Forecasts & Results

Lancashire 1Q24 trading statement

Posted 02/05/2024 – Quick takes

Lancashire plc has released its trading statement for 1Q24 ending 31st March 2024.


Main highlights

  • Gross premiums written increased by 7.8% year-on-year to $631.7m (Q1 2023: $586.2m).
  • Insurance revenue increased by 24.6% year-on-year to $422.0m (Q1 2023 $338.7m).
  • Group Renewal Price Index (RPI) of 104%.
  • Total investment return, including unrealised gains and losses, of 0.9%.
  • Regulatory ECR ratio of 328% as at 31 December 2023.

 

Alex Maloney, Chief Executive Officer, said:

“Lancashire has had a very strong start to 2024, reporting a record quarter. The positive underwriting environment allowed us to grow our business further with gross premiums written increasing nearly 8% year-on-year to $631.7m. Insurance revenue increased by nearly 25% year-on-year to $422.0m. We continue to see strong opportunities for profitable growth across our portfolio with a Group RPI for the quarter of 104%. I am excited by the prospects for Lancashire as we move through 2024”.

 

The group’s headline figures for 1Q24 are as follows:

Reinsurance division

  • The main contributor to Lancashire’s reinsurance growth was property reinsurance both in terms of new business being written and positive rate increases.
  • Casualty reinsurance offset some of the growth as rates were flat and exposures reduced on some contracts.

 

Insurance division

  • Growth was mainly driven by the property insurance class as Lancashire’s new US E&S carrier began writing business and rates increased.
  • All other classes increased their volumes of new business, however exposure decreases offset the growth slightly.

 

Claims

  • Catastrophe losses were relatively benign and although the group does have some exposure to the Baltimore bridge disaster via their Marine and Specialty reinsurance writings, claims are within expectations.
  • They do not expect any changes to their undiscounted combined ratio guidance of mid-80% range.

 

Investments

  • Current book yield has increased to 4.3% but recent rate increases had a negative mark-to-market impact on the portfolio.
  • Duration has slightly increased to 1.7 years in anticipation of rate cuts in the future as well as to achieve better alignment with liabilities.

Alpha comment

This is a good set of results from Lancashire. As we expected, the rate increases for the group of +4% were a little more than our other listed syndicates (Beazley +1% and Hiscox London Market +3%) as Lancashire has a larger property portfolio. Growth has been achieved as Lancashire looks to take advantage of the increased number of new business opportunities presented. The management team sounded very bullish during the earnings call Q&A and whilst some classes are starting to see single-digit rate decreases, they do not anticipate an imminent widescale market downturn.

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