Lancashire (LRE) H2 2024 earnings summary

Executive summary

• Achieved a return on equity (ROE) of 23.4% in 2024, with strong premium growth and robust underwriting results despite high industry losses.

• Premiums grew by 11.3% year-over-year to $2.1 billion, more than tripling since 2017, with over 20 new subproducts added.

• Maintained a disciplined, cycle-aware strategy focused on underwriting, capital efficiency, and diversification.

• Returned $354 million to shareholders, including special and ordinary dividends, while maintaining a strong balance sheet.

• Estimated BSCR coverage ratio of 270% and total capital of $1.9 billion, indicating strong solvency.

Financial highlights

• Profit after tax was $321.3 million for 2024, consistent with 2023, despite higher catastrophe and large risk losses.

• Insurance revenue increased by 16.1% year-over-year to $1.8 billion, outpacing gross premiums written due to prior years' growth.

• Combined ratio was 89.1% undiscounted (81% discounted), including all group expenses.

• Investment portfolio delivered a 5% return, with net investment return of $162.2 million.

• Total net losses from catastrophe and large events were $214.1 million, up from $106.1 million in 2023.

Outlook and guidance

• 2025 ROE guidance set at mid-teens, assuming similar catastrophe and large loss levels as 2024 plus the California wildfire loss.

• Premium growth expected in the low single digits, with growth focused on specialty reinsurance and the U.S. platform.

• Anticipates manageable rate softening in 2025, with healthy rate adequacy in most lines.

• Aggregate reinsurance protection in place to manage volatility from large catastrophe losses.

• Focus remains on sustainable, lower volatility results through strong underwriting and capital management.