In This Article:
-
Return on Equity (ROE): 23.4% for 2024.
-
Premium Growth: 11% increase in 2024.
-
Combined Ratio: 80% on a discounted basis, 89.1% on an undiscounted basis.
-
Dividends Returned: $294 million returned in regular and special dividends in 2024.
-
Gross Premiums Written Growth: 11.3% growth, slightly ahead of 10% guidance.
-
Rate Change: RPI of 101% for 2024.
-
Profit After Tax: $321 million, consistent with 2023.
-
Insurance Service Result: $379.9 million compared to $382 million in 2023.
-
Investment Return: 5% driven by investment income.
-
Operating Expense Ratio: 8.7%, down from 9.8% in 2023.
-
Net Losses from Catastrophes and Large Events: $214.1 million in 2024.
-
Prior Year Reserve Releases: $121.1 million in 2024.
-
Solvency Ratio: Estimated at 270%, reducing to approximately 250% post-California wildfire loss.
-
Special Dividends: $1.25 per share or $300.2 million returned in 2024, with an additional $0.25 per share announced.
Release Date: March 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Lancashire Holdings Ltd (LCSHF) achieved a remarkable ROE of 23.4% in 2024, despite a challenging year with high industry insured losses.
-
The company grew its premiums by 11% in 2024, continuing a trend of significant growth since 2017.
-
Lancashire Holdings Ltd (LCSHF) maintained a strong combined ratio of 80% on a discounted basis, demonstrating effective risk management.
-
The company successfully returned $294 million to shareholders through regular and special dividends, maintaining a strong balance sheet.
-
Lancashire Holdings Ltd (LCSHF) expanded its underwriting portfolio with over 20 new sub-products, enhancing diversification and reducing volatility.
Negative Points
-
The company anticipates a net loss of $145 million to $165 million from the LA wildfires, impacting 2025 results.
-
2025 is expected to be a costly year for insured losses, potentially affecting profitability.
-
Lancashire Holdings Ltd (LCSHF) expects marginal rate softening in 2025, which could impact premium growth.
-
The company faces increased competition and supply in the market, potentially affecting pricing dynamics.
-
The California wildfires have eroded a significant portion of the company's aggregate deductible, posing a risk for future large loss events.
Q & A Highlights
Q: How close is Lancashire Holdings to reaching its aggregate limit, and what are the implications of the California wildfires on this? A: Paul Gregory, Group Chief Underwriting Officer, explained that the California wildfires have significantly eroded the aggregate deductible. If similar loss events to those in 2024 occur, Lancashire would begin making recoveries under its aggregate protection, with limits still available. However, in extreme scenarios, the limit could be exhausted. This protection provides confidence in their guidance despite potential large losses.