Lancashire Holdings Limited

Welcome to the Lancashire Q2 2025 earnings conference call. The speakers today will be Alex Maloney, Natalie Kershaw, and Matthew Narbon. I'll now turn the call over to Alex. Please go ahead.

Good afternoon, everyone. Thank you for joining our call today. You will notice in the operator's introduction that Matt is presenting the underwriting portion of our call today. This is because Paul is on sabbatical, which is one of the benefits of working in Lancashire. After 10 years of being with us, you can take a well-deserved short break, which is what Paul is doing. So today, I will give some highlights on the progress the business has made so far this year. Matt, our Deputy Chief Underwriting Officer, who some of you know, will then focus on the underwriting trends. Natalie will cover the financials, and then we then go to Q&A. I want to start by saying that the first half of 2025 was very much the demonstration of our strategy in action. Even with the sizeable industry loss of California wildfires in Q1, we end the first half with an annualised ROE of about 15%. In fact, Q2 was our most profitable second quarter ever in our history. You can see that the work we have been doing since 2018 to make the group more resilient to cat losses has worked. This strong result allows us to, at this stage, upgrade our ROE expectations to high teens for the 2025 year. As a reminder, this assumes the same level of catastrophe and large losses as the second half of 2024 when we had hurricanes Milton and Helene. The insurance market conditions remain favourable and most lines fundamentally are well priced. As we have talked about before, after many years of rate increases, we are now seeing a more competitive market. This isn't in the form of new capital entering the market, rather it's the existing players looking to deploy more. There's still more capital in the industry but it tends to be more disciplined capital. This doesn't change our strategy of disciplined growth. As I've said many times before, we lead with underwriting and we will continue to grow above rate while the cycle is supportive of the strong returns for our investors and Matt will talk a bit more about this shortly. Our capital permission remains robust with solvency comfortable above requirements. This allows us to pursue selective growth and return capital when excess builds. Active management of our capital and risk exposures remains central to our strategy in order to deliver attractive, less volatile returns through cycle. You can see this in the first half of 2025 for our higher teens ROE expectation for this year. As I've said before, I'm extremely pleased that at this stage in the cycle we have a healthy balance sheet that allows us plenty of flexibility to underwrite the opportunities we see. The quality of the business we have built and the talent we have in our organisation together means that we can continue to deliver on our strategy of delivering more sustainable returns for our shareholders. With that, I'll hand over to Matt now to talk you through the underwriting trends.

Okay, thank you Alex. For those of you who have not had the chance to meet yet, I've been with Lancashire for about 14 years in total. and I took on the Deputy CUO role earlier this year. Today, I'd like to pick up on three of the themes Alex mentioned. Firstly, our strong half year results show that our strategy is working. The market conditions as we see them remain attractive. And finally, as we said before, at this stage of the cycle, we will continue to focus on disciplined growth ahead of rate. Taking these in turn, our strategy is working. The first half of 2025 saw insured natural catastrophe losses of about $80 billion globally, the second highest recorded for the first half of any year. In this context, our combined ratio reflects disciplined underwriting and an exceptionally resilient portfolio. What's more, our Q2 underwriting results are the strongest Lancashire has seen of any quarter since inception. As such, the first half of the year is evidence of the delivery of our strategy. This has not happened overnight. You all know that we started building a more resilient business as soon as cycle turned in 2018. We've consistently invested in building a more adaptable and more diversified business. We've expanded our underwriting capabilities, added complementary lines and new distribution channels, and brought in high-caliber teams to better seize opportunities across the cycle. Turning to market conditions, they remain attractive. As Alex mentioned, the rating environment remains healthy and most lines remain fundamentally well-priced. Demand for our products remains strong, but we're seeing existing companies deploying more capital. So far, this is coming through in a disciplined way and in line with our expectations for this year. We're only seeing the early phases of a softening market at portfolio level. Most importantly, terms and conditions and attachment points are broadly holding steady. All this bodes well for future underwriting results. You can see our focus on disciplined growth in the first half of 2025 as our premiums grew nearly 6% or nearly 3% excluding reinstatement premiums. As we said before, we want to grow ahead of rate in the current market as margins remain strong. But different lines of business are seeing somewhat different dynamics and our approach has to be selective. To give you a bit of colour by line, I'll start with our reinsurance business. It's fair to say that there's not been a material change in our view of the market. Within property reinsurance, we continue to see a disciplined market and have taken the opportunity to grow with some of our core clients. Our casualty book is now largely at scale, with growth coming through existing contracts and prior year premiums. The market is broadly stable, with generally flat commissions on quota share contracts. Our specialty reinsurance book comprises of two main parts. The property retrocession book, which we've deliberately scaled back for this year in response to pricing pressure, and our marine energy and terror reinsurance book, which we continue to expand through healthy new business. If I turn now to the insurance segment, property insurance is currently seeing the biggest headwinds and we continue to adjust our portfolio. Risk selection remains key. Over the last few years, we've been building a group portfolio, accessing a broader diversity of territories, diversity in the size of our clients, a range of different distribution channels operating across our various platforms in London, the US and Australia. All of this enables us to actively manage our portfolio and mitigate some of these pressures. Elsewhere, we continue to see good momentum in our marine and energy classes. In particular, within the energy liability segment on our US platform, which continues to benefit from the broader pressures in casualty. In this regard, our US platform build-out continues to progress well. In particular, we're pleased with the strong team we've been able to recruit and the quality portfolio they've built so far. Looking to the second half, our focus remains firmly on continuing to build on our existing strategy. Growing where margins are strong, maintaining discipline and positioning our portfolio to continue delivering sustainable returns beyond 2025. We remain comfortable with the growth premiums written growth indication we gave you earlier this year of low single-digit growth. I'll now hand over to Natalie to run through the detailed financials.