Lancashire Share Discussion Threads

[hooley] 16/2/2015 09:36

Valued by way of cash flow generated the shares are still at a 25% discount to the likes of Beazley. Target for share price at least 850p. Based on Q4 results and indications for this year, another good year is in prospect despite soft u/w conditions.

[effortless cool] 12/2/2015 14:08

Yes I did. Unfortunately, I dodged into the way of a CWD short.

[ursus] 12/2/2015 12:38

You dodged a bullet here, Coolie.

[hooley] 12/2/2015 11:26

A closer look at the figures in the context of the sector suggest the shares remain unjustifiably lowly rated . At 13x historic eps, the sectoral average, the share price would be £10. As it is, they are rated at under 8X eps. Plenty of upside from here?

[shauney2] 12/2/2015 10:01

From this morning market report in the Telegraph

Numis.
Strong underwriting result reaffirms Lancashire's earnings power.

Headline figs:

Quarterly PBT of $92m is substantially ahead of consensus of $58m (NS $75m) on account of a strong underwriting result and favourable reserve releases. The company is paying an additional special dividend of $0.50 (33p) due to strong Q4 profitability and enhanced capital efficiency from increased reinsurance purchase. We calculate NTA at Dec-14 of 406p at the current £/$ rate of 1.52, which is in line with our forecast. Annualised RONTA for the quarter was 23.6% and 17.1% for the full year.

●

A return to stellar margins:

The Q4 result is a return to former levels of profitability after several quarters that were impacted by abnormal items. The Q4 combined ratio of 50% is significantly better than 75% for the previous 9 months. After adjusting for reserve releases and large losses, the attritional loss ratio of 27% is improved from 40% for the first 9 months and is better than guidance for the normal run rate.

●

Further special dividend:

We regard to the second special dividend as consistent with Lancashire's stated strategy to right-size the balance sheet to reflect capital needs. The company says it has entered 2015 with historically low retained risk levels, which combined with strong Q4 profitability looks to have allowed a further special dividend ($1.20 was declared at the Q3 stage). In total Lancashire will have returned 168% of net income for the year.

[speedsgh] 12/2/2015 09:22

USD 1.85 total distribution for FY2014. That's the second highest payout since 2009...

TOTAL FY 2014 - USD 1.85
TOTAL FY 2013 - USD 0.80
TOTAL FY 2012 - USD 2.10
TOTAL FY 2011 - USD 0.95
TOTAL FY 2010 - USD 1.55
TOTAL FY 2009 - USD 1.40

[wllmherk] 12/2/2015 09:17

Bought in too, thought about it yesterday as had a feeling results might be good, but, annoyed with myself at the hesitation. Still what a cracking dividend to look forward to.

wllm

[hooley] 12/2/2015 09:10

Well above my expectations and a thumping special to boot. They're looking after shareholders' funds with a vengeance. So why the modest rating? Bought some more despite the rise from 515p ex the first special. This business really generates a lot of cash - I like that in a business.

[salpara111] 12/2/2015 08:38

On balance, better than I expected so pretty happy to continue holding.
My target was for 700p by the end of the year but if things keep improving as they appear to be then I can see it getting there sooner than that.

[woodcutter] 12/2/2015 08:24

patience being rewarded on a decent set of results and divi's.

chart trend looking pretty srtong imv.

woody

[chrisoil twitter] 11/2/2015 19:54

Well i thought it a good time to produce an article on Lancashire Group Holdings considering had it since IPO days

Have a read on my blog www.chrisoil.blogspot.co.uk

[tmoon] 28/1/2015 14:55

Not sure if it makes any difference to you Hooley but the results announcement is not until the 12th Feb. TM.

[irnbru2] 27/1/2015 19:07

nw99,

How do you mean, " in play"

It ain't.

[salpara111] 27/1/2015 17:23

Well, that is my short term target hit but I am in no hurry to sell as there does seem to be a lot of corporate activity in the sector at the moment.

[nw99] 26/1/2015 08:06

In play now chart suggests more upside

[harleymaxwell] 26/1/2015 07:33

So axis and partner re to merge. The theme continues and these guys could be part of the process maybe that's why they acquired cathedral to be defensive

[effortless cool] 25/1/2015 20:48

You could well be right, Hooley.

[hooley] 25/1/2015 10:06

Timing is all. Maybe LRE has been lucky? They knowingly take high risk business and manage that risk as best they can, despite soft rates. Their formula is write less and pay more dividends in consequence. The abnormally low rating of the shares recognises the risks. Waiting for the 'inevitable' crash is a bit like waiting for great-grandma to die - she will, but after her 100th birthday?

[effortless cool] 24/1/2015 12:25

Why LRE is a good question.

Firstly, strangely perhaps, because it has done so well in the past. Reward in insurance is a reflection of risk and, just because that risk has not crystallised up to now, that does not mean it is not there. At some point, I think that risk will catch up with LRE.

Secondly, because of the potentially destabilising effect of the mooted Brindle start-up.

Thirdly, because, unlike HSX and BEZ, LRE seems to me to be a business without substance. I don't see it as much more than a handful of underwriters writing big lines. Why would anyone want to take it over? In fact, it is only Cathedral that I see as providing real substance.

[ursus] 23/1/2015 22:28

Revenge is a dangerous motive, Coolie - it's what motivates all yr former Globo friends since you betrayed them (in their eyes). Glad I stayed out of that after the auditor malarkey sent me running a year ago. I can't see what's so much worse abt LRE than say HSX or BEZ, yet the nav discount for LRE is so different. Is it the Cathedral acquisition?

[ursus] 23/1/2015 19:00

A wise move to close yr short, Coolie. Rates still soft?

[nw99] 20/1/2015 13:50

Added more here