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Prices & Quotes - UK Markets - Lancashire Holdings Limited (LRE)

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Share Price:
Down 637.00p
Change Today:
-2.50p
Market Cap:
1,544.79m
Sector:
Insurance (non-life)

Lancashire swings to loss after increased Covid-19 loss estimate

By Josh White

Date: Wednesday 29 Jul 2020

LONDON (ShareCast) - (Sharecast News) - Lancashire Holdings reported a "resilient" business model in its first half on Wednesday, despite the global disruption caused by Covid-19, as gross premiums written increased 15.3% year-on-year to $495.5m (382.23m), although it did swing to a loss before tax of $23m.
The London-listed, Bermuda-domiciled insurance company said that was ahead of rate for the six months ended 30 June, with its group renewal price index standing at 111%.

It said it saw "strong" underlying underwriting performance, with a combined ratio of 88.9% absent the Covid-19 loss estimate, or 106.9% including Covid-19.

Net premiums written rose to $282.5m, from $222.6m year-on-year, although the company's underwriting income slid to $39.4m from $79.4m.

Lancashire swung to a loss before tax of $23m, from profits of $40.5m a year ago, while its comprehensive loss for the period was $14.7m, compared to income of $68.7m in the first half of 2019.

The firm said investments "rebounded" in the second quarter, resulting in a total net investment return of 1.3% for the six month period, down from 3.2%.

Its net loss ratio rose to 57.4% from 34.5%, and its combined ratio for the first half was 106.9%, rising from 86.6% a year prior.

The board declared an interim dividend of five US cents per common share.

"In the face of the challenges generated by the Covid-19 pandemic to both sides of the balance sheet, there has been a retrenchment in (re)insurance market risk capital and capacity," said chief executive officer Alex Maloney.

"In the year to 30 June, we have witnessed double-digit percentage rate increases in many of our lines of business and accelerated rating dislocation in the catastrophe exposed reinsurance lines, resulting in rises in the range of 20% to 30% for 1 June renewals in Florida.

"I believe that the economic fundamentals now dictate that this pricing trend is likely to strengthen throughout 2020 and into 2021 across a number of our business lines, and that current market conditions present an attractive opportunity for growth consistent with our strategy of deploying capital in line with the insurance market cycle."

Maloney said the company was "pleased" to have executed a successful equity capital raise on 10 June, which would allow Lancashire to deploy capital to take advantage of the growth opportunities presented by an improving pricing environment.

"The effects of Covid-19 as a loss event to the insurance and reinsurance markets remain both ongoing and uncertain.

"For Lancashire, the current estimated impact of the Covid-19 loss event has been assessed consistent with our usual internal processes for deriving ultimate loss estimates, albeit that there is higher uncertainty with this event."

During the second quarter, the company increased its Covid-19 loss estimate to around $42m, from $35m, net of reinsurance and reinstatement premiums.

"As noted in the our first quarter trading statement, Lancashire does not write the following lines of business - travel insurance, trade credit, accident and health, directors' and officers' liability, medical malpractice, and long-term life," Maloney noted.

"The group also has minimal exposure to mortgage business and is exposed to a small number of event cancellation contracts."

Alex Maloney said that, in the "rapidly changing" market, Lancashrie was seeing "attractive opportunities" to develop many of its existing lines of business, and to establish new ones.

"Our business is well positioned to grow our underwriting portfolio and to develop opportunities to improve the risk adjusted returns for our business and our investors."

At 0904 BST, shares in Lancashire Holdings were down 5.06% at 770p.

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

 

LRE Market Data

Currency UK Pounds
Price 637.00p
Change Today -2.50p
52 Week High 850.00p
52 Week Low 528.00p
Volume 399,095
Shares Issued 242.51m
Market Cap 1,544.79m

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What The Brokers Say

Strong Buy 8
Buy 1
Neutral 4
Sell 0
Strong Sell 0
Total 13
buy
Broker recommendations should not be taken as investment advice, and are provided by the authorised brokers listed on this page.

LRE Dividends

  Latest Previous
  Interim Final
Ex-Div 13-Aug-20 07-May-20
Paid 11-Sep-20 05-Jun-20
Amount 5.00¢ 10.00¢

Trades for 28-Oct-2020

Time Volume / Share Price
16:56 51,630 @ 643.82p
16:37 276 @ 637.00p
16:35 226,100 @ 637.00p
16:29 2 @ 637.50p
16:29 11 @ 637.50p

LRE Key Personnel

CEO Alex Maloney
CFO Natalie Kershaw