Following a terrible year for catastrophe losses in 2017 – with the insurance industry on the hook for more than $100bn from wildfires, earthquakes and hurricanes – the claims environment during the first half of 2018 was kinder to Lancashire Holdings (LRE). The specialist insurer avoided having to boost reserves against last year’s losses and reported an improved net loss ratio of 15.1 per cent, down from 26 per cent at the same time last year.
The combined ratio – of net claims as a proportion of net premiums – was also healthier at 67.1 per cent, compared with a less profitable 78.4 per cent in 2017. Rates also continued to harden – helping push up gross written premiums – led by the aviation and Lloyd’s divisions. The latter benefited not only from improved rates, but also new business and increased exposure to prior underwriting year risk-attaching business. However, the marine and energy segments suffered due to contract renewal timings. Gross premiums at the former declined by 45 per cent to $24m, with less pro-rata business also being written during the period.
Analysts at Peel Hunt expect adjusted earnings per share of 60.7¢ for the year to December 2018, compared with a loss of 38.6¢ in the previous year.
| LANCASHIRE HOLDINGS (LRE) | ||||
| ORD PRICE: | 551p | MARKET VALUE: | £1.11bn | |
| TOUCH: | 550.5-551.5p | 12-MONTH HIGH: | 774p | LOW: 523p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | na | |
| NET ASSET VALUE: | 573p | COMBINED RATIO: | 67.1% | |
| Half-year to 30 June | Gross premiums ($m) | Pre-tax profit ($m) | Investment income ($m) | Dividend per share (¢) |
| 2017 | 381 | 66.7 | 14.7 | 5 |
| 2018 | 393 | 74.9 | 15.9 | 5 |
| % change | +3 | +12 | +8 | |
| Ex-div: | 16 Aug | |||
| Payment: | 12 Sep | |||
| £1 = $1.32 | ||||
