Lancashire Holdings (LRE) must be hoping that 2019 does not make a hat trick, following two years of exceptional catastrophes. The good news is that as a result of these the benign claims environment is at an end, and premiums are on their way up.
Net written premiums grew by 5 per cent, and with insurance losses and loss adjustment expenses down from $538m (£417m) to $307m, the combined ratio (of claims as a percentage of premium income) swung back into profit at 92.2 per cent compared with a loss-making 124.9 per cent the previous year.
Underlying premium growth was around 20 per cent through a combination of higher rates and new business written. Most of this growth came in the last three months of 2018; aviation gross premiums for example jumped by 348 per cent and 95.3 per cent for the full-year. Much of this came from new business, helped by a new underwriting team.
While retaining a conservative stance on reserves, there remains a degree of uncertainty over the eventual ultimate losses in relation to hurricanes, earthquakes and wildfires, and it will be years before the full cost becomes known.
Analysts at Numis are forecasting EPS of 52p for the year to December 2019.
| LANCASHIRE HOLDINGS (LRE) | ||||
| ORD PRICE: | 620.5p | MARKET VALUE: | £1.25bn | |
| TOUCH: | 620.5-621.5p | 12-MONTH HIGH: | 662p | LOW: 492p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 42 | |
| NET ASSET VALUE: | 529¢ | COMBINED RATIO: | 92.2% | |
| Year to 31 Dec | Gross premiums ($m) | Pre-tax profit ($m) | Investment Income ($m) | Dividend per share (¢)* |
| 2014 | 908 | 227 | 28.6 | 15 |
| 2015 | 641 | 172 | 29.8 | 15 |
| 2016 | 634 | 150 | 29.8 | 15 |
| 2017 | 592 | -72.9 | 30.5 | 15 |
| 2018 | 639 | 33.6 | 34.7 | 35 |
| % change | +8 | - | +14 | +133 |
| Ex-div: | 21 Feb | |||
| Payment: | 27 Mar | |||
| £1=$1.289 *Excludes special dividends of 20¢ in 2018, 75¢ in 2017, 95¢ in 2015 and 170¢ in 2014 | ||||
