Lancashire Hld Ltd Q3 Trading Statement

 
TIDMLRE 
 
LANCASHIRE HOLDINGS LIMITED 
 
                                3 November 2022 
 
                               Hamilton, Bermuda 
 
Lancashire Holdings Limited ("Lancashire" or "the Group") today announces its 
trading statement for the nine  months ended 30 September 2022. 
 
Trading statement key points 
 
  * Gross premiums written increased by 34.3% year-on-year to $1.3 billion. 
 
  * Group Renewal Price Index (RPI) of 107%. 
 
  * Net loss estimates from hurricane Ian in the range of $160-$190 million. 
 
  * Total net investment return of negative 5.0%, primarily driven by 
    unrealised losses. 
 
  * Strong balance sheet and robust capital position. 
 
Alex Maloney, Group Chief Executive Officer, commented: 
 
"During the quarter we witnessed a number of catastrophe events and we extend 
our sympathies to the many people impacted. Insurers play a vital role in 
offering protection to vulnerable communities and we are reminded of both the 
potential destructive power of nature and the value of the risk solutions we 
offer. Our current estimate of the net impact of hurricane Ian, excluding 
inwards and outwards reinstatement premiums and Lancashire Capital Management, 
is within the range of $160 million to $190 million. This is within our 
expectations for an event of this type. 
 
During 2022, Lancashire has continued to grow and diversify its underwriting 
portfolio and deliver on its underwriting strategy. This has been fuelled by 
solid rate increases and strong market conditions which has given us additional 
resilience. 
 
Gross premiums written increased by 34.3% year-on-year to $1.3 billion. 
 
We expect the broader positive conditions to continue into 2023 and our 
strategy is to take advantage of attractive market opportunities. We believe we 
could see significant increases in rates and improving terms and conditions due 
to recent events and the fact that capacity had already been tightened in the 
wider market. 
 
Clearly the macro-economic outlook is increasingly uncertain with significant 
increases in interest rates, higher inflation, and broader dislocation in 
global markets and we expect this volatility to continue. Lancashire reported a 
total net investment return of negative 5%, primarily driven by unrealised 
losses. Future earnings in our portfolio should be bolstered by the higher 
interest rate environment, which we should benefit from relatively quickly 
given the short duration of our portfolio. 
 
We believe we are well-placed to manage inflationary pressures and have 
competence in dealing with previous inflationary and deflationary changes 
within a number of our product lines. Inflation will also present further 
opportunities for us as clients seek to purchase additional cover. 
 
Even allowing for the impact of hurricane Ian, and unrealised investment 
losses, our capital position remains strong and we will drive forward with our 
growth strategy and capitalise on the strong rate environment through our 
diversified product portfolio. 
 
As always, my thanks go to all our colleagues for their hard work and to our 
brokers, clients and shareholders for their support." 
 
Business update 
 
Gross premiums written 
 
                                                  Nine months ended 
 
                             30 September   30 September           Change           Change           RPI 
                                     2022           2021 
 
                                       $m             $m               $m                %             % 
 
Property and casualty 
reinsurance                         739.3          503.4            235.9             46.9           108 
 
Property and casualty 
insurance                           217.8          158.4             59.4             37.5           106 
 
Aviation 
                                     93.9           92.1              1.8              2.0          111 
 
Energy 
                                    156.0          145.2             10.8              7.4           103 
 
Marine 
                                     93.1           68.6             24.5             35.7           105 
 
Total 
                                  1,300.1          967.7            332.4             34.3           107 
 
The increase in gross premiums written of 34.3% for the first nine months of 
2022, compared to the same period in 2021, was primarily due to growth in the 
property and casualty reinsurance segment. This was mainly due to new business 
in the casualty reinsurance and financial lines classes of business as well as 
the continued strong RPI for this segment of 108%, which is driven by the 
continued hardening in property reinsurance classes. 
 
In the property and casualty insurance segment the new property construction 
class of business has contributed meaningfully to the premium growth alongside 
the continued build-out of the property direct and facultative book of 
business. 
 
The gross premium written in the aviation segment remained comparable to the 
prior year, albeit the major renewal period for this segment is in the fourth 
quarter. 
 
Most of our energy classes of business grew through the addition of new 
underwriting teams and product expansion across underwriting platforms to take 
advantage of the improving market conditions. 
 
The premium increase in the marine segment was primarily driven by new business 
in the marine cargo and marine liability classes as well as additional premiums 
recognised due to exposure increases on prior years' contracts in the marine 
cargo class. 
 
Loss environment 
 
Our estimated ultimate net losses incurred in relation to hurricane Ian, 
excluding the impact of reinstatement premiums and Lancashire Capital 
Management, are in the range of $160 million to $190 million. Loss information 
after these types of catastrophe events can take some time to emerge. As 
additional information emerges, the Group's actual ultimate net losses may 
vary, perhaps materially, from current estimates. See 'Note Regarding 
Forward-Looking Statements' below. 
 
Investments 
 
                                                   30 September 2022 30 September 2021 
 
Duration                                                   1.7 years         1.9 years 
 
Credit quality                                                   AA-                A+ 
 
Book yield                                                      2.3%              1.3% 
 
Market yield                                                    4.6%              0.8% 
 
Managed investments ($m)                                    $2,291.9          $2,267.8 
 
The investment portfolio delivered a negative return of 5.0% year-to-date. The 
majority of the losses are unrealised, resulting from further significant 
interest rate hikes by the U.S. Federal Reserve. 
 
Further intention to purchase own shares 
 
During the nine months ended 30 September 2022, Lancashire repurchased 
4,589,592 of its common shares (out of a combined maximum Board-approved limit 
for share repurchases of 6,000,000 common shares). These repurchases were made 
pursuant to and in accordance with the general authority granted by 
shareholders at Lancashire's Annual General Meeting held on 27 April 2022. 
 
Pursuant to and in accordance with that same general authority, Lancashire 
intends to purchase up to a further 3,000,000 of its common shares of $0.50 
each. All repurchased shares will be used to satisfy future exercises of awards 
under Lancashire's Restricted Share Scheme. A further announcement in 
accordance with Listing Rule 12.4 will be made in due course. 
 
Analyst and Investor Conference Call 
 
There will be an analyst and investor conference call on the trading statement 
at 1:00pm UK time / 9:00am EDT on Thursday 3 November 2022. The conference call 
will be hosted by Lancashire management and a presentation will be made 
available on the Group's website prior to the call. 
 
Participant Access 
 
Dial in 5-10 minutes prior to the start time using the number / confirmation 
code below: 
 
United Kingdom - Toll free:                           08003589473 
 
United Kingdom - Local:                               [phone] 
 
United States - Toll free:                            [phone] 
 
United States - Local:                                [phone] 
 
PIN Code                                              52088920# 
 
URL for additional international dial in numbers: 
 
 
https://events-ftp.arkadin.com/ev/docs/ 
NE_W2_TF_Events_International_Access_List.pdf 
 
 
The call can also be accessed via webcast, for registration and access: 
 
https://onlinexperiences.com/Launch/QReg/ShowUUID= 
CB9829B9-858E-40F6-96C8-4AA4950AEE36 
 
 
A webcast replay facility will be available for 12 months and accessible at: 
 
https://www.lancashiregroup.com/en/investors/ 
results-reports-and-presentations.htm l 
 
For further information, please contact: 
 
Lancashire Holdings Limited 
 
Christopher Head                       [phone] 
                                       [e-mail] 
 
Jelena Bjelanovic                      [phone] 
                                       [e-mail] 
 
FTI Consulting                            [phone] 
 
Edward Berry                           [e-mail] 
 
Tom Blackwell                          [e-mail] 
 
About Lancashire 
 
Lancashire, through its UK and Bermuda-based operating subsidiaries, is a 
provider of global specialty insurance and reinsurance products. 
 
Lancashire's common shares trade on the premium segment of the Main Market of 
the London Stock Exchange under the ticker symbol LRE. Lancashire has its head 
office and registered office at Power House, 7 Par-la-Ville Road, Hamilton HM 
11, Bermuda. 
 
The Bermuda Monetary Authority is the Group Supervisor of the Lancashire Group. 
 
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 UK Market 
Abuse Regulation and other regulatory obligations. The information was 
submitted for publication, through the agency of the contact persons set out 
above, at 07:00 BST on 3 November 2022. 
 
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 ALTERNATIVE PERFORMANCE MEASURES: 
 
THE GROUP USES ALTERNATIVE PERFORMANCE MEASURES TO HELP EXPLAIN BUSINESS 
PERFORMANCE AND FINANCIAL POSITION. THESE MEASURES HAVE BEEN CALCULATED 
CONSISTENTLY WITH THOSE AS DISCLOSED IN THE GROUP'S ANNUAL REPORT AND ACCOUNTS 
FOR THE YEAR ENDED 31 DECEMBER 2021. 
 
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 UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS THAT 
COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE GROUP TO BE 
MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED 
OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. FOR A DESCRIPTION OF SOME OF 
THESE FACTORS, SEE THE GROUP'S ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 
DECEMBER 2021 AND OUR UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL 
STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2022. IN ADDITION TO THOSE FACTORS 
CONTAINED IN THE GROUP'S PRIOR RELEASES, ANY FORWARD-LOOKING STATEMENTS 
CONTAINED IN THIS RELEASE MAY BE AFFECTED BY: THE ACTUAL DEVELOPMENT OF LOSSES 
AND EXPENSES IMPACTING ESTIMATES FOR CLAIMS WHICH ARISE AS A RESULT OF 
HURRICANE IAN (WHICH OCCURRED LATE IN THE THIRD QUARTER), THE IMPACT OF THE 
ONGOING CONFLICT IN UKRAINE, INCLUDING ANY ESCALATION OR EXPANSION THEREOF, ON 
THE GROUP'S CLIENTS, RESERVES, THE CONTINUED UNCERTAINTY OF THE SITUATION IN 
RUSSIA, INCLUDING ISSUES RELATING THE IMPACT OF SANCTIONS; THE IMPACT OF 
COMPLEX AND UNIQUE CAUSATION AND COVERAGE ISSUES ASSOCIATED WITH ATTRIBUTION OF 
LOSSES RELATING TO SUCH EVENTS; POTENTIAL UNCERTAINTIES RELATING TO REINSURANCE 
RECOVERIES, REINSTATEMENT PREMIUMS AND OTHER FACTORS INHERENT IN LOSS RANGE 
ESTIMATIONS; THE PRELIMINARY NATURE OF LOSS ESTIMATES BASED ON CURRENTLY 
AVAILABLE INFORMATION DERIVED FROM MODELS, CLIENTS AND BROKERS; THE SECURITIES 
IN OUR INVESTMENT PORTFOLIO AND GLOBAL FINANCIAL MARKETS GENERALLY, AS WELL AS 
ANY GOVERNMENTAL OR REGULATORY CHANGES, ARISING THEREFROM; AND A CONTINUATION 
IN FINANCIAL MARKET VOLATILITY AND OTHER ADVERSE MARKET CONDITIONS GENERALLY. 
ALL FORWARD-LOOKING STATEMENTS IN THIS RELEASE OR OTHERWISE SPEAK ONLY AS AT 
THE DATE OF PUBLICATION. LANCASHIRE EXPRESSLY DISCLAIMS ANY OBLIGATION OR 
UNDERTAKING (SAVE AS REQUIRED TO COMPLY WITH ANY LEGAL OR REGULATORY 
OBLIGATIONS INCLUDING THE RULES OF THE LONDON STOCK EXCHANGE) TO DISSEMINATE 
ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENT TO REFLECT ANY 
CHANGES IN THE GROUP'S EXPECTATIONS OR CIRCUMSTANCES ON WHICH ANY SUCH 
STATEMENT IS BASED. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS 
ATTRIBUTABLE TO THE GROUP OR INDIVIDUALS ACTING ON BEHALF OF THE GROUP ARE 
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THIS NOTE. PROSPECTIVE INVESTORS 
SHOULD SPECIFICALLY CONSIDER THE FACTORS IDENTIFIED IN THIS RELEASE AND THE 
GROUP'S PRIOR RELEASES NOTED ABOVE WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER 
BEFORE MAKING AN INVESTMENT DECISION. 
 
 
 
END 
 
 

(END) Dow Jones Newswires

November 03, 2022 03:00 ET (07:00 GMT)