumptions
Finance (expense) (73.0) 16.3 (56.7) (28.3) 9.3 (19.0)
income
Total net discounting 29.0 (10.0) 19.0 45.3 (5.3) 40.0
income (expense)
The total impact of discounting for the first six months of 2025 was a net benefit of
The discount rate for all of the Group's major currencies has decreased in the first six months of 2025. This has driven an adverse impact from the change in discount rate assumptions. The unwind of discount has increased and reflects the growth in the discount provision over recent years in what has been a relatively high discount rate environment.
In the first six months of 2024, discount rates increased across all major currencies creating a positive impact from the change in discount rate assumptions and a higher overall net benefit from discounting.
Investments
30 June 2025
30 June 2024
For the six months ended
$m $m
Total net investment return 108.2 75.2
Net investment income, excluding realised and unrealised gains and losses, was
The investment portfolio generated a total investment return of 3.7% during the first six months of 2025. The returns were driven by investment income, benefiting from higher yields in conjunction with higher prices from falling treasury rates, buffering the slight widening of investment grade credit spreads. In addition, the non-US dollar portfolios and cash, held for hedging purposes, benefitted from a weakening US dollar which added 50bps or
For the first six months of 2024, the investment portfolio generated a positive return of 2.3%.
The managed portfolio was invested as follows:
30 June 2025 31 December 2024
As at
$m $m
Fixed maturity securities 2,712.2 2,603.8
Managed cash and cash equivalents 270.1 294.4
Private investment funds 275.7 253.1
Hedge funds 5.7 7.9
Other investments (0.1) 0.1
Total 3,263.6 3,159.3
Key investment portfolio statistics for our fixed maturity securities and managed cash and cash equivalents were:
As at 30 June 2025 31 December 2024 Duration 2.0 years 2.0 years Credit quality A+ AA- Book yield 4.8% 4.7% Market yield 4.7% 5.0%
Other operating expenses
30 June 2025 30 June 2024
For the six months ended
$m $m
Operating expenses - fixed 103.5 89.3
Operating expenses - variable 19.9 12.3
Total operating expenses 123.4 101.6
Directly attributable expenses allocated to insurance (59.2) (51.8)
service expenses
Other operating expenses 64.2 49.8
The most significant driver of the increase in operating expenses for the first six months of 2025, compared to the same period in 2024, was an increase in employment expenses. The headcount for the Group was nearly 450 at the end of
In the first six months of 2025,
Capacity offer
On
Capital
As at
Dividends
On
Financial information
The Unaudited Condensed Interim Consolidated Financial Statements for the six months ended
Analyst and investor earnings conference call
There will be an analyst and investor conference call on the results at
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For further information, please contact:
Lancashire Holdings Limited
Christopher Head
chris.head@lancashiregroup.com
Jelena Bjelanovic
jelena.bjelanovic@lancashiregroup.com
FTI Consulting
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 in surance and reinsurance products. The Group companies carry the following ratings:
Financial Financial
Long Term Issuer
Strength Strength
Rating2
Rating1 Outlook1
A.M. Best A (Excellent) Stable bbb+
S&P Global Ratings A- Positive BBB
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 unaudited condensed interim 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 six months ended 30 June 2025 2024 Insurance service expenses 792.1 472.2 Amounts recoverable from reinsurers (221.3) (54.6) Net insurance expenses 570.8 417.6 Insurance revenue 930.1 854.1 Allocation of reinsurance premium (203.6) (213.7) Net insurance revenue 726.5 640.4 Net insurance ratio 78.6% 65.2%
Operating expense ratio:
Ratio, in per cent, of other operating expenses, excluding equity-based compensation expense, to net insurance revenue.
For the six months ended30 June 2025 2024 Other operating expenses 64.2 49.8 Net insurance revenue 726.5 640.4 Operating expense ratio 8.8% 7.8%
Combined ratio (discounted):
Ratio, in per cent, of the sum of net insurance expenses plus other operating expenses to net insurance revenue.
For the six months ended30 June 2025 2024 Net insurance ratio 78.6% 65.2% Net operating expense ratio 8.8% 7.8% Combined ratio (discounted) 87.4% 73.0%
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 six months ended30 June 2025 2024 Combined ratio (discounted) 87.4% 73.0% Discount included in net insurance expenses 75.7 59.0 Net insurance revenue 726.5 640.4 Discounting impact on combined ratio 10.4% 9.2% Combined ratio (undiscounted) 97.8% 82.2%
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 30 June 2025 31 December 2024 Shareholders’ equity attributable to the Group 1,513.9 1,493.3 Common voting shares outstanding* 242,008,350 240,584,795 Shares relating to dilutive restricted stock 7,095,276 6,877,762 Fully converted book value denominator 249,103,626 247,462,557 Diluted book value per share$6.08 $6.03
*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 30 June 2025 31 December 2024 Opening DBVS$6.03 $6.17 Q1 dividend per share$0.25 $0.50 Q2 dividend per share$0.15 $0.15 Q3 dividend per share —$0.075 Q4 dividend per share —$0.75 Closing DBVS$6.08 $6.03 Change in DBVS 7.6% 23.4%
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, which includes the net impact of foreign exchange. The total investment return can be approximated by dividing the total net investment return, excluding interest on non-managed cash and cash equivalents, and including net foreign exchange gains and losses related to investments and managed cash and cash equivalents, by the average portfolio net asset value, including managed cash and cash equivalents.
For the six months ended 30 June 2025 2024 Net investment return 108.2 75.2 Less interest income on non-managed cash and cash equivalents (7.6) (7.2) Net foreign exchange gains / (losses) related to investments and 15.7 (1.1) managed cash and cash equivalents Net investment return adjusted for interest and foreign exchange 116.3 66.9 Average invested assets including managed cash and cash 3,211.4 2,829.1 equivalents* Approximate total investment return 3.6% 2.4% Reported total investment return 3.7% 2.3%
*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 30 June 2025 31 December 2024 Opening share price$8.25 $7.96 Q1 dividend per share$0.25 $0.50 Q2 dividend per share$0.15 $0.15 Q2 closing share price$7.89 — Q3 dividend per share —$0.075 Q4 dividend per share —$0.75 Q4 closing share price —$8.25 Total shareholder return 0.4% 22.1%
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 six months ended 30 June 2025 2024 Gross premiums written 1,356.2 1,282.2 Change in unearned premiums (246.0) (296.2) Gross premiums earned 1,110.2 986.0 Adjust for reinstatement premiums (41.2) 0.3 Less commission and non-distinct investment components (138.9) (132.2) Total insurance revenue 930.1 854.1
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 six months ended 30 June 2025 2024 Gross premiums written by the Group 1,356.21,282.2 LSL Syndicate 2010 - external Names portion of gross premiums 53.5 75.7 written (unconsolidated) Total gross premiums written under management 1,409.7 1,357.9
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”, “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
2025 2024
For the six months ended 30 June
$m $m
Insurance revenue 930.1 854.1
Insurance service expenses (792.1) (472.2)
Insurance service result before reinsurance contracts held 138.0 381.9
Allocation of reinsurance premium (203.6) (213.7)
Amounts recoverable from reinsurers 221.3 54.6
Net expense from reinsurance contracts held 17.7 (159.1)
Insurance service result 155.7 222.8
Net investment return 108.2 75.2
Finance expense from insurance contracts issued (73.0) (28.3)
Finance income from reinsurance contracts held 16.3 9.3
Net insurance and investment result 207.2 279.0
Share of profit of associate 1.8 7.5
Other income 3.7 4.8
Net foreign exchange losses (1.4) (2.0)
Other operating expenses (64.2) (49.8)
Equity based compensation (11.4) (9.6)
Financing costs (17.1) (16.3)
Profit before tax 118.6 213.6
Tax charge (9.4) (12.8)
Profit after tax 109.2 200.8
Earnings per share
Basic $0.45 $0.84
Diluted $0.44 $0.82
Consolidated statement of financial position
30 June 2025 31 December 2024
As at
$m $m
Assets
Cash and cash equivalents 653.2 684.3
Accrued interest receivable 24.2 22.0
Investments 2,993.5 2,864.9
Reinsurance contract assets 620.8 557.2
Other receivables 31.3 20.5
Investment in associate 8.0 9.1
Right-of-use assets 14.4 16.2
Property, plant and equipment 7.9 8.7
Intangible assets 196.7 197.0
Total assets 4,550.0 4,379.9
Liabilities
Insurance contract liabilities 2,461.7 2,300.4
Other payables 73.0 91.9
Corporation tax payable 10.0 2.7
Deferred tax liability 22.5 22.3
Lease liabilities 21.7 22.3
Long-term debt 447.2 447.0
Total liabilities 3,036.1 2,886.6
Shareholders' equity
Share capital 122.0 122.0
Own shares (12.0) (20.5)
Other reserves 1,241.7 1,242.3
Retained earnings 162.2 149.5
Total shareholders’ equity 1,513.9 1,493.3
Total liabilities and shareholders’ equity 4,550.0 4,379.9
Consolidated statement of cash flows
2025 2024
For the six months ended 30 June
$m $m
Cash flows from operating activities
Profit before tax 118.6 213.6
Adjustments for:
Tax paid (2.1) (1.8)
Depreciation 3.3 3.1
Amortisation on intangible assets 1.5 0.3
Interest expense on long-term debt 12.9 12.9
Interest expense on lease liabilities 0.6 0.8
Interest income (71.7) (61.7)
Dividend income (9.9) (8.2)
Net unrealised gains on investments (31.0) (6.9)
Net realised losses on investments 1.3 1.2
Equity based compensation 11.4 9.6
Foreign exchange losses 2.1 1.0
Share of profit of associate (1.8) (7.5)
Changes in operational assets and liabilities
Insurance and reinsurance contracts 55.8 57.3
Other assets and liabilities (35.1) 3.5
Net cash flows from operating activities 55.9 217.2
Cash flows used in investing activities
Interest income received 69.5 56.9
Dividend income received 9.9 8.2
Purchase of property, plant and equipment (0.6) (0.8)
Internally generated intangible assets (1.2) (0.9)
Investment in associate 2.9 7.5
Purchase of investments and capital contributions (780.9) (802.0)
Proceeds on sale of investments and return of capital 707.5 634.5
Net cash flows used in investing activities 7.1 (96.6)
Cash flows used in financing activities
Interest paid (12.9) (12.9)
Lease liabilities paid (3.2) (2.0)
Dividends paid (96.5) (155.9)
Distributions by trust (3.8) (1.3)
Net cash flows used in financing activities (116.4) (172.1)
Net decrease in cash and cash equivalents (53.4) (51.5)
Cash and cash equivalents at beginning of year 684.3 756.9
Effect of exchange rate fluctuations on cash and cash 16.6 (7.0)
equivalents
Effect of other items on cash and cash equivalents 5.7 (0.2)
Cash and cash equivalents at end of year 653.2 698.2
