Lancashire Holdings Limited · LSE:LRE
Lancashire — Debt Investor Presentation (March 2021)
26 slides from Lancashire's debt investor presentation, March 2021
Slide 1: Debt Investor Presentation
Debt Investor Presentation www.lancashiregroup.com March 2021
Slide 2: Safe harbour statements
Safe harbour statements IMPORTANT: You must read the following before continuing. This document (the “Presentation”) has been prepared by Lancashire Holdings Limited (the “Issuer”) solely for information purposes and for use in presentations of the business and financial data of the Company. For the
Slide 3: Overview of Lancashire Group
Overview of Lancashire Group
Slide 4: Lancashire: Management team
Lancashire: Management team Alex Maloney – Group Chief Executive Officer Paul Gregory – Group Chief Underwriting Officer Alex joined Lancashire in December 2005 and was appointed Group Chief Paul joined Lancashire in May 2007 as a member of the underwriting team and Executive Officer in April 2014.
Slide 5: Organisational Overview of the Group
Organisational Overview of the Group Baa2 / BBB / bbb+ • U.S.$130 million 5.70% Issuing Senior Notes due 2022 LancashireHoldings Limited Entity • U.S.$97 million Subordinated % Voting Rights and % Notes due 2035 (issued via Ownership are the same Trust) • EUR24 million Subordinated Notes due 2035 93
Slide 6: Key Credit Highlights
Key Credit Highlights: • Underwriting comes first, whatever the market environment Underwriting • Has helped us deliver a market-leading track record, with better combined ratios over 3 years (4.6 pts Comes First outperformance) 5 years (2.3 pts outperformance) and 10 years (16.4 pts outperformance)
Slide 7: Business Profile & Financial Performance
Business Profile & Financial Performance
Slide 8: Lancashire is a global specialty P&C [Re]insurer
Lancashire is a global specialty P&C [Re]insurer Active portfolio construction and risk management will continue to support our performance irrespective of market conditions Our business model centres around our “Underwriting Energy comes first” principle: 18% Property 1. We aim to maximise risk-adj
Slide 9: Overview of Lancashire: Our recent history
Overview of Lancashire: Our recent history Key Financial Metrics 2013-2020 2013 2014 2015 2016 2017 2018 2019 2020 Gross premium written ($m) 680 908 641 634 592 639 707 814 Combined ratio 70.2% 68.7% 72.1% 76.5% 124.9% 92.2% 80.9% 107.8% Change in FCBVS 18.9% 14.7% 13.5% 13.5% -5.9% 2.4% 14.1% 10.2
Slide 10: COVID-19 Update
COVID-19 Update Operational resiliency. Since March 2020, The Lloyd’s, London and international insurance markets have effectively moved to a model of remote trading. We continue to work with our brokers and clients to deliver our insurance and reinsurance products in all our areas of specialism alo
Slide 11: Delivering better returns, even in heavier loss years
Delivering better returns, even in heavier loss years Combined Ratio (1) (2) • Delivering strong combined ratios in specialty insurance lines demonstrates Lancashire’s continued profitability in these lines of business 1. 10 year average based on 2011 to 2020 reporting periods. Annual sector ratios
Slide 12: Reserve adequacy - consistent favourable reserve development
Reserve adequacy - consistent favourable reserve development Favourable Reserve Development 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2008 and 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 prior Accident Year (1) • Reserving record has demonstrated consistent overall prior year release
Slide 13: Robust risk management process
Robust risk management process • Daily Underwriting and Marketing Conference Call for the Lancashire Insurance companies allows for better risk selection and portfolio construction. • Risk and Return Committee helps ensure active management of exposures by taking a strategic overview of risk and por
Slide 14: Our long-term performance is one of the most consistent in our peer group
Our long-term performance is one of the most consistent in our peer group (1) (1) Peer group as defined by the Board. Annual change in FCBVS calculated as the internal rate of return of the change in FCBVS in the period plus dividends accrued. For Arch, Argo, Beazley, Everest, Hanover and Ren Re bas
Slide 15: Outlook – positioned for growth
Outlook – positioned for growth • Market changes in risk perception are leading to stronger pricing momentum in our core lines of business. Over the past 12-24 months, actions taken by some of our peers to re-trench, as well as rating agency and regulatory pressure on the insurance industry to impro
Slide 16: Capital Structure Overview
ings Limited Capital Structure Overview
Slide 17: Ratings, Liquidity, and Capitalization
Ratings, Liquidity, and Capitalization Capitalization Table YE20 Adjustment Pro-Forma ECR Ratio = 225% as of YE19 (2) U.S.$97 million Subordinated Notes $97.0 ($97.0) — Recent Developments: EUR24 million Subordinated Notes $29.5 ($29.5) — • Equity raise of $340.3mm. EUR12 million Subordinated Notes
Slide 18: Capital deployment
Capital deployment AM Best capital adequacy ratios (insurance industry) (1) Regulatory Capital 2019 2019 2018 2018 Requirements $m % $m % Total statutory economic 1,116.8 - 959.5 - capital and surplus (2) Minimum margin of solvency 138.0 809% 124.7 770% Enhanced capital requirement 495.9 225% 435.9
Slide 19: Financial flexibility – capital tools
Financial flexibility – capital tools Equity raise • LHL’s shares were initially admitted to trading on AIM(1) in December 2005. Moved to the main LSE market in 2009; and the shares have been included in the FTSE 250 Index since 22 June 2009. • Our LSE listing provides easier and quicker access for
Slide 20: Investment Portfolio
Holdings Limited Investment Portfolio
Slide 21: Conservative portfolio structure – quality
Conservative portfolio structure – quality Asset allocation Credit quality Total investment portfolio as at 31 December 2020 Fixed maturities and managed cash as at 31 December 2020 Private Non agency investment Cash and short BB or below, structured funds, 5% term securities, 6% products, 7% 13% Ot
Slide 22: Investment Mix — Fixed Maturity Securities
Investment Mix — Fixed Maturity Securities Core1 Core plus1 Surplus2 Total As at 31 December 2020 % % % % • Short-term investments 2% 3% 0% 5% • Fixed maturity funds 1% — — 1% • U.S. treasuries 8% 9% 1% 17% • Other government bonds 1% 1% 2% 4% • U.S. municipal bonds 0% 0% 0% 1% • U.S. government age
Slide 23: Appendix
ings Limited Appendix
Slide 24: Consolidated balance sheet
Consolidated balance sheet 2020 2019 Consolidated balance sheet as at 31 December 2020 $m $m ASSETS Cash and cash equivalents 432.4 320.4 Accrued interest receivable 8.0 7.2 Investments 1,856.0 1,525.1 Inwards premiums receivable from insureds and cedants 371.9 350.5 Reinsurance assets • unearned pr
Slide 25: Consolidated statement of comprehensive income
Consolidated statement of comprehensive income 2020 2019 Consolidated statement of comprehensive income for the year ended 31 December 2020 $m $m Gross premiums written 814.1 706.7 Outwards reinsurance premiums (294.7) (282.0) Net premiums written 519.4 424.7 Change in unearned premiums (51.5) (35.8
Slide 26: For more information:
For more information: Investor Relations Media Contacts Jelena Bjelanovic FTI Consulting Lancashire Holdings Limited 200 Aldersgate, 29th Floor, Aldersgate Street, 20 Fenchurch Street, London, EC1A 4HD London, EC3M 3BY Email: Tom.Blackwell@fticonsulting.com Telephone: +44 (0) 20 7264 4066 Fax: +44 (
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