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Lancashire Holdings Ltd on Wednesday upped it special dividend as it
guided its combined ratio towards the higher end of expectations.
In the first nine months of the year, the Bermuda-based insurer said gross premiums written grew by 9.0% on-year to $1.70 billion from $1.56 billion, with its property portfolio serving as the main growth driver in the insurance segment as new business came through its US and Australia distribution channels.
Growth in its reinsurance division was driven by new business in the property reinsurance and speciality reinsurance classes.
Insurance revenue jumped by 17% to $1.30 billion from $1.11 billion the year prior.
Lancashire shares were up 7.5% at 676.00 pence on late Wednesday morning in London.
Investments for the FTSE 250-listed firm also performed well, with Lancashire reporting managed investment growth of 21% on-year to $3.21 billion from $2.66 billion.
Year-to-date, the portfolio returned 5.0% as it benefited from ‘higher yields in conjunction with higher prices from falling treasury rates and modest tightening of investment grade credit spreads.’
Lancashire noted that its private investment funds and bank loans also realised strong returns.
The firm revised its combined ratio expectations for this year towards the higher end of its previous guidance of the mid-80% range, up from 83% last year.
Combined ratios serve as an indicator of an insurance company’s profitability, with figures below 100% indicating a profit on underwriting, and therefore the lower they are the better.
Owed to its positive performance, Lancashire declared a 50% on-year increase in its special dividend to 75 cents per share from 50 cents, returning approximately $180 million to shareholders.
Lancashire Chief Executive Alex Maloney said: ‘I am pleased to report that Lancashire is in excellent shape as we approach the final months of 2024.
‘Over the past few years, we have successfully made our business more resilient to withstand volatility and deliver more sustainable returns for investors. We expect to deliver in line with our ROE guidance for the year.
‘In the year-to-date, the industry has seen an elevated catastrophe and risk loss environment, but we still expect our undiscounted combined ratio to be at the higher end of our range for the full-year. This is testament to our diversification strategy, and the quality of the business we have written.
‘We continue to hold an extremely robust capital position to underwrite the growth opportunities we expect to see in 2025.’
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