Lancashire Holdings Limited

Hello and welcome to the Lancashire Holdings Limited Q3 2026 earnings call. Throughout the call, all participants will be in a listen-only mode. And afterwards, there will be a question and answer session. Today, I'm pleased to present Alex Maloney, Group CEO, Paul Gregory, Group CEO, and Natalie Kershaw, Group CFO. Please go ahead with your meeting.

Thank you, of course. Good morning everyone and thank you for everyone who has joined us today. I'm pleased to report that Lancashire's momentum continued in the third quarter, resulting in a strong underwriting and financial performance for the year to date. As usual, Paul and Natalie will provide more detail, but first I would like to emphasise the key points from today's statement. Given the strong performance year to date, we expect to meet the guidance we have given and deliver a high-teens ROE for the current financial year. Due to our strong operational performance so far in 2026 and our robust balance sheet, we have announced a special dividend of £182 million, equivalent to 75 cents per share. This will be paid to shareholders in early December and continues our long-standing approach of returning surplus capital to shareholders as quickly and as efficiently as possible. As we guided at the start of 2026, gross premiums remained stable on an underlying basis and the benefit of business written in prior underwriting years has delivered a modest 1% year-on-year increase in insurance revenue. The loss environment in the quarter was mixed with active man-made losses, including the impact of the ongoing conflict in the Middle East, but a relatively benign catastrophe experience. As usual, we will provide guidance for 2027 when we report the current year's financial results in March. As you know, we are firm believers in the cycle and we will always actively manage our capital to match the underwriting opportunities available. and this has been our guiding principle whatever stage of the market cycle we're in. So of course you should expect to see us maintain a relentless focus on deploying capacity only where risk-adjusted returns meet our expectations whilst remaining committed and relevant to our core clients. Although this means we may limit exposures in some parts of our portfolio, we have a number of levers to help us manage this cycle that were not available or not to the same extent in previous periods, for example. A diversified business has many more product lines, each presenting different opportunities and risk and return profiles. So we can be agile and quickly allocate capital where it makes most sense. As a larger and more diversified group, we can use reinsurance effectively to manage our net exposures whilst maintaining appropriate gross lines. And of course, a benefit of a softening market is that this tool can be used to make us more efficient. Our balance sheet is well capitalised with prudent loss reserves and a conservative positioned investment portfolio that can make meaningful contributions to Lancashire's financial performance. This ability to be agile and to maintain and to remain disciplined as we manage the cycle underpins our ability to deliver attractive returns to shareholders across the whole cycle. Over the past few years, we've made it a priority to attract and retain the best talent in the market. Lancashire has a high-performing, experienced workforce that is deeply invested in the company's long-term success and understands how to navigate market cycles with discipline and confidence. We will continue to add skills, capabilities and product lines to ensure we not only manage this stage of the cycle appropriately, but we are set up for higher levels of growth when the market turns. So as demonstrated by today's trading statement, I believe we are very well positioned as we approach 2027 and the challenges and opportunities it will undoubtedly bring. With that, I will now hand over to PG.

Thank you, Alex, and good morning, everyone. Turning to slide three. Our year-to-date performance reflects the strength and resilience of the Lancashire underwriting franchise. Gross premiums written of £1.8 billion are stable on an underlying basis in line with guidance at the start of the year and market conditions have also been as anticipated with a portfolio RPI of 93%. Within that, we continue to see differing dynamics across the portfolio with the majority of product lines remaining rate adequate. Insurance premiums have increased by 5%, benefiting from growth in energy and marine lines related to both additional premiums associated with marine war and the continued development of Lancashire US. We've continued to add new product lines to Lancashire US, with property facultative reinsurance the most recent addition following environmental liability, financial lines and inland marine earlier this year. We'll enter 2027 with a suite of seven product offerings. In London we've added two product niches to our marine offering following the hiring of two new underwriters which will also be fully up and running in 2027. All of these new product lines will naturally mature in the next few years and we will be patient and build them out in line with market conditions. Re-insurance premiums reduced by six percent primarily reflecting less reinstatement premiums and our deliberate actions to reduce property retrocession exposure as we focus on cycle management and continue to manage catastrophe risk and earnings volatility through the cycle. None of this is accidental. We've consistently said we will hire new underwriters that can add value to our overall underwriting proposition whilst continuing to adjust net risk appetite, portfolio composition and capital deployment as market conditions evolve. The benefit of a larger, more diversified portfolio and product offering is it gives us greater flexibility to manage the cycle. Not all products move at the same pace and are at varying levels of adequacy. Therefore, we have more options to reallocate between products, classes and geographies, bringing lower volatility to both top and bottom line. We also have broader reinsurance options available, allowing us to manage the cycle appropriately, maintain relevance with clients through the cycle. This flexibility and willingness to be agile and disciplined in the face of changing market conditions is one of Lancashire's key competitive advantages and allows us to continue generating attractive risk-adjusted returns even as the market transitions to softer phase of the cycle. Overall, we are very pleased with the under-item performance year to date and it demonstrates the value of our disciplined cycle management approach. We do anticipate the market to remain competitive in 2027 and that is exactly what we have planned for. Our underwriting business is designed to manage the cyclical nature of the industry and will continue to deliver attractive through cycle returns. I'll now hand over to Natalie to discuss our financial performance in more detail.