Lancashire Holdings Limited

Hello, and welcome to the Lancashire Holdings Limited Q2 2026 earnings call. Throughout the call, all participants will be in listen-only mode, and afterwards, there will be a question-and-answer session. Today, I'm pleased to present Alex Maloney, CEO. Please go ahead with your meeting.

Thank you. Good morning, everyone, and thank you for everyone who joined our call today. As usual, I'll start with the highlights of the six months before handing over to Paul and Natalie to provide more details behind the results. Overall, this has been a strong six-month period for Lancashire, with broadly stable income and an attractive annualised ROE of nearly 20%. This means Lancashire is well positioned to manage and capitalise on the next phase of the insurance cycle. At Lancashire, underwriting comes first and we have a focus on disciplined, profitable growth from a diversified portfolio. You can see the results of this approach in a broadly stable gross return premiums compared with a year ago and an undiscounted combined ratio of 91%. Importantly, we continue to invest in our franchise to diversify our underwriting opportunities. notably with planned expansion in US product lines including inland marine, financial lines and environmental liability. And of course we remain open to opportunities to further build on our highly successful underwriting team. We have made this targeted investment while keeping costs firmly under control, meaning that profit after tax increased by 30% to $142 million and we delivered an annualised ROE of 19.6%. Now thinking about the current environment, let me give you some high level thoughts on where we are in the cycle. As we have seen, pricing across many lines started to soften 12 months ago and in some cases this trend has accelerated in early 2026 as the industry capacity remains abundant. It is important to stress that conditions are not the same everywhere. For example, The pricing pressure appears most acute in property insurance but there is currently less pressure on casualty lines. This makes diversification important. At Lancashire we have a very experienced team who have successfully navigated cycles before and our underwriters are incentivised to deliver appropriate returns whilst remaining relevant to clients. Although others may be tempted to push for growth at any price, It is in our DNA to manage the cycle in a disciplined way and of course we are active buyers of reinsurance. So in this market we can manage our net exposures through more efficient reinsurance programs. Therefore with the tailwind of a good six months financial performance, prudent reserves and a consistently strong capital position, I'm confident that we enter the next phase of this cycle in robust shape and we will be able to deliver resilient lower volatility returns for our shareholders. With the usual caveats regarding the US win season, I'm happy to reiterate that we expect to deliver a high team's return on equity in the current financial year. I will now hand over to Paul to provide more details from our underwriting results.

Thanks Alex and good afternoon everyone. As Alex has just mentioned, it's been a strong underwriting performance in the first six months of the year. The underwriting business we've successfully built over the past number of years was designed to withstand challenges, whilst delivering appropriate return for our stakeholders. Last year we withstood the impact of the large California wildfires, and this year the challenges have been very different. A softening, more competitive marketplace, plus the outbreak of war in the Middle East. The broader, more diversified portfolio and ability to adjust quickly to market conditions allows us to deliver these robust underwriting results. We have the flexibility to adjust risk appetite within product lines as the market environment changes. This allows us to manage the cycle whilst maintaining relevance to our clients and brokers. We'd continue to strengthen our underwriting team with new underwriters and product offerings across multiple distribution channels, further strengthening our franchise value. will continue to attract and retain high caliber underwriters and will strengthen whenever we find the right underwriting talent. With these new lines, we are prepared to be patient in their build out. There will be no unrealistic expectations. The only expectation is that we underwrite any line of business in line with the current market conditions. And as I will explain, not all product lines are moving in the same direction or at the same pace. We have demonstrated repeatedly over the years that we adjust risk appetite and deploy capital as market conditions evolve. This discipline remains central to Lancashire's underwriting culture. We guide into a broadly stable top line and we remain on track to deliver this. Underlying this, however, there are a number of moving parts. There's no arguing that we're in a softening market, with most product lines demonstrating varying degrees of softening. As Alex has mentioned, at the sharper end of the softening are the property lines, with casualty lines far more stable. However, importantly, adequacy does remain across the majority of classes. In certain areas, there is definitely a real need for underwriting discipline, risk selection and the willingness and confidence to walk away from business if adequacy thresholds are not met. That said, there is still plenty of good business with healthy adequacy but there is now far more need for increased scrutiny as to what that business is. This is the stage of the cycle that underwriters need to earn their money. We have previously signalled we have strategically reduced our Inward Retro footprint, a decision driven by the intention to manage earnings volatility and natural catastrophe exposure as we move through this phase of the cycle. Offsetting this has been our increased share of Syndicate 2010 following the buyout of names capacity The continued maturity of Lancashire US, plus some elements of growth in certain specialty lines, both insurance and reinsurance. A number of specialty insurance classes we have seen increased demand for cover and significantly higher pricing for war related exposures, resulting in some additional premium opportunities. More generally, while pricing is moderating We continue to see increased demand and attractive opportunities where expected returns remain commensurate with the risk assumed. We are happy to reiterate our premium guidance as broadly stable, albeit as always with us the usual caveat will be we are not driven by top line targets, only market conditions and underwriting profitability. As we've previously stated, we look to manage our natural catastrophe footprint as we move through the cycle. Our PMLs for major perils and territories are trending downwards. There are two primary drivers of this change. The aforementioned downsizing of our Inward Retro portfolio and the greater use of efficient reinsurance. As market conditions evolve, we are increasingly focused on maximising risk-adjusted returns. The reduction in PMLs reflects this disciplined portfolio optimisation rather than lack of underwriting opportunity. In fact, in our property catastrophe portfolio, we've been able to grow with many of our core clients, but manage this growth with some judicious reinsurance purchasing. In conclusion, we are very happy with the first six months of the year. Yes, market conditions are more challenging than they've been for a number of years, and yes, there have been some challenges to navigate, such as the ongoing war in the Middle East. Yet we have delivered strong, underwriting results, stable top line, managed our risk levels, and continue to build our bench of underwriting talent and products offering. Lancashire was built for changing market conditions. The first half demonstrates that we continue to generate attractive underwriting returns, actively manage risk and allocate capital where we see the best opportunities for our shareholders. I'll now hand over to Natalie.