Lancashire Share Discussion Threads

[csalvage] 29/4/2024 13:00

Barclays raises Lancashire price target to 790 (770) pence - 'equal weight'

[cwa1] 29/4/2024 09:56

Not a lot of chat on here, so here's this weekend's MoS Midas buy tip whilst we wait for Thursday's trading update:-

MIDAS SHARE TIPS: Premium income doubles and profits rise eight-fold as insurer Lancashire has disaster covered
By JOANNE HART
UPDATED: 04:25 EDT, 28 April 2024
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The collapse of Baltimore's Francis Scott Key Bridge was both horrific and deadly. Innocent people were killed, disruption persists and the repercussions spread far and wide.
Little more than a month after the disaster, the blame game has begun. City officials say the container ship that ploughed into the bridge outside Baltimore port was not seaworthy, and its crew were incompetent.
The shipowners have invoked a law dating from before the US Civil War to try to limit their liability. The FBI has launched its own investigation and transport regulators are heavily involved as well.
It is an unholy mess, the cost of which will almost certainly run into billions. For insurer Lancashire however, an event such as this is almost business as usual. The company specialises in complex underwriting – providing cover against disasters from storms and earthquakes to oil spills and plane crashes.
Formed in the wake of Hurricane Katrina in 2005, Lancashire has become a leading player in its field, operating out of Lloyd's of London and Bermuda, with offices in America and Australia too.
The shares are £5.86 and should increase in value, as Lancashire is highly profitable and should continue in that vein.
Horror toll: Calamities like the Baltimore bridge collapse are underwritten by leading insurers such as Lancashire +1
Horror toll: Calamities like the Baltimore bridge collapse are underwritten by leading insurers such as Lancashire
Most large-scale insurance cases involve numerous underwriters and Baltimore is no exception. The ship that crashed weighed almost 120,000 tons and was carrying 4,600 containers.
Both vessel and goods will be insured, as will the bridge and surrounding infrastructure. Underwriters will have been chosen on the basis of the prices they offer and the service they provide.
Lancashire is smaller than many peers, with just 400 employees, but the group prides itself on keen pricing, smart risk management and true customer support. Chief executive Alex Maloney, 50, leads by example. Starting out in insurance at the age of 19, he has worked in the industry ever since, joining Lancashire just after it was founded in 2005 and assuming the top job ten years ago.
Large scale insurance is all conducted through brokers and knowing the right people is fundamental to success. Maloney has had plenty of time to build relationships in the places that matter and ensure his team do likewise. He has also focused on diversifying Lancashire's business so the group has more customers in a wider range of industries and is less exposed to particular sectors.
The strategy has helped Lancashire to triple premium income over the past five years, doubling the number of products it offers and creating a larger and more resilient business.
Annual results for 2023 suggest that Maloney is on the right track. Premium income rose 17 per cent to $1.9 billion (£1.5 billion), large claims fell from $329 million to $106 million and post-tax profits soared to $322 million. The final dividend rose 50 per cent to 15 cents (12p) and a special 50 cent (40.2p) dividend was declared, the second such payout in just a few months.
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Describing market conditions as the best in a decade, Maloney also announced a change in Lancashire's future dividend policy, increasing the annual ordinary dividend by 50 per cent to 22.5 cents. That is likely to be supplemented by at least one 50 cent special this year too, with payments translated into sterling for UK shareholders, even though Lancashire's results are in dollars, as the US currency dominates the complex insurance sector.
Disasters such as the Baltimore bridge collapse are likely to push marine premiums higher and climate change is raising awareness across the business community of the need for cover against storms, droughts and other weather-related events.
Rising interest rates have also boosted investment income and may continue to do so. As a dyed-in-the-wool insurance man, Maloney knows better than most that good times do not last forever but extending into different business areas should make Lancashire more resilient.
Once the company focused on energy, marine, property and aviation. Today, no line of business accounts for more than 20 per cent of total premium income and the group is involved in areas including private jet insurance, regional hotel chains in America, even equipment used by charities overseas.
Most employees own shares as well so they are motivated to deliver results.
Midas verdict: Lancashire's premium income has more than doubled and profits have risen eight-fold. Yet the shares have fallen from £8.50 to £5.86, hit by fears about turmoil in the Middle East and war in Ukraine. These seem overdone, given that Lancashire is in the business of risk and has proved its mettle over many years. Decent dividends boost the stock's appeal. Buy and hold.
Traded on: Main market Ticker: LRE Contact: lancashiregroup.com or 020 7264 4000
DIY INVESTING PLATFORMS

[cwa1] 10/4/2024 17:52

Blimey. This one is bouncing about a hell of a lot these days!

[feddie] 26/3/2024 14:33

Hopefully the Dali, the container ship that collided with a bridge in Baltimore (US) is not insured by LRE. The damage appears to be significant.

[cwa1] 21/3/2024 14:13

LOL, it's my fault! Mea culpa

[cwa1] 20/3/2024 16:27

Don't want to jinx it...but it's been quite a nice time to be a holder recently

[cwa1] 14/3/2024 08:16

Ex the special dividend of 50 cents this morning with pay day being 12/4

[cwa1] 12/3/2024 08:25

Featured in the Questor column of The Telegraph today as a strong "hold"...

This insurer proved its mettle and its special dividends are investors’ reward
Questor share tip: Lancashire navigated low interest rates and natural disasters; now it can benefit from higher premiums as rivals drop out

Russ Mould
11 March 2024 • 8:00pm
Related Topics
Insurance industry, Share tips, Natural disasters

59
It really has to be good for this Yorkshireman to extol the virtues of anything to do with Lancashire but last week’s full-year results from Lancashire Holdings, the Lloyd’s of London syndicate manager, appear to more than justify our faith in the stock since our tip in May 2021.

We have needed plenty of patience, but the shares are trading at their highest level in more than three years.

Strong price increases, higher investment returns (thanks in part to higher bond yields) and skilled underwriting in its specialist areas of insuring (and reinsuring) across aviation, property, marine and energy are all turning into healthy profits at the manager of the Lloyd’s 2010 and 3010 syndicates.

Higher claims owing to natural disasters, higher repair costs thanks to inflation and higher costs of capital are all undeniable challenges for non-life insurers (and reinsurers) such as Lancashire.

But this combination is also taking capacity out of the insurance market at a time when demand is increasing. As a result, for those players strong enough and smart enough to withstand the storm, headline insurance rates are rising, and savvy specialists such as Lancashire are achieving rapid premium growth as a result.

Gross premiums written rose by 17pc in 2023, thanks to firm pricing and what chief executive Alex Maloney termed “the best market conditions we have seen for a decade”.

Meanwhile, natural disasters in America, New Zealand and Turkey have not led to losses of any great substance relative to the company’s capital base or book of business.

In 2023 net losses from catastrophe, weather and large loss events came to just $106m, down from $329m in 2022, when Hurricane Ian alone cost the company $181m.

This is all helping to boost the “combined ratio”, a key measure of profitability for the industry. A combined ratio of less than 100pc means the insurer is in profit and a figure above it means the insurer is in loss.

Higher interest rates, and costs of capital, have not just helped Lancashire by draining away supply from the market. They have driven up bond yields and provided the FTSE 250 company with a second tailwind in the form of higher returns on its $2.5bn investment portfolio.

As a result of all these trends, profits have surged once more. After two fallow storm-and-war-tossed years, Lancashire has just made its highest profits for a decade.

Consequently, the company is increasing its cash returns to shareholders. An increase in the final dividend to $0.15 from $0.10 in 2022, an interim dividend of $0.05 and two special dividends of $0.50 apiece take the total payment for 2023 to $1.15, or around 90p, enough for a 14.2pc yield at the current share price for anyone who bags all four payments.


This marks a return to form for Lancashire, which had last paid a special dividend in 2018. But even though profits may be at a decade high, the share price is around a quarter below its record level.

Perhaps this is because the dividend has yet to return to the record highs of more than a decade ago.

Perhaps it is because investors simply do not believe the company can continue to generate the profits it is making, and dividends it is paying, at a time of ever-growing concern over war in eastern Europe and the Middle East, increased tension between the West and China, not least over Taiwan, and climate change.

Yet Lancashire proved its skill during the very tough period of 2017-22 when interest rates were zero, investment returns minimal and catastrophe losses elevated.

The company negotiated all those challenges and has begun to reap the benefits as demand rises at a time of crimped capacity, thanks to those very same fallow years.

City analysts do expect further increases in profits, thanks to the growth in gross premiums written seen in the past two to three years, while the development of Lancashire’s American business is laying a path for further expansion.

Nor should it be forgotten that Lancashire was incorporated nineteen years ago when it seemed as if the catastrophe insurance market was on its knees, in the wake of Hurricanes Katrina, Rita and Wilma.

The decision to raise $1bn in capital and start to underwrite business paid off handsomely.

The company has since declared more than 900p a share in dividends, including the final and the second special announced alongside the 2023 results, a figure that exceeds the current share price, so its long-term record stands up well.

There is still much to like about Lancashire. Hold.

Questor says: hold

Ticker: LRE

Share price at close: 634p

[cwa1] 08/3/2024 15:50

Afternoon

Taken a punt on these at 625p. Have to concede it's not my area of expertise but the recent results SEEMED solid enough to my eyes and the yield on offer with the special dividend is nearly jaw dropping. Yes, I know, it's a special "one off" dividend but it's the second "one off" special in just a few months and if they keep on throwing off cash it shouldn't be the last one. They said this about 2024:-

Lancashire is always led by the underwriting opportunity. We believe there are
significant opportunities going into 2024 and we are well capitalised to be able
to fund these through existing resources and internal earnings growth.

...so fingers crossed. Clearly it can be a volatile business but perhaps they're in a sweet spot for the short/medium term at least?

I see the combined ratio has come in just shy of where brokers had been forecasting-but possibly not enough of a concern to have knocked the share price back as far as it has been?

XD for the special is next Thursday 14/3, with the final dividend being XD on 9/5.

Looks decent value to me...so what have I missed/what's the catch?

And...FWIW...the IC view:_

Lack of disasters helps underwriting
Big dividend increase in the pipeline
“The best market conditions we have seen in a decade,” was the emphatic verdict of Lancashire Holdings (LRE) chief executive Alex Maloney after the Bermuda-based specialist reinsurer delivered a thumping rise in profits. This allowed patient shareholders to be rewarded with a second special dividend of 50¢ a share (39p), along with a projected 50 per cent rise in the annual payment as the year progresses.

LRE:LSE
Lancashire Holdings Ltd

1mth
Today change
-1.95%Price (GBP)
628.00
The company, which participates in specialist Lloyd’s syndicates, rode that market’s buoyant growth, with Lancashire’s underwriting growth of 17 per cent in written premiums to £1.93bn reflecting the strength of the underlying market conditions.

That was combined with largely negligible losses for the year – the group’s total net loss was just $106mn (£83mn) with none of these material for the company, or roughly a third of the total for 2022; a quiet hurricane season led to few large loss events and consequently helped to drive the profitability on underwriting. The results were also helped by a net 94 per cent increase in Lancashire’s income from investments, which when unrealised gains and losses are stripped out, totalled $108mn.

It should be noted that Lancashire will pay the special dividend on 12 April, with an ex-dividend date of 14 March, which is different from the annual payment date.

Broker Peel Hunt said the shares are currently valued at 1.4 times tangible net assets for 2024, with the planned launch of the US insurance business likely to boost the company’s property book. The broker values the shares at a current price/earnings ratio of 8 for this year.

It is hard to argue with the fundamentals, especially with an indicative dividend yield of 8.8 per cent, when the special dividend is included, acting as a risk premium. Buy.

Last IC view: Buy, 593p, 10 Aug 2023

[feddie] 06/3/2024 08:32

Not clear why the share price is lower this morning. Was there an expectation of a larger special dividend? Was it a disappointment that the $50m buyback was not completed? No idea.

[speedsgh] 16/11/2023 11:52

XD today for $0.50 (c.41p) special payment due on 15 Dec.

[csalvage] 16/11/2023 10:53

RBC raises Lancashire price target to 825 (800) pence - 'outperform'--

[speedsgh] 10/11/2023 13:55

special (Dec 23) - USD 0.50/c. 41p
interim (Sep 23) - USD 0.05/?.??p
---------------------------------
TOTAL FY 2022 - USD 0.15 (??.??p)
final (Jun 23) - USD 0.10/?.??p
interim (Sep 22) - USD 0.05/?.??p
---------------------------------
TOTAL FY 2021 - USD 0.15 (??.??p)
final (Jun 22) - USD 0.10/?.??p
interim (Sep 21) - USD 0.05/?.??p
---------------------------------
TOTAL FY 2020 - USD 0.15 (11.01p)
final (Jun 21) - USD 0.10/7.19p
interim (Sep 20) - USD 0.05/3.82p
---------------------------------
TOTAL FY 2019 - USD 0.15 (12.26p)
final (Jun 20) - USD 0.10/8.12p
interim (Sep 19) - USD 0.05/4.14p
---------------------------------
TOTAL FY 2018 - USD 0.35 (26.9618p)
final (Mar 19) - USD 0.10/7.68p
special (Dec 18) - USD 0.20/15.3495p
interim (Sep 18) - USD 0.05/3.9323p
---------------------------------
TOTAL FY 2017 - USD 0.15 (11.0074p)
final (Mar 18) - USD 0.10/7.1508p
interim (Sep 17) - USD 0.05/3.8566p
---------------------------------
TOTAL FY 2016 - USD 0.90 (72.1666p)
final (Mar 17) - USD 0.10/7.9634p
special (Dec 16) - USD 0.75/60.4035p
interim (Aug 16) - USD 0.05/3.7997p
---------------------------------
TOTAL FY 2015 - USD 1.10 (73.5392p)
final (Mar 16) - USD 0.10/7.1608p
special (Dec 15) - USD 0.95/63.1292p
interim (Sep 15) - USD 0.05/3.2492p
---------------------------------
TOTAL FY 2014 - USD 1.85 (120.02p)
special (Apr 15) - USD 0.50/33.8333p
final (Apr 15) - USD 0.10/6.7666p
special (Dec 14) - USD 1.20/76.4112p
interim (Sep 14) - USD 0.05/3.0135p
---------------------------------
TOTAL FY 2013 - USD 0.80 (48.91p)
TOTAL FY 2012 - USD 2.10 (134.84p)
TOTAL FY 2011 - USD 0.95 (61.06p)
TOTAL FY 2010 - USD 1.55 (97.96p)
TOTAL FY 2009 - USD 1.40 (85.36p)
TOTAL FY 2008 - NO DIVIDENDS PAID
TOTAL FY 2007 - USD 1.10 (56.22p)
special (Jan 08) - USD 1.10/56.22p

[1knocker] 09/11/2023 20:16

What a joy to see another special. It has been a while. Years ago they used to be frequent, and we were richly rewarded for holding the shares.

[speedsgh] 09/11/2023 10:43

"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."

41p / 657.5p = 6.2%

[buoycat] 09/11/2023 10:37

By my reckoning at today's market cap, a special dividend if £119 million is a payout of 8.4%!

[csalvage] 09/11/2023 08:44

Lovely special dividend

[km18] 11/8/2023 16:18

Lancashire Holdings Plc posted solid HY23 Results earlier this week. Gross premiums written increased by 26.2% to $1,184 million, insurance revenue was up to $720.9 million from $579.8m. Profit after tax reached $159.2 million up from $31m a year ago. The combined ratio dipped to 71.4% while net investment returns moved back into positive territory at +2.2%. An interim dividend of $0.05 per share was also announced. Valuation looks very attractive with forward PE ratio at 5.9x top quartile for the Insurance market. The share price has been drifting sideways for nearly a year now and lacks some positive momentum accordingly. Other than that, there is a lot to like and LRE looks well worth buying for the longer run, although there is no particular rush here...

...from WealthOracle

[harleymaxwell] 10/7/2023 10:09

nice move up . reckon further consolidation in this segment after ren re buying validus ...hard market

[buoycat] 13/6/2023 10:24

Dividend just received. Stated as an overseas dividend payment. Maybe that's the reason for the delay?

[buoycat] 13/6/2023 09:32

Thanks for heads up. I haven't received my dividend in my HL account. I've just messaged them.