Lancashire Holdings Limited

Welcome to Lancashire Q3 2025 earnings conference call. The speakers today will be Alex Maloney, Natalie Kershaw, and Paul Gregory. I'll now turn the call over to Alex Maloney, Group Chief Executive Officer. Please go ahead.

Okay, thank you. Good morning, everyone. Thank you for joining our call today. We're going to take the usual approach. I will give some highlights on the progress the business has made so far this year. Paul will then focus on the underwriting trends Natalie will cover the financials and then we'll go to Q&A. I'm pleased to report that Lancashire continues to demonstrate the strength and resilience of its franchise, delivering robust results in a dynamic marketing environment. I'd like to highlight three key points. Our strategy remains central to our success. We continue to deliver disciplined, profitable growth. Growth premiums are up 7.4% year-on-year, reaching 1.8 billion supported by a diversified portfolio and disciplined underwriting. Even with the sizable industry loss of California wildfires in Q1, our business is in excellent shape with growth delivered by our new US platform and selective growth in our existing lines. You can expect to see more of this throughout 2026. Looking at the market more broadly, the margins remain favorable and most lines of business fundamentally well-priced. As we've talked before, after many years of rate increases, we're now seeing a more competitive market. We have yet to see more meaningful new capital enter the market, rather it being existing players looking to deploy more. It's still more capital in the industry, but it tends to be more disciplined capital. Second, we are actively managing our capital from a position of strength. In addition to our underwriting profitability, investment returns have been strong year to date. Our overall result has enabled us to declare a special dividend of 75 cents per share, reflecting our exceptionally strong capital position whilst retaining capacity to continue to expand the franchise. In addition, during Q3, we completed the minority buyout of Seneca 2010, enhancing our flexibility and future earnings potential. Active management of our capital and risk exposures remain central to our strategy in order to deliver attractive, less volatile returns throughout the cycle. Finally, we look with confidence to 26 and beyond. As I've said before, the quality of the business we have built and the talent we have within the organisation together mean that we can continue to deliver on our strategy of delivering more sustainable returns for our shareholders. I'm extremely pleased that at this stage in the cycle, we have a healthy balance sheet to allow us plenty of flexibility to underwrite the opportunities we see. With that, I'll hand over to Paul to talk you through the underwriting trends.

Thanks, Alex. Earlier this year, we set out our expectations for market conditions and our growth prospects in the context of those anticipated conditions. After seven years of positive rating momentum, we expected 2025 to be the first year of rate softening. Our expectation was that this would be measured softening and that pricing in the vast majority of business lines was to remain very healthy and attractive. With this context, We still expected to grow our premiums, albeit at a slower rate than in previous years. With the natural organic growth we would see from the build-out of our US operations, plus organic growth in established product lines with continued increased demand from clients, we believe that we could deliver low single-digit growth despite the marginal headwinds of softening rates. To date, the market has behaved in line with expectations. as demonstrated with our group RPI of 96%. And we are currently at the upper end of our growth expectations, with growth in gross premiums written at 4.8% if you exclude the impact of reinstatement premiums. It has been very pleasing to continue the build-out of the Lancashire franchise in what will be the eighth year of premium and product line growth. As expected, our growth has been aided by the development of Lancashire U.S. The foundation classes of property DNF and energy liability have continued to mature and we've recently added our third product line being general casualty. Outside of the US, we have measured growth in our reinsurance lines, in particular specialty reinsurance, which has been a growing class of business for us in recent years. As we look forward to next year, it is likely that 2026 will also see rates softening across a number of product lines. We are strong believers in the insurance cycle and it is likely that the supply of capital will outstrip increased demand and therefore there will be competitive pressure. However, importantly, we still believe that underwriting margins across the majority of business lines will remain healthy and attractive. Much like this year, we have options available to counteract the headwind of softening rate. Firstly, our US operation will continue to mature both via our newly established products and also we will continue to add further product lines. Additionally, as Alex has mentioned, we have successfully completed the purchase of the minority buyer of Syndicate 2010. This is simply more of the business we already underwrite and control but will benefit both our top and bottom line.