Lancashire’s H1’24 GPW hits $1.3bn with strong reinsurance performance

Bermuda-based Lancashire Holdings Limited has reported that gross premiums written (GPW) increased by $98.2 million, or 8.3% year-on-year to approximately $1.3 billion for the first half of 2024, split $734 million reinsurance and $547 million insurance.

In the company’s reinsurance segment, GPW increased by $76.6 million, or 11.6% for the first six months of the year, driven by strong growth in both the property and specialty lines of business.

For the insurance segment, GPW in H1 2024 increased by $21.6 million, or 4.1% and is attributed to new business within the property segment. Lancashire explains that this growth encompasses business written through both Lancashire U.S. and Lancashire Australia distribution channels, and the continued growth in the property construction class.

Lancashire’s insurance revenue growth was more substantial than GPW growth in the period as the firm continued to benefit from earnings coming through from prior underwriting years. Insurance revenue increased by $133.2 million, or 18.5% for H1 2024 to $854.1 million, split $407.6 million reinsurance and $446.5 million insurance.

Gross premiums earned, a major driver of insurance revenue, as a percentage of GPW was 76.9% for H1 2024 compared to 69.8% last year.

During the first six months of 2024, Lancashire recorded net losses, undiscounted, including reinstatement premiums, from large loss events of $45.5 million. However, the firm states that none of these events were individually material, with the MV Dali Baltimore bridge collision loss being the most significant. In comparison, in H1 2023, the firm experienced net losses from catastrophe and large loss events of $49.5 million.

Additionally, favourable prior accident year loss development, including reinstatement premiums and expense provisions, was $52 million for H1 2024, due primarily to a better attritional loss experience in the 2023 accident year, along with catastrophe event reserve releases, most notably on the 2021 accident year.

The insurance service result increased from $188.8 million in H1 2023 to $222.8 million in H1 2024, split $152 million reinsurance and $70.8 million insurance, with the stronger reinsurance performance more than offsetting a dip in insurance.

Lancashire’s net insurance ratio moved from 62.8% in H1 2023 to 65.2% in H1 2024, as the combined ratio remained robust at 73% compared with 71.4% last year.

Taking a look at investments, the total return, including realised and unrealised gains and losses, was 2.3% for H1 2024, driven by investment income as the portfolio continued to benefit from higher yields on a growing portfolio. Lancashire achieved a net investment return of $75.2 million for H1 2024, so up on last year’s $63.2 million.

All in all, the firm’s profit after tax hit $200.8 million for the first half of 2024, an improvement of 26% on the prior year’s $159.2 million.

Alex Maloney, Group Chief Executive Officer, commented: “Lancashire has delivered its best ever half-year performance in the first six months of 2024. This outstanding result demonstrates the continued success of our long-term strategy to manage the market cycle and further strengthen our business through diversification. We have continued to take advantage of favourable market conditions while holding true to our principles of disciplined underwriting and optimised capital allocation.

“For the first six months of the year, we continued to grow ahead of rate with gross premiums written increasing 8.3% year-on-year and insurance revenue increasing 18.5% to $854.1 million. We have also reported a combined ratio of 73.0% or 82.2% on an undiscounted basis.”

He continued, “We have continued to see rates remain positive across our product suite with a Group RPI for the period of 102%. Our strategic focus has always been to adapt to the market cycle and grow the business when the environment is right, while actively managing our capital to support those underwriting opportunities. This includes our new U.S. operation, which has made a fantastic start with an extremely strong team across our underwriting and support functions.

“The loss environment in the first half of 2024 was relatively active for the industry with significant insured market events including the MV Dali Baltimore bridge collision disaster. None of these events were individually material for the Group and we delivered a strong underwriting performance.”

“Our results have also been supported by our growing investment portfolio, which is now approaching $3 billion in size. We have continued to benefit from the higher yield environment with positive net returns of 2.3% or $75.2 million. With our strong balance sheet and capital base, we remain in excellent health going into the second half of the year.”

Further adding: “Based on our strong performance in the first six months of the year, we are well on track to deliver on our full year guidance for an average loss year undiscounted combined ratio in the mid-80% range, and an RoE, as measured by change in diluted book value per share, of around 20%.

“In March, we announced a change to our regular final and interim dividend policy to increase returns to our shareholders. For the first half of 2024, the Board has declared an ordinary interim dividend of 7.5 cents per common share consistent with this policy.

“Across Lancashire we have committed people who are the foundation of our strong, positive culture and commercial success. We place value on maintaining our distinct ways of working and collaborative approach, which make us an extremely attractive employer that is able to recruit and retain the very best talent in the sector. We also continue to support the important work of the Lancashire Foundation and, due to the strong operational performance of the Group in 2023, the Board has approved the maximum level of funding to aid its charitable work this year.

“As we head into the remainder of 2024, building on this record half-year performance, we look with confidence to 2025 and beyond. I would like to thank everyone at Lancashire for their hard work, and our clients, brokers and shareholders for their support.”

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