Lancashire Holdings Limited · LSE:LRE
Lancashire — Q4 2011 Earnings Presentation
25 slides from Lancashire's earnings presentation, 2012
Slide 1: Lancashire Holdings Financial Supplement Q4 2011
lancashire HOLDINGS LIMITED riting comes first ely balance tisk and return nimbly through the cycle Financial Supplement Contact: Jonathan Creagh-Coen Telephone: +44 (0) 207 264 4066 Q4 20 11 Email: jec@lancashiregroup.com
Slide 2: Note Regarding Forward-Looking Statements
NOTE REGARDING FORWARD-LOOKING STATEMENTS: CERTAIN STATEMENTS AND INDICATIVE PROJECTIONS (WHICH MAY INCLUDE MODELED LOSS SCENARIOS) MADE IN THIS RELEASE OR OTHERWISE THAT ARE NOT BASED ON CURRENT OR HISTORICAL FACTS ARE FORWARD-LOOKING IN NATURE INCLUDING WITHOUT LIMITATION, STATEMENTS CONTAINING TH
Slide 3: Table of Contents
Lancashire Holdings Limited table of contents 1. basis of presentation and non-GAAP financial measures 2. consolidated financial highlights 3. growth in fully converted book value per share plus dividends since inception 4. summary consolidated income statements 5. premiums by line of business 6. su
Slide 4: Basis of Presentation and Non-GAAP Financial Measures
Lancashire Holdings Limited basis of presentation and non-GAAP financial measures LANCASHIRE HOLDINGS LIMITED'S ("LANCASHIRE" OR "THE GROUP") AUDITED CONSOLIDATED FINANCIAL STATEMENTS ARE PREPARED IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED UNDER INTERNATIONAL FINANCIAL REPORTING STA
Slide 5: Consolidated Financial Highlights
Lancashire Holdings Limited consolidated financial highlights % change % change q4 q4 q4-11 vs. full year full year ytd-11 vs. 2011 2010 q4-10 2011 2010 ytd-10 highlights gross premiums written $ 109.6 $ 94.0 17% $ 632.3 $ 689.1 (8%) net premiums written 102.4 93.7 9% 565.1 649.9 (13%) net premiums
Slide 6: Growth in Fully Converted Book Value per Share Plus Dividends Since Inception
Lancashire Holdings Limited growth in fully converted book value per share plus dividends since inception 195% 185% growth in fully converted book value per share plus dividends 175% 165% 155% 145% 135% 125% 115% 105% 95% 85% 75% 65% 55% 45% 35% 25% 15% 5% -5% PAGE 3
Slide 7: Summary Consolidated Income Statements
Lancashire Holdings Limited summary consolidated income statements . q4 q3 q2 q1 q4 full year full year 2011 2011 2011 2011 2010 2011 2010 gross premiums written $ 109.6 $ 142.9 $ 207.9 $ 171.9 $ 94.0 $ 632.3 $ 689.1 outwards reinsurance premiums (7.2) (9.3) (16.5) (34.2) (0.3) (67.2) (39.2) net pre
Slide 8: Premiums by Line of Business
Lancashire Holdings Limited premiums by line of business q4 q3 q2 q1 q4 full year full year 2011 2011 2011 2011 2010 2011 2010 gross premiums written property cat excess of loss $ 5.6 $ 27.1 $ 16.3 $ 33.0 $ 2.2 $ 82.0 $ 98.1 terrorism 15.8 12.0 17.4 23.2 13.1 68.4 77.8 property direct and facultativ
Slide 9: Summary Consolidated Underwriting Segment Results
Lancashire Holdings Limited summary consolidated underwriting segment results twelve months ending 31 december 2011 property energy marine aviation consolidated gross premiums written $ 279.8 $ 229.0 $ 76.4 $ 47.1 $ 632.3 net premiums written 238.6 210.7 72.5 43.3 565.1 net premiums earned 256.4 195
Slide 10: Property Segment - Underwriting Statement
Lancashire Holdings Limited property segment - underwriting statement q4 q3 q2 q1 q4 full year full year 2011 2011 2011 2011 2010 2011 2010 underwriting income (loss) gross premiums written $ 49.7 $ 64.9 $ 62.9 $ 102.3 $ 36.9 $ 279.8 $ 323.6 outwards reinsurance premiums (8.4) (7.8) (12.2) (12.8) -
Slide 11: Energy Segment - Underwriting Statement
Lancashire Holdings Limited energy segment - underwriting statement q4 q3 q2 q1 q4 full year full year 2011 2011 2011 2011 2010 2011 2010 underwriting income gross premiums written $ 23.2 $ 53.7 $ 123.4 $ 28.7 $ 28.0 $ 229.0 $ 238.3 outwards reinsurance premiums 1.8 (1.5) (6.3) (12.3) (0.5) (18.3) (
Slide 12: Marine Segment - Underwriting Statement
Lancashire Holdings Limited marine segment - underwriting statement q4 q3 q2 q1 q4 full year full year 2011 2011 2011 2011 2010 2011 2010 underwriting income gross premiums written $ 18.6 $ 13.6 $ 10.9 $ 33.3 $ 6.5 $ 76.4 $ 76.4 outwards reinsurance premiums (0.6) - 3.1 (6.4) 0.2 (3.9) (0.9) net pre
Slide 13: Aviation Segment - Underwriting Statement
Lancashire Holdings Limited aviation segment - underwriting statement q4 q3 q2 q1 q4 full year full year 2011 2011 2011 2011 2010 2011 2010 underwriting income gross premiums written $ 18.1 $ 10.7 $ 10.7 $ 7.6 $ 22.6 $ 47.1 $ 50.8 outwards reinsurance premiums - - (1.1) (2.7) - (3.8) (5.5) net premi
Slide 14: Summary Consolidated Cash Flows
Lancashire Holdings Limited summary consolidated cash flows q4 q3 q2 q1 q4 full year full year cash flows 2011 2011 2011 2011 2010 2011 2010 net cash flows (used in) from operating activities $ (1.5) $ 71.6 $ 120.2 $ 67.4 $ 22.9 $ 257.7 $ 268.8 net cash flows from (used in) investing activities 103.
Slide 15: Summary Consolidated Balance Sheets
Lancashire Holdings Limited summary consolidated balance sheets 31 december 2011 30 september 2011 30 june 2011 31 march 2011 31 december 2010 assets cash and cash equivalents $ 311.8 $ 368.5 $ 448.9 $ 493.3 $ 512.5 accrued interest receivable 10.0 12.4 11.8 12.8 13.4 investments - fixed income secu
Slide 16: Composition of Investment Portfolio
Lancashire Holdings Limited composition of investment portfolio 31 december 2011 % 30 september 2011 % 30 june 2011 % 31 march 2011 % 31 december 2010 % type of investment short term investments $ 78.9 4.0% $ 102.2 4.7% $ 45.7 2.2% $ 57.7 2.9% $ 12.1 0.5% U.S. treasuries 351.1 17.8% 337.3 15.6% 251.
Slide 17: Investment Portfolio - Sector Detail
Lancashire Holdings Limited investment portfolio - sector detail 31 december 2011 estimated weighted average weighted average weighted average weighted average (2) fair value book yield market yield duration rating type of investment short term investments $ 78.9 0.1% 0.1% 0.2 AAA U.S. treasuries 35
Slide 18: Emerging Market Debt
Lancashire Holdings Limited emerging market debt 31 december 2011 sovereign agency corporate total top ten country exposures Russia $ 10.1 $ 1.1 $ 9.4 $ 20.6 Brazil 8.7 0.7 7.1 16.5 Indonesia 9.4 - 3.7 13.1 Mexico 7.1 1.9 3.2 12.2 Turkey 8.0 - 0.2 8.2 Qatar 3.2 3.4 0.8 7.4 United Arab Emirates - - 6
Slide 19: Corporate & Global Bond Holdings
Lancashire Holdings Limited corporate & global bond holdings 31 december 2011 par value estimated accrued unrealised credit units fair value interest gain (loss) quality(1) top twenty corporate holdings by issuer JP Morgan Chase & Company 15.4 $ 15.7 $ 0.2 $ - A Citigroup Incorporated 14.3 13.3 0.1
Slide 20: Net Losses and Loss Ratios
Lancashire Holdings Limited net losses and loss ratios q4 q3 q2 q1 q4 full year full year total 2011 2011 2011 2011 2010 2011 2010 net reserves: start $ 514.5 $ 530.6 $ 535.6 $ 471.6 $ 521.7 $ 471.6 $ 453.1 paid losses 63.3 32.1 20.0 39.5 38.8 154.9 145.4 change in prior AY (1) (37.3) (21.1) (46.1)
Slide 21: Losses by Accident Year
Lancashire Holdings Limited losses by accident year gross losses accident year 2006 2007 2008 2009 2010 2011 estimate of ultimate liability: at end of accident year 39.1 154.8 444.6 163.3 297.4 397.0 one year later 34.7 131.2 417.4 107.8 209.4 - two years later 32.0 103.5 377.5 73.1 - - three years
Slide 22: Estimated Exposures to Peak Zone Elemental Losses
Lancashire Holdings Limited estimated exposures to peak zone elemental losses 1 january 2012 1 january 2012 100 year return period 250 year return period estimated estimated estimated estimated zones perils gross loss net loss gross loss net loss gulf of mexico (1) hurricane $ 536.3 $ 328.7 $ 682.9
Slide 23: Earnings per Share
Lancashire Holdings Limited earnings per share q4 q4 full year full year 2011 2010 2011 2010 basic earnings per share: profit after tax $ 39.0 $ 131.8 $ 212.2 $ 330.8 net operating income $ 38.1 $ 123.4 $ 219.0 $ 306.5 dilutive shares weighted average shares outstanding - basic 155,859,689 151,852,5
Slide 24: Basic and Fully Converted Book Value per Share
Lancashire Holdings Limited basic and fully converted book value per share 31 december 2011 30 september 2011 30 june 2011 31 march 2011 31 december 2010 numerator ($ in millions): shareholders' equity $ 1,326.8 $ 1,432.5 $ 1,380.4 $ 1,282.1 $ 1,286.9 proceeds from assumed exercise of outstanding di
Slide 25: Basic and Fully Diluted Book Value per Share
Lancashire Holdings Limited basic and fully diluted book value per share 31 december 2011 30 september 2011 30 june 2011 31 march 2011 31 december 2010 shareholders' equity $ 1,326.8 $ 1,432.5 $ 1,380.4 $ 1,282.1 $ 1,286.9 weighted average exercise price per share of dilutive warrants $ 4.89 $ 4.87