Lancashire Holdings Limited · LSE:LRE
Lancashire — H1 2021 Earnings Presentation
17 slides from Lancashire's earnings presentation, July 2021
Slide 1: Investor Presentation H1 2021 Update
Investor Presentation H1 2021 Update www.lancashiregroup.com
Slide 2: Safe harbor statements
Safe harbor statements NOTE REGARDING FORWARD-LOOKING STATEMENTS: CERTAIN STATEMENTS AND INDICATIVE PROJECTIONS (WHICH MAY INCLUDE MODELLED LOSS SCENARIOS) MADE IN THIS PRESENTATION OR OTHERWISE THAT ARE NOT BASED ON CURRENT OR HISTORICAL FACTS ARE FORWARD-LOOKING IN NATURE INCLUDING, WITHOUT LIMITA
Slide 3: H1 2021 highlights
H1 2021 highlights • Strongest H1 for gross premium written since inception • GPW of $697.2 million in H1 2021, 40.7% growth versus H1 2020. • Rate increases remain strong, with RPI of 111%. • Strong underwriting performance despite Winter Storm Uri losses • Combined ratio of 80.7% and underwriting
Slide 4: Strong premium growth in H1 2021
Strong premium growth in H1 2021 Gross premiums written ($m) and cumulative RPI for the half year 2017 to 2021 Total Property and casualty insurance Property and casualty reinsurance $800 150% $120 150% $400 150% $700 140% $350 $100 140% $600 140% 130% $300 $80 130% $500 130% $250 $400 120% $60 120%
Slide 5: H1 2021 income statement
H1 2021 income statement Twelve Six months Six months months 2021 2020 2020 $m $m $m Gross premiums written 697.2 495.5 814.1 Outwards reinsurance premiums (269.3) (213.0) (294.7) Net premiums written 427.9 282.5 519.4 Net premiums earned 315.3 230.8 475.8 Insurance losses and loss adjustment expens
Slide 6: H1 2021 loss environment
H1 2021 loss environment • Net Loss ratio of 38.4% for the first half of 2021. • Winter Storm Uri losses of $44.8 million (net of reinsurance and reinstatement premium). • No material change to our estimated COVID-19 related losses. • Prior year favourable development of $53.6 million (see table). A
Slide 7: BSCR Coverage ratio development
BSCR Coverage ratio development • The Q1 2021 coverage ratio of 254% incorporates additional regulatory capital from the Q1 debt issuance. We retain meaningful regulatory headroom to fund further growth. • The stress scenario incorporates a net loss cat event – representative of our 1 in 100 GoM PML
Slide 8: Investments: conservative portfolio structure – quality
Investments: conservative portfolio structure – quality Asset Allocation Credit Quality total investment portfolio fixed maturities and managed cash Corporate and other loans 5% Alternative investments Cash and short term 9% 24% AA, 35% A, 27% Structured products 9% Duration 1.8 years Sovereign 17%
Slide 9: Outlook - positioned for growth
Outlook - positioned for growth • Our core strategy has not changed – navigate the insurance cycle, manage the business for the long term, ignore the herd and be bold when we see true opportunity. • After years of soft market conditions corrective action has led to multi-year rate hardening across t
Slide 10: Appendix
APPENDIX www.lancashiregroup.com
Slide 11: Changing business mix drives changes in the attritional loss ratio
Changing business mix drives changes in the attritional loss ratio • When Lancashire began writing business in 2005/6 around 80% of our premiums related to low attrition/high volatility risk exposure. • As we integrated Lancashire Syndicates from 2014, the low attrition/high volatility exposure prem
Slide 12: Business mix benefits
Business mix benefits • The relative loss ratio split between attritional/large/catastrophe varies by business line. • More attritional business generally has a lower capital requirement. The underlying combined ratio may be higher than catastrophe business, but the return on capital is positive and
Slide 13: Claims inflation is not a major concern for Lancashire
Claims inflation is not a major concern for Lancashire • We write a predominantly short-tail book, with the bulk of our policies renewing every year. • Policies renew through the year, not just on January 1st. • Clients provide regularly updated schedules of insured values where required. • Catastro
Slide 14: Our approach to capital
Our approach to capital • Two of our three long-stated strategic priorities relate to capital: Effectively Balance Risk and Return and Operate Nimbly Through the Cycle • We have a track record of active capital management, returning or raising capital where appropriate given expected underwriting re
Slide 15: Maintaining a strong capital position
Maintaining a strong capital position • We maintain a conservative capital position such that we can withstand a significant catastrophe event and still retain our ratings and regulatory solvency position. • Our key capital driver is the AM Best ‘cat stress’ model, which is more penal than the publi
Slide 16: ESG - a central part of our strategy since inception
ESG - a central part of our strategy since inception Environmental & Social Environmental • Societal resilience through the • Monitoring and management of provision of insurance products catastrophe exposures to aid recovery from natural • Low carbon emissions per employee catastrophe and man-made •
Slide 17: 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 Telephone: +44 (0) 20 7264 4066 Email: Tom.Blackwell@fticonsulting.com Fax: +44 (