TIDMLRE
RNS Number : 9542P
Lancashire Holdings Limited
14 February 2019
LANCASHIRE HOLDINGS LIMITED
CHANGE IN FULLY CONVERTED BOOK VALUE PER SHARE, ADJUSTED FOR
DIVIDS, OF (1.4)% IN Q4 2018 AND 2.4% IN 2018
COMBINED RATIO OF 107.4% IN Q4 2018 AND 92.2% IN 2018
FINAL ORDINARY DIVID OF $0.10 PER COMMON SHARE
FULLY CONVERTED BOOK VALUE PER SHARE OF $5.26 AS AT 31 DECEMBER
2018
14 February 2019
Hamilton, Bermuda
Lancashire Holdings Limited ("Lancashire" or "the Group") today
announces its results for the fourth quarter of 2018 and the year
ended 31 December 2018.
Financial highlights
31 December 2018 31 December 2017
------------------
Fully converted book value per
share $5.26 $5.48
Return on equity(1) - Q4 (1.4)% (0.9)%
Return on equity(1) - YTD 2.4% (5.9)%
Return on tangible equity(2) -
Q4 (1.5)% (1.1)%
Return on tangible equity(2) -
YTD 3.0% (6.8)%
Operating return on average equity
- Q4 (1.2)% (0.3)%
Operating return on average equity
- YTD 3.5% (7.3)%
Dividends per common share for
the financial year(3) $0.35 $0.15
------------------------------------ ------------ ---- ------------ ----
(1) Return on equity is defined as the change in fully converted
book value per share, adjusted for dividends.
(2) Return on tangible equity excludes goodwill and other
intangible assets.
(3) See "Dividends" below for Record Date and Dividend Payment
Date.
Three months ended Twelve months ended
31 December 31 December 31 December 31 December
2018 2017 2018 2017
------------------------------- ------------- ------------- -------------- -------------
Highlights ($m)
Gross premiums written 130.8 67.4 638.5 591.6
Net premiums written 97.4 52.1 417.7 398.0
(Loss) profit before
tax (16.0) (3.2) 33.6 (72.9)
(Loss) profit after tax(1) (14.1) (5.4) 37.5 (71.1)
Comprehensive (loss)
income(1) (16.4) (9.1) 24.7 (66.2)
Net operating (loss)
profit(1) (13.9) (3.1) 39.8 (86.0)
Per share data
Diluted (loss) earnings
per share ($0.07) ($0.03) $0.19 ($0.36)
Diluted (loss) earnings
per share - operating ($0.07) ($0.03) $0.20 ($0.43)
Financial ratios
Total investment return
(including internal currency
hedging) (0.1)% 0.4% 0.8% 2.5%
Net loss ratio 60.0% 75.5% 40.0% 78.4%
Combined ratio 107.4% 119.5% 92.2% 124.9%
Accident year loss ratio 95.1% 85.4% 70.0% 94.2%
------------------------------- --------- --------- --------- ---------
(1) These amounts are attributable to Lancashire and exclude
non-controlling interests.
Alex Maloney, Group Chief Executive Officer, commented:
"The fourth quarter of 2018 once again witnessed higher levels
of loss activity than average, with the occurrence of hurricane
Michael in October and a further series of catastrophic wildfires
in California causing a tragic loss of life. When considered with
the other major loss events during the year, 2018 ranks amongst the
four largest loss years of the last couple of decades. Following
2017, this is the second year in succession of well above average
global insured catastrophe losses. Against this backdrop, the Group
has generated a positive RoE for the full year of 2.4%. Overall, I
am pleased at the resilience of our portfolio and our reinsurance
programme, given the loss environment.
Looking ahead, I am encouraged with our new business momentum.
For the full year our underlying premium growth was about 20%,
which is early evidence of the benefits of our organic growth
strategy and our particular focus on opportunities in certain new
specialty lines which complement the Group's traditional portfolio.
Whilst the trading environment remains challenging, there are now
some signs of an improved rating environment in many of our
specialty lines, which account for over half our business.
Encouragingly, the pricing trends remain positive across most of
our business lines.
I am also pleased that, as the specific underlying losses have
developed, the ultimate loss estimates which we established in 2017
in respect of hurricanes Harvey, Irma and Maria have reduced over
the year.
We pride ourselves not only on our underwriting expertise, which
is key to the delivery of our strategy, but also on the dedication
and professionalism of our people throughout the business. I would
like to thank everyone across our Group for their contribution to
what has been a positive result in another challenging year. We are
well positioned to develop the opportunities which lie ahead."
Elaine Whelan, Group Chief Financial Officer, commented:
"The fourth quarter of 2018 was impacted by both further
catastrophe activity and significant volatility in the investment
markets. Our combined ratio was 107.4% and our investment return
was (0.1)%. That resulted in an RoE for the quarter of negative
1.4%, although we remained profitable for the year with an RoE of
2.4%. Despite the losses incurred this year we have produced an
underwriting profit with a combined ratio of 92.2%. Our investment
portfolio structure also ensured our loss for the quarter was
minimised and we produced a respectable return for the year of
0.8%.
We expect to see improved rates across many of our lines of
business, and growth through new business where we have recently
added new teams. We expect to put most of our capital to work, but
we will continue to hold some capital for opportunities that may
arise. In line with our stated dividend policy we are declaring our
standard final ordinary dividend of $0.10 per share."
Renewal Price Index for major classes
The Renewal Price Index ("RPI") is an internal methodology that
management uses to track trends in premium rates on a portfolio of
insurance and reinsurance contracts. The RPI is calculated on a per
contract basis and reflects our assessment of relative changes in
price, terms, conditions and limits on like for like renewals only,
and is weighted by premium volume (see "Note Regarding RPI
Methodology" at the end of this announcement for further guidance).
The RPI does not include new business, to offer a consistent basis
for analysis. The following RPIs are expressed as an approximate
percentage of pricing achieved on similar contracts written in
2017, with our Lloyd's segment shown separately in order to aid
comparability:
RPI Lancashire (excluding Lloyd's segment)
Class YTD 2018 Q4 2018 Q3 2018 Q2 2018 Q1 2018
--------------------------------------- ---------- --------- --------- --------- ---------
Aviation (AV52) 99% 100% 100% 100% 96%
Gulf of Mexico energy(*) 101% - - 101% 110%
Energy offshore worldwide 103% 102% 103% 103% 103%
Marine 98% 101% 100% 97% 97%
Property retrocession and reinsurance 107% 102% 100% 103% 111%
Terrorism 99% 99% 99% 99% 100%
Lancashire (excluding Lloyd's
segment)(1) 103% 100% 105% 101% 105%
--------------------------------------- ----- ----- ----- ----- -----
* There was no renewing Gulf of Mexico energy business written
in the third and fourth quarters of 2018.
(1) The table above summarises the RPI figures for the main
business classes, with the total incorporating all business
classes.
RPI Lloyd's segment
Class YTD 2018 Q4 2018 Q3 2018 Q2 2018 Q1 2018
--------------------------------------- ---------- --------- --------- --------- ---------
Aviation 104% 107% 105% 105% 102%
Energy 103% 101% 104% 103% 102%
Marine 105% 114% 104% 104% 101%
Property retrocession and reinsurance 108% 100% 102% 107% 108%
Terrorism 100% 103% 99% 99% 99%
Lloyd's segment(1) 106% 106% 106% 107% 106%
--------------------------------------- ----- ----- ----- ----- -----
(1) The table above summarises the RPI figures for the main
business classes, with the total incorporating all business
classes.
Underwriting results
Gross premiums written
Q4 YTD
2018 2017 Change Change 2018 2017 Change Change
$m $m $m % $m $m $m %
---------- ----- ---- ------ ------ ----- ----- ------ --------
Property 38.1 21.0 17.1 81.4 214.6 198.0 16.6 8.4
Energy 14.9 5.0 9.9 198.0 103.0 101.8 1.2 1.2
Marine 5.8 9.2 (3.4) (37.0) 31.1 67.6 (36.5) (54.0)
Aviation 17.9 4.0 13.9 347.5 33.0 16.9 16.1 95.3
Lloyd's 54.1 28.2 25.9 91.8 256.8 207.3 49.5 23.9
----
Total 130.8 67.4 63.4 94.1 638.5 591.6 46.9 7.9
---------- ----- ---- ----- ----- ----- ----- ----- -----
Gross premiums written increased by 94.1% in the fourth quarter
of 2018 compared to the same period in 2017. In 2018, gross
premiums written increased by 7.9% compared to 2017. The Group's
five principal segments, and the key market factors impacting them,
are discussed below.
Property gross premiums written increased by 81.4% for the
fourth quarter of 2018 compared to the same period in 2017 and
increased by 8.4% in 2018 compared to 2017. The increase for the
quarter was primarily driven by new business written in the
political risk class, where strong deal flow was only partially
offset by a reduction due to multi-year deals that were not yet due
to renew. Business flow in the political risk class is generally
less predictable than other classes due to the specific nature of
each deal. In addition to that new business, the property
catastrophe and property retrocession classes experienced slightly
higher levels of reinstatement premium compared to the same period
in the prior year. For the year, the property segment experienced
growth from new business and rate increases across most classes.
However, that growth was significantly offset by reductions due to
multi-year contracts not yet due to renew in the political risk and
property catastrophe classes. The third quarter of 2017 also
included $7.0 million of reinstatement premiums in connection with
hurricanes Harvey, Irma and Maria.
Energy gross premiums written increased by 198.0% for the fourth
quarter of 2018 compared to the same period in 2017 and increased
by 1.2% in 2018 compared to 2017. The fourth quarter is not
typically a major renewal period for the energy segment. The
increase for the quarter was mostly due to adjustments that were
made to prior underwriting year risk-attaching business in the same
period in the prior year, with exposure reductions in the worldwide
offshore book due primarily to some construction projects that were
delayed or cancelled projects. There was also some more new
business written in the onshore energy class in the fourth quarter
of 2018. These increases also drove the increase for the year, but
that was almost entirely offset by multi-year contracts written in
the Gulf of Mexico and offshore energy classes in 2017 that were
not yet due to renew, plus the restructuring of an existing Gulf of
Mexico multi-year deal.
Marine gross premiums written decreased by 37.0% for the fourth
quarter of 2018 compared to the same period in 2017 and decreased
by 54.0% in 2018 compared to 2017. The decreases for the quarter
and the year were due to a reduction in exposure on prior
underwriting year risk-attaching business in the other marine class
in addition to less pro-rata business written compared to the prior
periods. While the reduction in the fourth quarter was somewhat
offset by the timing of non-annual contract renewals in the marine
hull book, the reduction for the year was further compounded by the
timing of non-annual contract renewals.
Aviation gross premiums written increased by 347.5% for the
fourth quarter of 2018 compared to the same period in 2017 and
increased by 95.3% in 2018 compared to 2017. The increases for the
quarter and the year were mainly due to new business in the
aviation deductible class due to the addition of a new underwriting
team and the resulting new business introduced. There was also
increased exposure on prior underwriting year risk-attaching
business for the quarter and on a full year basis.
In the Lloyd's segment gross premiums written increased by 91.8%
for the fourth quarter of 2018 compared to the same period in 2017
and increased by 23.9% in 2018 compared to 2017. The increases for
the quarter and the year were mainly due to new business in the
aviation and energy classes due to the addition of new underwriting
teams and the resulting new business introduced. There was also an
increase in the property direct and facultative and marine classes,
primarily due to improved rates, new business and negative
adjustments made to prior underwriting year risk-attaching business
in the same period in the prior year. The increase for the year was
partially offset by reduced reinstatement premiums in the property
reinsurance class.
*******
Ceded reinsurance premiums increased by $18.1 million, or
118.3%, for the fourth quarter of 2018 compared to the same period
in 2017 and increased by $27.2 million, or 14.0%, in 2018 compared
to 2017. The increased spend for the quarter was primarily driven
by additional cover purchased in respect of the new lines of
business added plus higher reinstatement premiums. These increases
were offset partially by the timing of renewals. The increase for
the year was due to a combination of additional cover purchased and
rate increases, partially offset by the timing of some
renewals.
*******
Net premiums earned as a proportion of net premiums written was
109.3% in the fourth quarter of 2018 compared to 179.5% for the
same period in 2017 and 99.0% in 2018 compared to 107.5% in 2017.
The earnings ratio for the fourth quarter of 2017 was unusually
high due to the impact of exposure reductions on prior underwriting
year risk-attaching business in the worldwide offshore book. The
fourth quarter of 2018 included a higher proportion of multi-year
property political risk business compared to the same period in the
prior year, deferring more earnings to future periods. The lower
earnings ratio for 2018 compared to 2017 was also impacted by the
timing of gross premiums written in the year, with a higher
proportion being written in the fourth quarter of 2018 compared to
2017.
*******
The Group's net loss ratio for the fourth quarter of 2018 was
60.0% compared to 75.5% for the same period in 2017 and 40.0% for
2018 compared to 78.4% in 2017. The accident year loss ratio for
the fourth quarter of 2018, including the impact of foreign
exchange revaluations, was 95.1% compared to 85.4% for the same
period in 2017 and 70.0% for 2018 compared to 94.2% in 2017. The
fourth quarter of 2018 was impacted by hurricane Michael and the
California wildfires. Our net losses recorded for these events,
excluding the impact of inwards and outwards reinstatement premiums
and our share of losses from Kinesis, were $48.8 million. Our net
losses recorded for the fourth quarter of 2017 in relation to the
California wildfires, excluding the impact of inwards and outwards
reinstatement premiums and our share of losses from Kinesis, were
$34.5 million.
For 2018, our net losses incurred also included $56.1 million,
excluding the impact of inwards and outwards reinstatement premiums
and our share of losses from Kinesis, in relation to losses within
our marine portfolio plus natural catastrophe events, including
hurricane Florence and typhoons Jebi, Mangkhut and Trami. In the
prior year, the total estimated net loss, excluding the impact of
inwards and outwards reinstatement premiums and our share of losses
from Kinesis, for the 2017 catastrophe losses from hurricanes
Harvey, Irma and Maria, the two earthquakes in Mexico plus the
California wildfires, was $181.8 million as at 31 December 2017
compared to $164.7 million as at 31 December 2018.
While reserves have been recorded, uncertainty exists on the
eventual ultimate losses in relation to the hurricanes, typhoons,
earthquakes and wildfires as loss information after these types of
events can take some time to obtain. The Group's reserve estimates
for these natural catastrophe events were derived from a
combination of market data and assumptions, a limited number of
provisional loss advices, limited client loss data and modelled
loss projections. As additional information emerges, the Group's
actual ultimate loss may vary, perhaps materially, from the current
reported reserves. The final settlement of all these claims is
likely to take place over a considerable period of time.
There were no other significant net losses in either year.
Excluding the impact of foreign exchange evaluations, the
following table shows the impact of the current accident year
events noted above on the Group's loss ratio:
Q4 YTD
Losses Loss ratio Losses Loss ratio
$m % $m %
------------------------------------ ---------- ------------ ----------- ------------
Reported loss ratio at 31 December
2018 63.9 60.0% 165.4 40.0%
Absent natural catastrophe events 16.5 15.8% 78.6 19.2%
Absent large marine losses 63.7 59.9% 147.3 34.7%
Absent these combined events 16.3 15.6% 60.5 14.4%
------------------------------------ ---------- ------- ----------- -------
Note: The table does not sum to a total due to the impact of
reinstatement premiums.
As reported in the Group's results for the fourth quarter of
2017, excluding the impact of foreign exchange evaluations, the
following table shows the impact of prior year catastrophe events
on the Group's loss ratio:
Q4 YTD
Losses Loss ratio Losses Loss ratio
$m % $m %
------------------------------------ ---------- ------------ ----------- ------------
Reported loss ratio at 31 December
2017 70.6 75.5% 335.4 78.4%
Absent hurricane Harvey 73.9 79.5% 287.6 67.7%
Absent hurricane Irma 74.3 79.1% 281.6 66.1%
Absent hurricane Maria 68.8 75.9% 300.0 70.5%
Absent Mexico earthquakes 71.9 76.9% 325.1 76.0%
Absent California wildfires 36.1 38.8% 300.9 70.4%
Absent all catastrophe events 42.6 47.3% 153.6 36.6%
------------------------------------ ---------- ------- ----------- -------
Note: The table does not sum to a total due to the impact of
reinstatement premiums.
Prior year favourable development for the fourth quarter of 2018
was $39.9 million, compared to $7.4 million for the fourth quarter
of 2017, and $126.9 million for 2018 compared to $65.1 million for
2017. The favourable development in all periods was primarily due
to general IBNR releases across most lines of business due to a
lack of reported claims. The first and fourth quarters of 2018 also
included reductions on some prior accident year property and energy
reserves. In 2017, the Group experienced some adverse development
on prior accident year property and energy claims.
The table below provides further detail of the prior years' loss
development by class, excluding the impact of foreign exchange
valuations.
Q4 YTD
2018 2017 2018 2017
$m $m $m $m
---------- --------- ------------ ------------ ----------
Property 9.5 (3.3) 46.5 14.4
Energy 18.7 5.0 55.0 21.1
Marine 4.7 0.6 12.1 15.2
Aviation 0.2 0.6 1.4 3.0
Lloyd's 6.8 4.5 11.9 11.4
---------
Total 39.9 7.4 126.9 65.1
---------- --------- -------- ------------ --------
Note: Positive numbers denote favourable development.
Excluding the impact of foreign exchange revaluations, previous
accident years' ultimate losses developed as follows during 2018
and 2017:
Year ended Year ended
31 December 31 December
2018 2017
$m $m
------------------------------ ------------ --------------
2008 accident year and prior 3.1 0.1
2009 accident year 23.9 0.1
2010 accident year 1.6 1.8
2011 accident year 4.7 8.8
2012 accident year 8.8 5.0
2013 accident year 3.5 3.5
2014 accident year 3.4 9.2
2015 accident year 6.6 20.3
2016 accident year 33.3 16.3
2017 accident year 38.0 -
------------
Total 126.9 65.1
------------------------------ ------------ ------------
Note: Positive numbers denote favourable development.
The ratio of IBNR to total net loss reserves was 39.3% at 31
December 2018 compared to 44.8% at 31 December 2017.
Investments
Net investment income, excluding realised and unrealised gains
and losses, was $9.9 million for the fourth quarter of 2018, an
increase of 26.9% from the fourth quarter of 2017. Net investment
income was $34.7 million for 2018, an increase of 13.8% compared to
2017. Total investment return, including net investment income, net
other investment income, net realised gains and losses, impairments
and net change in unrealised gains and losses, was a loss of $1.8
million for the fourth quarter of 2018 compared to a gain of $7.3
million for the fourth quarter of 2017 and a gain of $12.5 million
for 2018 compared to a gain of $45.7 million for 2017.
The investment portfolio lost 0.1% during the fourth quarter of
2018 due to significant widening of credit spreads plus losses on
the Group's equities, hedge funds, bank loans and principal
protected notes as the markets declined considerably during the
quarter. The losses were mitigated by coupon income and gains on
the fixed maturity portfolios as a result of the reduction in
treasury yields. During the fourth quarter of 2017 the portfolio
returned 0.4%. While a modest increase in treasury yields, offset
by the narrowing of credit spreads plus coupon income, drove flat
returns in the standard fixed maturity portfolios in the fourth
quarter of 2017, the portfolio benefited from strong returns from
the hedge fund, bank loan and equity portfolios.
The investment portfolio returned 0.8% in 2018 driven by
positive returns on the Group's standard fixed maturity portfolios
as coupon returns more than offset the increase in treasury yields
and widening of credit spreads that took place in 2018. Returns on
the fixed maturity mandates outweighed the small losses on the
equities, hedge funds and bank loans during the year. Despite the
increase in treasury yields in 2017, the investment portfolio
produced a return of 2.5% due to the narrowing of credit spreads,
coupon income and strong returns in the Group's equities, hedge
funds, bank loans and principal protected notes.
The corporate bond allocation represented 29.9% of managed
invested assets at 31 December 2018 compared to 28.2% at 31
December 2017.
The managed portfolio was as follows:
As at As at
31 December 2018 31 December 2017
--------------------------- ------------------ ------------------
Fixed maturity securities 85.4% 80.1%
Hedge funds 8.5% 8.4%
Cash and cash equivalents 4.8% 10.2%
Equity securities 1.3% 1.3%
Total 100.0% 100.0%
--------------------------- ------------ --- ------------ ---
Key investment portfolio statistics were:
As at As at
31 December 2018 31 December 2017
Duration 1.5 years 1.7 years
Credit quality A+ AA-
Book yield 2.7% 2.0%
Market yield 3.1% 2.1%
---------------- ---------- ----- ---------- -----
Lancashire Third Party Capital Management
The total contribution from third party capital activities
consists of the following items:
Q4 YTD
2018 2017 2018 2017
$m $m $m $m
------------------------------------- -------------- ------- ------------ ------------
Kinesis underwriting fees 1.9 2.2 6.6 5.8
Kinesis profit commission - - - 5.9
Lloyd's fees & profit commission 4.5 4.0 5.8 5.5
------------------------------------- ---------- ------- -------- --------
Total other income 6.4 6.2 12.4 17.2
------------------------------------- ---------- ------- -------- --------
Share of (loss) profit of associate (7.0) 2.3 (7.1) (9.4)
------------------------------------- ---------- ------- -------- --------
Total net third party capital
managed income (0.6) 8.5 5.3 7.8
------------------------------------- ---------- ------- -------- --------
The Kinesis profit commission is driven by the timing of loss
experience, settlement of claims and collateral release and
therefore varies from quarter to quarter. Following the significant
catastrophe activity during the second half of 2017, and resulting
loss experience, there was no recognition in 2018 of any profit
commission for the 2017 underwriting cycles. The higher Kinesis
underwriting fees in 2018 reflect the higher level of premiums
under management compared to 2017. The share of (loss) profit of
associate reflects Lancashire's 10% equity interest in the Kinesis
vehicle. The loss during the fourth quarter of 2018 was entirely
driven by the catastrophe activity during the quarter. The Lloyd's
fees and profit commission are driven by the relative profitability
of the underwriting years impacting each period.
Other operating expenses
Other operating expenses consist of the following items:
Q4 YTD
2018 2017 2018 2017
$m $m $m $m
----------------------------- ---------- --------- ---- ------
Employee remuneration costs 7.1 9.2 49.0 40.2
Other operating expenses 10.3 11.4 40.2 43.4
Total 17.4 20.6 89.2 83.6
----------------------------- ---------- --------- ---- ----
Employee remuneration costs for the fourth quarter of 2018 were
$2.1 million lower than the corresponding quarter of 2017 and $8.8
million higher for 2018 compared to 2017. The lower remuneration
charge for the fourth quarter reflects a reduction in variable
compensation due to the loss activity in the quarter. The increase
for 2018 was primarily due to increased headcount following the
recruitment of new underwriters and underwriting teams and an
increase in the variable compensation element of employee
remuneration costs compared to 2017, given the relative
performance.
Other operating expenses for the fourth quarter and 2018 were
$1.1 million and $3.2 million lower than the respective periods in
2017. The reductions for the quarter and for the year were
primarily due to lower consulting fees incurred in the Lloyd's
segment.
Equity based compensation
The equity based compensation expense was $2.1 million in the
fourth quarter of 2018 compared to a credit of $0.3 million in the
same period of 2017 and $7.9 million for 2018 compared to a credit
of $0.4 million in 2017. The equity based compensation charge was
driven by anticipated vesting levels of active awards based on
current performance expectations. Lower equity based compensation
charges were recorded in 2017 due to incorporating the third and
fourth quarter losses into the performance estimates combined with
the lapsing of awards of former Cathedral employees on departure
from the Group.
Capital
As at 31 December 2018, total capital available to Lancashire
was $1.391 billion, comprising shareholders' equity of $1.067
billion and $324.3 million of long-term debt. Tangible capital was
$1.238 billion. Leverage was 23.3% on total capital and 26.2% on
total tangible capital. Total capital and total tangible capital as
at 31 December 2017 were $1.433 billion and $1.279 billion
respectively.
The Group will continue to review the appropriate level and
composition of its capital with the intention of managing capital
to enhance risk-adjusted returns on equity.
Dividends
The Lancashire Board declared the following dividends during
2018:
-- A final dividend relating to 2017 of $0.10 per common share;
-- An interim dividend of $0.05 per common share; and
-- A special dividend of $0.20 per common share.
Lancashire announces that its Board of Directors has declared a
final dividend for 2018 of $0.10 per common share (approximately
(GBP0.08) per common share at the current exchange rate), which
will result in an aggregate payment of approximately $20.1 million.
The dividend will be paid in Pounds Sterling on 27 March 2019 (the
"Dividend Payment Date") to shareholders of record on 22 February
2019 (the "Record Date") using the GBP / $ spot market exchange
rate at 12 noon London time on the Record Date.
Shareholders interested in participating in the dividend
reinvestment plan ("DRIP"), or other services including
international payment, are encouraged to contact the Group's
registrars, Link Asset Services, for more details at:
https://www.linkassetservices.com/shareholders-and-investors/shareholder-services-uk.
Group supervision
During 2018, the Group reviewed the location of its group
supervision with a view to better alignment with its strategic
priorities. With effect from 1 January 2019 Lancashire Holdings
Limited has become Group supervised by the Bermuda Monetary
Authority, and tax resident in Bermuda. There is no change for the
Group's UK subsidiaries, Lancashire Insurance Company (UK) Limited
and Cathedral Underwriting Limited, who remain regulated by the
Prudential Regulation Authority and the Financial Conduct
Authority. Additionally, Cathedral is also regulated by
Lloyd's.
Financial Information
The Audited Consolidated Financial Statements for the year ended
31 December 2018 and the 2018 fourth quarter Financial Supplement
are published on Lancashire's website at
www.lancashiregroup.com.
The Annual Report and Accounts are expected to be posted to
shareholders on 11 March 2019 and will also be made available on
Lancashire's website.
Analyst and Investor Earnings Conference Call
There will be an analyst and investor conference call on the
results at 1:00pm UK time / 9:00am Bermuda time / 8:00am EST on
Thursday 14 February 2019. The conference call will be hosted by
Lancashire management.
Participant Access:
Dial in 5-10 minutes prior to the start time using the number /
confirmation code below:
United Kingdom - Toll free /
Freephone: 0800 279 6619
United Kingdom - Local: 0844 481 9752
United States - Toll free / Freephone: 1 877 870 9135
United States - Local: +1 646 741 3167
Canada - Toll free / Freephone: +1 866 925 0818
Canada - Local: +1 646 741 3167
Confirmation Code: 2799373
The call can also be accessed via webcast, please go to our
website at:
https://www.lancashiregroup.com/en/investors.html or
https://edge.media-server.com/m6/p/e4gvgp5d
to register and access.
A webcast replay facility will be available for 12 months and
accessible at:
https://www.lancashiregroup.com/en/investors/results-reports-and-presentations.html.
For further information, please contact:
Lancashire Holdings Limited
Christopher Head +44 20 7264 4145
chris.head@lancashiregroup.com
Jelena Bjelanovic +44 20 7264 4066
jelena.bjelanovic@lancashiregroup.com
Haggie Partners
David Haggie +44 20 7562 4444 david@haggie.co.uk
Becky Young becky.young@haggie.co.uk
About Lancashire
Lancashire, through its UK and Bermuda-based operating
subsidiaries, is a provider of global specialty insurance and
reinsurance products. The Group companies carry the following
ratings:
Financial Financial Long Term
Strength Strength Issuer
Rating(1) Outlook(1) Rating(2)
A.M. Best A (Excellent) Stable bbb+
S&P Global Ratings A- Stable BBB
Moody's A3 Stable Baa2
------------------- -------------- ------------ -----------
(1) Financial Strength Rating and Financial Strength Outlook
apply to Lancashire Insurance Company Limited and Lancashire
Insurance Company (UK) Limited.
(2) Long Term Issuer Rating applies to Lancashire Holdings
Limited.
Cathedral benefits from Lloyd's ratings: A.M. Best: A
(Excellent); S&P Global Ratings: A+ (Strong); and Fitch: AA-
(Very Strong).
Lancashire has capital of approximately $1.4 billion and its
common shares trade on the premium segment of the Main Market of
the London Stock Exchange under the ticker symbol LRE. Lancashire
has its head office and registered office at Power House, 7
Par-la-Ville Road, Hamilton HM 11, Bermuda.
For more information, please visit Lancashire's website at
www.lancashiregroup.com.
The Bermuda Monetary Authority ("BMA") is the Group Supervisor
of the Lancashire Group with effect from 1 January 2019.
Lancashire Insurance Company Limited is regulated by the BMA,
with its registered office at Power House, 7 Par-la-Ville Road,
Hamilton HM 11, Bermuda.
Lancashire Insurance Company (UK) Limited is authorised by the
Prudential Regulation Authority ("PRA") and regulated by the
Financial Conduct Authority ("FCA") and the PRA, with its
registered office at Level 29, 20 Fenchurch Street, London EC3M
3BY, United Kingdom.
Cathedral Underwriting Limited is authorised by the PRA and
regulated by the FCA and the PRA. It is also authorised and
regulated by Lloyd's, with its registered office at Level 29, 20
Fenchurch Street, London EC3M 3BY, United Kingdom.
Kinesis Capital Management Limited is regulated by the BMA, with
its registered office at Power House, 7 Par-la-Ville Road, Hamilton
HM 11, Bermuda.
This release contains information, which may be of a price
sensitive nature that Lancashire is making public in a manner
consistent with the EU Market Abuse Regulation and other regulatory
obligations. The information was submitted for publication, through
the agency of the contact persons set out above, at 07:00 GMT on 14
February 2019.
Alternative Performance Measures
As is customary in the insurance industry, the Group also
utilises certain non-GAAP measures ("Alternative Performance
Measures" or "APMs") in order to evaluate, monitor and manage the
business and to aid users' understanding of the Group. In
compliance with the Guidelines on APMs of the European Securities
and Markets Authority, we give information on APMs in the table
below. This information has not been audited.
Management believes that the APMs included in this release and
accompanying supplementary materials are important for
understanding the Group's overall results of operations and may be
helpful to investors and other interested parties who may benefit
from having a consistent basis for comparison with other companies
within the industry. However, these measures may not be comparable
to similarly labeled measures used by companies inside or outside
the insurance industry. In addition, the information contained
herein should not be viewed as superior to, or a substitute for,
the measures determined in accordance with the accounting
principles used by the Group for its audited consolidated financial
statements or in accordance with GAAP.
The following APMs included in this release and accompanying
supplementary materials have not been prepared in accordance with
the accounting principles used by the Group for its audited and /
or interim consolidated financial statements. Below is an
explanation of the definition of these APMs as well as information
regarding their relevance:
APM Definition Relevance
Net loss ratio Ratio, in per cent, This ratio gives an
of net insurance losses indication of the amount
to net premiums earned. of claims expected to
be paid out per $1.00
of net premium earned
in the financial year.
------------------------------- ------------------------------
Net acquisition cost Ratio, in per cent, This ratio gives an
ratio of net insurance acquisition indication of the amount
expenses to net premiums expected to be paid
earned. out to insurance brokers
and other insurance
intermediaries per $1.00
of net premium earned
in the financial year
------------------------------- ------------------------------
Net expense ratio Ratio, in per cent, This ratio gives an
of other operating expenses, indication of the amount
excluding restricted of operating expenses
stock expenses, to net expected to be paid
premiums earned. out per $1.00 of net
premium earned in the
financial year.
------------------------------- ------------------------------
Accident year loss ratio The accident year loss This ratio shows the
ratio is calculated amount of claims expected
using the accident year to be paid out per $1.00
ultimate liability re-valued of net premium earned
at the current balance in an accident year.
sheet date, divided
by net premiums earned.
------------------------------- ------------------------------
Combined ratio Ratio, in per cent, The Group aims to price
of the sum of net insurance its business to ensure
losses, net acquisition that the combined ratio
expenses and other operating across the cycle is
expenses to net premiums significantly less than
earned. 100 per cent.
------------------------------- ------------------------------
Fully converted book Calculated based on Shows the Group's net
value per share ("FCBVS") the value of the total asset value on a diluted
attributable to the shareholders' equity per share basis for
Group attributable to the comparison to the market
Group and dilutive restricted value per share.
stock units as calculated
under the treasury method,
divided by, the sum
of all shares and dilutive
restricted stock units,
assuming all are exercised.
------------------------------- ------------------------------
Return on equity ("RoE") The internal rate of The Group's aim is to
(RoE is also sometimes return of the change maximise risk adjusted
referred to as the change in FCBVS in the period, returns for its shareholders
in FCBVS adjusted for plus dividends accrued. across the cycle.
dividends) Tangible RoE attributable
to the Group excludes
intangible assets from
capital.
------------------------------- ------------------------------
Operating return on Calculated as the net This metric gives an
average equity operating income (loss), indication of the average
divided by the average percentage return generated
equity over the period, by the Group's core
adjusted for dividends business.
declared. Net operating
income (loss) excludes;
realised gains and losses
net of impairments,
foreign exchange and
tax.
------------------------------- ------------------------------
Total investment return Total investment return The Group's primary
measures investment investment objectives
income and net realised are to preserve capital
and unrealised gains and provide adequate
and losses produced liquidity to support
by the Group's managed the Group's payment
investment portfolio. of claims and other
obligations. Within
this framework the Group
aims for a degree of
investment portfolio
return.
------------------------------- ------------------------------
NOTE REGARDING RPI METHODOLOGY
LANCASHIRE'S RENEWAL PRICE INDEX ("RPI") IS AN INTERNAL
METHODOLOGY THAT ITS MANAGEMENT USES TO TRACK TRS IN PREMIUM RATES
OF A PORTFOLIO OF INSURANCE AND REINSURANCE CONTRACTS. THE RPI
WRITTEN BY THE LANCASHIRE COMPANIES IN THE RESPECTIVE SEGMENTS IS
CALCULATED ON A PER CONTRACT BASIS AND REFLECTS LANCASHIRE'S
ASSESSMENT OF RELATIVE CHANGES IN PRICE, TERMS, CONDITIONS AND
LIMITS AND IS WEIGHTED BY PREMIUM VOLUME. THE CALCULATION INVOLVES
A DEGREE OF JUDGEMENT IN RELATION TO COMPARABILITY OF CONTRACTS AND
THE ASSESSMENT NOTED ABOVE. TO ENHANCE THE RPI METHODOLOGY,
MANAGEMENT OF LANCASHIRE MAY REVISE THE METHODOLOGY AND ASSUMPTIONS
UNDERLYING THE RPI, SO THE TRS IN PREMIUM RATES REFLECTED IN THE
RPI MAY NOT BE COMPARABLE OVER TIME. CONSIDERATION IS ONLY GIVEN TO
RENEWALS OF A COMPARABLE NATURE SO IT DOES NOT REFLECT EVERY
CONTRACT IN LANCASHIRE'S PORTFOLIO. THE FUTURE PROFITABILITY OF THE
PORTFOLIO OF CONTRACTS WITHIN THE RPI IS DEPENT UPON MANY FACTORS
BESIDES THE TRS IN PREMIUM RATES.
NOTE REGARDING FORWARD-LOOKING STATEMENTS:
CERTAIN STATEMENTS AND INDICATIVE PROJECTIONS (WHICH MAY INCLUDE
MODELLED 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 THE
WORDS "BELIEVES", "ANTICIPATES", "PLANS", "PROJECTS", "FORECASTS",
"GUIDANCE", "INTS", "EXPECTS", "ESTIMATES", "PREDICTS", "MAY",
"CAN", "LIKELY", "WILL", "SEEKS", "SHOULD", OR, IN EACH CASE, THEIR
NEGATIVE OR COMPARABLE TERMINOLOGY. ALL SUCH STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACTS INCLUDING, WITHOUT LIMITATION, THE
GROUP'S FINANCIAL POSITION, TAX RESIDENCY, LIQUIDITY, RESULTS OF
OPERATIONS, PROSPECTS, GROWTH, CAPITAL MANAGEMENT PLANS AND
EFFICIENCIES, ABILITY TO CREATE VALUE, DIVID POLICY, OPERATIONAL
FLEXIBILITY, COMPOSITION OF MANAGEMENT, BUSINESS STRATEGY, PLANS
AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS (INCLUDING
DEVELOPMENT PLANS AND OBJECTIVES RELATING TO THE GROUP'S INSURANCE
BUSINESS) ARE FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER IMPORTANT FACTORS THAT COULD CAUSE THE
ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE GROUP TO BE
MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS.
THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO: THE ACTUAL
DEVELOPMENT OF LOSSES AND EXPENSES IMPACTING ESTIMATES FOR
HURRICANE MICHAEL AND THE WILDFIRES WHICH IMPACTED PARTS OF
CALIFORNIA DURING THE FOURTH QUARTER OF 2018, HURRICANE FLORENCE,
THE TYPHOONS AND MARINE LOSSES THAT OCCURRED IN THE THIRD QUARTER
OF 2018, HURRICANES HARVEY, IRMA AND MARIA AND THE EARTHQUAKES IN
MEXICO THAT OCCURRED IN THE THIRD QUARTER OF 2017 AND THE WILDFIRES
WHICH IMPACTED PARTS OF CALIFORNIA DURING THE FOURTH QUARTER OF
2017; THE IMPACT OF COMPLEX AND UNIQUE CAUSATION AND COVERAGE
ISSUES ASSOCIATED WITH ATTRIBUTION OF LOSSES TO WIND OR FLOOD
DAMAGE OR OTHER PERILS SUCH AS FIRE OR BUSINESS INTERRUPTION
RELATING TO SUCH EVENTS; POTENTIAL UNCERTAINTIES RELATING TO
REINSURANCE RECOVERIES, REINSTATEMENT PREMIUMS AND OTHER FACTORS
INHERENT IN LOSS ESTIMATION; THE GROUP'S ABILITY TO INTEGRATE ITS
BUSINESSES AND PERSONNEL; THE SUCCESSFUL RETENTION AND MOTIVATION
OF THE GROUP'S KEY MANAGEMENT; THE INCREASED REGULATORY BURDEN
FACING THE GROUP; THE NUMBER AND TYPE OF INSURANCE AND REINSURANCE
CONTRACTS THAT THE GROUP WRITES OR MAY WRITE; THE GROUP'S ABILITY
TO IMPLEMENT SUCCESSFULLY ITS BUSINESS STRATEGY DURING 'SOFT' AS
WELL AS 'HARD' MARKETS; THE PREMIUM RATES WHICH MAY BE AVAILABLE AT
THE TIME OF SUCH RENEWALS WITHIN THE GROUP'S TARGETED BUSINESS
LINES; THE POSSIBLE LOW FREQUENCY OF LARGE EVENTS; POTENTIALLY
UNUSUAL LOSS FREQUENCY; THE IMPACT THAT THE GROUP'S FUTURE
OPERATING RESULTS, CAPITAL POSITION AND RATING AGENCY AND OTHER
CONSIDERATIONS MAY HAVE ON THE EXECUTION OF ANY CAPITAL MANAGEMENT
INITIATIVES OR DIVIDS; THE POSSIBILITY OF GREATER FREQUENCY OR
SEVERITY OF CLAIMS AND LOSS ACTIVITY THAN THE GROUP'S UNDERWRITING,
RESERVING OR INVESTMENT PRACTICES HAVE ANTICIPATED; THE RELIABILITY
OF, AND CHANGES IN ASSUMPTIONS TO, CATASTROPHE PRICING,
ACCUMULATION AND ESTIMATED LOSS MODELS; INCREASED COMPETITION FROM
EXISTING ALTERNATIVE CAPITAL PROVIDERS, INSURANCE LINKED FUNDS AND
COLLATERALISED SPECIAL PURPOSE INSURERS AND THE RELATED DEMAND AND
SUPPLY DYNAMICS AS CONTRACTS COME UP FOR RENEWAL; THE EFFECTIVENESS
OF THE GROUP'S LOSS LIMITATION METHODS; THE POTENTIAL LOSS OF KEY
PERSONNEL; A DECLINE IN THE GROUP'S OPERATING SUBSIDIARIES' RATING
WITH A.M. BEST, S&P GLOBAL RATINGS, MOODY'S OR OTHER RATING
AGENCIES; INCREASED COMPETITION ON THE BASIS OF PRICING, CAPACITY,
COVERAGE TERMS OR OTHER FACTORS; CYCLICAL DOWNTURNS OF THE
INDUSTRY; THE IMPACT OF A DETERIORATING CREDIT ENVIRONMENT FOR
ISSUERS OF FIXED MATURITY INVESTMENTS; THE IMPACT OF SWINGS IN
MARKET INTEREST RATES, CURRENCY EXCHANGE RATES AND SECURITIES
PRICES; CHANGES BY CENTRAL BANKS REGARDING THE LEVEL OF INTEREST
RATES; THE IMPACT OF INFLATION OR DEFLATION IN RELEVANT ECONOMIES
IN WHICH THE GROUP OPERATES; THE EFFECT, TIMING AND OTHER
UNCERTAINTIES SURROUNDING FUTURE BUSINESS COMBINATIONS WITHIN THE
INSURANCE AND REINSURANCE INDUSTRIES; THE IMPACT OF TERRORIST
ACTIVITY IN THE COUNTRIES IN WHICH THE GROUP WRITES RISKS; A RATING
DOWNGRADE OF, OR A MARKET DECLINE IN, SECURITIES IN THE GROUP'S
INVESTMENT PORTFOLIO; CHANGES IN GOVERNMENTAL REGULATIONS OR TAX
LAWS IN JURISDICTIONS WHERE THE GROUP CONDUCTS BUSINESS; LANCASHIRE
OR ANY OF THE GROUP'S BERMUDIAN SUBSIDIARIES BECOMING SUBJECT TO
INCOME TAXES IN THE UNITED STATES OR IN THE UNITED KINGDOM; THE
IMPACT OF THE CHANGE IN TAX RESIDENCE ON STAKEHOLDERS OF THE
COMPANY; AND THE IMPACT OF "BREXIT" (FOLLOWING THE UK'S
NOTIFICATION TO THE EUROPEAN COUNCIL UNDER ARTICLE 50 OF THE TREATY
ON EUROPEAN UNION ON 29 MARCH 2017) AND FUTURE NEGOTIATIONS
REGARDING THE UK'S RELATIONSHIP WITH THE EU ON THE GROUP'S
BUSINESS, REGULATORY RELATIONSHIPS, UNDERWRITING PLATFORMS OR THE
INDUSTRY GENERALLY.
ALL FORWARD-LOOKING STATEMENTS IN THIS RELEASE SPEAK ONLY AS AT
THE DATE OF PUBLICATION. LANCASHIRE EXPRESSLY DISCLAIMS ANY
OBLIGATION OR UNDERTAKING (SAVE AS REQUIRED TO COMPLY WITH ANY
LEGAL OR REGULATORY OBLIGATIONS INCLUDING THE RULES OF THE LONDON
STOCK EXCHANGE) TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY
FORWARD-LOOKING STATEMENT TO REFLECT ANY CHANGES IN THE GROUP'S
EXPECTATIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.
ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE GROUP OR INDIVIDUALS ACTING ON BEHALF OF THE
GROUP ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THIS NOTE.
PROSPECTIVE INVESTORS SHOULD SPECIFICALLY CONSIDER THE FACTORS
IDENTIFIED IN THIS RELEASE WHICH COULD CAUSE ACTUAL RESULTS TO
DIFFER BEFORE MAKING AN INVESTMENT DECISION.
Consolidated statement of comprehensive (loss) income
Q4 Q4 YTD YTD
2018 2017 2018 2017
$m $m $m $m
--------------------------------------- ---------- ---------- ------------ ----------
Gross premiums written 130.8 67.4 638.5 591.6
Outwards reinsurance premiums (33.4) (15.3) (220.8) (193.6)
Net premiums written 97.4 52.1 417.7 398.0
--------------------------------------- ------ ------ -------- ------
Change in unearned premiums 32.9 69.5 (19.7) 22.6
Change in unearned premiums
on premiums ceded (23.8) (28.1) 15.5 7.3
Net premiums earned 106.5 93.5 413.5 427.9
--------------------------------------- ------ ------ -------- ------
Net investment income 9.9 7.8 34.7 30.5
Net other investment (losses)
income (6.7) 2.7 (4.2) 1.2
Net realised (losses) gains
and impairments (2.8) 0.5 (5.1) 9.1
Share of (loss) profit of associate (7.0) 2.3 (7.1) (9.4)
Other income 6.4 6.2 12.4 17.2
Net foreign exchange gains (losses) 0.4 (0.8) (1.6) 2.3
Total net revenue 106.7 112.2 442.6 478.8
--------------------------------------- ------ ------ -------- ------
Insurance losses and loss adjustment
expenses 139.1 124.2 307.4 538.0
Insurance losses and loss adjustment
expenses recoverable (75.2) (53.6) (142.0) (202.6)
Net insurance acquisition expenses 33.1 20.6 126.4 115.6
Equity based compensation 2.1 (0.3) 7.9 (0.4)
Other operating expenses 17.4 20.6 89.2 83.6
Total expenses 116.5 111.5 388.9 534.2
--------------------------------------- ------ ------ -------- ------
Results of operating activities (9.8) 0.7 53.7 (55.4)
Financing costs 6.2 3.9 20.1 17.5
(Loss) profit before tax (16.0) (3.2) 33.6 (72.9)
Tax credit (charge) 1.9 (2.1) 4.0 2.3
(Loss) profit after tax (14.1) (5.3) 37.6 (70.6)
------ ------ ------
Non-controlling interests - (0.1) (0.1) (0.5)
------ ------
(Loss) profit after tax attributable
to Lancashire (14.1) (5.4) 37.5 (71.1)
--------------------------------------- ------ ------ -------- ------
Net change in unrealised gains/losses
on investments (2.2) (3.7) (12.9) 4.9
Tax (charge) credit on net change
in unrealised gains/losses on
investments (0.1) - 0.1 -
------ ------ -------- ------
Other comprehensive (loss) income (2.3) (3.7) (12.8) 4.9
--------------------------------------- ------ ------ -------- ------
Total comprehensive (loss) income
attributable to Lancashire (16.4) (9.1) 24.7 (66.2)
--------------------------------------- ------ ------ -------- ------
Net loss ratio 60.0% 75.5% 40.0% 78.4%
Net acquisition cost ratio 31.1% 22.0% 30.6% 27.0%
Administrative expense ratio 16.3% 22.0% 21.6% 19.5%
Combined ratio 107.4% 119.5% 92.2% 124.9%
--------------------------------------- ------ ------ -------- ------
Basic (loss) earnings per share $(0.07) $(0.03) $ 0.19 $(0.36)
Diluted (loss) earnings per
share $(0.07) $(0.03) $ 0.19 $(0.36)
Change in fully converted book
value per share (1.4)% (0.9)% 2.4% (5.9)%
Consolidated balance sheet
As at As at
31 December 31 December
2018 2017
$m $m
--------------------------------------------------- ------------ --------------
Assets
Cash and cash equivalents 154.6 256.5
Accrued interest receivable 6.8 6.1
Investments 1,659.0 1,654.6
Inwards premiums receivable from insureds and
cedants 318.1 297.9
Reinsurance assets
- Unearned premiums on premiums ceded 56.7 41.2
- Reinsurance recoveries 322.9 284.1
- Other receivables 9.8 20.7
Other receivables 35.3 42.4
Investment in associate 67.1 59.4
Property, plant and equipment 1.4 2.6
Deferred acquisition costs 74.2 76.7
Intangible assets 153.8 153.8
Total assets 2,859.7 2,896.0
--------------------------------------------------- ----------- -----------
Liabilities
Insurance contracts
- Losses and loss adjustment expenses 915.0 933.5
- Unearned premiums 370.6 350.9
- Other payables 36.0 40.7
Amounts payable to reinsurers 81.3 65.5
Deferred acquisition costs ceded 7.1 2.5
Other payables 45.4 48.0
Corporation tax payable 0.9 2.8
Deferred tax liability 11.2 16.5
Interest rate swap 0.4 2.0
Long-term debt 324.3 326.3
Total liabilities 1,792.2 1,788.7
--------------------------------------------------- ----------- -----------
Shareholders' equity
Share capital 101.0 100.7
Own shares (9.4) (12.1)
Other reserves 869.0 866.2
Accumulated other comprehensive loss (14.3) (1.5)
Retained earnings 120.9 153.6
Total shareholders' equity attributable to equity
shareholders of Lancashire 1,067.2 1,106.9
--------------------------------------------------- ----------- -----------
Non-controlling interest 0.3 0.4
Total shareholders' equity 1,067.5 1,107.3
Total liabilities and shareholders' equity 2,859.7 2,896.0
--------------------------------------------------- ----------- -----------
Basic book value per share $5.31 $5.53
Fully converted book value per share $5.26 $5.48
Consolidated statements of cash flows
YTD YTD
2018 2017
$m $m
---------------------------------------------------- --------- -----------
Cash flows used in operating activities
Profit (loss) before tax 33.6 (72.9)
Tax (paid) refunded (3.3) 1.3
Depreciation 1.4 1.8
Interest expense on long-term debt 18.1 16.4
Interest and dividend income (36.6) (37.1)
Net amortisation of fixed maturity securities (0.6) 2.8
Equity based compensation 7.9 (0.4)
Foreign exchange (gains) losses (4.3) 9.4
Share of loss (profit) of associate 7.1 9.4
Net other investment losses (income) 3.9 (1.2)
Net realised losses (gains) and impairments 5.1 (9.1)
Net unrealised gains on interest rate swaps (1.6) (1.7)
Changes in operational assets and liabilities
- Insurance and reinsurance contracts (51.5) 52.0
- Other assets and liabilities 18.3 (9.4)
Net cash flows used in operating activities (2.5) (38.7)
---------------------------------------------------- -------- --------
Cash flows (used in) from investing activities
Interest and dividends received 35.9 37.6
Purchase of property, plant and equipment (0.2) (0.6)
Investment in associate (14.8) (19.1)
Purchase of investments (1,143.1) (1,196.1)
Proceeds on sale of investments 1,115.8 1,209.5
Net cash flows (used in) from investing activities (6.4) 31.3
---------------------------------------------------- -------- --------
Cash flows used in financing activities
Interest paid (18.0) (16.3)
Dividends paid (70.2) (29.9)
Dividends paid to minority interest holders - (0.6)
Distributions by trust (2.6) (3.9)
Purchase of shares from non-controlling interest (0.3) -
Net cash flows used in financing activities (91.1) (50.7)
---------------------------------------------------- -------- --------
Net decrease in cash and cash equivalents (100.0) (58.1)
Cash and cash equivalents at the beginning of
year 256.5 308.8
Effect of exchange rate fluctuations on cash and
cash equivalents (1.9) 5.8
Cash and cash equivalents at end of period 154.6 256.5
---------------------------------------------------- -------- --------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UOOARKSAUAUR
(END) Dow Jones Newswires
February 14, 2019 02:00 ET (07:00 GMT)
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