Forecasts & Results
Lancashire Q3 2023 trading statement
Posted 09/11/2023 – Quick takes
Lancashire plc has released its Q3 2023 results for the period ending 30th September 2023.
Main highlights from the statement:
- Gross written premium increased by 23% year on year to $1,560m (Q3 2022: $1,266m)
- IFRS 17 insurance revenue increased by 22% to $1,111m (Q3 2022: $910m)
- Group Renewal Price Index (RPI) of 117% (Q3 2022: 107%)
- Total net investment return of $79.6m or +2.8% (Q3 2022: -5.0%)
- Capital return of up to $169m ($119m in special dividend and up to $50m in buy-backs of Lancashire Common Shares) following strong operating performance to date
Alex Maloney, Chief Executive Officer, said:
“During the first nine months of 2023, we have continued to successfully implement our long-term strategy to manage the market cycle and deliver strong profitable growth through a portfolio of diversified products. Gross premiums written increased by 23.2% to $1.6 billion in the year to date, with rates remaining extremely attractive across our product lines. We continue to expect a positive environment into 2024, with further opportunities for Lancashire. Our investment returns have also continued to benefit from the higher interest rate environment and the short duration of our portfolio, with a total net investment return, including unrealised gains and losses, of 2.8% for the period. Capital management and balancing risk and return have for a long time been at the heart of our strategy, and we continue to hold an extremely robust capital position. Our disciplined underwriting, and successful diversification strategy, mean that we are in a position to pay out some of the capital generated to date, and still have the flexibility to fund further growth and realise our ambitions for this phase of the market cycle. Following the strong operating performance in the year-to-date, I am pleased to report that the Board has approved a capital return of up to $169 million, including $119 million in special dividend and up to $50 million in buy-backs. Our previously announced plans to expand our international footprint further through Lancashire Insurance U.S. continue, and we are pleased with the progress we are making towards an underwriting launch in early 2024. I am always impressed by the talent, hard work and dedication of our people across the Lancashire Group and I would like to thank them for their ongoing commitment to the business. I would also like to thank our clients, brokers and shareholders for their continued support.”
The group’s performance for Q3 2023 in terms of gross premiums written and IFRS 17 insurance revenue by business division are as follows:
Source Lancashire
Lancashire reported suffering claims as a result of a number of catastrophe events including Severe Convective Storms (SCS) in the US, Hawaiian wildfires, the Turkish earthquake, Hurricane Idalia and Cyclone Gabrielle but none of these losses are thought to be individually material.
Alpha comment:
Lancashire plc is achieving significant rate increases, ahead of the overall group rate increases reported by Beazley and Hiscox earlier this week due to Lancashire’s focus on property reinsurance and insurance classes. The investment return, as compared with 2022, has vastly improved and similar to their peers. It is also very encouraging that Maloney reports that Lancashire expects 2024 underwriting conditions to continue to be very favourable. Recent underwriting year results and forecasts for syndicate 2010 have been disappointing for members, with 2010 lagging behind Lancashire’s group results. Lancashire has, however, been working on improving the performance of syndicate 2010. At this stage the 2021 and 2022 years are forecasting losses, but market conditions in 2023 have strengthened such that we would expect the first forecast for the 2023 year (issued in May 2024) to be positive.
