Q3 Trading Statement

Lancashire Holdings Limited (“Lancashire” or “the Group”) today announces its trading statement for the nine months ended 30 September 2024.

Trading statement highlights

Gross premiums written increased by 9.0% year-on-year to $1.7 billion, insurance revenue increased by 16.8% year-on-year to $1.3 billion.

Net losses relating to recent weather events expected to be between $110 million to $140 million.

Total investment return of 5.0%, including unrealised gains and losses.

Special dividend of 75 cents per common share, or $180 million, following a strong operating performance year-to-date.

Guidance: ROE for the year affirmed, combined ratio expected at higher end of range.

Alex Maloney, Group Chief Executive Officer, commented:

“I am pleased to report that Lancashire is in excellent shape as we approach the final months of 2024.

Over the past few years, we have successfully made our business more resilient to withstand volatility and deliver more sustainable returns for investors. We expect to deliver in line with our ROE guidance for the year.

In terms of gross premiums written in the first nine months of 2024, Lancashire continued to grow ahead of rate increasing premiums by 9% to $1.7 billion.

The devastation caused by the recent weather events in the U.S. and other catastrophes has been tragic and our thoughts are with all those affected. Instances like these show the value of (re)insurance products in supporting communities to help them rebuild after major catastrophe events.

In the year-to-date, the industry has seen an elevated catastrophe and risk loss environment, but we still expect our undiscounted combined ratio to be at the higher end of our range for the full year. This is testament to our diversification strategy, and the quality of the business we have written. Our estimated ultimate net losses incurred in relation to recent weather events including hurricanes Milton, which occurred in the fourth quarter, Helene, Debby and storm Boris, and the Calgary hailstorms, are expected to be in the range of $110 million to $140 million.

Our strong underwriting results during the period have continued to be supported by our growing investment portfolio, which has now reached $3.2 billion, and has delivered a healthy return of 5% for the year to date.

Following our strong operating performance, I am pleased to announce the approval of a special dividend of 75 cents per share, which will result in an aggregate payment of approximately $180 million. We continue to hold an extremely robust capital position to underwrite the growth opportunities we expect to see in 2025.

Lancashire’s long-term strategy has always been to actively manage the market cycle and deliver strong profitability by taking advantage of opportunities in positive underwriting conditions. We will continue to do that during the remainder of 2024 and into 2025. We have talented and fully-committed teams across our Group and our strong balance sheet and capital base give us added confidence in our ability to drive the business forward.

I would like to thank all my colleagues at Lancashire for their hard work so far this year and all our stakeholders for their continued support.”

Business update

Gross premiums written and insurance revenue

Nine months ended

Gross premiums written

Gross premiums written increased by $140.1 million, or 9.0%, in the first nine months of 2024 compared to the same period in 2023. The most significant driver of growth in the reinsurance segment was new business in the property reinsurance and specialty reinsurance classes. The property insurance portfolio was the main driver of growth within the insurance segment with new business coming through from the Lancashire U.S. and Lancashire Australia distribution channels.

Insurance revenue

Insurance revenue increased by $186.8 million, or 16.8%, in the first nine months of 2024 compared to the same period in 2023. Growth was more significant for insurance revenue than for gross premiums written due to the recognition of earnings coming through from prior years.

Loss environment

During an active third quarter for catastrophe loss events, the Group had exposure to losses in respect of hurricanes Helene and Debby, the Calgary hailstorm, and storm Boris. These events were then followed by hurricane Milton in October. The estimated ultimate net losses incurred in respect of all these weather events (undiscounted, including reinstatement premiums) is expected to be within the range of $110 million to $140 million. Loss information after these types of events can take some time to emerge. As additional information becomes available, the Group’s actual ultimate net losses may vary, perhaps materially, from current estimates.

During the first nine months of 2024, the Group also experienced net losses (undiscounted, including reinstatement premiums) from large risk events totaling $72.8 million. None of these were individually material for the Group, with the MV Dali Baltimore bridge collision loss being the most significant.

Investments

The Group’s investment portfolio, including unrealised gains and losses, returned 5.0% for the first nine months of 2024. The positive returns were driven by investment income as our portfolio benefited from higher yields in conjunction with higher prices from falling treasury rates and modest tightening of investment grade credit spreads. Additionally, our bank loans and private investment funds had strong returns.

Dividends

Lancashire’s Board of Directors has declared a special dividend of 75 cents per common share (approximately 58 pence per common share at the current exchange rate), which will result in an aggregate payment of approximately $180 million. The dividend will be paid in Pounds Sterling on 13 December 2024 (the “Dividend Payment Date”) to shareholders of record on 15 November 2024 (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.

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 Wednesday 6 November 2024. 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.

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