Forecasts & Results

Lancashire plc has released its group result for the 2023 financial year.

Posted 06/03/2024 – Quick takes

 

Lancashire plc has released its group result for the 2023 financial year.

 

Group headline figures

2023 2022
Gross written premium $1,931.7m $1,652.3m
Insurance revenue $1,519.9m $1,226.5
Insurance service result $382.1m $141.6m
Net investment return $160.5m -$76.7m
Profit after tax $321.5m -$15.5m
Group combined ratio (undiscounted) 82.6% 98.7%

 

  • Gross written premium increased by 16.9% to $1,931.7m (2022: $1,652.3m)
  • Rates increased by +15% across the group
  • Group undiscounted combined ratio improvement of 16.1 points to 82.6% (2022: 98.7%)
  • Group Return on Equity (ROE) of 24.7%

 

Reinsurance segment headline figures

2023 2022
Gross written premium $967.5m $842.1m
Insurance revenue $714.9m $560.4m
Insurance service result $207.9m $19.4m

 

Reinsurance segment highlights

  • The increases in premium income for the division were primarily driven by new business in casualty reinsurance
  • Divisional rate increases for 2023 were +22%, up from +8% achieved in 2022
  • Property reinsurance experienced strong rate increases in 2023, however a lack of reinstatement premiums following a benign catastrophe year offset the growth

 

Insurance segment headline figures

2023 2022
Gross written premium $964.2m $810.2m
Insurance revenue $805.0m $666.1m
Insurance service result $174.2m $122.2m

 

Insurance segment highlights

  • Strong growth within the property D&F and property construction classes were the main drivers of premium income increases
  • Divisional rate increases for 2023 were +10%, up from +8% in 2022

 

Claims and reserving

  • Catastrophe losses totalled $106.1m in 2023 (2022: $329.4m) with the catastrophe claims experience being relatively benign with no single event individually material for the Group
  • $78.8m of reserves were released from prior years (2022: $134.3m) which are as a result of reductions on catastrophe events in 2022.

 

Alex Maloney, Group Chief Executive Officer, commented:

“Lancashire delivered an outstanding performance in 2023. We continued to focus on writing profitable business in the best market conditions we have seen for a decade.

Gross premiums written increased by 16.9%, and insurance revenue increased by 23.9%, during the year, due to a combination of new business and rate rises across our portfolio.

This focus on profitable growth has resulted in an excellent underwriting performance with a combined ratio (undiscounted) of 82.6%, or 74.9% on a discounted basis, with a net insurance services result of $382.1 million. Our overall profit after tax for the year was $321.5 million resulting in a change in diluted book value per share of 24.7%.

Our investment portfolio also had a strong year and benefited from higher interest rates. The portfolio returned 5.7%, resulting in a net investment return of $160.5 million.

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.”

Alpha comment

Lancashire’s significant improvement in its undiscounted combined ratio has paved way for a strong 2023 result and a good profit to shareholders. The group was able to achieve some good rate increases across the portfolio both through their insurance and reinsurance segments. The claims experience in 2023 was much improved as compared with 2022 at the slight expense of a reduction in the volume of reinstatement premium income. However, the lack of large catastrophes in 2023 has clearly had a positive impact on the underlying results. Lancashire highlighted the significant work that the group has undergone in the past five years to optimise their portfolio, including syndicate 2010, supported by third party members. The remediation work which has been undertaken should put syndicate 2010 in a strong position to deliver a meaningful profit for 2023.

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