Lancashire (LRE) Q3 2024 TU earnings summary

Executive summary

• Gross premiums written rose 9% year-over-year to $1.7 billion, with a Group Renewal Price Index (RPI) of 102%.

• Insurance revenue increased 16.8% year-over-year to $1.3 billion, driven by both reinsurance and insurance segments.

• Special dividend of $0.75 per share declared, reflecting strong operating performance and robust capital position.

• Net losses from recent catastrophe and weather events, including several hurricanes and storms, are estimated at $110–$140 million.

• Investment portfolio delivered a 5% return year-to-date, benefiting from higher rates and managed investments reaching $3.2 billion.

Financial highlights

• Reinsurance gross premiums written up 12.4% year-over-year to $941.2 million; insurance up 5.1% to $758.8 million.

• Insurance revenue growth outpaced premium growth due to recognition of prior year earnings.

• Net losses from large risk events totaled $72.8 million, with no single event being individually material.

• Book yield on investments increased to 4.8% from 3.9% year-over-year; market yield at 4.7%.

• Total investment portfolio and managed cash stood at $3,207.2 million as of 30 September 2024.

Outlook and guidance

• Full-year ROE guidance affirmed; combined ratio expected at the higher end of the target range due to elevated catastrophe losses.

• Growth anticipated in 2025, primarily from U.S. operations and organic expansion of existing teams.

• Year-on-year growth rate in 2025 likely to be lower than 2024, with more concrete guidance to be provided next quarter.

• Business remains resilient and strongly capitalised to deliver on strategy, with disciplined underwriting and portfolio optimisation.

• Sees strong opportunities for growth in late 2024 and 2025, especially in an attractive rating environment.