Shares in Lancashire (LRE) pushed up 9 per cent on the day after the insurer booked a full-year return on net tangible assets of 16 per cent, which was well in advance of consensus forecasts. The main contributors to a strong final quarter were bigger than expected reserve releases of $24m (£19m) and better investment returns following the recent uplift in bond yields.
The combined ratio - the proportion of insurance claims against income - edged up year on year along with a 29.2 per cent net loss ratio, which is the actual amount paid out. But Lancashire can still boast decent underwriting margins, notwithstanding contractions in gross premiums written in the marine and Lloyd's divisions; the latter again impacted by lower rates and pressure from market overcapacity. On the flipside, the major property and energy divisions showed good growth and there was progress on the strategic push to buy more reinsurance, as outward premiums increased from $159m to $175m.
Analysts at Numis upgraded their forecasts by 4 per cent on these results, and now expect EPS of 52.2p in 2017, rising to 53.1p the year after.
LANCASHIRE (LRE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 740p | MARKET VALUE: | £1.48bn | |
| TOUCH: | 740-741p | 12-MONTH HIGH: | 748p | LOW: 427p |
| DIVIDEND YIELD: | 2%* | PE RATIO: | 12 | |
| NET ASSET VALUE: | 604¢ | COMBINED RATIO: | 77% | |
| Year to 31 Dec | Gross premiums ($m) | Pre-tax profit ($m) | Investment income ($m) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 724 | 237 | 32.5 | 15 |
| 2013 | 680 | 218 | 25.4 | 15 |
| 2014 | 908 | 227 | 28.6 | 15 |
| 2015 | 641 | 172 | 29.8 | 15 |
| 2016 | 634 | 150 | 29.8 | 15 |
| % change | -1 | -12 | - | |
Ex-div: 23 Feb Payment: 22 Mar £1=$1.25. *Excludes special dividend of 75¢ in 2016 (95¢ in 2015; 170¢ in 2014) | ||||
