Q3 Trading Statement

Lancashire Holdings Limited (“Lancashire” or “the Group”) today announces its trading statement for the nine months ended 30 September 2023.

Trading statement highlights

Gross premiums written increased by 23.2% year-on-year to $1.6 billion.

IFRS 17 insurance revenue increased by 22.1% year-on-year to $1.1 billion.

Group Renewal Price Index (RPI) of 117%.

Total net investment return, including unrealised gains and losses, of 2.8%.

Capital return of up to $169 million ($119 million in special dividend and up to $50 million in buy-backs of Lancashire’s Common Shares) following strong operating performance year-to-date.

Alex Maloney, Group Chief Executive Officer, commented:

“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.”

Business update

Gross premiums written and IFRS 17 insurance revenue

Nine months ended

Gross premiums written

Gross premiums written increased by $294.2 million or 23.2% in the first nine months of 2023 compared to the same period in 2022. The Group’s two segments, and the key market factors impacting them, are discussed below.

Reinsurance segment

The build out of our casualty reinsurance lines continued to be the most significant contributor to growth in the reinsurance segment. Our specialty reinsurance class also continued to add new business in a positive rating environment, with the property reinsurance class also benefiting from significant rate increases. Overall the RPI was 123% for the segment.

Insurance segment

The growth in the insurance segment is primarily driven by property insurance, with significant rate increases in the property direct and facultative class and the continued build out of the property construction book of business. In specialty insurance more premium was written in the political risk class, and energy and marine continued to grow across our underwriting platforms taking advantage of positive market conditions across most classes. Aviation insurance benefited from exceptionally strong RPIs, albeit the major renewal period is in the fourth quarter. Overall the RPI was 112% for the segment.

IFRS 17 insurance revenue

Insurance revenue is a new measure introduced by IFRS 17 and is comparable to IFRS 4 gross premiums earned less inwards reinstatement premium and is net of commission costs. Insurance revenue increased by $200.9 million or 22.1%, in the first nine months of 2023 compared to the same period in 2022. The market factors driving the increase in gross premiums written also drove the increase in insurance revenue.

Loss environment

The first nine months of 2023 has seen natural catastrophe loss activity across a number of events including U.S. wind and convective storms, the Hawaiian wildfires, the Turkey earthquake, hurricane Idalia, and cyclones and flooding in New Zealand. We also incurred some risk losses, particularly in our energy classes. These losses were not individually material.

Investments

The Group’s investment portfolio, including unrealised gains and losses, returned 2.8% for the first nine months of 2023. The positive returns were driven by $79.6 million of investment income as our portfolio benefited from higher yields.

The Group’s investment portfolio, including unrealised gains and losses, returned negative 5.0% for the first nine months of 2022. The majority of the losses were driven by significant increases in treasury rates.

Dividends

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. The dividend will be paid in Pounds Sterling on 15 December 2023 (the “Dividend Payment Date”) to shareholders of record on 17 November 2023 (the “Record Date”) using the £ / $ spot market exchange rate at 12 noon London time on the Record Date. Shareholders interested in participating in the dividend reinvestment plan (“DRIP”), or other services including international payment, are encouraged to contact the Group’s registrars, Link Asset Services, for more details.

Intention to purchase own shares

At Lancashire’s Annual General Meeting held on 26 April 2023, Lancashire’s shareholders granted a general authority for Lancashire to make market purchases of up to 24,401,000 of its own common shares of $0.50 each

(“Common Shares”). Pursuant to and in accordance with that authority, Lancashire intends to purchase its own Common Shares within certain parameters at an aggregate price not exceeding $50 million. 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 Bermuda time / 8:00am EST on Thursday 9 November 2023. 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.

Please register to obtain your personal audio conference pin and call details.

Please use this link to register and access the call via webcast.

Investor Day 2023

Lancashire will be holding an Investor Day on 14 November 2023 at 20 Fenchurch Street, London. For further information please contact jelena.bjelanovic@lancashiregroup.com.