Bermuda-based insurer Lancashire Holdings (LRE) delivered a solid performance last year, despite a benign claims environment that drove premiums lower. Chief executive Alex Maloney makes no secret of the fact there is currently "too much capacity in many of the reinsurance and speciality areas", which is "driving competition on both price and terms and conditions". However, with a combined ratio (of claims to premiums) of 68.7 per cent, Lancashire remains an exceptionally profitable underwriter - allowing Mr Maloney to announce a 170¢ (111p) special dividend.
The big jump in gross premiums reflects the acquisition in 2013 of underwriter Cathedral Capital, but even without this there was a decent rise in premiums written. Energy premiums fell in the fourth quarter, but still rose 14 per cent year-on-year. And despite a 23 per cent fourth-quarter fall in marine business, premiums written still rose 8 per cent for the year. The exception was the property book, where gross premiums fell 42 per cent in the fourth quarter and 21 per cent in the year -though much of this reflected the timing of contract renewals in the terrorism book.
Analysts at Numis are forecasting EPS of 61.2p and year-end net tangible assets of 418p a share (compared with 67.7p and 413p in 2013).
| LANCASHIRE HOLDINGS (LRE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 644p | MARKET VALUE: | £1.22bn | |
| TOUCH: | 643.5-644.5p | 12-MONTH HIGH: | 660p | LOW: 506p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 716¢ | COMBINED RATIO: | 68.7% | |
| Year to 31 Dec | Gross premiums ($m) | Pre-tax profit ($m) | Investment income ($m) | Dividend per share (¢)* |
|---|---|---|---|---|
| 2010 | 689 | 339 | 53.4 | 15 |
| 2011 | 632 | 219 | 43.2 | 15 |
| 2012 | 724 | 237 | 32.5 | 15 |
| 2013 | 680 | 218 | 25.4 | 15 |
| 2014 | 908 | 227 | 28.6 | 15 |
| % change | +34 | +4 | +13 | - |
Ex-div: 19 Mar Payment: 15 Apr *Excludes special dividends: 140¢ in 2010, 80¢ in 2011, 195¢ in 2012, 65¢ in 2013 and 170¢ in 2014. £1=£1.526 | ||||
