Lancashire Share Discussion Threads

[pogue] 11/9/2017 08:24

looks like others had same idea as me

[jrphoenixw2] 11/9/2017 08:04

@9.01am
Vol/Average = 375,919/177,902 ie over double avg daily in the opening hour.
Px +7.4%

[pogue] 11/9/2017 07:00

Thanks bulltradept for the info still no way of quantifying it I guess so its a punt at these prices on how much exposure there is. I am thinking along the lines of buy on the rumours and sell on the news as I cant see them being that exposed.

[bulltradept] 10/9/2017 18:03

Pogue, It is exposed though as the IC states:

July 28, 2017

A lack of major claims meant that premiums continued to soften in the Lloyd’s of London market, but Lancashire (LRE) resisted the temptation to chase unprofitable business in the first half. At the same time, reinsurance remained attractively priced, and more protection for hurricane risk was bought than in previous years. And with risk levels at historic lows, if there are no major events in the coming hurricane season Lancashire expects to return capital to shareholders later in the year.

Gross property premiums written fell by 13.6 per cent, mainly because multi-year contracts in the political risk and terrorism classes are not yet due for renewal. Energy gross premiums were also down, falling by 18 per cent, while the timing on non-annual renewals helped to boost marine gross premiums by 56.7 per cent, and in the Lloyd’s section premiums fell by 12.9 per cent. Aviation premiums were down by more than a half.

The major declines came in the energy, property and terrorism books as overcapacity in the market continued to put downward pressure on rates. Net investment income fell 8.1 per cent (see table), equating to a return of 1.5 per cent.

Analysts at Numis are forecasting EPS of 52.2p for the year to December 2017, from pre-tax profit of $150m, down from 61.2p in 2016.

Hence why LRE is where it is today, I'd suggest.

[pogue] 09/9/2017 09:50

Thank you for 'teaching' me Effortless Cool though I am not sure what I have actually learned. You appear like the rest of us not to actually know what LRE is exposed to in this hurricane season neither does anyone else here know, their published company information is not very specific and their only public statement was positive but had a couple of big if's in it.

[eeza] 08/9/2017 19:46

A little more about Cat reinsurance, but may not be directly applicable to LRE.

[effortless cool] 08/9/2017 12:54

pogue,

I'm afraid that I have spent enough time trying to teach you and others on here basic insurance knowledge.

Have yourself a good weekend; it is certainly going to be an interesting one ....

[pogue] 08/9/2017 12:49

I read all the online information last night, whilst tired, but the only property insurance I remember was a figure for the whole of USA. I could not find anything specifying what they covered industrial plants for shutdowns due to hurricanes.
I still cannot see anything that justifies the large drop. If you could point out the specifics that show the reason I would be very grateful.

[effortless cool] 08/9/2017 08:41

Looking at LRE's 2016 accounts, the $156m 1-in-100 loss is actually not a PML, but an estimated loss (i.e. a best estimate). Most of their exposure seems to relate to Property Catastrophe Treaties.

[effortless cool] 08/9/2017 08:32

PML is Probable Maximum Loss. It represents a pessimistic assumption of the losses that an insurer or reinsurer would incur as a result of a specific event.

Anyone who thinks that a portfolio of predominately large commercial facultative exposures is in some way immune to loss from a cat 4 or cat 3 hurricane is deluding themselves. There is not only the property damage exposure, but also business interruption. The latter could be massive if Irma runs through the centre of Florida, as now currently forecast, and decimates the infrastructure.

LRE will also pick up excess of loss treaty exposure through Cathedral.

[jrphoenixw2] 08/9/2017 07:09

Re: ECool/1195
I'm not trying to engage in semantics but doesn't the PML reflect the value of what they insure rather than it's nature?

[jrphoenixw2] 08/9/2017 06:57

Like pogue I've yet to make a major connection on what lies at the root of LREs exposure here. The mood and chat is that they're exposed, but it's unclear [IMPO] in what way. Perhaps someone who can see it could kindly suggest where the liability lies, or if necessary how it is structured direct/re/?
To illustrate my disconnect, AFAIUI LRE insure power stations, rigs, airports, shipping fleets etc. When the Deepwater Horizon disaster unfolded I clearly saw the connections vs LRE, I'm not quite joining the dots on this hurricane yet...

re: ECool comment above. Does the reinsurance activity go beyond the kind of risks underwritten in their 'direct core book'?

[effortless cool] 07/9/2017 20:16

Their PML reflects what they insure.

[pogue] 07/9/2017 19:58

I expect ti to go down more but am struggling to see why as I said they insure large plant not houses. Large plant is designed usually to withstand these storms houses are not.

[effortless cool] 07/9/2017 18:36

pogue,

Irma could well be the biggest insurance loss ever. LRE are exposed, like all other reinsurance businesses, although perhaps more exposed proportionately than most.

As to the fall being overdone, I think you are likely to get the opportunity to add more on a down day tomorrow.

[pogue] 07/9/2017 18:28

effortless cool
what exactly are LRE exposed to insurancewise thats so bad? 11.5% of funds tells me if they were in household insurance I would be worried however they aren't its major industrial plant IIFRC plus they have a large threshold before they pay out. Too me the drop seems a bit over done.

[solarno lopez] 07/9/2017 13:24

All you have to do with this stock is buy during the hurricane and sell ahead of the next hurricane according to the chart above

[effortless cool] 07/9/2017 12:53

"Irmageddon" - superb!

[gsbmba99] 07/9/2017 12:34

This site is pretty useful if you're following Irmageddon ( ). I think one of the authors used to do forecasting for Deutsche's energy trading arm.

[effortless cool] 07/9/2017 10:51

Beazley and Hiscox will have proportionately less exposure compared to their capital base. XL Catlin is more of a worry. Also some of the big US/Bermudian reinsurers, e.g. Everest, Validus.

[solarno lopez] 07/9/2017 10:49

Thanks Gary

[garycook] 07/9/2017 10:47

Beazley,and Hiscox

[solarno lopez] 07/9/2017 10:36

Which other insurance companies are similar to Lancashire and will therfore have a taken a hit ?