Lancashire (LRE) H2 2024 earnings summary

Executive summary

• Achieved a return on equity (ROE) of 23.4% in 2024, with strong premium growth and robust underwriting performance despite a high-loss environment.

• Profit after tax was $321.3 million for 2024, with a 23.4% increase in DBVS and a strong capital position.

• Premiums grew by 11.3% year-over-year to $2.1 billion, more than tripling since 2017 and diversifying into over 20 new subproducts.

• Maintained a disciplined approach to capital management, returning $354 million to shareholders, including special dividends, while preserving a strong balance sheet.

• Strategic focus on underwriting excellence, capital efficiency, and portfolio diversification to reduce volatility and maximize returns.

Financial highlights

• Insurance revenue increased by 16.1% year-over-year to $1.8 billion, outpacing gross premiums written due to prior years' growth.

• Investment portfolio delivered a 5% return, with net investment return of $162.2 million, driven by high yields and positive contributions from risk assets.

• Undiscounted combined ratio was 89.1% (discounted: 81%), slightly above guidance due to actuarial refinements.

• Total net losses from catastrophe and large events were $214.1 million, up from $106.1 million in 2023.

• Operating expense ratio at 8.7%, down from 9.8% in 2023.

Outlook and guidance

• 2025 guidance assumes mid-teens ROE, factoring in both 2024 loss levels and the California wildfire loss ($145–$165 million).

• Premium growth expected in the low single digits, with continued expansion in specialty reinsurance and the U.S. platform.

• Anticipates manageable rate softening in 2025, with healthy rate adequacy in most lines and potential for further growth in select areas.

• Aggregate reinsurance protection in place to manage volatility and support attractive returns even in high-loss scenarios.

• Focus remains on sustainable, lower volatility results through strong underwriting and capital management.