Annual Report & Accounts 2023

Delivering

together

Holdings Limited

Our culture and focus

enables our success

Our values underpin

everything we do and are

at the core of our culture.

These embedded values create

a culture which delivers in the

right way for all our stakeholders,

as we continue to grow and

move forward.

Strategic report

Delivering together

2 2023 at a glance

3 Key performance indicators

4 Chair’s statement

6 Group Chief Executive’s review

Delivering our strategy

9 Business model

10 Our strategy

12 Financial review

14 Underwriting review

18 Business review

Delivering for our clients

23 Enterprise risk management

28 Principal risks

Delivering for our people

33 Our people and culture

Environmental, social and

governance report

Delivering sustainably

41 Chair’s introduction

43 Our ESG strategy and progress

Sustainability

Delivering for our communities

45 The Lancashire Foundation

49 2023 TCFD Report

65 Delivering responsibly

Governance

Delivering as a responsible business

72 Board of Directors

76 Corporate governance report

80 Section 172

83 Committee reports

101 Directors’ Remuneration Report

118 Directors’ Report

121 Statement of Directors’ responsibilities

Financial statements

122 Independent auditor’s report

131 Consolidated primary statements

135 Accounting policies

148 Risk disclosures

167 Notes to the accounts

Additional information

196 Shareholder information

198 Glossary

205 Alternative Performance Measures

207 Contact information

Leadership

Exhibiting passion and commitment in all aspects of

Lancashire life and inspiring others to do the same, we are…

Aspirational

aspiring to deliver a superior service for our clients,

ourselves and our business partners, we are…

Nimble

in our decisions, actions and business processes, and

considerate of our environment and wider society, we are…

Collaborative

valuing teamwork and a diversity of skills and experience

and sharing in our success, and we are…

Straightforward

in conducting our business inanaccountable, open,

honest and sustainable way.

Our long-term strategy is to manage the market

cycle and deliver strong returns for shareholders

through a portfolio of diversified products.

During 2023, we delivered on those objectives

with a disciplined approach to managing risk.

Find out more about how we’re delivering...

Our purpose – page 9

Our strategy – page 10

For our people – page 33

Sustainably – page 41

For our communities – page 45

As a responsible business – page 65

Delivering

together

1Lancashire Holdings Limited | Annual Report & Accounts 2023

2023 at a glance

2023 was a year

of delivering for all

our stakeholders

We are a provider of global specialty insurance and reinsurance

products offering risk transfer solutions to brokers and clients.

We always strive for long-term and mutually beneficial

relationships with our clients and stakeholders.

A strong, growing and sustainable business

We want to be the best and we are building on our strengths

Delivering

for our clients

Delivering

for our people

Delivering

for our investors

Delivering

for our communities

Our (re)insurance products give people and businesses confidence

to operate, thrive and recover quickly if loss events occur.

Our people are experts in their fields. From underwriting to support

functions, we strive to have strong, diverse and inclusive teams who

are focused on delivering our potential.

During 2023, we paid a total of

Delivering

sustainable operations

.m

donated through the

Lancashire Foundation in 2023



individual organisations supported



employees attended our

Project Transform volunteering

programme in Tanzania

%

of calculated GHG emissions

offset from our own operations

.m

in dividends to

our shareholders



core product groups with

associated business lines



colleagues across our offices

Top

employer in Bermuda in 2023

%

engagement score in

2023 all-staff survey

• New visitor suite opened at our London office

• U.S. office opened to support the expansion of our client offering

.m

gross losses paid in 2023

2 Lancashire Holdings Limited | Annual Report & Accounts 2023

5.7

(3.5)

82.6

98.7*

24.7

(1.2)*

2,072.2

1,850.7

382.1

141.6

9.5

11.7

Change in DBVS

An excellent result due to profit after tax of

$321.5 million, reflecting a strong underwriting

performance complemented by positive

investment returns.

Our shares performed broadly in line with the FTSE

250 in 2023. However, the total shareholder return

of 9.5% was supported by a special dividend of $0.50

per share in the year. This is in line with Lancashire’s

proven track record of returning excess capital to

shareholders over time.

Combined ratio

(undiscounted)

During 2023, we continued to implement our

long-term strategy to manage the market cycle

and deliver strong profitable growth through a

portfolio of diversified products. The combined

ratio (undiscounted) of 82.6% is a strong result

in a year with over $100bn of insured natural

catastrophe events.

Insurance revenue grew 23.9% to $1,519.9 million

driven by growth in casualty reinsurance, specialty

reinsurance, property insurance and energy and

marine insurance. 2023 was reasonably active for

natural catastrophe and weather loss activity and

we also saw some risk losses in our energy classes.

However, none of these were individually material

to the Group.

Total investment return

The Group’s investment portfolio, including

unrealised gains and losses, returned 5.7% in 2023.

The positive returns were driven by $108.5 million

of interest and dividend income as our portfolio

benefited from higher yields. The Group also

benefited from net movement in unrealised gains

on our fixed income portfolios due to the expectation

of rate cuts in 2024.

The Group continues to expand and diversify its

underwriting portfolio by taking advantage of the

current hard phase of the insurance market cycle

and the associated rate increases across multiple

lines of business. In 2023, the Group also announced

the launch of Lancashire Insurance U.S., which

will operate under a delegated underwriting

arrangement with Lancashire’s UK company

platform. Underwriting will commence in 2024.

Key performance indicators

Alternative Performance Measures (APMs).

Refer to page 205.

KPI linked to Executive Directors’ remuneration.

For more information, see pages 101 to 117.

Key

Total shareholder

return

Insurance service result Gross premiums written

under management

.bn.m.%

.% .%

.%

* Comparative figures have been restated to reflect the

adoption of IFRS 9 and IFRS 17.

3Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

“ Our strong performance allowed

us topay a special dividend in

December 2023. A further special

dividend was announced in March

2024, along with an increase inour

ordinary dividend of 50%.”

Peter Clarke

Non-Executive Chair

Chair’s statement

Our strength

and resilience

The Board is very pleased with the

performance of the business during

2023. As part of the Board’s annual

review of Lancashire’s strategic

priorities in 2023, we discussed

and affirmed three areas of focus:

underwriting comes first; balance risk

and return through the cycle; and

insurance market employer of choice.

Lancashire Holdings Limited | Annual Report & Accounts 2023

The management team have been committed to delivering on these

priorities and the performance of the business in 2023 is testament

to their success.

From an underwriting perspective, the business has continued to

grow with the market opportunity. These are some of the best market

conditions in over a decade, and Lancashire has always been a business

that is able to quickly and efficiently match capital to the best

underwriting opportunities. Gross premiums written increased by 16.9%,

and insurance revenue increased by 23.9%, as Alex discusses in his

review on page 6. The growth has come from a more diversified portfolio

which better mixes catastrophe risk with less volatile product lines.

This was the result of a strategic decision to diversify the portfolio that

has been implemented over the past five years, and I am pleased that

we are now seeing the results of that pivot come through in earnings

and in a healthy combined ratio (undiscounted) of 82.6% for 2023.

The performance of the business also resulted in a positive change

in diluted book value per share of 24.7%.

The strength of Lancashire’s business model has also allowed

us to increase our ordinary dividend by 50%.

Lancashire’s strong performance during 2023 was discussed at our third

quarter Board meeting, and the Board was pleased to approve a special

dividend of $119.5 million, which was paid in December 2023. The Board

also approved a buyback of Lancashire’s common shares. However,

no shares were repurchased under the programme. A further special

dividend was announced in March 2024.

While the underwriting result is key, the business has also benefited

from the higher interest rate environment within its investment

portfolio. The portfolio delivered a return of 5.7%, which is a welcome

outcome following the investment market volatility and negative returns

reported during 2022.

As Natalie discusses in her review, Lancashire has an extremely robust

capital position and has ample capital to fund its planned underwriting

during 2024 while rewarding its shareholders. The Group’s reserving

philosophy has traditionally been conservative for both newer and

more established lines of business. That remains the case, and there

are no plans to change this successful approach.

During 2023, the Group has also continued its focus on environmental,

social and governance matters. I discuss these in more detail in the

introduction to the Sustainability and Governance sections of this report,

starting on page 41. As always, I would like to commend the work of the

Lancashire Foundation and its efforts to help those less fortunate. This

includes putting ‘ESG into action’ through volunteering, particularly

through Project Transform, and in assisting a range of causes, which

during 2023 included a specific focus on the environment.

This is my final report to shareholders as I prepare to step down from

my roles as Chair and Non-Executive Director following the 2024 AGM,

having completed nine years’ service. I am delighted that Philip Broadley

has been appointed as Non-Executive Director of LHL and as the LHL

Chair designate. Philip has a wide breadth of experience across the sector

and beyond, and I know the Board and the Company will be in safe hands

under his stewardship.

As I reflect on the past nine years, Lancashire has changed considerably

and has grown from a relatively small underwriter of select risks to a

much larger, diversified business and a respected leader across the (re)

insurance sector. In 2016, my first year as Chair, the business wrote

$633.9 million of premium – and underwrites three times that today.

This growth has been accompanied by a commensurate investment

across our business in underwriting, actuarial and support functions.

Lancashire’s product suite has also expanded with the introduction of

many new lines of business. While catastrophe risk is still a significant

part of the portfolio, the less volatile lines now add ballast to the

business. Lancashire remains a lean and efficient company and is able

to react quickly when the right opportunities are available. None of this

could have been achieved without a dedicated and committed team and

I would like to thank Alex, Natalie and Paul, and the other members of

the management team, for their leadership. It has not always been easy

and we have seen some challenging periods, but I am confident that the

business is in excellent hands and that their passion for ongoing success

will be realised. I know that this commitment to the business is shared by

all employees across the Group, and I would like to thank them for their

hard work, enthusiasm and good humour. The Group’s headcount has

grown from 198 in my first year as Chair to nearly 400 today. Despite

this rapid expansion, Lancashire has retained its distinctive and vibrant

culture and will continue to do so.

So, as I sign off for a final time, I would like to thank all my colleagues

at Lancashire, my fellow Board members, both past and present, and

our shareholders for their fantastic support and dedication during my

tenure as Chair. I am extremely proud to have been the Chair of this

great company that places its clients, business partners, shareholders,

people and all stakeholders at the centre of everything it does. I offer

everyone at Lancashire my very best wishes for the future, and I look

forward to the continued success of the business in 2024 and beyond.

Chair designate Philip Broadley

Philip Broadley was appointed as a Non-Executive Director

in November 2023. Philip was also identified as the Chair

designate, and his appointment as Chair is expected to take

effect immediately following Lancashire’s 2024 AGM in

May 2024, subject to shareholder approval.

Philip is Senior Independent Director and Audit Committee Chair

at AstraZeneca PLC and a Non-Executive Director of Legal &

General Group Plc, and has held senior roles across financial

services, including as Group Finance Director at Prudential plc

and Old Mutual plc. He has also served as Chair of the 100 Group

of Finance Directors and as a member of the Code Committee of

The Takeover Panel.

Philip said: “Lancashire is in a period of robust growth in a strong

market environment. I join a business which is in very good hands.

I am extremely pleased to accept my appointment to the Board.

I look forward to working with Alex and all my colleagues at

Lancashire and to leading the LHL Board as Chair following

the 2024 AGM.”

5Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

“ At the heart of our business is our belief in

the importance of managing the cycle. This

means we will take opportunities to grow

when the environment is right and, during

2023, we continued to focus on writing

profitable business during the best market

conditions we have seen for a decade.”

Alex Maloney

Group Chief Executive Officer

Delivering our growth

and profit ambitions

I am extremely pleased with

Lancashire’s performance in 2023, its

development as a growing organisation,

and the future opportunities we see.

Group Chief Executive’s review

6 Lancashire Holdings Limited | Annual Report & Accounts 2023

We have delivered on our growth and profit ambitions, delivered for our

people, and within our communities. We have achieved this through our

unique culture and way of approaching our work and, as I look into 2024,

I am extremely encouraged by the opportunities that await us and our

ability to continue to deliver on our strategic objectives.

Delivering our growth and profit ambitions

At the heart of our business is our belief in the importance of managing the

cycle. This means we will take opportunities to grow when the environment

is right and, during 2023, we continued to focus on writing profitable

business during the best market conditions we have seen for a decade.

Gross premiums written increased by 16.9%, and insurance revenue

increased by 23.9%, during the year, due to a combination of new

business and rate rises across our portfolio. The insurance service result

increased by 169.8%. This excellent underwriting performance resulted

in a combined ratio (undiscounted) of 82.6% and, as our 2023 results

demonstrate, we have built a better balanced and more diverse

underwriting portfolio, which generated more profit against our capital

base. Our ultimate goal at Lancashire is to maximise risk-adjusted returns

for our shareholders. Our diversified product mix means we aim to have

lower earnings volatility and the ability to produce better returns on

capital and grow our diluted book value per share over the long term.

Due to the strong operational performance during the year, in the third

quarter we announced a special dividend of $0.50 per share. At its March

2024 meeting, the Board also agreed a further special dividend of $0.50

per common share.

We are always led by the underwriting opportunity, and we believe there

are significant opportunities going into 2024. We are well capitalised to

be able to fund those opportunities through internal earnings growth

while also rewarding our shareholders.

While Lancashire remains a significant insurer of catastrophe risk, since 2018

we have invested in our underwriting teams and added new product lines

that better balance that risk and inherent volatility. At the same time, we

have benefited from the positive underwriting conditions for catastrophe

business during the past 12 months. This mix of products during this phase

of the market cycle has resulted in higher returns and this has improved

our portfolio’s overall resilience to the impact of catastrophe losses.

We have now shown that we can manage volatility through a balanced

portfolio whilst also substantially growing the business. During 2023,

Lancashire did not incur any individually material catastrophe or large

risk losses and we were able to release reserves on prior years. As Natalie

discusses in her review on page 12, allocating our capital to the most

profitable opportunities remains our focus.

Delivering for Lancashire’s people

and communities

We are fundamentally a people business, and we believe that focusing on

our people as part of our strategy is crucial to our ongoing success. We

instil high expectations in our people and aim to offer a culture that is

diverse, unique and special. My role as CEO is to keep that positive culture

alive because it seeps into all areas of our business. The promise we make

to our people is that we will give them every opportunity to thrive and

develop their careers. The growth we have seen over the past few years

has increased the scope of the opportunities available. We also want to

reward people for their hard work, and I am always proud to be able to

announce our internal promotions – and we made 46 of those during

2023. We are all invested in Lancashire and committed to success.

I’ve been at Lancashire for 18 years, Paul Gregory has been here for 16 years

and Natalie Kershaw for 14 years. We also have underwriters who have

been with us for all or the majority of their careers. This tells its own story

– that we have a dedicated team who like what we do and how we do it.

That doesn’t mean we are afraid to question ourselves, but we always do

that in a positive way for a better outcome. We have also been incredibly

successful at attracting new talent to the Group in recent years to help us

challenge how we work across both underwriting and support services.

I was particularly pleased with the results of our 2023 employee survey

which showed strong support for our culture and the experience we offer

our people. Our overall engagement score (a common way to track how

companies are doing based on four core questions: recommending a

business as a good place to work, feeling proud to work there, being

motivated to do your best work, and intention to stay) was 90%. It’s an

important measure, and one that has increased since our last survey in

2021 and is 14 points higher than our peer benchmark. Our highest scores

were for being proud to work at Lancashire at 94%, while 92% of people

responding said they are motivated to do their best work and would

recommend Lancashire as a great place to work. This is great feedback,

showing that we are on the right path, and I look forward to developing

this engagement even further in 2024 and beyond (please see page 33

for more information).

Aside from our strong financial performance, I am also pleased with our

continued focus on environmental, social and governance matters. This

is particularly the case in our communities, where our ethos is supporting

those less fortunate through the work of the Lancashire Foundation.

During 2023, 12 employees travelled to Tanzania to assist with a

construction project and we believe it is initiatives like this that bring

social responsibility to life (please see page 48 for more information).

Seizing the opportunities and looking

ahead to 2024

During 2023, we announced the first significant geographical expansion

of our business since our inception. Lancashire Insurance U.S. will operate

under a delegated underwriting arrangement with Lancashire’s UK

company platform. It will allow us to write business that we could not

access before through new distribution channels and with new clients.

This development has been driven by the compelling underwriting

opportunity that we see in the U.S. Excess and Surplus market.

While we are being conservative in our initial approach, with our

reputation for underwriting excellence and service to our clients we

are excited by the long-term opportunities that we see. There will be

significant opportunities for Lancashire in 2024 with the continuing

strong rate environment across our product suite. Our strong capital

base means we will continue to write profitable business that is within

our appetite and respond quickly to new opportunities.

I remain focused on delivering our objectives and continuing the growth

and momentum we have built during 2023. Our franchise remains

resilient, and we have fantastic teams across the Group who are

dedicated to achieving our goals.

I would like to thank everyone at Lancashire for their hard work during

2023 and their commitment to the business. Going into 2024, we have

a strong vision for the future, and we have the right people, products

and operational expertise to deliver it.

7Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Delivering

our strategy

“Our franchise remains

resilient and we have

fantastic teams across the

Group who are dedicated

to achieving our goals.”

Group CEO

Alex Maloney

8 Lancashire Holdings Limited | Annual Report & Accounts 2023

Our purpose

Our business model

Our people

%

of employees say

they are proud to

work at Lancashire

Our policyholders

.m

gross losses paid in 2023

Our shareholders

.%

change in diluted

book value per share

Society

m

donated through the

Lancashire Foundation

since 2007

The environment

,

carbon credits purchased

to support our continued

carbon-neutral status

Delivering value for

Business model

Deliver bespoke risk

solutions that protect

our clients and support

economies, businesses and

communities in the face of

uncertain loss events.

Support our people and

work with our stakeholders,

fostering a positive,

sustainable and open

business culture to the

benefit of society.

Our vision is to be the leading underwriter of specialty insurance and reinsurance products.

We work to deliver that vision through our business model which focuses

on our core strengths.

• We value our long and mutually beneficial relationships with our clients and brokers

• Our aim is to enable our clients to recover from loss events as soon as practicable

• We focus on customer service and ensure we are responsive, open and honest at all times

• Our experienced management team has a diverse skill set and is focused on delivering our strategy

• We have skilled teams across the Group and make decisions quickly and effectively through our lean

business operations

• We offer highly-specialised multi-class products with market barriers to entry

• We maintain rigorous systems for risk monitoring and management

• Our strong track record of capital management is central to our strategy

• We manage our underwriting portfolio through market cycles and reduce volatility

by optimising our capital

• We have the ability to write business across our platforms

• Through access to multiple markets we provide clients with bespoke solutions and ourselves

with underwriting opportunities

• We have a stable core book of business and disciplined underwriting approach

Expert people and

specialised products

Customer focus

Disciplined risk and

capital management

A diverse offering

Manage our risk exposures

and capital resources

to generate returns for

our investors.

9Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Our strategy

Focusing on

our strategy

Our goal is to

maximise risk-adjusted

returns for our

shareholders

Profitable

growth

Our speed and agility in the

way we manage volatility

helps us underwrite our

core portfolio profitably

through the cycle, as well

as enabling us to explore

opportunities for growth in

markets where we believe

the right long-term

opportunities exist.

Maximise

risk-adjusted

returns

Rigorously monitor and

manage our risk exposures

alongside capital availability

to enable us to operate

efficiently whilst seizing

opportunities when they

present themselves.

Positive culture

enables sustainability

Maintaining our positive culture and the ability to retain

and attract the best talent is key for success, coupled with

a strong focus on profitability and risk selection.

10 Lancashire Holdings Limited | Annual Report & Accounts 2023

Underwriting

comes first

Strategic pillar Objective

Profitable

growth

• Continue to grow in classes

where favourable and improving

market conditions exist, and

explore new distribution

opportunities

• Reduce earnings volatility from

natural catastrophe risk

• Focus on maintaining a

diversified portfolio structure

and our core clients

Focus

• Gross premiums written of

$1,931.7 million in 2023

• Insurance revenue of

$1,519.9 million in 2023

• New U.S. operation to begin

underwriting in 2024

Delivery

Balance risk and

return through

the cycle

Strategic pillar Objective

Maximise

risk-adjusted

returns

• Actively manage capital to

support underwriting

opportunities

• Deploy capital quickly when it

is needed and have the discipline

to return it when it is not

• Encourage a culture of risk

challenge, questioning and

understanding

Focus

• Total capital available of

$1,954.5 million

• Total dividends paid to

shareholders of $155.3 million,

including special dividend

announced in Q3 2023 due to

strong operational performance

Delivery

Insurance market

employer of

choice

Strategic pillar Objective

Positive

culture

enables

sustainability

• Foster entrepreneurial,

collaborative culture via

Lancashire values

• Further develop the Group’s

ESG principles to ensure we

operate responsibly as a business

• Continuously strive for

operational efficiency alongside

development of data capabilities

Focus

• Five-star employer award from

survey organisation WorkBuzz

• 90% Group-wide

engagement score

• First ClimateWise report

published detailing progress

on climate risk

Delivery

11Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Lancashire’s strong financial

performance in 2023 clearly

demonstrated the benefits of our

growth and diversification strategy.

For the year ended 31 December

2023

2022

Highlights

Gross premiums written 1,931.7 1,652.3

Insurance revenue 1,519.9 1,226.5

Insurance service result 382.1 141.6

Net investment return 160.5 (76.7)

Profit (loss) after tax 321.5 (15.5)

Dividends

155.3 36.2

Net insurance ratio 65.1% 83.4%

Combined ratio (discounted) 74.9% 90.2%

Combined ratio (undiscounted) 82.6% 98.7%

Total investment return 5.7% (3.5%)

Diluted book value per share $6.17 $5.48

Change in diluted book value per share 24.7% (1.2%)

1. Comparative figures have been restated to reflect the adoption of IFRS 9 and IFRS 17.

2. Dividends are included in the financial statement year in which they were recorded.

Financial review

Natalie Kershaw

Group Chief Financial Officer

A diversified and

capital-efficient portfolio

12 Lancashire Holdings Limited | Annual Report & Accounts 2023

Our long-term aim has been to develop a more diversified and

capital-efficient portfolio as we spread risk across catastrophe

and non-catastrophe related business.

This approach has resulted in a robust underwriting profit and

an undiscounted combined ratio of 82.6%, while maintaining

our usual discipline and focus on balancing risk and return.

Our strong operating performance and very healthy capital position

meant we were able to announce a special dividend of $0.50 per share at

our third quarter results, as well as a potential share buyback scheme of

up to $50 million. In March 2024 we also announced further capital

return actions, including a 50% increase in our ordinary dividends. This

illustrates the benefit of our diversified portfolio alongside our

considered approach to balancing our capital requirements – shaped by

the underwriting environment – and rewarding our shareholders.

Our undiscounted combined ratio of 82.6%, or 74.9% on a discounted

basis, translated into a net insurance services result of $382.1 million.

This was an increase of 169.8% compared to the same period last year.

The benefit of our growth over the last few years and additional

premiums written in newer and existing product lines resulted in

insurance revenue of $1,519.9 million, a 23.9% increase compared

to 2022.

Our overall profit after tax for the year was $321.5 million, resulting

in a change in diluted book value per share of 24.7%.

During 2023, market loss environment was reasonably active with

estimates for global insured losses from natural disasters hitting

$118 billion, according to Aon research. This is more than 30%

higher than the average since 2000.

Despite this, Lancashire did not incur any individually material loss

events. Total catastrophe, weather and large losses, (undiscounted

and net of reinstatement premiums), were $106.1 million.

The benefits of our diversification strategy to better balance the portfolio

and our established underwriting discipline and risk selection expertise

are clear in this context.

Lancashire has always maintained a conservative reserving philosophy

and this has continued in 2023. The confidence level of our net insurance

reserves is 88%, with a net risk adjustment of $239.1 million, or 16.7%

of net insurance contract liabilities. Our confidence level remains within

our preferred range of 80%-90%.

Additionally, favourable prior year loss development totalled

$78.8 million, primarily due to releases on the 2022 and 2021 accident

years across most lines of business. During 2023, our estimate of

potential claims from the conflict in Ukraine has remained stable.

Within our investment portfolio we have benefited from higher interest

rates and the portfolio returned 5.7% during the year, resulting in a

net investment return of $160.5 million. The overall credit rating of

our investment portfolio is AA-. We have always maintained a relatively

conservative investment portfolio. During 2024, we plan to modestly

increase the duration of the portfolio but we do not intend on making

any material changes to our investment strategy.

All in all, 2023 was a very strong year for Lancashire in which we were

able to demonstrate that we are delivering on our strategic objectives

through disciplined underwriting and maximising risk adjusted returns.

While we were able to return some capital to shareholders in 2023, we

ended the year with a strong capital position from which we can fund

future growth in 2024. Looking forward, active capital management

will continue to be at the heart of how we run the business.

This Annual Report is our first since the implementation of the IFRS 17

accounting standard. Although this has been a significant change in the

presentation of our financial performance it has not had a significant

impact on financial performance in 2023.

I would like to thank all my colleagues in the finance and actuarial teams

for their hard work and diligence during 2023 in preparing our financial

reports on the new basis. This has been a fantastic team effort and I am

extremely grateful for the expertise and commitment they have brought

to the task of continuing our established focus on transparency.

What is your thinking regarding

Lancashire’s capital requirements going

into 2024?

We have always focused on balancing risk and return through

the market cycle, and we manage our capital to support the

underwriting opportunities that we see. Our success has been

built on being able to deploy capital quickly when it’s needed

but also having the discipline to return it when it’s not. In fact,

Lancashire has returned approximately $3 billion since inception

and raised about $550 million. We believe that there will be

significant opportunities for Lancashire in 2024, and we are

confident that we have the capital headroom to make the

most of those opportunities, including the U.S. operation.

So, overall, the work we have put in to diversify the business puts

us in a really strong position to maximise the market opportunity

from a solid base. Our focus is always to provide the best returns

for our shareholders, and we will deploy our capital where it

makes the most sense and offers the greatest rewards.

A diversified and

capital-efficient portfolio

13Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Underwriting review

The intention of this strategy has been to build out a more robust

portfolio that allows us to better absorb the inherent volatility of

the business we underwrite. Whilst we have seen continued rating

momentum over the past five years, there was a more marked

improvement in trading conditions in 2023 and this allowed us to

continue to deliver on our strategy. We are clearly seeing the benefits

of the investments in our business we have made alongside the improved

market conditions in our 2023 underwriting result. All classes within our

underwriting portfolio have contributed to an exceptional underwriting

result with an undiscounted combined ratio of 82.6%, which results in

an insurance service result of $382.1 million.

Our underwriting strategy has remained

simple since inception. We look to

actively manage the underwriting cycle.

Since 2018 we have been growing and

diversifying our underwriting portfolio,

taking advantage of market conditions

that have been improving each year.

Paul Gregory

Group Chief Underwriting Officer

A more robust

portfolio

14 Lancashire Holdings Limited | Annual Report & Accounts 2023

Loss activity from natural catastrophes continued around the world

in 2023, creating devastating consequences for those affected and

leading to significant economic and insured losses. It was another year

where estimated insured losses from natural catastrophes were above

$100 billion, ranging from the earthquake in Turkey and Syria, hurricanes

in Mexico, cyclones in Asia, to wildfires and severe convective storms

in the U.S. and storm activity in Europe. Given the changes to our

catastrophe exposed products in rating, attachment levels and structure

we have been able to produce profitable underwriting returns despite

a reasonably large amount of loss occurrences and cost.

The geopolitical tensions of 2022 continued throughout 2023. The

conflict in Ukraine continues with little sign of relenting, and the conflict

between Israel and Gaza adds to increased tensions in the Middle East.

Events such as these have far-reaching humanitarian and economic

consequences and undoubtedly bring loss exposure to the (re)insurance

market. The financial impact to (re)insurers remains uncertain, also

bringing with it a number of challenges and complexities for the

broader market and Lancashire. Whilst we have exposure to such

events, this has remained very manageable and within our risk

tolerances and expectations.

The market conditions in 2023 have been the most favourable we

have seen in over 10 years. The underwriting environment was very

supportive, as demonstrated by a portfolio RPI of 115%. Every class of

business delivered a positive year-on-year rate increase. For the majority

of product lines 2023 was the sixth straight year of positive rating. Given

that the market has struggled to make adequate underwriting returns

over the past few years this adjustment was needed.

It is these strong market conditions, as well as the continuing maturity

of newer lines of business that have allowed us to grow premiums by

16.9% to $1.9 billion – a record high for the Group. Since the turn of

the market in 2018 we have more than tripled our premiums, matching

our long-held strategy of managing the cycle. Whilst we anticipate a

more stable market in 2024, we again expect to grow our underwriting

footprint, supported by the creation of Lancashire U.S.. This is an exciting

next development for the Group, and a good example of the continued

investment in people within the underwriting function. It will be

spearheaded by Huw Jones as the CEO of that operation as he moves

from his role of Group Head of Specialty. We have a long tradition

of promoting from within to strengthen our underwriting team and this

continues to be a vital part of our continued success. Complementing

this, we continue to hire quality individuals externally to bring new

thoughts and ideas as our underwriting function evolves.

The dynamics across all our business segments have varied and we

cover these more specifically in the analysis that follows.

“Strong market conditions, as well as the continuing maturity

of newer lines of business, have allowed us to grow premiums

by 16.9% to $1.9 billion – a record high for the Group.”

Gross premiums written $m Insurance revenue $m RPI

Segment 2023 2022 Variance 2023 2022 Variance 2023 2022

Reinsurance 967.5 842.1 125.4 714.9 560.4 154.5 122% 108%

Insurance 964.2 810.2 154.0 805.0 666.1 138.9 110% 108%

Total 1,931.7 1,652.3 279.4 1,519.9 1,226.5 293.4 115% 108%

15Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Reinsurance

Our reinsurance segment contains casualty reinsurance, property

reinsurance and specialty reinsurance. There has been significant

premium growth during 2023 of approximately 14.9%, with an

RPI of 122%. This was expected given the continued build-out of

casualty reinsurance and the strong rating environment for property

and specialty reinsurance.

Casualty reinsurance comprises casualty, professional and financial

lines, and accident and health reinsurance. The rating environment for

all these sub-classes has been broadly stable with an RPI of 101%.

Growth came from the continued maturity of the casualty sub-class and

professional and financial lines sub-classes. For the casualty sub-class

we are now close to a mature portfolio and if market conditions remain

broadly stable then we will not see the same levels of growth we have

seen in prior years. We understand that the inflationary and recessionary

environment can bring challenges to some of these longer tail classes.

Having entered these classes very recently, we have no legacy portfolio,

where reserve deterioration can become a negative drag on results, and

rating levels remain at historical highs. Whilst old casualty years written

before our entry into the class have no direct impact on our portfolio,

we continually review loss trends to ensure we are satisfied with the

underlying margin of our book. Our underwriting and reserving approach

to these lines will remain prudent as we build out this portfolio.

Property reinsurance comprises our catastrophe-exposed reinsurance

classes, as well as our excess of loss risk and other property treaty

portfolios. As anticipated, we saw a very dislocated market in 2023;

this is seen in the RPI of 134% for property reinsurance. There was a real

disconnect between demand and supply which resulted in hard market

conditions. Inflationary pressure pushed demand whilst supply was

restricted as carriers pulled back risk levels following multiple years

of inadequate returns. As significant as rate change was, the changes to

product structure and attachment levels meant the reinsurance product

moved toward one of balance sheet protection rather than an earnings

protection for buyers. This means that cedants have to retain more risk

before their reinsurance coverage is triggered. For reinsurers this

insulates the portfolio from the frequency of small to mid-size losses.

The value of these changes in structure was seen in underwriting results

during 2023. Despite a reasonable amount of loss activity, the majority

of losses were small to mid-size, with less impact to reinsurance products

than there would have been in prior years. In line with the Group’s

overall appetite for catastrophe risk, our aim was to keep net catastrophe

risk broadly stable year on year whilst optimising the portfolio. The hard

market conditions allowed us to achieve this objective in 2023. In 2024,

we will continue to optimise the portfolio, and anticipate a more stable

rating level.

Specialty reinsurance comprises our reinsurance offering for classes

such as aviation, marine and energy, as well as our property retrocession

portfolio. The rating environment across all of the sub-classes remained

positive during 2023, with an RPI of 138%. We continue to build out

our specialty treaty account in areas such as energy, marine and political

violence, adding to the already well-established sub-classes of aviation

reinsurance and property retrocession. Much like our property

reinsurance class, our risk appetite for the property retrocession

sub-class was broadly stable as we look to maintain the Group’s

natural catastrophe footprint. In line with the market our retrocession

portfolio increased in attachment point which insulated it from natural

catastrophe losses during 2023, yielding profitable underwriting results.

We have seen significant hardening in the aviation reinsurance market

as prior year market losses have deteriorated and capacity from a

number of carriers reduced. In the specialty classes we had modest

exposure to events, such as political unrest in the Middle East and

some large energy losses.

Insurance

Our insurance segment includes aviation insurance, casualty insurance,

energy and marine insurance, property insurance and specialty insurance.

We have seen another year of growth opportunities across this segment

with rates positive across all classes. The insurance segment RPI for 2023

was 110% with premium growth of approximately 19.0%. A combination

of the positive rating environment, inflationary pressure increasing values

at risk and the continued build out of new teams has contributed to the

growth we have seen in 2023.

Aviation insurance saw a less dramatic year than 2022. As a result of

the uncertainties arising from the Russia / Ukraine conflict the aviation

market hardened again during 2023 as is demonstrated by an RPI of

112%. The aviation industry itself continues to successfully rebound

strongly from COVID-19, with passenger demand continuing to climb

globally which aids demand for the product. Within our portfolio there

are sub-classes that are broadly stable from a rating perspective, given

rates have increased steadily over the past five years but remain at

healthy levels. War/terrorism exposed products have continued to

see meaningful increases in rating levels, which skews the overall RPI

positively. We remain underweight within certain segments of the

aviation portfolio where rating is inadequate for a broader risk appetite.

Should market conditions change, we would broaden our appetite, in

line with our overall underwriting strategy.

.%

increase in gross premiums written

Underwriting review continued

16 Lancashire Holdings Limited | Annual Report & Accounts 2023

Casualty insurance is a small segment of the business and comprises

our accident and health insurance sub-class and a small amount of

professional lines insurance which is adjunct to our casualty reinsurance

class. Market conditions remain positive with an RPI of 102%.

Energy and marine insurance provides products across the spectrum

of the marine and energy sectors. The rating environment has remained

positive, with an RPI of 107% for 2023. Whilst each product was driven

by its own dynamics, all saw rate increases.

The challenges of inflation, volatile commodity prices and political unrest

remain. Both the marine and energy industries have long been exposed

to these risk factors, which we always consider in our underwriting

decisions when assessing risk. Importantly, we consider such events

both in terms of risk, as well as potential opportunity. Growth in our

cargo book, for example, has been aided not only by rate improvement

but also by the value of goods and commodities in transit rising which

increases the values at risk and also the demand for the product and

associated premium volumes. And within certain classes such as

upstream energy, there remains an abundance of insurance capacity

due to relatively low insured losses.

We continue to expand our knowledge and underwriting expertise to

support the transition within the energy sector, in line with our stated

strategy. The industry needs to evolve by offering products and services

that cater to the changing risks our clients face. Insurance will continue

to be a key risk management tool for the industry, supporting global

net-zero goals and the wider transition. Please see the ESG report

starting on page 41 for more information.

Property insurance comprises property direct and facultative

insurance and construction insurance. Trading conditions have been

very favourable with an RPI of 117% which is the highest within the

insurance segment. Premium growth in property insurance this year has

been driven by the favourable rating environment, inflationary pressures

increasing demand, and significantly reduced capacity for natural

catastrophe exposed risks. We anticipated favourable market conditions

but our expectations were surpassed with more rate and demand flowing

through. Our property offering in Australia has continued to mature well

as market conditions have been supportive. We anticipate similar success

in the U.S. with property insurance being a cornerstone product offering

of this new venture. The construction team continued their impressive

development since joining the Group with favourable market conditions

allowing us to develop this class ahead of expectations. Attractive

market conditions continue to support our property insurance segment

in 2024 and this combined with the opening of the U.S. operation should

provide ample profitable growth opportunities.

Specialty insurance comprises our terrorism, political violence and

political and sovereign risks sub-classes. Following the conflict in

Ukraine last year, the terrorism and political violence market saw rate

improvement in 2023 – the first year for many years that has happened.

The RPI of 102% is driven by the positive rate change in terrorism and

political violence sub-classes. The world continues to be an extremely

volatile place amplified in 2023, with the continuation of the conflict in

Ukraine and the conflict in Israel and Gaza both adding further pressure

to global geopolitical tensions. We continue to navigate these challenges

in our underwriting and to date any losses have been very manageable.

As ever we remain vigilant to the ever-changing risk landscape and how

this should influence our underwriting decisions. The political and

sovereign risk portfolio is predominantly non-renewable business and

therefore is not subject to RPIs but the rating levels remain strong

against this backdrop, and the higher-interest rate environment has

seen improvement in the underlying terms and conditions. We have

delivered strong premium growth in these classes with a number of

new opportunities. The outlook for 2024 is currently relatively stable

from a rating perspective but, as the broader landscape remains volatile,

this is a class that could change quite quickly.

We are extremely proud of what the underwriting team achieved

in 2023. We almost certainly have the most robust underwriting

portfolio in our history. Rating adequacy in almost all of our products

is in a very strong position. The successful diversification of product lines,

investment in our underwriting team and growth at the right time in the

market cycle has created an excellent foundation to continue to develop

our underwriting footprint in the coming years.

We have always said that underwriting is a team sport, and the

exceptional underwriting result in 2023 is because of the underwriters

and all those across the business that support them in delivering

together as a team.

“ We almost certainly have the

most robust underwriting portfolio

in our history.”

Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

For the year ended 31 December 2023 31 December 2022

Reinsurance

Insurance

Total

Reinsurance

Insurance

Total

Gross premium written 967.5 964.2 1,931.7 842.1 810.2 1,652.3

RPI 122% 110% 115% 108% 108% 108%

Insurance revenue 714.9 805.0 1,519.9 560.4 666.1 1,226.5

Insurance service expenses (254.2) (442.0) (696.2) (528.3) (466.3) (994.6)

Insurance service result before reinsurance

contracts held 460.7 363.0 823.7 32.1 199.8 231.9

Allocation of reinsurance premium (174.6) (250.2) (424.8) (152.7) (219.1) (371.8)

Amounts recoverable from reinsurers (78.2) 61.4 (16.8) 140.0 141.5 281.5

Net expense from reinsurance contracts held (252.8) (188.8) (441.6) (12.7) (77.6) (90.3)

Insurance service result 207.9 174.2 382.1 19.4 122.2 141.6

Net insurance ratio 61.5% 68.6% 65.1% 95.2% 72.7% 83.4%

Other operating expenses 9.8% 6.8%

Combined ratio (discounted) 74.9% 90.2%

Combined ratio (undiscounted)

82.6% 98.7%

1. The combined ratio (discounted and undiscounted) is the ratio, in per cent, of the sum of net insurance expense plus all other operating expenses to net insurance revenue.

James Irvine

Group Chief Underwriting Officer

– Reinsurance

James Flude

Group Chief Underwriting Officer

– Insurance

Gross premiums written

Gross premiums written increased by $279.4 million or 16.9% during

2023 compared to the same period in 2022. Excluding the impact of

reinstatement premiums and multi-year contracts, underlying growth in

gross premiums written was 17.8%. The Group’s two principal segments,

and the key market factors impacting them, are discussed below.

Reinsurance segment

The increase in the reinsurance segment was primarily driven by new

business in the casualty reinsurance classes as well as the continued

successful build out of our specialty reinsurance classes in a strong

rating environment. The property reinsurance classes also benefited

from strong RPIs and new business, albeit these were somewhat offset

by a lower level of reinstatement premiums than in 2022 due to higher

catastrophe losses in that year. Overall, the RPI was 122% for the

reinsurance segment up from 108% in the prior year.

Insurance segment

The increase in the insurance segment was primarily due to strong

growth in our property insurance lines of business, which include

property direct and facultative and also property construction. In these

classes we are seeing the benefit of a strong rating environment and also

a more mature book of business following the decision to add new teams

in recent years. Gross premiums written in the energy and marine lines

also increased meaningfully with new business across all lines of business

and rate and exposure increases in power and energy liabilities classes.

To a lesser extent, new business contributed to growth across all of our

casualty insurance lines of business. Rate and exposure increases were

the driver of growth in aviation insurance. Overall, the RPI was 110% for

the insurance segment.

Underwriting results

Business review

18 Lancashire Holdings Limited | Annual Report & Accounts 2023

Insurance revenue

Insurance revenue comprises gross premiums earned less inwards

reinstatement premium, and is net of commission costs. Insurance

revenue increased by $293.4 million or 23.9% in 2023 compared to the

same period in 2022. The market factors driving the increase in casualty

reinsurance, property insurance and energy and marine insurance gross

premiums written also drove the increase in insurance revenue

recognised in the period.

Allocation of reinsurance premiums

Allocation of reinsurance premiums comprises ceded earned premium

less outward reinstatement premiums, and is net of outward commission

costs. Allocation of reinsurance premiums increased $53.0 million or

14.3% in 2023 compared to the prior year. This increase was largely

the result of the rate increases experienced upon renewal of the Group’s

outwards reinsurance programme, additional cover purchased for

some of the newer lines of business and a higher level of quota share

reinsurance spend driven by the growth in insurance revenue. Overall

the allocation of reinsurance premiums as a percentage of insurance

revenue was 27.9% down from 30.3% in the prior year.

Net claims

During 2023, the Group experienced net losses (undiscounted, including

reinstatement premiums) from catastrophe, weather and large loss

events totalling $106.1 million. None of these events were individually

material for the Group.

In comparison, during 2022, the Group experienced net losses

(undiscounted, including reinstatement premiums) from catastrophe,

weather and large loss events of $329.4 million. Within this, catastrophe

and weather related losses for the year ended 31 December 2022, were

$232.4 million. This included $181.0 million from hurricane Ian. Large

losses for the year amounted to $97.0 million.

Prior year development comprises the undiscounted movement in loss

reserves, expense provisions and reinstatement premiums. Favourable

development was $78.8 million in 2023 compared to favourable

development of $134.3 million in 2022. In 2023, there were reductions

in reserves for some of the 2022 natural catastrophe events. The 2022

year included reserve reductions from natural catastrophe loss events in

the 2019 and 2018 accident years as well as relatively large beneficial

claims settlements on risk losses in the 2017 accident year.

Net discounting benefit

The table below shows the total net impact of discounting, by financial

statement line item.

For the year ended 31 December 2023

Insurance

contracts issued

Reinsurance

contracts held

Total

Initial discount included in

insurance service result 101.9 (17.2) 84.7

Unwind of discount (84.2) 28.4 (55.8)

Impact of change in

assumptions (14.1) 3.3 (10.8)

Finance (expense) income (98.3) 31.7 (66.6)

Total net discounting

income 3.6 14.5 18.1

For the year ended 31 December 2022

Insurance

contracts issued

Reinsurance

contracts held

Total

Initial discount included in

insurance service result 109.1 (36.6) 72.5

Unwind of discount (39.7) 13.7 (26.0)

Impact of change in

assumptions 59.8 (20.4) 39.4

Finance income (expense) 20.1 (6.7) 13.4

Total net discounting

income (expense) 129.2 (43.3) 85.9

In 2023 discount rates across all our major currencies were at a relatively

high level throughout the year with a small decrease in the fourth

quarter. This drove the high initial discount impact and relatively low

change in assumption impact.

In comparison, 2022 began in a relatively low discount rate environment,

which then experienced significant increases across all currencies

throughout the year. This increase in rates resulted in a favourable

$39.4 million impact from the change in discount rate assumptions.

This was only partly offset by $26.0 million unwind of the initial discount

previously recognised in relation to prior accident years that had been

set in a lower rate environment.

19Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Investment results

Business review continued

Investments and liquidity

Since inception, the primary objectives for our

investment portfolio have been capital preservation

and liquidity, and we position our portfolio to limit

down-side risk in the event of market shocks. Those

objectives remain unchanged and are more important

than ever in today’s volatile markets. The year started

with elevated yields, which only continued

throughout the year, finishing with a 5.7% return.

The higher yield environment was a positive for

the reinvestment of income, maturities and sales

of securities. While rates were higher, there was

continued volatility with respect to geopolitical

tensions around the world and risk of a U.S. recession,

given the inverted yield curve. However, despite the

inverted yield curve, fundamentals remain strong

in the U.S. and recession risk has reduced toward

the latter part of the year. Given the volatility

and inverted yield curve, we remain cautious

but will look to modestly increase duration in

the first half of 2024. We will continue to maintain

a short, high credit quality portfolio with some

portfolio diversification to balance the overall

risk-adjusted return.

Our portfolio mix illustrates our conservative

philosophy, as shown in the chart below.

Investment performance

Net investment income, excluding realised and

unrealised gains and losses, was $108.5 million in

2023, an increase of 94.8% compared to 2022. Total

investment return, including net investment income,

net realised gains and losses and net change in

unrealised gains and losses, was $160.5 million in

2023 compared to a loss of $76.7 million in 2022.

In a year of continued volatility, the investment

portfolio generated an investment return of 5.7%.

The returns were driven primarily from investment

income given the higher yields during the year. While

the Federal Reserve raised rates by 1.0% this year,

the higher yields and tighter spreads mitigated any

losses on the portfolio. In addition, the risk assets,

notably the bank loans, hedge funds and private

credit, all contributed positively to the overall

investment return.

In 2022, the investment portfolio generated a

negative return of 3.5%. The returns were driven

primarily from interest rate increases and the

widening of credit spreads, resulting in losses in

all asset classes, most of which were unrealised.

Credit quality

Fixed maturities and managed cash

Asset allocation

Total investment portfolio and managed cash

Denise O’Donoghue

Group Chief Investment Officer

Conservative portfolio structure – quality

Duration

1.6 years

Average credit

rating of AA-

AAA:

19%

Private investment funds: 6%

Non-agency

structured products:

10%

AA:

37%

Managed cash and

short term securities:

13%

23%

U.S.

government

bonds and

agency debt:

24%

BB or

below: 6%

Corporate and

bank loans:

40%

Other government

bonds and agency debt:

BBB:

15%

Agency structured products:

20 Lancashire Holdings Limited | Annual Report & Accounts 2023

Other financial information

Hayley Johnston

Chief Executive Officer,

Lancashire Insurance Company

Limited and Reinsurance Manager

John Cadman

Group General Counsel and Chief

Executive Officer, Lancashire

Insurance Company (UK) Limited

John Spence

Chief Executive Officer,

Lancashire Syndicates Limited

Other operating expenses

For the year ended 31 December

2023

2022

Operating expenses – fixed 147.9 118.9

Operating expenses – variable 41.7 9.8

Total operating expenses 189.6 128.7

Directly attributable expenses

allocated to insurance service expenses (82.2) (70.4)

Other operating expenses 107.4 58.3

A significant driver of the increase in operating expenses is the increase

in variable costs related to remuneration of $31.9 million given the

strong financial performance of the Group. Fixed expenses have

increased by 24.4% or $29.0 million largely due to the Group’s growth

and subsequent impact on headcount. IT and consulting expenses also

increased during the year as we focused on upgrading our systems and

data capabilities.

For the year ended 31 December 2023, $82.2 million of operating

expenses were considered directly attributable to the fulfilment of

(re)insurance contracts issued, and have therefore been re-allocated to

insurance service expenses and form part of the insurance service result.

This compares to $70.4 million in 2022.

Bermuda corporate income tax

During 2024, the Group will continue to assess the potential impact of

the Economic Transition Adjustment introduced by the recent Bermuda

Corporate Income Tax legislation. Based on its current plans, the Group

does not anticipate that it will become subject to Bermuda corporate

income tax until 1 January 2030, as it expects to fall within the exclusion

within the Bermuda corporate income tax rules that means groups with

a limited international presence are excluded from scope for a period of

up to five years.

Capital

As at 31 December 2023, total capital available to Lancashire was

approximately $2.0 billion, comprising shareholders’ equity of

$1.5 billion and $0.5 billion of long-term debt. Tangible capital was

$1.8 billion. Leverage was 22.8% on total capital and 25.2% on tangible

capital. Total capital and total tangible capital as at 31 December 2022

was approximately $1.8 billion and $1.6 billion respectively.

Share repurchase

During the period commencing 22 November 2023 and ending on

29 February 2024, the Company had authorised a share repurchase

programme of its common shares of $0.50 each up to a maximum

consideration of $50 million. No shares were repurchased under the

programme. No other share repurchase programmes were conducted

during the year ended 31 December 2023.

Dividends

Lancashire’s Board of Directors has declared a special dividend of $0.50

per common share (approximately £0.39 per common share at the

current exchange rate), which will result in an aggregate payment of

approximately $119.0 million. The dividend will be paid in Pounds

Sterling on 12 April 2024 (the “Dividend Payment Date”) to shareholders

of record on 15 March 2024 (the “Record Date”) using the £ / $ spot

market exchange rate at 12 noon London time on the Record Date.

Lancashire also announces that its Board of Directors has declared a

final dividend of $0.15 (approximately £0.12) per common share, subject

to a shareholder vote of approval at the AGM to be held on 1 May 2024,

which will result in an aggregate payment of approximately

$36.0 million. On the basis that the final dividend is approved by

shareholders at the AGM, the dividend will be paid in Pounds Sterling

on 7 June 2024 (the “Dividend Payment Date”) to shareholders of

record on 10 May 2024 (the “Record Date”) using the £ / $ spot

market exchange rate at 12 noon London time on the Record Date.

21Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Delivering

for our clients

“If our clients are impacted

by a loss, our aim is to

support them in recovering

as quickly and as fairly as

possible. It is our opportunity

to deliver on our promise to

pay, and we strive to do that

consistently across all claims

in a manner that is clear and

transparent to our client and

broker stakeholders.”

Steve Yeo

Group Head of Claims

22 Lancashire Holdings Limited | Annual Report & Accounts 2023

Enterprise risk management

Over the last five years, as Lancashire has

focused on growing in a strengthening

market, our corporate infrastructure has

developed to manage the changing risk

and support our growth.

Everyone is a

risk manager

“ Our collaborative risk culture

is driven from the ‘top down’

via the Board and the executive

management team to the business,

with the management Risk

Return Committee central

to these processes.”

Louise Wells

Group Chief Risk Officer

Enterprise risk management

23Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Enterprise risk management continued

Effective risk management, underpinned by a strong collaborative risk

culture, has been vital in our success, enabling the business to deliver

on its strategic objective of balancing risk and return through the cycle.

The risk culture starts with us, the employees: everyone is a risk manager

at Lancashire.

During 2023, the risk management function expanded further to ensure

it had sufficient capacity and expertise to drive the development required

and deliver the expanding remit.

Key areas of development in 2023 were the emerging risk process,

more detail on which can be found on page 27; our forward-looking

risk assessments which articulate our opinion on future trends, risk

mitigation requirements and business actions by risk, and our ESG

reporting, both internal and external.

Our ClimateWise report was published on our website for the first

time in August 2023 and our TCFD report, which complements

our ClimateWise report, starts on page 49 of this report.

Geopolitical risk and macro-economic risks have continued to be

a focus during 2023 and that focus will carry over into 2024.

The ongoing conflict in Ukraine, as well as other potential areas of

conflict, and the increasing tensions in the Middle East, are examples

of issues that are closely monitored by the business to seek to ensure

exposure remains within appetite and expectations. As geopolitical

risks can change and evolve rapidly, these are factors that we carefully

consider in our underwriting decisions. Where appropriate, thematic

reviews are performed to provide a more detailed analysis of the risk

and potential impact.

Cyber security risk has also been a key area of focus in 2023 and again

will continue to be so in 2024. Cyber security risk is included within

the principal risk of operational risk, which is discussed on page 31.

Risk strategy

Our risk management strategy remains closely aligned with the

Group strategy, focused on adding value to the business and providing

assurance over both the most material risks and the emerging risks

to the Group. The Board is responsible for managing risk and retains

responsibility for the oversight of risk management activities.

The risk management function, led by the Group CRO, ensures there

is appropriate risk governance and a risk management framework to

support the Board, CEO and Group Executive Committee in managing

risk. It is critical that the risk management framework can adapt to the

changes associated with the delivery of the Group’s strategy. The risk

strategy is updated annually and the associated plan of work is approved

by the Board.

Risk management framework

The Group takes an enterprise-wide approach to managing risk. The

primary objective being to ensure that the capital resources held are

matched to the risk profile of the Group and that the balance between

risk and return is considered as part of all key business decisions. The

Group risk management framework sets out our approach to identifying,

assessing, mitigating, and monitoring the principal risks the Group faces.

The diagram on page 25 illustrates how the various parts of the risk

management framework come together to form Lancashire’s overall

Own Risk and Solvency Assessment (ORSA) process.

Our ORSA process is an ongoing analysis of the Group's risk profile and

its capital adequacy to support the business strategy over the business

plan horizon. The key activities within this process consider how the

financial and principal risks to which we are exposed may change over

the planning cycle, what drives these changes, and how resilient the

Group's resources are to a range of extreme but possible events. As

such, it is a key business management tool which is used to inform

key business decisions.

The ERM and ORSA activities are underpinned by our risk culture and

governance. Our collaborative risk culture is driven from the ‘top down’

via the Board and the executive management team to the business,

with the management Risk Return Committee central to these processes.

The RRC is the key management tool for monitoring and challenging the

assessment of risk on a regular basis. It seeks to optimise risk-adjusted

returns and facilitate the appropriate use of the Group's internal models,

including considering their effectiveness. Risk culture is also driven from

the ‘bottom up’ through the risk and control affirmation process. The

primary role of the Group CRO is to facilitate the effective operation

of ERM and the ORSA processes throughout the Group and to provide

day-to-day oversight and challenge on risk-related issues.

24 Lancashire Holdings Limited | Annual Report & Accounts 2023

Key activities

• Review of business strategy with challenge from the Board

• Annual approval of a business strategy paper by the Board

• Development of ESG strategy and framework

• Quarterly risk and

control affirmations

• Quarterly emerging

risk working group

• Quarterly internal audit

reports to the Audit

Committee providing an

update on work performed

and analysis of root causes

of audit findings

• External audit reports to

the Audit Committee

• Audit Committee annual

review of the effectiveness

of financial controls

• Monthly CCWG

• Monthly ESG Committee

• Review of risk strategy and

‘attitude to risk’

• Review and measurement

of risk appetite and limits

• Review of Group

risk tolerances

• Management, Board and

subsidiary board approval

and monitoring of risk

appetite and tolerances

• Stress and scenario

testing (business plan)

• Assessment of

management actions

• Group CRO review

of business plan

• Board business

performance review

• Board consideration of

stakeholder engagement

• Review of risk

management policies

• Assessment of

risk management

framework maturity

• Integrated assurance

assessment

• Emerging risk assessment

• ESG framework and strategy

• Review and approval of

business plan by the Board

• Group CRO reports to

Board and Group

Executive Committee

• Production of quarterly

ORSA report for review

and approval by the Board

• Capital and liquidity

management frameworks

• Review of internal model

policies, capital and

solvency appetites

• Full/proxy capital assessments

• Rating agency

capital assessments

• Stress and scenario testing

• Board quarterly review of

capital needs, headroom

and actions

Board sign-off and embedding

Business strategy

Risks

Key elements of ORSA

ERM & ORSA

Strategy review & challenge

Risk identification & assessment

Risk appetite & tolerances

Business planningRisk & business management

Risk solvency & assessment

Capital management

Strategy review

& challenge

Risk

identification

& assessment

Risk appetite

& tolerances

Business

planning

Capital

management

Risk

solvency &

assessment

Risk & business

management

Board

RRC

The ORSA processes are ongoing and operate throughout the year, with

the annual ORSA report summarising their outcome for management

and the Board on an annual basis. The quarterly ORSA update report

provides the Board with a point in time update on the key activities

listed above and the challenge provided by the Group CRO.

Risk governance is a major component of the overall risk management

framework and provides for clear roles and responsibilities in the

oversight and management of risk. It also provides a framework for

the reporting and escalation of risk and control issues across the Group.

Lancashire operates a three lines of defence governance model, which

is highlighted overleaf.

Capital and solvency

Stress and scenario testing

25Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Key

Risk owners within each business

function are responsible for promoting

a strong risk culture, managing their

risks within risk appetite and ensuring

the effectiveness of their controls.

Provides expert advice, challenge

and guidance together with providing

independent oversight to the first line

of defence to help ensure that risk taking

remains within risk appetite. Includes the

risk, compliance and actuarial functions,

reporting to the RRC via the CRO.

Audit

Committee

Risk Return

Committee

LHL

Board

Three lines of defence – governance framework

line of defence

Executive Management Committee

Investment Risk & Return Committee

Reserving Committee

Reinsurance Security Committee

View of Risk Committee

New Business Committee

ESG Committee

Broker Vetting Committee

Underwriting & Marketing Conference Call

Risk Internal Audit

Actuarial

line of defence 3

line of defence

Compliance

Committee of the Board

Management Committee

Key Control Function

The internal audit team provides

independent assurance to the

Audit Committee, by assessing the

effectiveness of our risk management

processes and that risk controls are being

managed in line with approved policies,

appetite, frameworks and processes,

and helps verify that the internal control

system is effective. The Head of Internal

Audit reports to the Board Audit

Committee on internal control

framework issues.

Underwriting

& Underwriting

Risk Committee

Investment

Committee

Remuneration

Committee

Nomination,

Corporate

Governance &

Sustainability

Committee

Enterprise risk management continued

26 Lancashire Holdings Limited | Annual Report & Accounts 2023

The Board retains responsibility for all risk within the Group and is

responsible for setting and monitoring the Group’s risk appetite and

tolerances, whereas the individual entity boards are responsible for setting

and monitoring entity-level risk tolerances. Risk tolerances represent the

maximum amount of capital, generally on a modelled basis, that the Group

and its entities are prepared to expose to certain risks. The Group’s appetite

for risk will vary marginally from time to time to reflect the potential risks

and returns that present themselves. However, protecting the Group’s

capital and maximising risk-adjusted returns for investors over the long

term are constants. All risk tolerances are subject to at least an annual

review and consideration by management and the respective boards. The

Board and individual entity boards review actual risk levels versus tolerances,

emerging risks, loss event and near miss reporting, key risk indicators, and an

overview of the control environment (driven by key control testing and

control affirmations, and supported by internal audit findings) at least

quarterly. In addition, on at least a monthly basis, management assesses

our PMLs against risk tolerances to ensure that risk levels are managed

in accordance with them.

The Group CRO provides regular reports to the management team

outlining the status of the Group's ERM activities and strategy, as

well as formal reports to the Board.

The Group CRO reports to the Chair of the Board and Group CEO

but ultimately has the right to report directly to the Group and entity

regulators if they feel that management is not appropriately addressing

areas of concern regarding the Group as a whole or any of the individual

operating entities.

We continue to perform a quarterly risk and control affirmation process

whereby the operation of all key controls is affirmed by the control

operators and then reviewed and approved by the risk owners. In

addition, the risk owners are required to affirm that their risks remain

appropriately documented and scored. The risks are scored on both a

gross basis (i.e., inherent risk pre-controls) and a net basis (i.e., residual

risk post the application of controls). The output from this process is

reported to the RRC and the Group and operating subsidiary audit

and risk committees or boards of directors as appropriate.

As at 31 December 2023, all Group entities were operating within

their Board-approved risk tolerances.

The quarterly ORSA reports prepared by the Group CRO to the Group

and subsidiary boards provide a timely analysis of current and potential

or emerging risks, compared against risk tolerances, along with their

associated capital requirements.

The 2024 annual ORSA report will be presented to the Board for review,

challenge and approval at the Q1 2024 Board meeting. The equivalent

reports for the operating subsidiaries will also be presented to their

boards for review, challenge and approval during Q1 2024. As a Lloyd’s

managing agent, LSL falls within the Society of Lloyd’s for Solvency II

reporting, preparing ORSA reports for each syndicate. LSL has its own

ERM framework to ensure it operates in line with the principles for

doing business at Lloyd’s.

Emerging risk process

Emerging Risk Identified

Risk

identification

Risk investigation

& assessment

Risk mitigation

& monitoring

RM team-coordinated investigation

& provisional risk scoring

RM research

Stress & scenario

development

Emerging risk identified by the

business / ER forum

Risk Mgt. team horizon

scanning

Compliance team regulatory

horizon scanning

Regulatory-driven

investigations

Engage with subject matter experts lnput from ER forum

Stress & scenario

development

Business-agreed action

to mitigate risk

Risk level accepted, no

further action required

Outcome recorded into

emerging risk log

Action ongoing: “developing risk”

Emerging risk incorporated into BAU and action closed

Emerging risk

Lancashire defines emerging risk as a change in, or change in

understanding of, the internal or external risk environment that

could impact the validity of assumptions relating to strategy,

decision-making and/or risk management approach. An emerging

risk can arise in three ways:

(as appropriate)

• A genuinely new source of risk that has not existed before;

• A change in the way that an already identified risk can manifest

which may not be adequately managed through Lancashire’s

current risk management procedures; or

• A change in understanding of an already identified risk.

Revised risk scoring indicates materiality & required action

27Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

The process by which emerging risks are identified, investigated, assessed and reported is illustrated in the diagram on the previous page.

A growing number of emerging risks are identified by the business and the emerging risk forum run by the risk management function, a Group-wide

forum with cross-functional membership. A detailed log of all emerging risks identified is maintained including the anticipated impact, likelihood,

time horizon, velocity, longevity, risk sector, risk type and any actions required.

The top emerging risks for the Group are recorded on our emerging risk radar and discussed with risk owners, executive committees, the Board

and entity boards of directors each quarter. The emerging risk radar is therefore subject to an iterative process of review and oversight. Examples

of emerging risks discussed by the Board during the year include: climate change, operational strain (driven by growth), geopolitical risk, inflation,

tax and regulatory change, OECD global minimum tax and Bermuda corporate income tax, and cyber security risks.

Thematic reviews were performed during the year on potential geopolitical areas of conflict and on the potential impact of the OECD minimum

global tax and Bermuda corporate income tax.

Current assessment of principal risks

The Board evaluated the risks disclosed, alongside other factors, in the

assessment of the Group’s viability and prospects as set out in the going

concern and viability statement in the Directors’ report at page 118.

Given the broad reach of climate change and the risks associated with it,

we concluded these risks are most appropriately managed by including

their impact through existing principal risks, rather than a separate

climate change principal risk. The impact of climate change is therefore

covered in the following principal risks: underwriting, investment,

operational and strategic.

Key

Principal risk

Underwriting

(Re)insurance counterparty

Investment and Liquidity

Operational

Reserving

Strategic

2023 2022

Increasing ﬁnancial and non-ﬁnancial consequences

Increasing likelihood

2 5

3 6

Principal risks

28 Lancashire Holdings Limited | Annual Report & Accounts 2023

Principal risks

Principal risk category/risk owner Key mitigating actions How the Board reviews this risk

Underwriting

UURC

Risk description and performance

Inadequate pricing of risk resulting

in insufficient premium to cover

any losses arising.

Failure to monitor exposure

accurately such that losses

exceed expectation.

Our underwriting performance

is discussed on page 14.

Our RPI for the insurance and

reinsurance segments was

122% and 110% respectively.

We remained within tolerance

for all PMLs and RDSs during 2023.

We define our underwriting risk appetite and set risk tolerances as a

percentage of capital we are willing to risk for both natural catastrophe

events and man-made disasters.

PMLs for natural catastrophe perils are modelled monthly, and RDSs

for non-elemental perils are updated quarterly. Both are provided to

the RRC for review.

We model our portfolio against Lloyd’s RDS to assess potential losses.

We apply loads to and stress test stochastic models and develop

alternative views of losses using exposure damage ratios. We review

assumptions periodically to ensure they remain appropriate.

We use our RPI measure to track trends in premium rates for our

renewed business.

The RRC considers accumulations, clashes and parameterisation

of losses and models.

Underwriters’ have individual underwriting authorities they must

comply with.

Reinsurance is purchased to manage exposure and protect our

balance sheet.

The Board delegates oversight of

underwriting risk to the UURC. See

page 96 for how the committee

discharged its responsibilities in

this area. Management reports to the

UURC on underwriting performance,

strategy and risk tolerances.

The Board is engaged in the

development and implementation

of the Group’s underwriting

strategy, including the potential

risks to this such as geopolitical

risks and climate-related physical,

transition and litigation risks. The

Board reviews and approves the

underwriting risk appetite, the risk

tolerances and the structure of the

outwards reinsurance programme

on an annual basis.

The Board reviews performance

against risk tolerances on a

quarterly basis.

Investment & liquidity

Investment Committee

Risk description and performance

The risk of insufficient liquid

assets to pay claims when due.

The Group continues to have

excess liquidity compared to

tolerance and remained within

investment guidelines.

We stress our portfolio to understand the impact of a range of realistic

loss scenarios including risk-on, risk-off and interest rate hike scenarios.

A biannual strategic asset allocation study is performed, the

recommendations from which are discussed at the Investment

Committee and presented to the Board for approval.

The IRRC meets quarterly and reports to the RRC and to the Investment

Committee via the CRO.

External investment managers are used to manage the portfolios.

The Group’s principal investment managers are signatories to the

UN Principles for Responsible Investment.

The Board delegates oversight of

investment risk to the Investment

Committee. See page 94 for how

the committee discharged its

responsibilities this year.

Management reports to the

Investment Committee on

investment performance, strategy

including asset allocation, and

risk tolerances.

The Investment Committee receives

and reviews the investment strategy,

guidelines and policies, risk appetite

and associated risk tolerances and

makes recommendations to the

Board in this regard.

The Committee monitors

performance against risk tolerances,

investment guidelines, carbon

intensity scores and a climate

value at risk measure quarterly.

29Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Strategic objectives Risk trends Impact trend Appetite trend

Underwriting comes first Stable risk High Acceptable

Balance risk and return

through the cycle

Decreased risk Moderate Reassess

Insurance market

employer of choice

Increased risk Low Unacceptable

Principal risks

Principal risk category/risk owner Key mitigating actions How the Board reviews this risk

Reserving

Audit Committee

Risk description and performance

The risk that established

reserves are inadequate

and claims exceed them.

The confidence level of 88%

is within our desired range.

Lancashire adopts a conservative reserving approach for all new classes

of business until they are established.

Actuarial and statistical data is used to set estimates of future losses.

These are reviewed by underwriters, claims staff and actuaries to ensure

they reflect the actual experience of the business.

Reserves are reviewed and approved by the Reserve Committee whose

members include representation from finance, actuarial and claims;

there are additional attendees from underwriting, legal and risk.

An independent review by external actuaries of reserve adequacy

is performed twice a year.

The Board delegates oversight

of reserving risk to the Audit

Committee. See page 83 for

how the committee discharged

its responsibilities this year.

Management reports to the Audit

Committee quarterly on reserves

for material new claims,

developments on established

reserves, the reserve margin

and confidence levels.

The Audit Committee receives

and considers the report from

the external actuary on reserve

adequacy. The Committee’s review

is also informed by the work

performed by the external auditor.

(Re)Insurance and intermediary

counterparty risk

UURC

Risk description and performance

The risk our reinsurance

counterparties are unable

or unwilling to pay us in the

event of a loss.

The risk of mishandling by,

or failure of, our intermediaries.

The Group was within our stated

risk appetite and tolerance during

the year.

Our Broker Vetting Committee is responsible for the broker vetting

approval process and monitoring credit risk in relation to brokers.

Business is conducted using non-risk transfer TOBAs. Monies are held

by brokers in segregated client money accounts.

Board-approved counterparty credit limits are used, reinsurers must

meet minimum rating standards and collateral agreements are used

where appropriate.

The RSC approves counterparties within the framework set and

monitors first loss and aggregate limits against the approved tolerances.

The UURC receives quarterly

information from management

with regard to broker distribution.

The CRO reports to the Board

on performance against Board-

approved risk tolerances.

Principal risks continued

30 Lancashire Holdings Limited | Annual Report & Accounts 2023

Principal risks

Principal risk category/risk owner Key mitigating actions How the Board reviews this risk

Operational

Audit Committee & Board

Risk description and performance

The risk of inadequate or failed

internal processes, personnel,

systems or (non-insurance)

external events.

The Group did not have any

material operational loss

events during the year.

The Group has a robust quarterly risk and control affirmation process

in place which is supported by detailed control testing.

IT availability risk is mitigated through disaster recovery and business

continuity plans which are tested annually.

IT integrity risk is mitigated through independent penetration tests and

restricting access to key systems to individuals who are qualified and

need to use them.

We have a cyber incident response plan to guide management in the

event a third party gains access to our systems. The annual test of this

is facilitated by a third-party specialist.

KRIs and KPIs are used to monitor performance against our cyber

risk appetite.

The Board delegates oversight

of internal controls and risk

management systems to the Audit

Committee. See page 83 for how

the committee discharged its

responsibilities this year. The Board

retains the responsibility for risk

oversight of IT and cyber risk.

The Group CEO and management

team manage the operation of the

business and report to the Board

and its committees.

The Audit Committee receives a

quarterly report form the Group

CRO summarising the results from

the quarterly risk and control

affirmation process and detailed

control testing, along with the

Group CRO’s opinion on the

overall control environment.

The Audit Committee reviews

this alongside the quarterly update

from the Head of Internal Audit.

The Board receives a quarterly

ORSA update report from the CRO

which includes by exception details

of loss events, performance against

operational risk KRIs, and changes

in the risk and control environment.

The COO reports to the Board on

operational matters, including the

programme of change, IT and

cyber security.

Strategic

Board

Risk description and performance

The risk of failing to devise and/or

implement an effective business

strategy that is aligned with risk

appetite and/or not adapting the

strategy/business plan for the

prevailing market conditions.

Strategic opportunities and capital planning are discussed at a

dedicated session attended by all Directors and members of the

management team.

A clear vision and strategic objectives that are well communicated

internally allowing the whole Group to understand their role and

contribution to the whole.

Town halls with all employees to communicate performance against

the strategic objectives.

Succession planning to ensure awareness of the strength in depth, or

lack of, and the necessary action in the event a key role becomes vacant.

The Board retains responsibility for

the oversight of strategic risk. The

Group CEO and management team

lead in the delivery of strategy.

The Directors are involved in

setting the strategy and approve

the annual business plan.

The Board receives quarterly

updates on the Group’s

performance against the plan

in its execution of the strategy.

31Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Delivering

for our people

“We believe that giving our

people an opportunity to

feedback on their experience

of working at Lancashire is

vital in ensuring we deliver the

best possible environment, in

which colleagues can thrive

and reach their full potential.”

Sarah Rogers

Group Chief Human Resources Officer

%

of our people say they are

proud to work at Lancashire

32 Lancashire Holdings Limited | Annual Report & Accounts 2023

Our people and culture

A respectful, rewarding

and thriving work environment

Our people strategy helps us deliver one of our key goals –

to make Lancashire an employer of choice.

Gender split of employees

Total number

of employees



(permanent and FTC)

Voluntary annual

employee turnover

.%

% of women

in senior

management

%

Permanent employees

eligible for RSS awards

%

% of women on

the Group Executive

Committee

%

%

%

We are committed to retaining and attracting the best talent across

our markets and focus on delivering a respectful, rewarding and thriving

work environment across our locations.

At the heart of this are the Lancashire values (see insider cover).

These are the bedrock of what we do and how we expect our people

to behave whether in the office or outside with clients, brokers and

other stakeholders.

Lancashire has continued to grow during 2023, and we have

been pleased to welcome a large number of new colleagues to

the business who each bring their own expertise and experiences.

We believe this makes Lancashire both a diverse place to work and

a true catalyst for collaboration.

Average age of employees

<20

24%

32%

26%

14%

Key

20-29

30-39

40-49

50-59

60-69

1-3<1

Years

4-6 7-9 10+

39%

23%

16%

10%

13%

Average tenure of employees

33Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Collaborative

Hard-working

Respectful

Supportive

Focused

Friendly

Flexible

Results-orientated

Positive

Ambitious

Listening to our people

We believe that giving our people an

opportunity to feedback on their

experience of working at Lancashire is

vital in ensuring we deliver the best

possible environment in which colleagues

can thrive and reach their full potential.

During 2023, we carried out a full survey

which was open to all employees in all

locations to complete.

Importantly, the survey was confidential

and carried out on our behalf by a

third-party. This third-party support also

enables us to benchmark our responses to

organisations of a similar size.

Based on our results and the response

rate, Lancashire was awarded a five-star

employer award from the survey company,

which is given to top-performing employers

based on the surveys it runs for hundreds

of clients. Results were collated both for

the Group and for individual functions and

teams with more than five employees.

We are pleased that the response rate was

extremely high at 87%. This was 13 points

higher than the last survey in 2021.

Our overall engagement score was 90%,

an increase of 2% on the last survey and

14 points higher than the benchmark. The

results were presented to the Boards and

Group Executive Committee. Team

managers were also supplied with

local results to allow them to review

and discuss these with colleagues.

Our highest scores were for being proud

to work at Lancashire, at 94%, while 92%

of responders said they are motivated to

do their best work and would recommend

Lancashire as a great place to work.

We welcome the honest and constructive

feedback, and areas that did not score so

highly will be reviewed and action plans

put in place to address these.

Engagement

score

%

Proud to work

at Lancashire

%

Recommend Lancashire

as a great place to work

%

Response

rate



%

Our people and culture continued

The top ten words used by our employees to describe working at

Lancashire are:

34 Lancashire Holdings Limited | Annual Report & Accounts 2023

Enhancing support for our people

A top ten employer

Lancashire was named a Top Ten employer in Bermuda in the annual

awards run by the island newspaper Royal Gazette. Lancashire was placed

seventh in the top 10 (out of 30+ participating companies). In 2021,

we came eighth. Our employees in Bermuda were instrumental in

our nomination, showing high levels of engagement.

Delivering leadership

Due to the growth of Lancashire in terms of headcount, management

are aware of the importance of communication to create a sense of

community and understanding.

We encourage a culture of meritocracy and openness, and senior

executives are available to discuss issues with employees on both

a formal and ad hoc basis.

Group CEO Alex Maloney communicates regularly with employees

on Company issues. Quarterly town hall meetings are held for all

colleagues where our progress against our strategic goals is reviewed,

and Group-wide corporate activities are highlighted.

A Non-Executive Director attends these events where they are asked

to discuss their role, recent Board discussions, and answer questions.

The Lancashire Employee Network

The Lancashire Employee Network (LEN) was launched in 2023 to

give colleagues an opportunity to get together to share knowledge

and experiences.

The LEN is led and managed by a group of employees from across the

business. Its initial focus is on running ‘lunch and learn’ sessions, hosting

internal and external speakers, and offering ‘soft skills’ training. Events

held during the year included a talk by a former SAS member on how

experiences from differing environments can be carried across to

business operations, a discussion with one of Lancashire’s shareholders

on their expectations of the business, and internal team events focusing

on individual areas of expertise to share knowledge and understanding.

Group CEO Alex Maloney was also interviewed for LEN sessions in

London and Bermuda, discussing his career and offering advice to

employees on maximising the opportunities available to them.

Results-orientated

Positive

Delivering a best-in-class

working environment

During 2023, our London office was expanded and redesigned to

offer our employees a better working environment and our guests

an enhanced experience when visiting.

The work included a new visitor lounge and reception area and

state-of-the-art meeting rooms. Floor space was also reconfigured

to give colleagues more space and further encourage collaboration

within and across functions.

A modern organisation

Following the 2021 employee survey, a number of benefits,

with a particular focus on ‘family-friendly’ employment policies,

were introduced.

These included enhancements to maternity, paternity and adoption

leave, and the addition of a benefit of paid leave for IVF treatment

and pregnancy loss.

In line with other organisations, following the period of remote working

during the COVID-19 pandemic, Lancashire’s UK employees are able to

work flexibly. This includes both flexible working hours and working

from home for a period each week. These are discussed with managers

to ensure business operations continue as normal.

During 2023, we also developed a support framework for employees

experiencing the menopause, as part of our commitment to providing a

safe and inclusive environment and encouraging colleagues to have open

conversations. We recognise that there is no ‘one size fits all’ approach,

but expect people to be supportive of colleagues who may be affected

by the menopause. Additionally, some employees may benefit from

reasonable adjustments at work to support their symptoms.

Recognising long service

Lancashire has a long history of retaining employees, due to the focus we

place on wellbeing, rewarding people appropriately, and developing their

skills and talents.

We benefit from the experience and expertise of our people, many of

whom have spent large parts of their career with us. To acknowledge

this contribution, since 2022, we have offered a sabbatical benefit for

those who have served for 10 years or more.

35Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Our people and culture continued

Attracting and growing talent

Delivering a diverse talent pool

Lancashire aims to attract people to the business who share

our values and can bring their talents to the benefit of the Group.

We actively recruit new employees at all levels from a range of

backgrounds and through a number of channels, whether direct

outreach, corporate social media, and through our website.

While it is important to attract experienced employees when appropriate

vacancies arise, we also believe that offering less experienced people,

who are beginning their careers, or who are making a significant career

change, is valuable to the business.

Apprentices

During 2023, Lancashire was pleased to welcome a cohort

of apprentices to the business.

The group were recruited into a number of functions including HR

and IT. The Lancashire apprentice scheme aims to give young people

starting their careers an opportunity to learn through on-the-job

practical support and guidance while working towards formal

qualifications. Group HR Apprentice Sienna Ray applied for the

scheme after finding out about it online. She said one of the

attractions was the mix of live work and the ability to study.

“It’s been really good so far and I am lucky

that I can work with people with lots of

different skills and experience. It gives

you a different perspective.”

Sienna will be working towards a Foundation Certificate in People

Practice. “There are several qualifications you can work towards,

right up to degree level. I am really glad I joined Lancashire

as it’s a big step forward in my career,” she said.

IT Business Support Apprentices Tyreque Muhammad and

Jenna Webster also applied for their roles after seeing an online

advertisement for the scheme. Jenna had been studying fashion

but decided that she wanted to move into IT, while Tyreque had

completed a self-taught IT course.

Jenna said: “It’s been really interesting coming from a different

background and into IT – it was a huge jump. I have learnt a lot

already and the team has been really good. The key thing is to

remember that there are no stupid questions – just ask and someone

will help. I am really proud of myself for joining Lancashire and I

wouldn’t have learnt as much just doing a course.”

Tyreque and Jenna will be working towards a professional

qualification as IT Business Support Technicians. Tyreque said:

“There’s been a lot to learn, and it is good to

be able to mix practical work with course work.

I wouldn’t have developed as much at this stage

without being in a team with experienced people,

and actually doing the job.”

This includes recruiting a number of apprentices, who are offered

the opportunity to work with more experienced colleagues and

begin to progress in their chosen field.

In addition to attracting new employees, we are also focused

on developing our existing colleagues and promoting them to

new roles when opportunities arise.

During 2023, 46 colleagues were promoted internally across

our underwriting and support functions.

Our induction programme for new employees includes training

on diversity matters to support our focus on fairness and inclusion.

36 Lancashire Holdings Limited | Annual Report & Accounts 2023

Training and development

To help employees make the best of their talents and meet their

ambitions, Lancashire has a number of training and professional

development initiatives.

We see real benefit in increasing people’s skills, experience

and knowledge – whether at a more junior level or within our

manager community.

During 2023, we carried out a pilot Management Development

Programme in order to gain feedback on the planned training

and ensure that it meets the needs of our team leaders.

The full programme will be rolled out in 2024 for new and existing

managers with three or more direct reports.

It is designed to equip managers with tools and techniques to help drive

individual and team performance across departments. Key objectives

include the role of managers at Lancashire, and what is expected of

them; inclusive leadership; how to appropriately manage team members’

performance; and adapting to change.

Lancashire’s training and professional study programme also offers

employees a range of support through our online ‘LMS – Insurance

Assess’ e-learning platform.

This provides compliance, soft skills, management and health and

wellbeing training, along with (re)insurance-specific training courses.

In some cases, financial incentives for professional qualifications are

available. All employees are encouraged to discuss training requirements

with their manager on an on-going basis and through more formal

performance review discussions.

Compulsory training

Additionally, we have a clear set of policies and procedures to uphold

our high standards of behaviour and to educate our employees on what

is expected of them.

Compulsory training is delivered to all new permanent employees,

including people working part time, and those on fixed-term contracts.

Topics covered include tax/regulatory operating guidelines, disclosure

(including the requirements of the Market Abuse Regulation 2016),

inspections, financial crime, ERM, cyber security, communications

etiquette/equality, diversity and inclusion, GDPR and conduct rules.

New employees are expected to complete this training during the

first three months of employment.

Further training is offered, depending on individual requirements.

The Board receives quarterly updates regarding completion

of these sessions.

37Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Our people and culture continued

Diversity, equity and inclusion

Since its inception, Lancashire has had a strong focus on diversity, equity

and inclusion (DE&I). We believe that these important themes should

reflect not just gender and ethnicity but also ensure that we have a

range of talents available to the Group.

Our internal initiatives are led by our DE&I working group, which is

formed of employees from across the business. It is important that

our activities match the expectations of our people, and the Group

is reviewing the outputs from the 2023 employee survey and will

set out its agenda for the coming year in early 2024.

For a number of years, Lancashire has actively supported external

initiatives which seek to build more diverse, equitable and inclusive

businesses. These include the Hampton-Alexander and Davies Reviews

on gender diversity; and the FTSE Women Leaders Review, to improve

the representation of women on boards and in leadership positions.

The Group submits data annually to the Review.

The gender and ethnic diversity of the Board and the senior management

group is set out in the tables below. Additionally, the Chair’s statement

on our Diversity Policy is available on our website.

Our efforts in this area are supported by policies that help ensure

people do not face any discrimination as an employee or during

our recruitment process.

We operate a zero-tolerance approach to bullying and harassment and

all employees are encouraged to speak up about any issues of concern.

Our open corporate culture is a key driver in this and our Dispute

Resolution Policy, where issues cannot be initially resolved, can be

used by employees, without fear that they will be penalised in any way.

Our Anti-Harassment and Bullying Policy also offers employees a

mechanism through which they can raise issues of concern.

The tables below set out data about the sex and ethnicity of the Board and executive management as at 31 December 2023, in the format prescribed

by the Listing Rules.

Number of

Board members

Percentage of

the Board

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in executive

management

Percentage of

executive

management

Men 7 70 3 4 44

Women 3 30 1 5 56

Other categories – – – – –

Not specified/prefer not to say – – – – –

Number of

Board members

Percentage of

the Board

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in executive

management

Percentage of

executive

management

White British or other White (including minority-white groups) 9 90 4 9 100

Mixed/Multiple Ethnic Groups – – – – –

Asian/Asian British – – – – –

Black/African/Caribbean/Black British 1 10 – – –

Other ethnic group, including Arab – – – – –

Not specified/prefer not to say – – – – –

38 Lancashire Holdings Limited | Annual Report & Accounts 2023

Employee support and

industry initiatives

Supporting and rewarding

All permanent employees have an enhanced interest in the performance

and success of the Company through our RSS to ultimately become a

shareholder in LHL.

For a number of years the Group has provided free lunches on

specific days for employees to encourage them to interact in the

office during breaks.

Offering advice and information on health, wellbeing and financial

matters is also part of being a responsible and understanding employer.

During 2023, we held a number of events including marking World

Mental Health Day, highlighting the support available through our

Employee Assistance Programme (EAP), promoting the benefits available

from our health care provider, including health checks, and financial

wellbeing workshops focusing on topics such as cost of living support

and pensions.

Expert telephone support is available 24 hours a day through the EAP,

along with resources and information to support home life, work life

and physical and emotional health, and the opportunity to enrol in

self-help programmes.

The Group has volunteer first aid and wellbeing officers available to

employees, and Lancashire offers non-judgmental support for those

suffering mental health difficulties and ill-health.

Our responsibility as an employer

We comply with all relevant requirements with respect to human

rights, rights of freedom of association, collective bargaining, and

working time regulations.

We believe every employee, and prospective employee, should be

treated with dignity, respect and fairness. As an equal opportunity

employer, we do not discriminate, or tolerate discrimination, on

grounds of race, age, sex, sexual orientation, marital or civil partnership

status, gender reassignment, pregnancy or maternity, disability, religion

and/or beliefs.

All employees have a duty to treat colleagues, visitors, clients,

customers, suppliers and former staff members with dignity at all times.

Employees who believe they may have been discriminated against

are encouraged to raise the matter through our Grievance Procedure.

Abusive or discriminatory behaviour by an employee towards another

will be seriously and confidentially investigated and will be dealt with

in accordance with the Group’s disciplinary procedure.

We are also an Accredited Living Wage Employer, for our business

and our supply chain.

Our Global Employee Handbook, distributed to employees on joining

and available on our internal intranet, is supported by country-specific

supplements where relevant.

Leading market-wide discussion

Lancashire is a partner for the Insider Progress initiative, launched by the

Insurance Insider. Our support will ensure events are free for participants

across the industry from all backgrounds. Insider Progress is designed

to promote discussions around building an insurance workplace for

the future with a focus on DE&I. Our Group CFO Natalie Kershaw is a

member of the Insider Progress advisory board, which sets the agenda

for events and highlights topics and areas for discussion.

Lancashire is also a member of the Insurance Breakfast Club and

offers selected employees the valuable opportunity to participate in

its events. The Insurance Breakfast Club programme involves 10 months

of structured development and provides connections for people at a

crucial time in their careers. Its overall aim is to assist companies in

their development of female talent.

39Lancashire Holdings Limited | Annual Report & Accounts 2023

Strategic report

Delivering

sustainably

“The depth of experience

and insight within our teams

is invaluable in ensuring that

ESG matters are considered

and implemented across the

Company’s operations.”

Jelena Bjelanovic

Chair of the Lancashire ESG Committee

40 Lancashire Holdings Limited | Annual Report & Accounts 2023

The Group’s ESG Committee, chaired by our Group Head of Investor

Relations, reports quarterly to the Board and includes representatives

from across Lancashire’s operations, including senior members of the

underwriting, risk, legal, HR, finance and communications teams. This

depth of experience and insight is invaluable in ensuring that ESG

matters are considered and implemented across the Company’s

operations. Senior management also receive regular reports on the ESG

Committee’s activities and are fully engaged with all decision-making.

We believe our attention and influence is best put to use in focusing

on those areas where we can have a meaningful and more immediate

impact on society, our people and the environment. This includes

developing the potential of our people, and managing our own carbon

emissions through positive action such as carbon offsetting. Additionally,

the activities of the Lancashire Foundation are clear examples of the

importance of putting ESG into action rather than just words.

As in previous years, the discussion around climate change and other

environmental factors, and the best way to respond to those challenges,

has continued at both a governmental and local level in 2023.

As a responsible business, Lancashire actively plays a role in this debate

through our engagement with our clients as they go through their own

transition away from carbon-based energy, and we welcome the

opportunity to utilise our expertise in areas of risk management in

these discussions. During 2023, Lancashire also published its first report

to ClimateWise, which is available on our website, and continued

to support the aims of the Task Force on Climate-related Financial

Disclosures (TCFD). Our full TCFD report can be found on pages 49 to 64

which sets out clearly our progress in the area of climate change

management of risk and opportunity.

Lancashire’s approach to environmental,

social and governance matters continues

to evolve and support our purpose.

Peter Clarke

Non-Executive Chair

Embedding

a sustainable

culture for

a profitable

business

Chair’s introduction

The strong financial results which the Company has delivered in 2023

are a result of our values-driven sustainable business culture. The Board,

and Alex and the management team, have a strong focus on the Group’s

operational effectiveness, which informs much of our debate in the

Board and its committees.

During 2023, the Group made considerable progress in delivering on

the areas of focus aligned with the pillars of our ESG strategy: being

a sustainable and responsible underwriter and investor; operating

responsibly in our own business practices and in managing and

monitoring our own carbon emissions; and delivering social

good through the Lancashire Foundation.

The Board debates and approves the ESG strategy and oversees

its implementation by management and within the business.

A report on the work of the Lancashire Foundation, including the

Project Transform volunteering initiative, can be found on pages 45

to 48 and information on our progress against our strategic

objective to be an employer of choice is outlined on page 33.

Reporting on our own emissions can be found on page 68.

41Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Introduction

During 2023, the Board has continued its active engagement with the

Group’s stakeholders. In particular, our Non-Executive Directors regularly

meet with employees from across the business to discuss a range of

matters on both a formal and informal basis. Board members welcome

the opportunity to attend the quarterly Town Hall events which are

led by Alex Maloney to discuss the work of the Board and to answer

questions from employees. Presentations were also received at various

committees on a range of topics including feedback from the 2023

employee survey, underwriting opportunities within product classes,

and wider corporate developments and enhancements, such as the

plans for a U.S. operation.

Succession planning is also an important part of the Board’s work

to ensure that we have the appropriate skills, experience and expertise

to support the business.

During the year, we welcomed two new Non-Executive Directors to

Lancashire. In April, Bryan Joseph joined the Board and as a member of

the Audit and Underwriting and Underwriting Risk Committees. Bryan

has over 40 years’ experience as an actuary in the global insurance and

reinsurance industry. Later in the year, we announced the appointment

of Philip Broadley as a Non-Executive Director and as the LHL Chair

designate. He is expected to succeed me in that role, subject to

shareholder approval, following Lancashire’s 2024 AGM.

Our Senior Independent Director Robert Lusardi led the search for a

Chair successor and on behalf of the Board. I would like to thank him and

colleagues on the Nomination, Corporate Governance and Sustainability

Committee for their hard work and diligence.

Due to its relatively small size, the appointment or departure of a single

director may temporarily impact Board diversity and that is the case at

present, where the percentage of women on the Board is below our

stated objective of 40%. We plan to address this during 2024 and the

Board will continue to explore opportunities to further improve diversity

within its own make-up and across the wider Group.

We fully recognise the benefits of diversity across the Group, and the

importance of appointing high-quality Directors with a wide range of

backgrounds, skills, gender, ethnicity and diversity of thought. However, the

need to identify the best person for a role to best advance the business

and interests of the Group and all its stakeholders is also important.

With regard to the Group’s disclosure reporting obligations for diversity

targets under listing rule 9.8.6 R (a) the Company is able to report the

following position at the 2023 year end.

The Board has a 40% objective for women Directors on the Board and on

the Group’s principal executive management team. As at 31 December

2023, the percentage of female representation on the Board stood at

30% and within the executive management team at 56%. The Board

intends to take action as part of its succession planning to meet this

objective in the short to medium term. With Natalie Kershaw as our

Group CFO we are able to confirm that the Board continues to have at

least one woman in one of the four most senior positions on the Board.

In line with the recommendations set out in the Parker Review on ethnic

diversity, the Board has adopted the Parker Review objective to have at

least one qualifying Director on the Board by 2024. This objective is

currently met following the appointment of Bryan Joseph in 2023.

As a premium-listed company on the LSE, Lancashire measures its

corporate governance compliance against the requirements of the UK

Corporate Governance Code published by the UK FRC. This requires each

company with a premium listing to disclose how it has complied with

Code provisions or, if the Code provisions have not been complied with,

provide an explanation for the non-compliance. The Board’s Nomination,

Corporate Governance and Sustainability Committee monitors the

Group’s Code compliance quarterly and more information can be

found in the report starting on page 89. In addition, the Company also

monitors compliance with applicable corporate governance requirements

under Bermuda law and regulations. The Company is subject to group

supervision by the BMA, which also regulates LICL, the Group’s

Bermuda-incorporated (re)insurance entity. The Group’s UK insurance

entities are regulated by the PRA and the FCA, and Lloyd’s in the case

of LSL and Syndicates 2010 and 3010.

The Board has continued to focus on proactive and constructive

stakeholder engagement aligned to the Section 172 responsibilities of

boards under the UK Companies Act 2006. While not formally subject

to Section 172 as a matter of law, due to the Company’s incorporation

in Bermuda, we believe that, as a responsible business, complying with

those responsibilities is a matter of importance and that they provide

practical working tools by which we can monitor our engagement. The

Board’s statement regarding matters covered by Section 172 can be

found on page 80 which outlines examples of how the Board and the

business have factored in the needs of our stakeholders in their

discussions and decision-making.

I am pleased to say that, in the judgement of the Board, the Company

has complied with the principles and provisions as set out in the Code

throughout the year ended 31 December 2023, and has appropriately

considered those duties set out in Section 172.

Chair’s introduction continued

42 Lancashire Holdings Limited | Annual Report & Accounts 2023

Our ESG strategy, impact, progress and areas of focus

During 2023, we have continued to deliver on the Group’s ESG strategy and priorities.

• Maintain high levels of engagement and

continue to offer formal and informal

channels for employee feedback.

• Gender Pay Gap reporting.

• Expand activities for Lancashire Employee

Network to include soft skills training,

following feedback.

• Continue to monitor applications to ensure

we attract a diverse talent pool.

• Management Development Programme to

continue to be rolled out in 2024 for new

and existing managers.

• Annual reporting aligned

to ClimateWise requirements.

• ESG insurance underwriting guidelines reviewed

by Board to ensure they are appropriate.

• Maintain ESG-related premium

metrics and report to Board quarterly.

• Continue engagement with ClimateWise

and seek to improve reporting and disclosures

for 2024.

• High levels of employee engagement

measured through 2023 all-employee survey.

• Reported diversity aligned to FCA

disclosure requirements.

• Lancashire Employee Network launched

offering peer-to-peer information sessions

and external speakers.

• Increased use of social media to expand

hiring pool for vacancies.

• New employees continue to receive

training on diversity matters in employee

induction programme.

• ESG insurance underwriting guidelines

reviewed and approved by the Board.

• ESG-related premium evaluated and

reported to the Board quarterly.

• Regular monitoring of energy clients’

transition plans.

• Maintained active dialogue on ESG issues

with clients and brokers.

• Published first public ClimateWise report.

1. People

and culture

Giving our people the environment,

tools, skills and support they need

to thrive in an open, honest and

diverse culture.

2. Sustainable insurance

Ensuring our business considers

climate change and other ESG issues

in our underwriting decision-making.

FocusProgress in 2023

• Continue to monitor principal investment

managers as signatories to the UN Principles

for Responsible Investment.

• Monitor the climate change risk sensitivity, ESG

profile and carbon intensity profile of the Group’s

investment portfolio with regard to developing

expectations and methodologies and keeping

within agreed guidelines.

• 96.7% of the Group’s principal investment

managers are signatories to the UN Principles

for Responsible Investment.

• Continued to review and monitor ESG

investment guidelines as embedded in

external investment managers’ guidelines.

3. Responsible

investment

Demonstrating our commitment

to ESG, including responsibility

for our environment, through the

management of our investments.

• Group emissions reduced per FTE.

• Fully offset calculated 2023 GHG market-based

emissions by purchasing verified credits.

• More than $23 million donated to charitable

organisations since 2007.

• 2023 report submitted to Carbon

Disclosure Project.

• Continued to support and report against

the aims of the TCFD.

• Sustainable lighting installed as part

of London office refurbishment.

4. Operating responsibly

Running our business as a good

corporate citizen, being a responsible

preserver of resources, and holding

our supply chain to the high standards

we apply to ourselves. Supporting

wider society through our corporate

and charitable activities including the

Lancashire Foundation. Meeting and

complying with legal, regulatory and

investor obligations on ESG.

• Monitor and report annually the

Group’s emissions.

• Continue to fully offset calculated GHG

market-based emissions through purchasing

verified credits.

• Maintain and support the work of the Lancashire

Foundation through funding and volunteering.

• Continue to engage with Carbon Disclosure

Project and report against the aims of the TCFD.

• Maintain awareness of emerging frameworks

for future reporting requirements (for example

the Taskforce on Nature-related Financial

Disclosures (TNFD)).

43Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Introduction

Delivering

for our communities

“The Lancashire Foundation’s funding

is linked to the Group’s financial results.

Our employees know that strong

business performance will allow us

to continue to support charities in the

communities where we operate, as well

as in communities around the world.”

Jennifer Wilson

Chair of the Lancashire Foundation

Donations Committee

44 Lancashire Holdings Limited | Annual Report & Accounts 2023

The Lancashire Foundation

The Lancashire Foundation is funded

through a donation pool which is linked

to the Group’s financial results. This

means that our employees know that

strong business performance will assist

in supporting the wider community.

The Lancashire Foundation, which has been a UK-registered charity since

September 2012, receives 0.75% of Group profits with a minimum

threshold of $250,000 to a maximum of $750,000. The Board

periodically receives reports from the Foundation’s Trustees and a

designated Board representative meets with employees involved in

the Foundation annually to discuss the strategy for giving for the

upcoming year.

During 2023, the Lancashire Foundation continued its work supporting

a range of causes in our home markets and further afield. Since it was

formed in 2007, over $23 million has been donated by the Foundation

to charitable organisations.

A number of these causes have long-standing relationships with

Lancashire, and we are proud of the ongoing support we have

given them.

During 2023, the Foundation has focused on supporting causes working

to protect the environment. This followed a successful programme of

support for social causes in 2022.

The Foundation made a $50,000 donation as part of our partnership

with the charity Waterstart Bermuda, which plans to open a sustainable

campus and other initiatives on Burt Island. It will ultimately serve as

a microcosm of an ideal community and a role model in Bermuda and

more widely. Waterstart Bermuda’s mission is to promote personal

growth and environmental awareness through experiential education.

Our support is our way of giving back

The British Mountaineering Council’s Access and Conservation Trust was

also a beneficiary of a £45,000 donation. This charity funds projects to

protect cliffs, uplands, mountains and outdoor spaces across the United

Kingdom and Ireland.

The Foundation has also supported the Bermuda Underwater Exploration

Institute’s 2023 Youth Climate Summit. The week-long event engages

young people on global climate issues and is the foundation for a year of

youth-led activities focused on local climate action on conservation and

sustainability. Over 150 students aged 13 to 22, from across Bermuda,

were involved.

More widely, the Foundation has also helped those in need following

earthquakes in Turkey and Syria in early 2023. A donation of £50,000

was made to the Disasters Emergency Committee (DEC) via the British

Red Cross. The DEC is a group of 15 UK aid charities that work together

to raise funds quickly and efficiently at times of crisis overseas.

The Foundation also matched all employee donations to the DEC/British

Red Cross.

The Foundation also donates funds to enhance the impact of a range

of activities undertaken by colleagues.

For example, during 2023, colleagues in Bermuda took part in the

Relay for Life to raise funds to increase access to cancer prevention,

early detection, treatment and support at the Bermuda Cancer and

Health Centre.

Alongside a donation from the Foundation, employees made generous

personal donations via the proceeds from a silent auction and bake sale.

Lancashire’s people raised almost $21,000 and the overall event raised

over $800,000.

m

Since it was founded in 2007, over $23 million has been

donated by the Foundation to charitable organisations.

,

donation as part of our partnership with the charity

Waterstart Bermuda which plans to open a sustainable

campus and other initiatives on Burt Island.

£,

The Foundation has also helped those in need following

earthquakes in Turkey and Syria in early 2023 donating to the

Disasters Emergency Committee via the British Red Cross.

45Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

The Lancashire Foundation continued

Our long-standing partnerships

The Family Centre in Bermuda

Lancashire has been supporting The Family Centre in Bermuda since

2007 to aid their work helping children suffering from emotional, social,

behavioural and trauma-based challenges. Assistance is available to any

Bermuda resident that meets the criteria and has the need. During the

year, in addition to the ongoing donation, a $100,000 donation was

made in honour of the Family Centre’s founder, Martha Dismont,

who passed away in 2023.

Tomorrow’s Voices

Tomorrow’s Voices is a Bermudian autism early intervention centre

which has been helping the community since 2007. It aims to assist

people diagnosed with autism or on the autism spectrum, starting

at the age of two.

Cancer Research UK

Cancer Research UK is the world’s largest independent cancer

research organisation and is dedicated to saving lives through

research, influence and information.

Causes close to our people

Importantly, the Foundation also encourages employees to nominate

charities that they believe would benefit from funding. We know that

even a relatively small single donation can have a big impact. More

than $56,000 was donated to organisations nominated by employees

during 2023. Donations to employee-nominated charities are a

minimum of £2,000. The Foundation’s Donations Committee

meets quarterly to review submissions from employees and make

recommendations for donations. The Committee is made up of

employees and their recommendations are submitted for approval

by the Foundation’s Trustees. Additionally, the Foundation provides

matching donations for fundraising endeavours such as marathons,

triathlons, and other activities by employees.

St Giles Trust

The Lancashire Foundation is proud to have been supporting the

St Giles Trust for 10 years.

The charity helps people held back by poverty, dealing with addiction

or mental health problems, caught up in crime or a combination of

these issues and others.

During 2023, employees Sharyl Jauod and Florinda DeMaio volunteered

their time to restock the St Giles Trust pantry in London. The pantry

offers high-quality, nutritious and healthy food to those struggling

to feed themselves and their families.

“ We are proud of the ongoing support

we have given to our long-term partners.”

46 Lancashire Holdings Limited | Annual Report & Accounts 2023

Just some of the charities nominated by employees

which received funding from the Foundation during 2023.

Forget Me Not

Support Group

Supporting bereaved parents

and families of babies.

Waves Music Therapy

– Toby’s Fund

Assisting children suffering

from complex trauma and/or

emotional and behavioural issues

through specialist music therapy.

Crohn’s & Colitis UK

Funding research into potential

cures and treatments and also

supporting those suffering from

these illnesses.

The Royal Marsden

Cancer Charity

Improving diagnosis

and personalised care

for cancer patients.

SCARS Bermuda

Reducing the risk of child sexual

abuse by raising public awareness,

educating adults on prevention,

and lobbying decision-makers

to protect children.

WeSeeHope

Helping vulnerable children in

Southern and Eastern Africa

through early childhood

development, educational and

vocational-based training.

The Kevin Bell

Repatriation Trust

Assisting bereaved families

to repatriate the bodies of

loved ones.

Home for Good

Providing a home for every child

who needs one via fostering,

adoption or supported lodgings.

Haven House

Children’s Hospice

Providing high-quality palliative

and holistic care services to

babies, children and young

people and their families.

Friends of Treetops School

Refurbishing a sensory room for

children with disabilities.

George’s Windmills

Supporting children’s wards

and family areas connected

to hospitals.

Plymouth Hospitals Charity

– Derriford Children’s Wards

Improving a hospital ward or area

that needs extra care to make it

more friendly or calming for

people who need it.

Usher Kids UK

Serving the needs of children and

young people and their families

living with Usher syndrome – a

rare cause of progressive deafness

and blindness.

Oakhaven Hospice

Providing support through

hospice and home care services.

It Takes a Village Foundation

Supporting vulnerable women

with education, food vouchers

and other necessary items, not

currently offered by the statutory

authorities or other charitable

organisations in Bermuda.

Trees for Cities

Creating high-quality green

spaces in socially and

environmentally deprived

areas. They hope to plant

their 2,000,000

tree

in 2024.

47Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Project Transform

During 2023, Lancashire was pleased to relaunch Project Transform,

which offers employees the opportunity to take part in volunteering

activities overseas.

The first Project Transform visit took place in 2010 in the Philippines

and since then annual trips have been arranged, with a pause during

the COVID-19 pandemic. The Tanzania programme was organised

with the International Volunteer HQ organisation.

Figures from the UN Development Programme show that more than

57% of the population in Tanzania lives in poverty, making assistance

initiatives, such as Project Transform, extremely valuable.

The 2023 activity saw 12 employees from across the Group travel to

the country to assist with a construction project to build a new home

for 68-year-old widow Beatrice.

Team member Jamie Grant said: “When we arrived, she welcomed us

into her current house, a tumbledown shack with a low tin roof (secured

with rocks), no windows but plenty of holes in the mud walls, and only a

narrow sofa for a bed.”

During the week-long programme, the team helped clear an adjoining

plot, dig and pour the foundations and begin the construction of the new

home. The group were welcomed by members of the local community.

Team member Kelly Turner said: “Saying farewell to the local children

was very tough. These kids had been with us all week – watching our

progress, entertaining us with their singing and their dancing, as well as

taking every opportunity to encourage us to down tools and join them

in a game of street football.”

“The project team had coordinated gift bags for 25

children, colouring books and pencils for the younger

ones and exercise books and maths sets for the older

ones who were soon to be heading to senior school.”

“The team left Tanzania after a truly amazing

experience, with many team members having been

inspired to consider further volunteering work

when back in the UK/Bermuda, or further afield.”

48 Lancashire Holdings Limited | Annual Report & Accounts 2023

Sustainable insurance and responsible investment

2023 TCFD report

Meeting the challenges and

opportunities of ESG and climate

issues has been a focus within the

Lancashire business for many years.

Our underwriting mindset is grounded in a pragmatic understanding of

potential perils, their nature, and mitigation factors. The risks of climate

change on the insurance industry affect the asset and liability side of the

balance sheet. That double exposure drives us to work with our clients

to assist them with risk solutions that help them recover from the impact

of catastrophic events, including those associated with climate change.

We also act as a partner with our clients during their journey through

this phase of global carbon transition.

Lancashire operates in a subscription market that allows us to adjust

our insurance solutions and provide policyholders with flexibility as

their needs change to address climate-related challenges and planning.

Our approach to reporting

Every year, we build upon our increasing knowledge to move discussions

further in identifying the opportunities to work alongside our clients,

investors, and other stakeholders to address complex climate change

issues. The summary on the following pages details our disclosures,

which are consistent with the TCFD’s four core elements – governance,

strategy, risk management, and metrics and targets – underpinned

by 11 recommendations.

About this report

In compliance with the Financial Conduct Authority (FCA)

listing rules, these disclosures are consistent with the TCFD

recommendations and recommended disclosures.

Lancashire is a TCFD supporter and recognises the value of

consistent disclosures. Annual reporting against TCFD allows

us to understand climate-related business risks and opportunities.

Some additional guidance in the October 2021 TCFD Annex

requires more time for us to consider fully. We will continue

this review throughout 2024.

Our Scope 3 disclosures relate to the measurable emissions

referable to our own operations, as more specifically detailed

in this report. At this time, there is no commonly-adopted

methodology, nor the available data for accurate and comparable

measurement and apportionment of Scope 3 emissions referable

to the economic activity associated with the Group’s investment

portfolio or its (re)insureds; further details on our approach can

be found in the Strategy section of this report.

This report complements Lancashire’s ClimateWise Report dated

August 2023, our Principles for Sustainable Insurance disclosures

and our CDP submission.

Governance

The organisation’s governance

around climate-related risks

and opportunities

Strategy

The actual and potential

impacts of climate-related

risks and opportunities on

the organisation’s business,

strategy and financial planning

Risk Management

The processes used

by the organisation to

identify, assess, and manage

climate-related risks

Metrics and Targets

The metrics and targets to

assess and manage relevant

climate-related risks and

opportunities

Governance

Strategy

Risk Management

Metrics and Targets

The Four Core

Elements of

the TCFD

Lancashire’s TCFD roadmap

In 2023, the Board assessed the prominent risks facing the Group,

including those that could threaten our business model, future

performance, solvency, or liquidity. This review stressed the 2023

business plan for several severe but plausible scenarios, including

climate change and the impact on capital evaluated. Since then, we

have completed annual disclosures relating to GHG emissions, focusing

on continuous improvement over time. Looking at our progress to date,

we can identify areas to focus on and prioritise combining short- and

long-term actions and commitments that support meeting the UK

government’s net-zero target by 2050.

49Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Sustainable insurance and responsible investment continued

Core areas of TCFD disclosure

Governance

Disclosure elements 2023 Practice

Board’s oversight of climate-

related matters

See page 51

• Continued to evolve Board oversight and monitoring of climate-related risks and opportunities,

actioned through Board committees with climate-specific related duties.

• Oversaw the strategic planning process and approved the annual update of the strategic plan,

including building on climate change risks and opportunities.

Management’s role in assessing

and managing climate-related

matters

See page 51

• Continued to focus on the actual and potential impacts of climate-related risks and opportunities

through our underwriting, risk and exposure management with wider oversight by the ESG

Committee across the business.

• Carried out climate-related risk and opportunities analysis, governed by the RRC, facilitated

by our Group CRO and delivered through strategic business units and functional groups.

Strategy

Disclosure elements 2023 Practice

Climate-related risks and

opportunities identified over the

short, medium and long term

See page 54

• Identified climate-related risks and opportunities using an internal view of risks and the impact

of physical and transitional risks.

Impact of climate-related risks

and opportunities

See page 57

• Continued to explore opportunities and manage risks and the impact they have on all aspects

of our business and strategy.

• Linked underwriting guidelines to our formal risk appetite and focused on assisting the broader

set of efforts to mitigate climate change’s impact on the economy and society.

Resilience to climate-related risks

using scenarios analysis

See page 59

• Conducted stress and scenario testing as part of our business planning process to get insight

into the impact natural catastrophe events could have on our business.

• Supplemented the underwriting approach with several sophisticated models that model

exposures and predict losses for hurricanes and other weather occurrences.

• We manage our capital by reference to sophisticated modeling using actuarial inputs relating

the Group’s exposure to major catastrophic events, including climate-driven catastrophes.

Risk Management

Disclosure elements 2023 Practice

Processes for identifying,

assessing and managing

climate-related risks

See page 60

• Continued dialogue with risk owners and subject matter experts across the Group including

annual underwriting strategy days to review current and anticipated climate risks.

• Continued to monitor PMLs of top elemental perils and continued to manage climate risk as a part

of underwriting and investment risk considerations and as a driver of our capital requirements.

• Continued to monitor ESG-related premiums to identify transition risk with these premiums

reviewed by the Board every quarter.

Integration into risk

management framework

See page 61

• Embedded climate-related risk into our ERM framework, by using qualitative and quantitative

risk analysis, and our risk appetite statements.

• Integrated climate risk tolerances in Group and individual entity risk appetite statements,

which are assessed at least annually.

• Continued to enhance the process for identifying climate-related risks and opportunities

with tools and frameworks used across the Group.

Metrics and Targets

Disclosure elements 2023 Practice

Metrics used to assess climate-

related risks and opportunities

See page 62

• Reported on PMLs and the outputs of how risk is monitored against various perils in different

global regions.

• Continued to test assumptions with external models challenging the macro and specific account levels.

Scope 1, 2, 3 GHG emissions

See page 63

• Reported Scope 1, 2 and 3 operational GHG emissions, relating to our own emissions, and

progress towards our path to the UK carbon net-zero in 2050.

• Disclosed operational emissions per full-time employee (FTE) against our target of a further

reduction in emissions per FTE of 15% by 2030.

Targets used to manage

climate-related risks and

opportunities

See page 64

• Monitored our net-zero target for 2050 for our own operations’ emissions and continually sought

innovative ways to make improvements.

• Established corporate policies in place and a commitment to offset our emissions for our own operations.

50 Lancashire Holdings Limited | Annual Report & Accounts 2023

Governance

Board’s oversight of climate-related matters

Our governance structure for managing the Group’s climate-related risks and opportunities is the same as for any other key risks and opportunities

identified on our risk register. Below is an overview of the organisational structure and how climate-related risks and opportunities are embedded

in our governance structure.

Board and Board Committees

Management Committees and Forums

Management Oversight

Board Oversight

ESG Committee

Disclosure Committee

Investment Risk and Return Committee (IRRC)

Risk and Return Committee (RRC)

Reinsurance Security Committee (RSC)

View of Risk Committee

Group Chief

Financial Officer

Group Chief

Operating Officer

Group General

Counsel and Chief

Executive Officer

Lancashire

Insurance Company

(UK) Limited

Chief Executive

Officer, Lancashire

Syndicates Limited

Group Chief

Risk Officer

Group Chief

Human Resources

Officer

Chief Executive

Officer Lancashire

Insurance Company

Limited and

Reinsurance

Manager

Group Chief

Underwriting

Officer and

LCM CEO

Executive Committee

Chief Executive Officer

Oversees and responsible for providing strategic direction and implementation regarding climate-related goals, risks, and disclosures.

Board of Directors and its Committees

Oversees and approves our climate strategy and how we manage climate risks and opportunities.

Nomination,

Corp Governance &

Sustainability Committee

Oversees issues of

sustainability, including

developments in climate

change risk management

and reporting. Committee

makes recommendations to

the Board regarding the

ESG responsibilities of

the Company.

Oversees the investment risks,

including sustainability risks, by

monitoring the portfolio’s

climate change risk sensitivity,

performance against a climate

Value at Risk (VaR) appetite

statement and the carbon

intensity of certain investment

assets as part of the regular

quarterly reporting process.

Oversees the Group’s

remuneration packages,

including the Group’s

remuneration structure,

ensuring they are in line

with the Group’s business

and ESG strategy.

Oversees our financial

reporting, internal and

external audit oversight,

internal controls and risk

management systems.

Oversees the disclosures of

the Group’s ESG strategy,

carbon accounting footprint

and offsetting, and the

Group’s TCFD report.

Investment Committee

Underwriting

& Underwriting

Risk Committee

Remuneration Committee Audit Committee

Oversees the impacts as an

influence on insured perils of

climate change and transition

risk, as well as the broader

ESG risks, and articulates

appropriate appetites and

tolerances for the Group.

Governance

51Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Sustainable insurance and responsible investment continued

Examples of Board ESG and climate change

oversight in 2023

Annual review and approval of the Group’s:

• Strategy including ESG factors;

• Risk appetite statements, including climate-related reports

for the asset and liability side of our business; and

• Tolerances for elemental PMLs and non-elemental RDSs.

Review and approval of the Group’s:

• Insurance underwriting guidelines including ESG

considerations;

• Annual ORSA report and quarterly reporting, which contains

information on all risk categories highlighting material risk

considerations, including climate-related risk where

appropriate; and

• Stress test outputs as part of the annual business planning

exercise and the annual ORSA reporting process, including

climate-related scenarios.

Monitors performance against:

• VaR risk appetite statement as part of the regular quarterly

reporting process;

• Preference for the financial impact of the Climate VaR on

the Group’s actual fixed maturity portfolio;

• Investment portfolio performance referencing the MSCI

carbon sensitivity and ESG profile tool;

• Business underwritten within the Group against the strategic

plan and the Board-approved risk tolerances, including those

linked to climate-related catastrophe loss events; and

• ESG-related premium as a percentage of total premium

written.

Board oversight

The LHL Board is responsible for the oversight of climate-related risks

and opportunities. It oversees the Group’s ERM activities and receives

regular updates on material risks, including ESG-related risks and

opportunities. This is done through the Nomination, Corporate

Governance and Sustainability Committee, the Underwriting and

Underwriting Risk Committee, and the Investment Committee.

The Board’s five reporting committees provide oversight and

challenge management on progress against goals and targets.

The Nomination, Corporate Governance and Sustainability

Committee monitors issues of sustainability, including developments

in climate change risk management and reporting.

The Underwriting and Underwriting Risk Committee monitors the

Group’s underwriting exposure to catastrophic risks including those

influenced by the impacts of climate change on the transition and

physical risks, as well as strategic planning of ESG risks, and articulates

appropriate risk appetites and risk tolerances for the Group. The

Committee also monitors exposures versus the Board-approved

risk tolerances on a quarterly basis.

The Investment Committee monitors climate change risk sensitivity,

the ESG, and the carbon intensity profile of the Group’s investment

portfolio and investment risk parameters, which include specific

Board-approved climate-related investment guidelines applied

across the Group’s fixed maturity portfolio.

Director development

In 2024, our Group CRO will deliver a session on climate risk for Board

members. The objective is to share current and emerging risk practices,

regulatory developments, and evolving climate-related ESG issues. This

will build on the existing quarterly ORSA updates that the Group CRO

prepares, which informs on climate-related risk and capital implications.

ORSA updates report on the Group’s risk exposures and compare them

against risk tolerances, including natural catastrophe perils. Were

material breaches to occur, they would be presented and mitigation

strategies would be recommended. Emerging risks, including climate-

related financial risks are discussed, including their potential impact

on the business plan.

Management’s role in assessing and managing climate-related matters

At the Executive Management level, the Group CEO is accountable for the development and execution of the Group strategy, setting the right

tone company-wide, and establishing our ESG priorities, including managing climate-related risks and opportunities and overseeing the process

for calculating the Group’s GHG emissions for its own operations and for the related purchase of offsetting credits.

The Group CUO is ultimately responsible for the business written by the Group, assisted by the segment and subsidiary CUOs and active underwriters.

Climate-related risks and opportunities related to the business written are assessed as part of the underwriting process. Each underwriter has

underwriting authority, in which climate-related underwriting guidelines are embedded.

The Group CRO is responsible for the implementation of the risk management framework, which includes facilitating the identification, assessment,

evaluation, and management of existing and emerging risks, and for ensuring these risks are considered and are properly included in management and

the Board oversight and decision-making process.

Governance

52 Lancashire Holdings Limited | Annual Report & Accounts 2023

Management reporting

The key areas of monitoring the overall governance processes

and management reporting processes are:

• Achievement of strategic objectives;

• Business performance;

• Investment performance and liquidity;

• Concentration exposure;

• Reserving adequacy;

• Capital requirements;

• Material risks faced by the business;

• Risk appetite and tolerance;

• Effectiveness of the control environment; and

• Compliance with laws and regulations.

ESG-linked compensation

The Group CEO and CFO’s performance-related compensation is

based on Company-wide performance and personal performance

objectives with a 75%/25% weighting. Their personal objectives

include ESG-related objectives. Achieving our ESG targets is a

fundamental component of our incentive plan, which the Board

approves. By aligning our incentive compensation awards to our

ESG performance, we have created a direct link between ESG-related

criteria and executive compensation.

Management-level ESG Committee

The ESG Committee, which was established by management in 2021,

is tasked with the oversight, co-ordination and internal management

of the Group’s ESG strategy. The ESG Committee reports to the

Nomination, Corporate Governance and Sustainability Committee

quarterly and regularly to the Group Executive Committee and is

supported by the Diversity, Equity & Inclusion Working Group.

Key developments are reported to the Nomination, Corporate

Governance and Sustainability Committee, as well as the Investment

and the Underwriting and Underwriting Risk, Audit and Remuneration

Committees as appropriate, and ultimately to the Board via the Group

CRO’s quarterly reporting and periodic reporting from the ESG

Committee Chair.

Management-level Risk and Return Committee

The RRC evaluates and monitors the Group’s modelled underwriting

PMLs and RDSs against the Group’s tolerance levels on a monthly and

quarterly basis, respectively. Lancashire underwrites predominantly

short-tail business, with loss exposures usually crystallising within a

policy period of 12 months. As a result, with PML levels updated monthly

and shared internally, we ensure we closely track both market pricing

and coverage conditions and the Group’s modelled climate-related loss

exposures; this information, in turn, is communicated quarterly to the

Board. Please see page 150 for more information.

Management-level Investment Risk and Return

Committee

The IRRC actively monitors the potential impacts of climate change-

related transitional risk on assets within the Group’s investment

portfolio. We work with our external portfolio managers to monitor

the carbon and ESG profile of the Group’s investment portfolio. The

requirement to monitor, develop and implement ESG and TCFD

principles is included within its terms of reference.

The Group CRO is a member or attendee of all the committees described

above and provides a link between each individual forum and the Group

Executive Committee.

Group-wide teams supporting climate initiatives

Our governance structure supports the effective oversight, management,

and execution of our climate-change ambitions across our business.

Our exposure management team — led by the Group Chief Actuary

— works alongside the Group Head of Exposure Management and

modelling professionals to ensure that climate-related physical risks

are modelled, with the sensitivity of peril parameters (frequency and

severity) assessed. The results inform decision-making with regards

to our strategy and portfolio.

In our underwriting operations, we manage climate risk by sharing

knowledge and guidance on the insurance underwriting guidelines that

are part of each underwriter’s authority. Adherence to underwriting

authority forms part of the annual performance appraisal process.

Our internal modelling expertise is supplemented with external vendor

models that support complying with the tolerances and preferences

created to manage our exposure, including loss events that climate

change trends may have shaped.

Governance

53Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Sustainable insurance and responsible investment continued

Strategy

Short-term

We predominantly underwrite short-tail business, so the principal impact of climate-related risks and opportunities is on short-term strategy.

Potential impacts are mitigated by our ability to consider new data regarding the frequency and severity of elemental catastrophe events,

re-evaluate the portfolio annually, re-price physical risks and reset exposure levels.

Medium-term

Over the last several years, we have seen increased climate-related information provided in the underwriting process. We recognise that climate

change impacts the longer-term strategy regarding emerging risks. The Group’s casualty risk exposures, which have a medium-term time frame,

are not typically heavily influenced by catastrophic climate change-related loss events.

Long-term

Management works with some of the leading external catastrophe model providers to better capture the latest science that underlies and informs

developments in the short- and long-term climate-related assumptions in their stochastic models. These developments are included in the Group’s

management and Board-approved business strategy with a view towards 2030, which is reviewed and updated annually. More information can be

found on page 120.

The process by which management identify emerging risks, including those which are climate-related, is described on page 27 of the enterprise risk

management section. As part of this process the potential impact of the risks is assessed including magnitude, likelihood and time horizon. Risk

mitigation and monitoring plans are then put in place using a risk based approach to prioritise those considered most material and likely to impact

the business.

Board oversight of strategy

While our strategic planning is based on the period to 2030, the Board’s strategic discussions are informed by consideration of potential global future

trends in the medium- to longer-term scenarios. The Board examines the impacts of transitional climate change risk on our business, the Group’s

underwriting and investment portfolios, and associated strategies.

Short-term Medium-term Long-term

15-30 years

from now

5-15

years

Up to

5 years

Strategy

We integrate climate-related opportunities into our business to build on our

strengths and capabilities.

The Group analyses its investment portfolio and uses tools to understand the resilience to climate-related scenarios, the carbon intensity of assets

and other ESG-related considerations. The Group does not yet have a sufficiently robust set of analytical tools and data to articulate a GHG baseline

for the investment portfolio, which might be used in target setting, but intends to work with its portfolio managers to refine the analytical tools and

available data in the coming years. Similarly, there is no insurance industry-wide common methodology for calculating and reporting GHG emissions

relating to an insured portfolio, and the Group does not yet have the data or a commonly accepted methodology to establish a meaningful baseline

or associated target for its underwriting activities. The Group intends to continue engaging with industry bodies and think tanks to develop its strategic

thinking in these areas, mainly through our participation in ClimateWise.

Climate-related risks and opportunities identified over the short, medium, and long term

Strategy and planning time frames

When evaluating the actual and potential impacts of climate-related risks and opportunities on our strategy and financial planning, we scrutinise three

sets of time frames.

54 Lancashire Holdings Limited | Annual Report & Accounts 2023

Wildfire

United States & Europe

Inland Flood

United States & Europe

Capital

Constraints

Declining

Energy

Premium

Declining

Transport

Premium

External Factors

e.g. regulation

Tropical Cyclone

United States

Tropical Cyclone

Japan

Emergent

Region Perils

Litigation

Extratropical Cyclone

Europe

Climate change risk radar

Time horizon

Long-term: 15-30 years from now

Medium-term: 5-15 years

Short-term: up to 5 years

Impact on insurance

service results

High

Medium

Low

Key

Decarbonising economy to net-zero

Decarbonising the power sector is expected to be a key driver in transitioning the global economy. Globally, the shift will be to swap to alternative

energy sources. Investments and risk coverage will need to run parallel to this new lower carbon economy.

The Group may face the transitional risk of a declining premium environment in the traditional oil and gas sector, and transportation classes over

time, and/or the risk of exposure to climate change-related litigation. As the economy transitions from a carbon-based one towards a net-zero

future, we have considered the impact of new technology and how it will influence the whole energy sector including renewable energy risks,

which we underwrite.

We can mitigate loss of revenues from these declining sectors by working with clients as they transition, and insuring the infrastructure and assets

required for the transition.

Internal view of risk

In 2021, we developed a Climate Risk Radar, which was refreshed in 2023. It illustrates Lancashire’s current internal view of the physical and transition

risks from climate change, including the potential time horizon over which they may be faced, the potential magnitude of financial impact, and the

geographical region (for physical risks). It allows us to map the climate dependencies to understand where the disruption might occur and financially

impact our business from a physical or transition risk.

Strategy

The arrows pointing inward indicate shortening time-frames for these risks.

55Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Sustainable insurance and responsible investment continued

Potential effects of climate risk

Annual strategy days

The two annual underwriting strategy days for our insurance and reinsurance segments included the assessment of climate-related risks of current

and anticipated future risks. This includes but is not limited to transition risk arising from a decline in the value of assets to be insured, changing

energy costs, and liability risks that could arise from climate-related litigation. Physical, transition, and liability risks are considered by business

segment and geographical location, and the expected impact from the risks identified are tested for magnitude and timescale.

Over the last several years, we have continued to identify and articulate the financial impacts of physical and transitional climate-related risks;

examples are:

Strategy

Extreme Weather

• Flooding

• Drought

• Rising sea levels

• Rising temperatures

• Wind

• Forest fires

• Convective storms

Physical risk to our own operations is less material. We

do not have significant physical assets to be impacted by

physical risk, with the main impact of physical risk arising

from our underwriting portfolio as losses from elemental

catastrophic events. We do, however, have robust business

continuity processes in place.

Loss amplification factors, time frame, and magnitude

are considered for each extreme weather physical risk

identified, as are metrics by which these risks can be

monitored and reported.

Transitional risks that the Group may face include

the probability of a declining premium environment

in the traditional oil and gas sector or transportation

classes over time, or the risk of exposure to climate

change-related litigation.

The potential impact in terms of premium is thought

to range from low to medium for the relevant subsidiary

writing the business. However, the financial impact of

these risks on the Group ranges from very low to low due

to the inherent responsiveness in the Group’s underwriting

strategy. The impact would be expected to be felt in both

business segments, i.e., insurance and reinsurance.

• Legal and regulatory

• Technology

• Market

• Reputational

Physical risks Transitional risks

56 Lancashire Holdings Limited | Annual Report & Accounts 2023

Impact of climate-related risks and opportunities

Climate-related opportunities

As a (re)insurer, the Group accepts and mitigates risk; for every risk identified, there is the potential for an opportunity. Opportunities will arise from

the investment in infrastructure required for the world’s transition to a lower-carbon economy; this infrastructure will require insurance which lies

within the Group’s existing classes of business and risk appetite. The demand for new environmental insurance products and services is also expected

to increase. We will work closely with existing clients to provide the insurance they need as they transition and access new market offerings in the

form of new assets and locations requiring insurance coverage.

A summary of the opportunities, their likelihood, time frame, and magnitude of impact on insurance service result is included in the table below.

Risk Description Market Opportunity Time frame Likelihood Magnitude

Political risk

insurance

Currently, a strong uptick in ESG-related funding

from our existing client base and this trend is expected

to continue.

Natural catastrophe

(re)insurance

Additional limit purchased by insureds and reinsurers

at improved pricing levels as catastrophe risk increases

with both earnings protection and capital protection

being sought.

Renewables The trend for global renewable electricity generation

is fully expected to continue. As our clients transition

from fossil fuels to renewable energy, there will be

sizeable opportunities in the market to grow this

part of our portfolio.

Decommissioning

insurance:

Oil & gas assets

Energy transition will accelerate the decommissioning of

many offshore platforms and complexes. As these assets

reach the end of their commercial life, there will be

increased pressure to ensure that their decommissioning

is done in an environmentally friendly way with

appropriate risk management solutions.

Carbon capture:

injection of CO

into

depleted gas fields

Offshore carbon capture and storage may play a

major role in global efforts to reduce emissions

with appropriate risk management solutions.

Environmental

insurance products

Environmental insurance provides coverage for loss

or damages resulting from unexpected releases of

pollutants typically excluded in general property

and liability policies.

Parametric (weather)

insurance products

for food and

agriculture industry

Industries will look at new ways of managing weather risk

where parametric triggers are more likely to offer a form

of indemnity.

High High

Medium Medium

Low Low

Likelihood MagnitudeTime frame

Long-term 15-30 years from now

Medium-term 5-15 years

Short-term up to 5 years

Short- to medium-term

Medium- to long-term

Strategy

57Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Sustainable insurance and responsible investment continued

Managing risk

Lancashire is exposed to the risk of heightened severity and frequency

of weather-related losses, which may be influenced by climate change.

We manage this risk using stochastic models from third-party vendors

with a long history of quality data governance. In addition, we adapt

these models based on our views of climate risk and our clients’

exposure data to create aggregate loss scenarios.

The modelling data and the capital deployment are closely monitored

by executive management. Likewise, the Board monitors this quarterly

as part of strategic risk and capital management, with the testing of

the models leading to changes in risk levels, reinsurance purchasing

and structuring strategy as required.

As part of the financial planning process, the assumptions within the

underwriting portfolio are reviewed, including the expected rate adequacy

and losses for each class of business. Several factors, including climate

change-related factors such as frequency and severity of elemental events

and the potential for associated claims inflation, drive our assumptions.

The level and availability of capital, as well as capital utilisation by

class of business, are also key considerations in the financial planning

process. The business mix is also reviewed, with new products and

lines considered where rates prove attractive and accretive.

Underwriting guidelines

Climate-related insurance underwriting guidelines have been embedded

within our Underwriting Authority framework since their development

in 2021. The guidelines monitor and guide underwriting in the more

carbon-intensive industries, restricting insurance policies covering

targeted activities in specific global regions. When a risk is unclear,

a referral process is in place. We continue to enhance how we track

premiums and policies according to their climate profile. We continue

to engage with our clients in the more carbon-intensive industries to

understand their progress on their net-zero commitments.

Business continuity processes

Lancashire’s exposure to physical risk in our operations is modest.

As a business with an office in Bermuda, we recognise that this area of

the world is vulnerable to catastrophic windstorm events and may be

affected by future climate change trends. All Lancashire offices have

business continuity processes (BCPs) and disaster recovery plans in

place. Specifically, the Bermuda management team and Board consider

hurricane and tsunami risks within the Bermuda office’s BCP.

Risk partnerships

Outside of physical risk, Lancashire has been a risk partner of businesses

operating in the aviation, marine and energy sectors worldwide for many

years. The risk solutions we provide help deliver the wider social benefits

of safer operations in a properly regulated environment with access to

capital resources to repair quickly and remediate damage in the event of

accidents or catastrophic failure.

Lancashire has strong relationships with brokers distributing our products

via larger international firms and smaller independent intermediaries. We

strive to be a trusted partner and add value through our expertise in risk

management and risk transfer. We will continue to support our clients in

meeting their business needs and in their journey to transition away from

carbon-based forms of energy.

Investment portfolio

We have tools to identify, measure, and manage the potential

impact of ESG and climate-related risks and opportunities on the

Group’s investment portfolio. This information is reviewed and reported

through the IRRC, the RRC, and the Board’s Investment Committee.

For the past three years, we have collaborated with our external portfolio

managers to monitor the carbon intensity and ESG profile of the Group’s

investment portfolio. The Group’s investment guidelines restrict

investments in companies that rely on thermal coal for power generation

or derive revenues from oil sands or Arctic oil/gas, as well as investments

in fixed maturity securities with high carbon intensity ratings. Compliance

with the investment guidelines is monitored every month and any

adjustments are approved by the Board and Investment Committee.

Every quarter, we monitor the climate VaR against the MSCI benchmark

by analysing the underlying securities measured by MSCI. Management’s

target preference is for the impact of climate change to be less detrimental

on our portfolio than the relevant benchmark at the same level.

Lancashire monitors the ESG profile of its fixed maturity portfolio for

those securities covered by the MSCI ESG rating tool. The majority of the

portfolio for the year-end of 2023 was designated within the “average”

ESG category. Please see the Investment Committee report starting

on page 94 for further information.

Strategy

External investment managers

As of 31 December 2023, 96.7% of our external investment portfolio was

administered by managers who are signatories to the United Nation’s

Principles for Responsible Investment. After stress testing, our year-end

analysis has shown that our investment portfolio, specifically the fixed

maturities, is more resilient to the impacts of climate change than the

relevant benchmark, which we have linked to a 1.5°C future pathway

scenario. In our last strategic asset allocation study, we recommended a

target percentage to be invested in a sustainable fund. In 2023, a portion

of the funds has been dedicated to an ESG sweep facility product, an

investment tool that directs cash into a money market fund account daily.

In 2024, we will continue to look at other suitable sustainable funds. We

are committed to working with external portfolio managers to refine our

analysis further.

Lancashire total MSCI benchmark

AAA AA A BBB BB B CCC

MSCI overall rating (%)

Percentages for the MSCI Benchmark data are up-scaled to compare with the Lancashire

securities that are covered by the MSCI.

58 Lancashire Holdings Limited | Annual Report & Accounts 2023

Resilience to climate-related risks using

scenarios analysis

Stress and scenario tests

Stress and scenario testing and reverse stress tests are performed as part of

the annual business planning process and the yearly ORSA reporting process

that includes climate-related scenarios. The capital impacts from various

scenarios, including climate-related risks and opportunities, are presented to

the RRC and Board for review and discussion. We test against the prescribed

underwriting loss event scenarios outlined in the Bermuda Solvency Capital

Requirements (BSCR) every year. In 2023, stress testing was performed on

the Group’s business plans to understand the impact should the recent high

catastrophe event experience be more indicative of the average experience

than that currently predicted by the third-party catastrophe models.

Climate scenario used

The key climate change scenario used in the business plan and ORSA was

one where the timeline for the onset of climate change related risk was

deemed to accelerate. The scenario included physical risk assumptions with

regards to frequency and severity of major hurricanes, and transition risk

assumptions resulting in a stressed impact on inwards premiums and

outwards premiums. Loss ratios were increased and an inflationary impact

added, expenses were increased and investment return decreased. Overall,

the scenario reduced key metrics such as Diluted Book Value Per Share,

profit and return on average equity by circa 30%, but had sufficient capital to

meet regulatory and rating agency requirements. This led management to

conclude the Group has resilience to the impacts of climate change risk in its

strategy and business model.

New modelling tool

In 2022, we transitioned to a different catastrophe model provider to

increase the range of secondary perils we can model. As part of this

transition and our annual model review, we have explicitly considered

the impact of climate change to ensure our hazard selections within the

model are appropriate for our understanding of the current environment

and impact with respect to climate change.

In addition, our exposure management team has licensed a new tool

to perform climate-related scenario testing looking at the impact of

changes in the frequency and severity of hurricanes and the impact

of storm surge for specified temperature increases.

All material new models and model changes are validated via the View

of Risk Committee.

Historic modelling

Every quarter, we model the Lloyd’s catastrophe RDSs for our current

portfolio to understand the present-day impact of their re-occurrence.

Such events include, but are not limited to, a Japanese typhoon based

on the 1959 typhoon Vera, Florida windstorms landing in Miami-Dade

County, and Pinellas County, Gulf of Mexico windstorm, Northeast

windstorm and Carolinas windstorm.

Wind scenarios 2°C of warming

The Group calculates its outputs for modelled wind exposures which

are estimated for a 2°C warming scenario, with frequency and severity

assumptions for this scenario drawn from published scientific research

reviewing multiple underlying published estimates of hurricane changes.

The high-level stress testing looked at the relative impact using current

Lancashire exposure values, applying established relationships for windspeed

changes in terms of both severity and frequency under the differing response

parameters, compared to current assumptions. The change in Lancashire

exposure (based on current values) is shown below, which we estimate has

a slightly lower impact than that for our estimate of the impact of overall

industry exposures, using the same set of climate scenario assumptions

and modelling.

Scenarios shown consider only the impact of the physical response of 2°C of

global warming upon hurricane activity in terms of estimated wind impacts

and do not consider the impact of additional physical parameters such as

changes in the level of expected storm surges or rainfall patterns. Frequency

and severity estimate of hurricane response under projected global climate

change are inherently uncertain, with individual modelling studies generating

significant variations in results for different hurricane metrics and regions, as

a result of using different underlying resolutions of climate models with

different underlying emission scenarios and warming ranges and/or different

temperature change baselines.

Reviews of individual studies apply methods and assumptions to standardise

results into common climate baselines, with then our own expert

interpretation applied to selected ranges for the most appropriate values for

our exposure footprint. Limitations of the scenarios are that calculations

assume exposure responses, and insurance conditions remain constant as per

today’s relationships to hurricane frequency and severity parameters. No

consideration is given to any specific mitigations (e.g., the construction of

additional sea defences) or specific adaptions (e.g., strengthened local

building codes, zoning regulations, etc.), or wider changes in policy responses.

Scenarios assume no changes in exposure values through inflation or from

underwriting decisions.

Resilience in our strategy

The following key factors lead the Board and management to conclude there is resilience in the Group’s strategy and business model to the impacts of

climate change risk: i) our book of business is largely short-tail; ii) we are able to model the geographical indications and economic impacts of climate

risk on the products we sell; and iii) we price based on flexible and dynamic risk analysis.

Wind only – example 1

Metric Lancashire percentage change in exposure (based on the current portfolio)

Scenarios chosen: 0% change in frequency, 4% increase in severity (for 2°C of global warming)

Occurrence exceedance probability every 1 in 200 years 10%

Wind only – example 2

Metric Lancashire percentage change in exposure (based on the current portfolio)

Scenarios chosen: 15% decrease in frequency, 4% increase in severity (for 2°C of global warming)

Occurrence exceedance probability every 1 in 200 years 8%

Strategy

59Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Sustainable insurance and responsible investment continued

Processes for identifying, assessing and

managing climate-related risks

Identifying climate risks

Climate-related risks are identified and assessed as part of the usual risk

identification and management process, including dialogues with risk

owners and subject matter experts across the Group, and discussions

at the Group’s Emerging Risk Forum and the ESG Committee.

Risk management

One of Lancashire’s keyoperating principles, which supports the Group’s strategy

to produce an attractive risk-adjusted total return to shareholders over the long term,

is to balance risk and return through the cycle.

Risk Management

Our approach to managing the effects of climate change is through an enterprise risk

management (ERM) framework.

The impact of climate-related risks is managed within an existing ERM framework that functions as an active partner in business

decision-making, see risks page 27.

Some examples of risks identified include the assets to be insured,

their physical location, weather-related perils that have impacted

that location, historical frequency, severity, and expected short- and

long-term changes.

The potential impact of all material risks is assessed through:

• the development and monitoring of early warnings or triggers that

allows timely consideration of, and adequate response to, material risks;

• the development and regular use of measurement techniques to

determine the relative materiality of identified risks at a Group

and entity level;

• the identification of risks that are elevated relative to business

preference, to enable the prompting of remedial actions where

appropriate;

• the development of processes for regular monitoring and updating

of risk assessments in response to changes to the internal and

external risk environment; and

• the assessment of the adequacy of the internal control framework

in aggregate at a risk, entity or Group level.

Risk management methods include:

• transferring part of the risk elsewhere;

• treating or mitigating the risk;

• accepting or tolerating the level of risk;

• eliminating or terminating the risk; or

• revising risk appetite levels or tolerating the breach for a defined

period of time.

These risks are managed similarly to others: identified, monitored,

mitigated, and reported upon against tolerance as appropriate.

The emerging risk process on page 27 explains how emerging risks

are assessed for potential impact to the business, and the process for

establishing mitigating actions and ongoing monitoring. In addition to

these conversations, our insurance underwriting guidelines and our

processes and controls allow us to identify any risks written outside

predetermined criteria.

Climate-related risks specific to the (re)insurance portfolios are identified

and assessed as part of the day-to-day underwriting process by individual

underwriters in their analysis of specific risk information and, more

broadly, in the context of the wider portfolio during the daily UMCC

and the fortnightly RRC meetings.

Climate risks are a part of the

Group’s underwriting and

investment risk considerations

60 Lancashire Holdings Limited | Annual Report & Accounts 2023

Integration into risk management framework

The Group subscribes to a ‘three lines of defence’ governance model

with respect to the identification, ownership, monitoring and mitigation

of risk. Please see page 26.

The management of climate-related risk falls within this same

framework, which is fully embedded throughout the Group and includes

discussions on climate change as the core agenda item for the ESG

Committee. Read more on page 41 and page 53.

Annual review of risk tolerances

All risk tolerances are subject to at least an annual review and

consideration by the individual boards of directors. A yearly assessment

of risk tolerances enables designing a contrasting but appropriate risk

assessment. The Board is actively involved in identifying and considering

a balanced risk and reward trade-off as they establish the Risk Profile,

Risk Appetite, and Risk Tolerances to be used. The Board considers the

capital requirements of the business on at least a quarterly basis.

The Group’s exposure to natural catastrophe risks is one of the

key drivers of the capital held by the Group to support

its underwriting activities.

Underwriting strategy days

The underwriting strategy days for the insurance and reinsurance

segments also provide a good platform for reviewing current and

anticipated future climate-related risks. Examples of such risks include

transition risks arising from a decline in value of assets to be insured,

changing energy costs and liability risks that could arise from climate-

related litigation. Physical, transition and liability risks are considered by

business segment and geographical location, and the expected impact

from the risks identified is considered with respect to both magnitude

and timescale.

Engaging with stakeholders

We actively engage with our clients to understand their net-zero

transition pathways, evaluate new risk solutions, and provide insurance

cover for their business needs, including climate risk-related solutions.

We will work with our clients through a period of global energy transition

to help manage their operational and catastrophe-exposure risks in a

controlled and responsible way.

Monitoring and reporting PMLs

The PMLs related to the top perils are monitored and reported monthly

to the RRC and quarterly to the Board. These elemental perils are

primarily those that are directly influenced by global warming.

We monitor our PMLs as a percentage of tangible capital; the chart

on page 63 shows this for our 100-year Gulf of Mexico wind net PML

at 31 December.

Risk management

Climate change may influence the severity and frequency of eventsthat impact

policyholders, and Lancashire’s quick response tosuch post-loss situations can,

therefore, be seen as a competitive advantage.

61Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Sustainable insurance and responsible investment continued

Metrics and Targets

We are committed to measuring, tracking and reporting our operational performance against

our path to attaining our carbon net-zero ambition in 2050.

We have engaged with ClimatePartner to calculate our corporate carbon footprint through their five-step climate action strategy.

Metrics used to assess climate-related risks and opportunities.

Our risk appetite for underwriting risks is defined as a percentage of capital we are willing to lose in a specific event, and we set a capital loss tolerance

for and track the Company’s modelled PMLs to weather-related hurricane perils. Our underwriting strategy is based on several factors, (including but

not limited to):

• market conditions;

• available capital;

• market opportunities; and

• pricing adequacy

Impact of climate-related risk on the current portfolio

In the Strategy section starting on page 54, we described the work undertaken in 2023 to identify and articulate the financial impacts of climate-

related risks. The table below sets out the possible financial impact of physical risk based on our current portfolio. If exposure was to change materially

the financial impact could be more significant. However, the longer term impact to the Group should be managed by our ability to reprice contracts if

needed and develop new products.

Further detail is also included in the insurance risk disclosures on pages 149 to 153, where we have noted the geographical area of risks insured and the

Group’s exposure to certain peak zone elemental losses by geography as a percentage of tangible capital over a 100-year and 250-year return period.

Physical: acute and chronic Time frame Magnitude of impact Potential financial impact Group net PML/ % of capital

Tropical Cyclone

U.S. Windstorm – Gulf of Mexico Medium High $300.5 million/16.9%

U.S. Windstorm – Non-Gulf of Mexico Medium High $237.9 million/13.4%

Japan Typhoon Medium Medium $134.0 million/7.6%

Extratropical Cyclone

European Windstorm Medium – Long Medium $161.4 million/9.1%

Mitigation

• Positive feedback loop in pricing models that reflect heightened risks from climate change

• Lancashire adjusts gross risk appetite wherever the risk is viewed as inappropriately priced for the exposure

• Outwards reinsurance is adapted to reflect the changing exposures

• Robust internal controls ensuring PMLs are monitored monthly by the RCC

• Additional secondary perils now modelled

• We continue to develop views on other perils

62 Lancashire Holdings Limited | Annual Report & Accounts 2023

Our PMLs are derived using stochastic models licensed from third-party vendors. These models include perils such as windstorm, convective storm,

wildfire and flood. The View of risk committee assesses the assumptions within the licensed model and, where appropriate, applies loadings to it.

Model outputs are regularly challenged at both the macro and specific account levels. The RRC reviews our PMLs and the actual in-force exposure

versus tolerance on a monthly basis. The loadings applied to the model are reviewed by the View of Risk Committee periodically to assess their

ongoing appropriateness.

Additionally, risk learning can be performed following a large catastrophe event to compare the actual loss versus the modelled loss to assess further

the appropriateness of the assumptions and loadings within the model and establish whether further adjustments are required.

Carbon intensity of fixed-income

The IRRC is cognisant of the potential impact transitional risk has on the Group’s assets within the investment portfolio. Carbon intensity limits have

been added to our fixed-income managers’ guidelines. We monitor our fixed-income portfolio’s carbon intensity and transition risk. Updates on these

metrics, including the investment portfolio’s exposure to climate-related risk, for those securities covered, as compared to the MSCI Climate VaR is

monitored and reported to the Investment Committee quarterly. The Lancashire Fixed Maturity portfolio has a target preference for the aggregate

climate risk measured by Climate VaR by MSCI, at the 1.5°C degrees global warming goal, in line with the Paris Accord, to have a lesser financial

impact than the relevant MSCI ESG benchmark.

Most of the investment portfolio at year-end 2023 comprised of fixed maturity securities, making up 83.8%, of which almost half were government-

related securities. We had 34.5% allocated to corporate bonds, of which we had a small exposure to climate-related risks. Further insight into the

structure of our financial portfolio can be found on page 20.

Scope 1, 2, and 3 GHG emissions

Measuring and offsetting

The Group is committed to managing the environmental impact of its business. We measure our carbon footprint to minimise its negative impact

through mitigation strategies and offsetting 100% of our greenhouse gas (GHG) emissions from our own operations to remain carbon neutral.

The ClimatePartner certification program provides insight into the effectiveness of our efforts to make progress on our 2050 net-zero ambition. Our

approach to reporting GHG emissions is to be transparent, aiming to continually refine our processes to reflect relevant standards, methodologies,

and, where appropriate, best practices.

During 2022, we instructed ClimatePartner to calculate and facilitate offsetting our carbon emissions; a report on the metrics collected can be found

on page 68.

CDP submission

The Group CRO and the Board oversee the Company’s annual submission to the CDP (previously known as the ‘Carbon Disclosure Project’) and note

that the information which is requested as part of that reporting process is aligned with the recommendations of the TCFD.

2013 2014 2015 2016 2017 2018 2019 2020 2021 20232022

PML as a percentage of GWP

The chart below illustrates the Gulf of Mexico one in a 100-year event, and how the PML as a percentage of gross written premium has been managed

over time.

Metrics and Targets

63Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Sustainable insurance and responsible investment continued

Digital capabilities

With global operations in London, Bermuda, Australia, and recently

in the U.S., as well as clients and brokers around the world, the

Lancashire Group has incurred the bulk of its carbon footprint from

business travel. Timely communication and knowledge sharing are

critical to our operation for employees to perform their jobs effectively.

We have adopted several digital solutions in our offices to reduce

inter-office travel and facilitate remote work and virtual collaborations.

All our offices have video and telephone conferencing capabilities at

all individual workstations and meeting rooms. As travel restrictions

started to lift in 2022, in-person conferences and events recommenced,

which saw an uptick in travel when it was considered safe for our

employees. Following the global pandemic, travel levels during 2023

are back to what we consider normal and necessary for our business

to maintain good relationships with our clients and stakeholders.

Targets used to manage climate-related

risks and opportunities

Net zero in 2050 objective

In 2021, the Group expressed its objective to meeting the UK

Government’s net-zero target by 2050. Our baseline year, 2015,

was selected because it was the first full year in our London office

at 20 Fenchurch Street, an energy-efficient building with a BREEAM

“Excellent” rating.

The following diagram shows our path to carbon net-zero in 2050,

illustrating the planned downward trajectory of our emissions per FTE

and the intended increase in offsetting projects that remove carbon from

the atmosphere.

Offsetting emissions

The Group commits to continue to offset 100% of Scope 1 and 2

emissions and 100% of the Scope 3 emissions pertaining to our

operations, which we are able to accurately calculate and exercise

sufficient control over at this time. These include business travel,

waste generated in operations, our employees’ commuting, and fuel

and energy-related activities not included within Scope 1 or Scope 2.

As a financial services company, we consider some emissions categories

to be either not applicable to our operations or that we have minimal

operational control over them. We are working with a specialist third

party and alongside others in the industry to understand how to

accurately calculate and track emissions within the unreported

categories where applicable.

Going forward

The Group will continue to benefit from the 100% renewable electrical

energy from our 20 Fenchurch Street London office location, a BREEAM

“Excellent” rated building. As the Group continues to search for

innovative ways to reduce our own emissions, we will continue to

challenge the status quo and propose ideas for consideration outside of

those related to business travel. We are always looking at ways to reduce

paper usage further, reduce water waste, improve recycling, and

eliminate single-use plastics. A list of the full metrics can be found in the

GHG disclosure section on pages 69 and 70.

For the Group’s investments, we continue to have a target of managing

the impacts of our fixed maturity portfolio by reference to a Climate

VaR appetite statement, as discussed in the risk management section.

For our underwriting exposure, Lancashire limits its tangible capital at

risk by referencing a series of PML loss exposure scenarios, including

climate-related loss scenarios. PMLs are regularly monitored and

reported to the Board every quarter and reflect real-time changes in

the Group’s underwriting portfolio. The Group’s stated tolerance is to

expose not more than 25% of its tangible capital by reference to any

one of its principal PMLs. More information on the reported outcomes

of this process can be found in the Financial Statements section under

Risk disclosures, see page 150; it further shows the details of the Group’s

principal PMLs, including those related to catastrophic weather loss

events linked to climate change risk.

Carbon emissions neutralised

emissions

2015 2020 2030

-16% CO

per FTE

-15%

per FTE

2050

Carbon emissions removed from atmosphere

Lancashire’s path to carbon net-zero in 2050

Metrics and Targets

In terms of the Group’s own emissions targets and the Group’s business

travel emissions, we have travel policies in place to reduce our impact

on the environment whilst balancing the needs of our employees and

Directors. For instance, our policy is not to ordinarily book a business

class airline ticket if the flight is less than five hours long.

64 Lancashire Holdings Limited | Annual Report & Accounts 2023

Delivering responsibly

We understand that we have an obligation to ensure we operate in a

responsible, respectful and sustainable way. Central to this is maintaining

high standards of business supported by appropriate policies, controls

and oversight.

We aim to be a good corporate citizen and a responsible preserver of

resources. To that end, the Group operates in line with all relevant

regulatory and legal requirements, giving particular regard to the

environmental, social and governance regulations of the BMA, PRA, FRC,

FCA, Lloyd’s, UNEP-FI, TCFD, Mandatory Greenhouse Gas Emissions

reporting/Streamlined Energy and Carbon Reporting (SECR), and Home

Office (Modern Slavery Statement Registry).

Society

and the

environment

Brokers Regulators Suppliers

Our

shareholders

and investors

Our

policyholders

Our

people

Our stakeholder responsibilities

A responsible approach to protect and support

Policy / area Our approach Stakeholder impact Board oversight

Health and safety We are less exposed to major incidents due to our operations being based in an office

environment. However, to ensure our people and visitors are supported and protected

we regularly consult with employees on health and safety issues.

We maintain risk assessments for tasks carried out by employees where potential danger has

been identified. Business Continuity, Disaster Recovery, and Fire Safety training, is mandatory

for all employees.

Our full Health and Safety Policy is communicated to employees on joining and is available

on the intranet.

Our people

Brokers

Regulators

Our shareholders

and investors

Society and the

environment

Yes

Whistleblowing Each Group entity has a designated whistleblowing champion, a Non-Executive Director, who

can be contacted if employees would prefer to raise concerns with them.

We encourage people to report any activity that may constitute a violation of laws, regulation

or internal policy, and reporting channels are provided to staff for this purpose within a

whistleblowing policy available on the Group intranet.

Our people

Regulators

Our shareholders

and investors

Yes

Data protection

and privacy

As part of our day-to-day operations, the Group collects and uses information about its

employees, policyholders, shareholders and others.

Information, however it is collected, recorded and used, must be handled and dealt with

correctly and in line with our data protection policies.

The Audit Committee of the Board has overall responsibility for data protection and privacy

and receives a quarterly report for review.

The Group fully endorses and adheres to the principles of data protection as set out in the

relevant UK data protection legislation. All employees are expected to familiarise themselves

and comply with the regulations.

Our policyholders

Our people

Brokers

Regulators

Suppliers

Our shareholders

and investors

Yes

65Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Sustainable insurance and responsible investment continued

Policy / area Our approach Stakeholder impact Board oversight

Information

security

During 2023, we developed enhanced Information Security and Acceptable Usage Policies.

These policies provide good practice security principles presented in easily accessible terms

and designed to keep employees, the Company, and its information safe.

Our people

Regulators

Our suppliers

Our shareholders

and investors

Yes

Cyber incident

response

Lancashire is aware of the risks from cyber security incidents and has a number of

technologies, processes and procedures in place to mitigate and respond to any issues

that may arise. These include ‘table-top’ exercises to stress test our plans, which are

attended by colleagues from appropriate functions across the Group.

Our policyholders

Our people

Brokers

Regulators

Suppliers

Our shareholders

and investors

Yes

Anti-slavery and

human trafficking

We are proud of the conditions of employment for all our employees throughout the

Lancashire Group. We consider that there is minimal risk that, within either the Lancashire

Group or the very limited supply chains which support our business activities, the Lancashire

Group is involved in, supportive of, or complicit in slavery and human trafficking.

The Group’s Anti-Slavery and Human Trafficking Statement is available on our website.

Our policyholders

Our people

Society

Brokers

Regulators

Suppliers

Our shareholders

and investors

Yes

Anti-Money

Laundering,

Bribery and

Financial Crime

Policy

The Group has appropriate procedures to prevent and/or report incidents of money

laundering, bribery and other forms of financial crime. A training programme is active to

ensure a widespread understanding of our policies. All Group employees are required to

report to their local Money Laundering Reporting Officer any potentially suspicious activity.

A report is received by the Audit Committee of the Board on a quarterly basis.

Our policyholders

Our people

Regulators

Our shareholders

and investors

Yes

Procurement Lancashire engaged with a strategic IT vendor (SCC) in 2023 to establish recycling services

for technology assets (e.g. mobile phones, laptops, servers, etc.) that are no longer required.

This partnership enables Lancashire and SCC to securely and environmentally process items

that are refurbished, remarketed or recycled.

Suppliers

Society

Sanctions Lancashire looks to ensure compliance with all applicable sanctions legislation in the

jurisdictions in which the Group operates. These include the sanctions regimes of the United

Nations, United Kingdom, Bermuda, United States and European Union. The processes and

systems are documented and approved annually by the LHL and relevant subsidiary boards.

Quarterly reports are provided to LHL and subsidiary boards to confirm whether there have

been any breaches, or not, during the period.

Our policyholders

Society

Brokers

Regulators

Yes

Share dealing The Group’s Share Dealing Code places restrictions on the trading of LHL’s securities for

employee shareholders and, along with the Group’s Disclosure Policy, restricts the

disclosure of any confidential information.

Regulators

Our shareholders

and investors

Our people

66 Lancashire Holdings Limited | Annual Report & Accounts 2023

Understanding the role we play

A culture of responsibility

We understand that successfully operating a modern business comes

with increased responsibility.

We embed our values across our operations including showing

appropriate leadership and acting as a good corporate citizen

and a responsible preserver of resources.

Our regulators, rating agencies and lenders

The Group has an active programme of engagement with the

relevant regulatory bodies which provide the Group with supervision

and oversight.

This includes meetings, regular reporting or engaging with routine

regulatory reviews. The Board and management monitors changes

in regulatory and supervisory requirements closely.

Lancashire and its insurance subsidiaries are assessed for financial

strength and creditworthiness by three major rating agencies: A.M. Best,

S&P and Moody’s. We engage with each regularly to discuss financial

performance and when significant events occur, such as loss events.

We underwrite business successfully in all major regulated global

(re)insurance markets and purchase reinsurance coverage as

part of our capital management and regulatory compliance.

We operate in compliance with our credit facilities, which

support underwriting obligations.

Additionally, the syndicates benefit from Lloyd’s current ratings,

resources, brand and network of global licences.

The Group requires the flexibility to execute its strategy and react to

economic conditions, and values its strong relationships with its lenders.

Tax authorities

The Group maintains proactive relationships with relevant tax authorities

in order to comply with all its tax obligations. This requires us to keep

abreast of developments in tax legislation and to work with the tax

authorities to manage our tax risk.

Collaboration with third parties

During the course of our business operations, Lancashire utilises a

number of third-party suppliers. These providers complement our

in-house skills and we recognise the importance of these partnerships

and that success comes through openness and collaboration.

We strive to receive assurance that employers within the ancillary

services and limited supply chains used by the Group pay a Living Wage.

Payments to service providers are made in accordance with the

individual payment terms agreed. The Group’s UK subsidiary, LUK,

complies with its statutory reporting duty for payment practices and

performance in relation to qualifying contracts on a half-yearly basis.

Lancashire has its own responsibilities to those within its limited supply

chain. Any concerns arising over the ethical practices and human rights

records of insureds and potential clients would be considered as part of

the underwriting process.

67Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Sustainable insurance and responsible investment continued

GHG reporting

Environmental impact and offsetting

The Group is committed to both understanding and managing the

environmental impact of its business operations and has engaged

ClimatePartner to calculate its corporate carbon footprint (CCF),

for the 2023 reporting year. The CCF reflects the total CO₂ emissions

released by the Company’s own business operations, within defined

system boundaries and for a specified period of time, with the

calculations based on the guidelines of the Greenhouse Gas Protocol

Corporate Accounting and Reporting Standard (GHG Protocol).

We are committed to measuring our carbon

footprint for our own operations annually,

to minimise its negative impact through

mitigation strategies, and to offsetting at least

100% of our calculated GHG emissions.

Historically, the Group has achieved its carbon-neutral status

for its own operations through the purchase of carbon credits,

predominantly in carbon avoidance programmes, which assist in

the creation and/or maintenance of systems and technologies that

replace carbon intensive processes.

In 2021, for the first time, the Group offset 15% of its emissions via a

carbon sequestration project, which aims to actively remove carbon

from the atmosphere, with the remainder of our carbon credits procured

via carbon avoidance projects.

We followed the same approach for 2022, but have increased the

allocation to carbon sequestration projects for 2023. This year we have

procured 20% of our carbon credits via a carbon sequestration project

with the remaining 80% offset in a carbon avoidance programme. We

report the emissions data for the Group in the table on page 69.

GHG overview and methodology

Our GHG inventory is used as a tool for meeting the Group’s carbon

reduction goal, understanding our energy consumption, identifying ways

to reduce our footprint, understanding energy and emission trends, and

improving our methodology in data collection.

Emissions data was calculated using the Company’s consumption data

and various emission factors researched by ClimatePartner. Wherever

possible, primary data was used. If primary data was not available,

secondary data from highly credible sources was used, with emission

factors taken from scientifically recognised databases such as ‘Ecoinvent’

and DEFRA.

Operational boundaries

Lancashire used an operational control approach to assess its boundaries

and identify all the activities and facilities for which it is responsible.

Per the ISO 14064-1 guidance, operational control is defined when an

organisation has control over its operation, and they have full authority

to introduce and implement its operating policies at the operational

level. We have reported 100% of our Scope 1 and Scope 2 CCF, along

with areas of our Scope 3 CCF with high levels of operational control.

Employee commuting

For the last two years, the Group has reported emissions associated

with its employees’ commuting and home working within its Scope 3

emissions. For this reporting period, a more detailed survey regarding our

employees’ commuting habits was undertaken, which was completed by

over 40% of employees globally. This change led to a significant

improvement in both the volume and quality of data collected, with a

subsequent reduction of estimated data employed by our consultant in

these CCF calculations. As a result of this improved data quality, we note

a reduction in our employee commuting emissions of 67.6%, from 515.8

tCO

e in 2021-2022 to 166.9 tCO

e, in this 2022-2023 reporting period.

International operation footprint

With active commercial operations in four countries, along with clients

and brokers around the globe, the Group has typically incurred the bulk

of its carbon footprint within Scope 3 due to airline travel. Historically,

these emissions were calculated based upon all the flights booked within

the reporting period. For the past two years, in order to improve the

accuracy of our reporting, we have changed the methodology to only

include the flights that were taken within the period.

Our offices

Our London office is already well optimised, as 20 Fenchurch Street has

a BREEAM ‘excellent’ certified performance rating. The building sources

100% renewable electricity on a tariff that is backed up by associated

Renewable Energy Guarantees of Origin (REGOs), with an appropriate

residual grid factor applied for our operations in Bermuda and Australia.

Representatives from the London office have engaged with the building

management’s ‘Green Building’ meetings and the property’s energy-

saving initiatives. We continue to work with the respective building

management teams in both Bermuda and Australia, in order to

participate in any applicable initiatives for the business, in each location.

FTE as intensity metric

Lancashire uses tCO

e per full time employee (FTEs) as its intensity

metric in its CCF. As the company grows, the FTEs count has increased

year-on-year, with significant recruitment in 2023. Although there

has been a small increase in total emissions, emissions per FTE have

decreased in this reporting period. The progress against our 2030 target

table on page 70 depicts the Group’s CCF for the current and prior

reporting period, noting the change in the reporting period and the

emissions broken down by source.

68 Lancashire Holdings Limited | Annual Report & Accounts 2023

Streamlined energy and carbon reporting disclosure – 1 July 2022 to 30 June 2023

Current 2023 reporting year

(market-based)

1 July 2022 to 30 June 2023

Previous 2022 reporting year

(market-based)

1 July 2021 to 30 June 2022

UK & Offshore UK Only UK & Offshore UK Only

Emissions from the combustion of fuel or the operation of any facility

including fugitive emissions from refrigerants use / tCO

e 101.6 92.1 154.1 150.5

Emissions resulting from the purchase of electricity, heat, steam or cooling by

the company for its own use / tCO

e 280.6 – 265.1 –

Gross emissions (Scope 1,2) / tCO

e 382.2 92.1 419.2 150.5

Energy consumption used to calculate above emissions /kWh 1,320,545.0 944,270.0 2,004,830.0 1,366,540.0

Total gross emissions (Scope 1, 2, 3) / tCO

e 2,642.8 2,407.7

tCO

e per FTE 7.3 7.8

We have purchased a total of 2,907 carbon credits, to support our continued carbon-neutral status.

Fully offset own emissions

The Group has fully offset its calculated GHG market-based emissions

for 1 July 2022 to 30 June 2023 with ClimatePartner, by purchasing

verified credits in both carbon avoidance and carbon sequestration

programmes. A safety margin of 10% was applied to the total carbon

footprint incurred, to compensate for uncertainties in the underlying

data that naturally arise from using database values, assumptions,

or estimates.

Carbon credit breakdown

80% carbon avoidance renewable energy projects in Asia

20% carbon sequestration renewable energy in Chile and tree

planting in the UK

These offsetting proposals were discussed and agreed with the Group CEO.

69Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Sustainability

Types of emissions Activity

1 July 2022 –

30 June 2023

1 July 2021 –

30 June 2022

Scope 1

Direct emissions from Company facilities

Heat (self-generated) 77.2 135.6

Refrigerant leakage 24.4 18.5

Scope 2

Purchased electricity for own use Electricity (stationary) 280.6 265.1

Scope 3 Business travel (flights, hotel nights, vehicles, and rail) 2,006.4 1,348.0

Employee commuting and home office 166.9 515.8

Fuel- and energy-related activities (upstream emissions for

electricity and heat) 79.1 116.0

Purchased goods and services (office paper and water) 6.9 7.0

Waste generated in operations 1.3 1.7

Gross emissions (tCO

e) (market-based) 2,642.8 2,407.7

Gross emissions per FTE (tCO

e/FTE) 7.3 7.8

Carbon credits 2,907.0 2,648.5

Total net emissions after offset (tCO

e) – –

Please note: all numbers quoted have been rounded to one decimal place.

Upstream fuel- and energy-related activities include Well-to-Tank and Transmission & Distribution emissions. These are emissions associated with the upstream processes of

extracting, refining and transporting raw fuel and the emissions associated with the electrical energy lost during transmission to our business.

Progress against our 2030 target

The following diagram shows the change in the Group’s emissions per FTE from the baseline year of 2015 against our current target of a further

reduction in emissions per FTE of 15% by 2030.

Encourage and support employees

The Board will continue to monitor the Group’s emissions from its own operations and be mindful of the Group’s strategic and business operational

requirements. We encourage the use of public transport, walking and cycling to commute to our places of work. As a result of the employee

commuting surveys completed in 2022 and 2023, we note that the majority of our employees commute to their place of work via public transport.

We continue to provide incentives for our London office employees to support this with a season ticket loan scheme as well as assistance in purchasing

bicycles, with all of our offices having designated storage.

Gross emissions per FTE (tCO

e/FTE) Target

202320222021202020192018201720162015

Sustainable insurance and responsible investment continued

70 Lancashire Holdings Limited | Annual Report & Accounts 2023

Delivering as a

responsible business

“Strong corporate

governance is central

to Lancashire’s

long-term success.”

Peter Clarke

Non-Executive Chair

71Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

Board of Directors

Delivering oversight

B I

Skills, experience and qualifications:

Peter Clarke was Group Chief Executive of Man Group plc between April 2007 and February 2013. In 1993,

Mr Clarke joined Man Group plc, a leading global provider of alternative investment products and solutions

as well as one of the world’s largest futures brokers. He was appointed to the board in 1997 and served in a

variety of roles, including Head of Corporate Finance and Corporate Affairs and Group Company Secretary,

before becoming the Group Finance Director in 2000. During this period, he was responsible for investing

in and developing one of the leading providers of third-party capital insurance and reinsurance products.

In November 2005, he was given the additional title of Group Deputy CEO. Mr Clarke has previously

served as the Chair of the National Teaching Awards Trust. Mr Clarke took a first in Law at Queens’

College, Cambridge and is a qualified solicitor, having practised at Slaughter and May, and has

experience in the investment banking industry, working at Morgan Grenfell and Citibank.

External appointments/Other roles:

Mr Clarke is currently a Non-Executive Director of RWC Partners Limited, RWC Holdco Limited,

RWC Midco Limited and Lombard Odier Asset Management.

Date of appointment to the Board: 9 June 2014

Board meeting attendance: 4/4

Peter Clarke

Non-Executive Chair

Skills, experience and qualifications:

Alex Maloney joined Lancashire in December 2005 and was appointed Group Chief Executive Officer in

April 2014. On joining, Mr Maloney was responsible for establishing and building the energy underwriting

team and account and, in May 2009, was appointed Group Chief Underwriting Officer. Since November

2010, Mr Maloney has served as a member of the Board. Mr Maloney has also been closely involved in the

development of the Group’s Lloyd’s strategy. Mr Maloney has over 30 years’ underwriting experience and

has also worked in the New York and Bermuda markets.

B U

Date of appointment to the Board: 5 November 2010

Board meeting attendance: 4/4

Alex Maloney

Group Chief Executive Officer

Skills, experience and qualifications:

Philip Broadley was appointed as a Non-Executive Director to the Board and as Chair designate of the

Lancashire Board in November 2023. Mr. Broadley was Group Finance Director of Prudential plc from

2000 until 2008 and subsequently held the same position at Old Mutual plc from 2008 until 2014. He has

served as Chairman of the 100 Group of Finance Directors and as a member of the Code Committee of The

Takeover Panel. He chaired the Group Audit Committee of Legal & General for six years. Prior to his board

roles, Mr. Broadley began his career at Arthur Andersen in 1983, becoming a partner in 1993, where he

specialised in auditing banks and insurance companies. Mr. Broadley is a Fellow of the Institute of Chartered

Accountants in England and Wales. Mr. Broadley graduated in Philosophy, Politics and Economics from St.

Edmund Hall, Oxford, where he is now a St. Edmund Fellow. He holds an MSc in Behavioural Science from

the London School of Economics.

External appointments/Other Roles:

Mr. Broadley is Senior Independent Director and Audit Committee Chair at AstraZeneca PLC and a

Non-Executive Director of Legal & General Group Plc. He is Treasurer of the London Library and Chair

of the Board of Governors at Eastbourne College.

Date of appointment: 8 November 2023

Board meeting attendance: 0/0

Philip Broadley

Non-Executive Director and Chair Designate

72 Lancashire Holdings Limited | Annual Report & Accounts 2023

Skills, experience and qualifications:

Michael Dawson has more than 40 years’ experience in the insurance industry, having started his career

at Lloyd’s in 1979. He joined Cox Insurance in 1986 where he was the Chief Executive from 1995 to 2002.

In 1991, Mr Dawson formed and became the underwriter of Cox’s and subsequently Chaucer’s specialist

nuclear syndicate 1176, where he remains the active underwriter. Between 2005 and 2008, Mr Dawson was

appointed Chief Executive of Goshawk Insurance Holdings PLC and its subsidiary Rosemont Re, a Bermuda

reinsurer. Mr Dawson served on the Council of Lloyd’s from 1998 to 2001 and on the Lloyd’s Market Board

from 1998 to 2002.

External appointments/Other roles:

Mr Dawson is Deputy Chair of the Management Committee of Nuclear Risk Insurers Limited. He is also a

director of Knoll Investments Limited, Dawmouse Limited and Glengau Limited, all private family companies.

B N R U

Date of appointment to the Board: 3 November 2016

Board meeting attendance: 4/4

Michael Dawson

Non-Executive Director

Skills, experience and qualifications:

Jack Gressier has over 30 years’ experience in the insurance industry, including as Chief Operating Officer

of Axis Capital Holdings Ltd. and the Chief Executive Officer of its Insurance segment. He served as an

underwriter at Charman Underwriting Agencies from 1989 until 1998, when acquired by ACE Limited.

At ACE, he served in a number of senior roles including as a member of the Global Markets Executive

Underwriting Committee and was appointed Joint Active Underwriter of Syndicate 2488 and director

of the ACE Agency Board, where he served until joining AXIS in 2002.

External appointments/Other roles:

Currently serving as Non-Executive Chair to strategic intelligence ﬁrm, Herminius Holdings Ltd.

B R U A

Date of appointment to the Board: 26 July 2022

Board meeting attendance: 4/4

Jack Gressier

Non-Executive Director

Skills, experience and qualifications:

Natalie Kershaw joined Lancashire in December 2009 as the Group Financial Controller and has also

held the positions of Chief Financial Officer of Lancashire Insurance Company Limited and Group Chief

Accounting Officer. She has over 20 years’ experience of the insurance/reinsurance sector with previous

roles at Swiss Re, ALAS (Bermuda) Ltd and PwC. Ms Kershaw graduated from Jesus College, Oxford in 1996

with a first class degree in Geography and is a Fellow of the Institute of Chartered Accountants in England

and Wales.

Date of appointment to the Board: 1 March 2020

Board meeting attendance: 4/4

Natalie Kershaw

Group Chief Financial Officer

Key

Board of

Directors

Investment

Committee

Audit

Committee

Nomination, Corporate

Governance and

Sustainability Committee

Remuneration

Committee

Underwriting and

Underwriting Risk

Committee

Chair

73Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

N R U

Key

Board of

Directors

Investment

Committee

Audit

Committee

Nomination, Corporate

Governance and

Sustainability Committee

Remuneration

Committee

Underwriting and

Underwriting Risk

Committee

Chair

Skills, experience and qualifications:

Bryan is a Fellow of the Institute and Faculty of Actuaries with over 40 years of experience in the insurance

and reinsurance industry. Having started his career as a trainee actuary in Legal & General, Bryan held a

number of senior roles in the industry including partner and global chief actuary for PwC. Bryan left PwC in

2015 and founded Vario Partners LLP, an ILS consultancy specialising in transforming underwriting risk into

capital markets. In 2016, Bryan joined XL Catlin (now AXA XL) as an independent non-executive director

serving in a variety of non-executive director and committee Chair roles within the AXA XL group including

as Chair of the audit committees, and as Chair of XL Insurance Company SE, the group’s European and Asia

Pacific focused entity, overseeing its move to the Republic of Ireland and merger with AXA. Bryan stepped

down from all AXA XL Directorships in 2023 to take on his role with Lancashire.

External appointments/Other roles:

Bryan is a partner of Vario Partners LLP and a director of Vario Global Capital Limited, the Vario operating

company. Bryan was appointed as a Non-Executive Director for Sabre Insurance Group plc in June 2023.

B A U

Date of appointment to the Board: 26 April 2023

Board meeting attendance: 2/2

Bryan Joseph

Non-Executive Director

Board of Directors continued

B A I R

Skills, experience and qualifications:

From 1980 until 1998, Robert Lusardi was an investment banker in New York, ultimately as Managing

Director of the insurance and asset management industries. From 1998 until 2005, he was a member of

the Executive Management Board of XL Group plc, first as Group CFO then as CEO of one of their three

operating/reporting segments; from 2005 until 2010 he was an EVP of White Mountains (an insurance

merchant bank) and CEO of certain subsidiaries; and from 2010 to 2015 he was CEO of PremieRe Holdings,

a private insurance entity. He has been a director of a number of insurance-related entities including

Symetra Financial Corporation, Primus Guaranty Ltd., OneBeacon Insurance Group Ltd., Esurance Inc.,

Delos Inc., Pentelia Ltd. and FSA International Ltd. He received BA and MA degrees in Engineering and

Economics from Oxford University, an MBA from Harvard University and PhD from Barry University.

External appointments/Other roles:

He is also on the boards of Symetra Financial Holdings, Inc., a life insurer, and a Board member of Oxford

University’s 501(c)3 charitable organisation.

Date of appointment to the Board: 8 July 2016

Board meeting attendance: 4/4

Robert Lusardi

Senior Independent

Non-Executive Director

Skills, experience and qualifications:

Irene McDermott Brown most recently held the position of Chief Human Resources Officer at M&G plc,

a FTSE 100 international savings and investments firm, retiring from that role on 31 December 2021. Her

executive career has included international human resources roles at Barclays, BP, and Cable and Wireless.

Ms McDermott Brown’s UK experience includes over 12 years at Mercury Communications, Digital

Equipment Company and the Electricity Supply Industry. She has an MSc from the London School of

Economics in Industrial Relations and is a Fellow of the Chartered Institute of Personnel and Development.

Date of appointment to the Board: 28 April 2021

Board meeting attendance: 4/4

Irene McDermott Brown

Non-Executive Director

74 Lancashire Holdings Limited | Annual Report & Accounts 2023

B IA N R

Skills, experience and qualifications:

Christopher Head is a qualified solicitor and joined Lancashire in September 2010. He was appointed

Company Secretary of LHL in 2012 and advises on issues of corporate governance and generally on legal

affairs for the Group. He also advises on the structuring of Lancashire’s third-party capital underwriting

initiatives, which have included the Accordion and Kinesis facilities. Prior to joining Lancashire, he was

in-house Counsel with the Imagine Insurance Group, advising specifically on the structuring of reinsurance

transactions. He transferred to Max at Lloyd’s in 2008 as Lloyd’s and London Counsel. Between 1998

and 2006, Mr Head was Legal Counsel at KWELM Management Services Limited, where he managed an

intensive programme of reinsurance arbitration and litigation for insolvent members of the HS Weavers

underwriting pool. Mr Head worked until 1998 at Barlow Lyde & Gilbert in the Reinsurance and

International Risk Team. Mr Head has a History MA and legal qualification from Cambridge University.

Christopher Head

Company Secretary

Skills, experience and qualifications:

Sally Williams has more than 30 years’ experience in the financial services sector, with extensive risk,

compliance and governance experience, having held senior positions with Marsh, National Australia

Bank and Aviva. Ms Williams is a chartered accountant and spent the first 15 years of her career with

PricewaterhouseCoopers, where she was a director specialising in financial services risk management

and regulatory relationships. She also undertook a two-year secondment from PwC to the Supervision

and Surveillance Department at the Bank of England. Ms Williams is also a Director of Lancashire

Insurance Company (UK) Limited.

External appointments/Other roles:

Ms Williams is a Non-Executive Director of Family Assurance Friendly Society Limited (OneFamily),

where she is chair of both their Audit Committee and their With Profits Committee, and a member

of the Risk, Nominations and Member and Customer Committees. Ms Williams is also a Non-Executive

Director of Close Brothers Group plc and Close Brothers Limited, where she is a member of their Audit

and Risk Committees.

Date of appointment to the Board: 14 January 2019

Board meeting attendance: 4/4

B N

Sally Williams

Non-Executive Director

Director skills matrix

i. Including legal, regulatory

and compliance

ii. Including business

development and M&A

iii. Including equity, debt and

corporate funding projects

iv. Including investment treasury,

portfolio and asset-liability

management

v. Including internal control

and internal audit processes

vi. Including sustainability

and climate change

vii. Including senior management

experience, people

management, succession,

culture and communication.

viii. Including oversight of data

management, information

security and cyber

0 1 2 3 4 5 6 7 8 9 10

Listed Capital Markets Experience

Digital and Technology oversight and resourcing

viii

Leadership

vii

ESG

Risk Management

Actuarial / Reserving

Investment

Corporate Finance

iii

Insurance / Reinsurance

Accounting / Audit

Strategy

Corporate Governance

Number of Directors with relevant skills

75Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

Corporate governance report

Board Committees

Board and Committee administration

The Board of Directors is responsible for the leadership, strategy and

control and the long-term success and sustainability of Lancashire’s

business. The Board has reserved a number of matters for its decision,

including responsibility for setting the Group’s values and standards,

and approval of the Group’s strategic aims and objectives. The Board

has delegated certain matters to Committees of the Board, as described

below. Copies of the Schedule of Board-Reserved Matters and Terms of

Reference of the Board Committees are available on the Company’s

website at www.lancashiregroup.com.

The Board has approved and adopted a formal division of responsibilities

between the Chair and the Group CEO. The Chair is responsible for the

leadership and management of the Board and for providing appropriate

support and advice to the Group CEO. The Group CEO is responsible

for the management of the Group’s business and for the development

of the Group’s strategy and commercial objectives. The Group CEO

is responsible, along with the executive team, for implementing the

Board’s decisions.

The Board and its Committees meet on at least a quarterly basis. At the

regular quarterly Board meetings, the Directors review all areas of the

Group’s business, strategy and risk management and receive reports

from management on underwriting, reserving, reinsurance, finance,

investments, capital management, internal audit, risk, legal and

regulatory developments, compliance, climate change risk, ESG and

sustainability and other matters affecting the Group. Management

provides the Board with the information necessary for it to fulfil its

responsibilities. In addition, presentations are made by external advisers

such as the independent actuary, the investment managers, the external

auditors, the remuneration consultants and the corporate brokers. The

Board Committees are authorised to seek independent professional

advice at the Company’s expense.

The Board also meets to discuss strategic planning matters in addition

to the customary schedule of quarterly meetings. The Board dedicated

time to strategic opportunities and capital planning at a dedicated Board

strategy session which was held in April 2023 in which all Directors and

invited members of the management team participated.

The Chair holds regular meetings with the Non-Executive Directors,

without the Executive Directors present, to discuss a broad range of

matters affecting the Group. The Chair also holds regular meetings

with the Chairs of the Group’s principal operating subsidiaries: LICL,

LUK, LSL and LCM.

All Directors attended the scheduled quarterly proceedings of the 2023

Board and their relevant Committees meetings, with the exception of

Peter Clarke who was unable to attend the November Investment

Committee meeting due to illness.

The Directors

Appointments to the Board are made on merit, against objective criteria,

and with due regard to the right balance of skills, experience, knowledge,

independence and diversity required for the Board to operate effectively

as a whole. These areas are considered in detail by the Nomination,

Corporate Governance and Sustainability Committee. The Board

considers all the Non-Executive Directors to be independent within

the meaning of the Code. Michael Dawson, Robert Lusardi, Jack Gressier,

Irene McDermott Brown and Sally Williams are independent, as each

is independent in character and judgement and has no relationship

or circumstance likely to affect his or her independence. Peter Clarke

was independent upon his appointment as Chair on 4 May 2016.

Bryan Joseph joined the Board as a Non-Executive Director with effect

from 26 April 2023. The appointment of Mr Joseph was facilitated by the

specialist recruitment agency Per Ardua Associates Ltd which conducted

a Non-Executive Director search exercise under the direction of the

Nomination, Corporate Governance and Sustainability Committee and

Peter Clarke as the Company Chair. Per Ardua Associates Ltd prepared

an independent candidate report which was considered at the

Nomination, Corporate Governance and Sustainability Committee.

Close consideration was given to the balance of skills and experience

on the Board. The Board also considered the question of Mr Joseph’s

independence of character and judgement, and determined that he

should be considered independent on his appointment. Bryan Joseph

was appointed, during 2023, as a member of the Audit and the

Underwriting and Underwriting Risk Committees.

Philip Broadley joined the Board as a Non-Executive Director and as

the Board Chair designate with effect from 8 November 2023. The

appointment of Mr Broadley was facilitated by the specialist recruitment

agency Spencer Stuart which conducted a Non-Executive Director search

exercise under the direction of the Nomination, Corporate Governance

and Sustainability Committee. Robert Lusardi as the Senior Independent

Director oversaw the Board process for the selection of the Board Chair.

Spencer Stuart prepared an independent candidate report which was

considered at the Nomination, Corporate Governance and Sustainability

Committee meeting held on 7 November 2023. The Board considers

that Mr Broadley has a range of skills and experience appropriate to

providing the required strategic leadership to the Board and the business.

The Board also considered the question of Mr Broadley’s independence

of character and judgement, and considered that he should be

considered independent on his appointment. Subject to shareholder

approval at the Company’s 2024 AGM , Mr Broadley will assume the

role of LHL Board Chair at the conclusion of the AGM on 1 May 2024.

Please see the Nomination, Corporate Governance and Sustainability

Committee Report on page 89 for more details of the appointment

process and the consideration of the respective skills of Mr Joseph and

Mr Broadley within the context of Board succession planning and the

need for an appropriate balance of skills and perspectives on the Board

and its Committees. The question of Mr Broadley’s Committee

memberships will be considered during the course of 2024.

76 Lancashire Holdings Limited | Annual Report & Accounts 2023

At the Board meeting held on 5 March 2024, further to a

recommendation by the Nomination, Corporate Governance and

Sustainability Committee, the Board affirmed its judgement that

seven of the ten members of the Board are independent in their roles as

Non-Executive Directors. The Board noted that Peter Clarke, having been

appointed as a Non-Executive Director on 9 June 2014, and the Chair

on 4 May 2016, had completed his ninth full year of service as a Director

to the Company and would no longer be considered independent under

the guidance of the Code. Peter Clarke will therefore not stand for

re-election at the 2024 AGM. Therefore, in the Board’s judgement, the

Board’s composition complies with the Code requirement that at least

half the Board, excluding the Chair, should comprise Non-Executive

Directors determined by the Board to be independent.

In accordance with the provisions of the Company’s Bye-laws and the

Code, and for 2024 with the exception of Peter Clarke, all the Directors

are subject to election (in the case of Mr Broadley and Mr Joseph) or

re-election annually at each AGM.

Information and training

On appointment, the Directors receive written information regarding

their responsibilities as Directors and information about the Group.

An induction process is tailored for each new Director in the light of

his or her existing skill set and knowledge of the Group and includes

meetings with senior management and visiting the Group’s operations.

Information and advice regarding the Company’s official listing, legal

and regulatory obligations and on the Group’s compliance with the

requirements of the Code are also provided on a regular basis. An

analysis of the Group’s compliance with the Code is collated and

summarised in quarterly reports together with a more general summary

of corporate governance developments, which are prepared by the

Group’s legal and compliance department for consideration by the

Nomination, Corporate Governance and Sustainability Committee.

That Committee also receives reports from the ESG Committee Chair

on its work. The Directors have access to the Company Secretary and

the Group General Counsel who are responsible for advising the Board

on all legal and governance matters.

The Directors also have access to independent professional advice as

required. Regular sessions are held between the Board and management

as part of the Company’s quarterly Board meetings, during which

in-depth presentations covering areas of the Group’s business are

made. During these presentations the Directors have the opportunity

to consider, challenge and help shape the Group’s commercial strategy.

The Directors are also encouraged to seek supplementary know-how

training suitable to their roles offered by the many external providers of

training pertinent to governance, in particular the roles of Non-Executive

Directors, and to consider their training needs and priorities as part of the

year-end performance evaluation for the Board and its Committees.

Board performance – 2023 evaluation

A formal performance evaluation of the Board, its Committees and

individual Directors is undertaken on an annual basis and the process

is initiated by the Nomination, Corporate Governance and Sustainability

Committee led by the Chair of the Board. The aim of this work is to

assess the effectiveness of the Board and its Committees in terms of

performance and risk oversight, strategic development, stakeholder and

employee engagement, composition, skillset, supporting processes and

management of the Group. The evaluation is forward-looking in terms

of identifying strategic priorities and actions as well as considering

performance, training and development needs for the Directors within

the context of the work of each Committee and that of the Board.

The 2023 evaluation process for the Board and each of its Committees

was conducted internally and was based on a set of questionnaires which

were prepared by the Company Secretariat and agreed with the Board

Chair and the Chairs of each of the Committees and made available

to participants using a web-based platform. The Group’s principal

operating subsidiaries, LICL, LUK, LSL and LCM also carried out

performance appraisals facilitated by the respective company secretaries.

The reports covering the subsidiary boards and relevant committees

including recommendations were discussed with the respective

subsidiary chairs and have been discussed within the relevant subsidiary

boards. Key themes from those subsidiary evaluations were also reported

to the LHL Board.

The 2023 LHL Board and Committee evaluation process involved each

Director as well as the Company Secretary, the Group CRO, Group

General Counsel and other Committee members and members of

senior management who were invited to review and complete online

questionnaires. Further to this process the Company Secretary prepared

an evaluation report for the Board which collated feedback from the

responses on an anonymised basis and identified a series of themes

covering both areas of effectiveness and potential actions and areas for

further discussion or development. The summary reports were discussed

between the Company Secretary and the Board Chair and the relevant

Committee Chairs before being distributed to each of the Directors. The

Chair invited feedback on key findings in the evaluation reports prior to

their finalisation.

The performance evaluation reports were formally tabled and

discussed at meetings of the Nomination, Corporate Governance and

Sustainability Committee and the Board held in March 2024, and each

of the other Committees discussed the report pertinent to its own

operation and performance. The reports identified a number of key

strengths of the Board and its Committees, including; dynamics and

chairing; skills and expertise of both Non-Executive and Executive

Directors; effective oversight of strategy and performance; effective

shareholder and stakeholder engagement; strong Committee reporting;

an open, candid and collaborative Board culture; effective risk

management and controls; an effective Group structure and governance;

and good company secretariat support. The Board discussions on the

reports were led by the Chair.

77Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

In summary, in its consideration of the 2023 performance evaluation

reports, the Board concluded that it operates effectively and has a good

blend of insurance, financial, regulatory and other relevant expertise. All

Non-Executive Directors are committed to the continued success of the

Group and to making the Board and its Committees work effectively.

Attendance at Board meetings was found to be good. The Group CEO

and the Group CFO, the Company’s Executive Directors, were also found

to be operating effectively.

The Board also concluded that appropriate infrastructure, processes

and governance mechanisms are in place to support the effective

performance of the Board and its Committees. The Board is also

considered to manage risk effectively. Furthermore, the number

of Directors on the Board and the balance of skills is considered

to be appropriate.

The Board acknowledges the need to actively address the gender

and diversity balance of the Board in its succession planning.

Further to the Board engagement with the evaluation process and

consideration of the reports, the Board concluded that Board and

Committee oversight of strategy, risk tolerances and controls had

operated effectively. Management’s presentation to the Board of

strategy had generated a useful discussion of the longer term strategic

trajectory of the Group and good progress had been made in the

establishment of a Group U.S. underwriting presence. The processes for

Board and Chair succession had been well managed and had operated

effectively. Implementation of the IFRS 17 accounting reporting standard

during the year had been well implemented by management and

discussed effectively within the Board and its Committees.

Engagement between the Board and the workforce was considered to be

generally strong and beneficial to the operation of the business. Effective

workforce engagement will continue to be a priority for the Board. For

further information on workforce engagement, please see Peter Clarke’s

introduction to the Sustainability and Governance sections starting on

page 41 and the report from the Nomination, Corporate Governance

and Sustainability Committee starting on page 89.

Other strategic priorities identified by the Board for the year ahead

included ensuring a balance between the maintenance of a robust capital

base for the Group, capable of supporting the strategic growth plans for

the business and the Group’s strategic objective of actively managing its

capital. The Board and management are also committed to maintaining

a close focus on recruitment, skills, employee retention and training to

further strengthen and build a workforce equipped to deliver the Group’s

strategic growth plans.

The Board identified a number of areas for training and specific themes

for monitoring over the coming year, including the following:

• To review strategic opportunities for growth and the related

resourcing requirements;

• To monitor the progress in the establishment of the Group’s new

U.S. underwriting platform;

• To continue to monitor expected legislative and regulatory changes

in the area of UK financial reporting, audit and associated regulation;

and

• To monitor changes to the Bermuda, UK and global tax rules and

to consider the strategic implications.

The Board will continue to review its procedures, training requirements,

effectiveness and development during 2024.

The Chair’s performance appraisal was led by the Senior Independent

Director, who consulted with the Non-Executive Directors with input

from the Executive Directors during August 2023. The Chair was

considered to be effective in facilitating strategic decision-making,

whilst ensuring an appropriate level of challenge and a culture of

constructive discussion.

Following the year-end, the Chair met with the Group CEO, and the

Group CEO met with the Group CFO, to conduct a performance

appraisal in respect of 2023 and to set targets for 2024. The results

of these performance evaluations were discussed by the Chair and

the Non-Executive Directors and are reported in the Directors’

Remuneration Report commencing on page 101.

Relations with shareholders

During 2023, the Group’s Head of Investor Relations, usually

accompanied by one or more of the Group CEO, the Group CUO, the

Group CFO, the Chair or a senior member of the underwriting team,

made presentations to major shareholders, analysts and the investor

community. Formal reports of these meetings were provided to the

Board on at least a quarterly basis.

Conference calls with shareholders and analysts hosted by senior

management are held quarterly following the announcement of the

Company’s quarterly financial results or trading statements. The Group

CEO, Group CUO and Group CFO are generally available to answer

questions on these calls.

Shareholders are invited to request meetings with the Chair, the Senior

Independent Director and/or the other Non-Executive Directors by

contacting the Group Head of Investor Relations. All of the Directors are

expected to be available to meet in person or virtually with shareholders

at the Company’s 2024 AGM.

The Chair of the Remuneration Committee led a shareholder advisory

exercise with the Group’s largest shareholders regarding the Board’s

remuneration plans during early 2024.

The Company commissions regular independent shareholder analysis

reports, and also receives periodic reports from the Group’s Head of

Investor Relations on feedback from shareholders and analysts.

The Company’s bye-laws are governed by Bermuda Company Law

and subject to approval of shareholders in a general meeting. The

bye-laws are available on the Company website. A copy of the

Company’s bye-laws is also available for inspection at the

Company’s registered office.

Corporate governance report continued

78 Lancashire Holdings Limited | Annual Report & Accounts 2023

Enterprise risk management

The Board is responsible for setting the Group’s risk appetites, defining

its risk tolerances, and setting and monitoring the Company’s risk

management and internal control systems, including compliance with

risk tolerances. During 2023, the Board carried out a robust assessment

of the emerging and principal risks affecting the Group’s business model,

future performance, solvency and liquidity and the operation of internal

control systems.

Further discussion of the emerging and principal risks affecting the

Group, as well as the procedures in place to identify and manage them,

can be found in the ERM section of this report on page 23 and in the risk

disclosures section on page 148. The Group’s reporting of climate change

risk and its management within the business can be found in the TCFD

Report starting on page 49.

Each of the Committees is responsible for various elements of risk (see

the various Committee reports from page 83 for further detail). The

Group CRO reports directly to the Group and subsidiary boards and

facilitates the identification, evaluation, quantification and control of

risks at a Group and subsidiary level. The Group CRO provides regular

reports to the Group and subsidiary boards covering, amongst other

things, actual risk levels against tolerances, emerging risks, loss events

and near misses, key risk indicators, and an overview of the control

environment (driven by key control testing and control affirmations,

and supported by internal audit findings). The Board considers that

a supportive ERM culture, established at the Board and embedded

throughout the business, is of key importance. The facilitating and

embedding of ERM and helping the Group to improve its ERM practices

are a major responsibility assigned to the Group CRO. The Group

CRO’s remuneration is subject to annual review by the Remuneration

Committee. The Board is satisfied that the Company’s risk management

and internal control systems have operated effectively for the year under

review. In this regard, please see the Audit Committee report on page 83.

Committees

The Board has established Audit, Investment, Nomination, Corporate

Governance and Sustainability, Remuneration, and Underwriting and

Underwriting Risk Committees. Each of the Committees has written

Terms of Reference, which are reviewed regularly and are available on

the Company’s website. The Committees’ Terms of Reference were

reviewed by the Board during 2023 and considered again as part of the

2023 year-end performance evaluation process. The Committees’ Terms

of Reference are considered to be in line with current best practice.

The Committees are generally scheduled to meet quarterly, although

additional meetings and information updates are arranged as business

requirements dictate. Director attendance at the 2023 Board meetings

is set out on pages 72 to 75. A report from each of the Committees,

which covers Committee attendance, is set out at the front of each

of the Committee reports.

79Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

We engage with a range of stakeholders

through the course of our operations. We

value those relationships and aim to create

a healthy and sustainable corporate culture

that delivers on their expectations.

Our people

We aim to attract and retain the best talent across our underwriting and

support functions. Our positive and distinctive culture is supported by our

values which guide the way that we operate. We ask our people to tell

us their opinions on their experience with the Group through our annual

employee survey and value and act on their feedback. We believe in

offering the best possible working environment for employees and, during

2023, we enhanced our London office space and facilities. The Group is

committed to providing a range of policies that protect and support

colleagues in their day-to-day work and more widely. When attracting

new employees to the business, we value diversity, equity and inclusion

and train our hiring managers to ensure all candidates are treated fairly.

Our policyholders

We have long-standing relationships with many policyholders and use

our diverse product offering to foster effective partnerships with new

clients. Our policyholders are at the centre of everything we do, and

we strive for excellence in all our activities on their behalf.

Our experienced teams include our claims specialists, who have specific

and detailed knowledge of our diverse product lines and are focused on

ensuring a timely and equitable claim resolution for our clients. We aim

to adopt an approach to the claims handling process, which is proactive

and efficient, as well as transparent and flexible, while acting in

accordance with the terms and conditions of the (re)insurance policy

provided. This enables our clients to recover from the impact of loss

events as soon as practicable. We also operate in a highly-regulated

market, seeking to engage constructively with the Group’s regulators.

This regulation helps reinforce management’s focus on maintaining

an open culture, good risk management and a strong capital base.

Brokers

Lancashire strives to be a trusted partner to brokers distributing (re)

insurance solutions to our policyholders and, since inception, we have built

strong relationships with large international firms and smaller independent

intermediaries. Our expert understanding of risk management and transfer

adds value to our discussions with broker partners and we actively look

for new ways to further strengthen and enhance our relationships. Our

underwriters attend a number of industry events and conferences each

year where they are able to discuss our products and appetite for various

types of business with broker representatives. During 2023, these included

events in Monte Carlo, Baden-Baden, and Singapore. Our marketing

activities through corporate social media, our Company website and

hosting face-to-face events with brokers also encourages a good

understanding of our business and priorities. A new reception area

and visitor suite was also opened at our London office in 2023 to

create a professional and comfortable space for guests.

Our shareholders and investors

As a premium-listed company on the LSE we pride ourselves on our

mutually beneficial relationships with our shareholders and those

entities which lend to the Group. We maintain open and transparent

communication channels with them and work hard to foster good

relations through our active programme of engagement. Our relationship

with our shareholders is led by our Group Head of Investor Relations, in

collaboration with members of the Board and the wider Executive team.

This includes an Investor Day which was most recently held in London in

November 2023, which included presentations from our senior leaders on

our strategy, capital management, claims and reserving and our Lloyd’s

syndicates. These presentations are followed by a questions and answers

session. The Group’s corporate brokers provide guidance on investor

priorities and perception and meet regularly with the Board. We maintain

a regular and open dialogue with the Group’s main ratings agencies.

Society and the environment

Lancashire measures and offsets carbon emissions for our own

operations and seeks to be a responsible underwriter and investor.

We align our activities to the global transition to net-zero. Within

underwriting, we continue to support our clients as they transition and

reduce GHG emissions and through active engagement with them with

regard to our ESG Underwriting Guidelines. The Lancashire Foundation

makes a tangible difference to communities across our markets and

beyond, through charitable donations and utilising the talent and

energy of our people for good.

Our universe of stakeholders

Section 172 – Delivering responsibly

for stakeholders

Our

policyholders

Our

people

Our

shareholders

and investors

Society and the

environment

Board

engagement

and decision-

making

Lenders

Rating

agencies

Communities

Lancashire

Foundation

Brokers

Government

and regulators

Service

providers

Corporate governance report continued

80 Lancashire Holdings Limited | Annual Report & Accounts 2023

Responsible Board decision making

The Code requires formal disclosure around the interests of and engagement with stakeholders, and the duties falling upon boards under Section 172

of the UK Companies Act 2006. Although the Company is incorporated in Bermuda and is therefore not subject to the UK Companies Act

requirements, the Board continues to pay close attention to developments in English law and governance best practice.

In this 2023 Annual Report and Accounts, we give an overview of how both the Board and the business have factored in the needs of our stakeholders in

their discussions and decision making in all areas of performance review, strategy, risk and capital management. To that end, this section should be considered

together with the rest of this report as the Company’s comprehensive summary of its Directors’ compliance with their equivalent Section 172 duties.

Section 172 responsibilities in focus

Due to the robust capital position of the Group, arising from the strong operational performance of the business during 2023, the Board approved a

special dividend of $0.50 per common share, which was paid to shareholders on 15 December 2023. Additionally, the Board approved expenditure of

up to $50 million to repurchase Lancashire’s shares. No shares were repurchased under the programme. Including the final and interim dividends paid

during 2023 the total dividend to shareholders during the year amounted to $0.65 per common share. In taking these capital deployment decisions,

the Board considered the capital requirements for the business to support its underwriting and wider business plans for 2024. The Board also discussed

requirements for capital held in light of the Group’s regulatory capital requirements and with regard to the market credit rating agency models. The

Board concluded that Lancashire’s performance and diversification strategy over recent years has both improved its capital efficiency and strengthened

its overall capital position. The Board also actively considered the needs of the Group’s policyholders as a key part of capital planning. The Company’s

financial security and balance sheet strength is a key part of its offering to its (re)insured policyholders. Additionally, the Board noted that employees

who are members of the RSS were eligible to share in the company’s strong performance through the special dividend.

Capital return to shareholders

Criteria considered (See table)

Relevant stakeholders

Our shareholders

Our people

Our policyholders and brokers

Government and regulators

During 2023, two new appointments to the Board were approved. In November, Philip Broadley was appointed as a Non-Executive Director and as

the LHL Chair designate. His appointment as Chair is expected to take effect immediately following Lancashire’s 2024 AGM, subject to shareholder

approval. The search for a Chair successor was led by Robert Lusardi, Lancashire’s Senior Independent Director, who assumed the role of Chair for all

relevant Board and Committee discussions. The appointment process was conducted through Lancashire’s Nomination, Corporate Governance and

Sustainability Committee and approved by the LHL Board. In April, Bryan Joseph was also appointed as a Non-Executive Director and a member of

both the Audit and Underwriting and Underwriting Risk Committees. Philip and Bryan bring significant additional expertise to the Board to help us

deliver on our strategic ambitions.

Board succession planning

Criteria considered (See table)

Relevant stakeholders

Our policyholders and brokers

Government and regulators

Our shareholders

Our people

Society

Environment

Lancashire continued to grow premiums written in 2023 with an increase of 16.9%. This growth included business written in both existing and newer

lines of business. The Board discusses the growth strategy of the business at its quarterly meetings and meets with senior underwriters to understand

current market dynamics, risks and opportunities. Additionally, all Board members attend the quarterly UURC. During 2023 the Board also considered

and approved the expansion of the business through the launch of Lancashire Insurance U.S. Lancashire Insurance U.S. will operate under a delegated

underwriting arrangement with Lancashire’s UK company platform and is expected to begin underwriting in early 2024. The U.S. operation will be

complementary to our existing capabilities. This growth strengthens the policy offering to our clients and further enhances the societal benefits of

the risk management (re)insurance products we offer, delivers opportunity for our people, and generates returns for our investors. It is implemented

with due regard to legal and regulatory requirements and close consideration of the capital demands of our business.

Growth in premiums written and

geographic expansion

Criteria considered (See table)

Relevant stakeholders

Our policyholders and brokers

Government and regulators

Our shareholders

Our people

Society

Environment

81Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

Section

172(1):

Duty to promote the success of the

company, with regard to: For further details, see:

The likely consequences of any decision

in the long term;

The Group’s statement of purpose – page 9

The Group’s business model – page 9

The Group’s strategic goal and three priorities: that Underwriting comes first; balancing risk

and return through the cycle; operating as an insurance market employer of choice – pages

10 and 11

Embedding a sustainable culture for a profitable business – page 41

The Board’s assessment of the Group’s viability and prospects as set out in the going concern

and viability statement – page 120

The interests of the company’s

employees;

The importance of our people, and the business’s focus on Lancashire’s values, culture,

diversity & inclusion, training and development and workforce engagement – page 33

The need to foster the company’s

business relationships with suppliers,

customers and others;

Our business depends upon the strong business relationships that we build and maintain

with our core and broader stakeholders. All Board members attend the quarterly UURC and,

during 2023, gave close consideration to business development opportunities as summarised

in the Committee’s report – page 96

The impact of the company’s operations

on the community and the environment;

Society and the environment form part of our ‘core’ set of stakeholders. The Board is

engaged with the impact of the Company’s operations through its oversight of the

Lancashire Foundation, the Group’s submission to the CDP, the annual offsetting of our own

operations’ GHG emissions, and our commitments to report against the UNEP FI Principles

for Sustainable Insurance (see our website for details) and address the requirements of the

TCFD – page 49 to 64.

The desirability of the company

maintaining a reputation for high

standards of business conduct; and

Through its compliance with the Code, the Company strives to operate in line with high

standards of governance expectation and business conduct. A healthy and sustainable

corporate culture is embedded throughout the business, which is assessed by the Board

through various channels – page 92

The Audit Committee oversees the Group’s implementation of whistleblowing

arrangements, and other systems and controls for the prevention of fraud, bribery and

money laundering – page 88

The need to act fairly as between

members of the company.

The Board is committed to treating the Company’s shareholders fairly, and engaging with

them through a broad programme of investor relations activities, meetings (including the

AGM), and targeted consultations; be that with our substantial shareholders, the Company’s

own employees, private individuals, or via shareholder advisory groups. See ‘Section 172

responsibilities in focus’, regarding the Board’s consideration of the balance between

underwriting opportunities and the payment of dividends – page 81

Corporate governance report continued

82 Lancashire Holdings Limited | Annual Report & Accounts 2023

Committee membership

The Audit Committee comprises four independent Non-Executive

Directors and is chaired by Sally Williams. The qualifications for each of

the Committee members are detailed on pages 72 to 75. The Committee

members bring a diverse range of experience in finance, risk, control

and business, with particular experience in the specialty insurance and

reinsurance sectors. The Board has confirmed that the members of the

Committee have the necessary expertise to provide effective challenge

to management; this includes the chair.

The Group’s internal and external auditors have the right of direct

access to both the management team and the Audit Committee.

The Audit Committee’s detailed Terms of Reference are available

on the Group’s website.

Committee members Meetings attended

Sally Williams (Chair) 4/4

Simon Fraser 2/2

Jack Gressier 1/1

Bryan Joseph 2/2

Robert Lusardi 4/4

Following the 2023 AGM Simon Fraser stepped down as a Director of the Board

and Committee member with effect from 26 April 2023. As part of the Board’s longer

term succession planning, Bryan Joseph joined the Committee on 26 April 2023 and

Jack Gressier became a member on 9 August 2023.

Audit Committee

Committee reports

“ The Audit Committee has worked closely with Natalie Kershaw and

the finance team in overseeing the implementation of the IFRS 17

and IFRS 9 accounting standards, effective from 1 January 2023. I

would like to thank all those within the business who have worked

hard in embedding these new standards, and in ensuring that the

Committee has been given the appropriate tools for oversight of

their implementation. The Committee hasremained focused on

challenging the key accounting judgements, assessing the integrity

and fair presentation of the Group’s financial reporting, and

reviewing the maintenance and effectiveness of the Group’s internal

controls. The Committee also monitored and reviewed the activities

and performance of internal and external audit.”

Sally Williams

Chair of the Audit Committee

Principal responsibilities of the Committee

• Monitoring and reviewing significant accounting judgements;

• Monitoring the integrity of financial and narrative reporting

including recommending to the Board if this is fair, balanced

and understandable;

• Reviewing the activities and effectiveness of Group internal audit;

• Reviewing the effectiveness and quality of the external audit process,

the independence of the external auditor and the findings from the

audit with the external auditor;

• Recommending the appointment of the external auditor and the

approval of their fees;

• Overseeing the effectiveness of the Group’s internal controls and

risk management systems; and

• Monitoring compliance, whistleblowing, speaking up mechanisms

for financial irregularities, risk and fraud.

Specific details of the Committee’s responsibilities and activities in

these principal areas during the year are set out in the table on the

following pages.

83Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

IFRS 17 and IFRS 9 implementation

2023 was the year in which both IFRS 17 and IFRS 9 accounting

standards were implemented. Preparing for this new standard has been a

multi-year project requiring significant change to accounting systems

and processes. The Committee recognises the very considerable efforts

by our finance and actuarial teams in delivering this successfully.

The Committee devoted additional time to reviewing reports received

from the finance team relating to the assumptions, judgements,

restatements, changes to APMs and other changes arising from this

implementation, together with the related disclosures in the financial

statements.

Significant areas of judgement and estimation

An annual paper is presented by management to the Committee that

details the areas of judgement and estimation in the preparation of the

consolidated financial statements. This is scrutinised and challenged by

the Committee. Key areas of judgement and estimation challenged by

the Committee during the year are discussed below.

Measurement of insurance contracts issued and

reinsurance contracts held

The most significant area of judgement and estimation considered

by the Committee during 2023 related to the Group’s measurement

of insurance contracts issued and reinsurance contracts held. These are

recognised on the statement of financial position as ‘insurance contract

liabilities’ and ‘reinsurance contract assets’. As a result of the judgemental

nature of these balances, changes in assumptions made may materially

change the fulfilment cashflows that make up these balances. The

estimation of the fulfilment cashflows is a complex actuarial process

which incorporates a significant amount of judgement, in particular

in relation to the estimation of the liability for incurred claims and

the asset for incurred claims (i.e. the gross and net loss reserves).

The Committee’s primary areas of focus and challenge relates to the

adequacy of these gross and net loss reserves. The Committee held

regular sessions with the Group Chief Actuary and the Group Head of

Claims during the year to discuss reserving and claims developments.

The Committee also received independent estimates of the Group’s

loss reserves from an external actuary and compared these third-party

estimates to those of the Group at its second and fourth quarter Audit

Committee meetings.

During the year the committee discussed and challenged:

• developments in reserves across the Group’s entities;

• reserving for loss events which occurred during the year, together

with reserve developments in respect of prior year losses;

• the impact of inflation on the Group’s approach to reserving and

related assumptions;

• developments in the Group’s reserving approach;

• the IFRS 17 risk adjustment maintained within insurance contract

liabilities above the established actuarial best estimate; and

• the IFRS 17 confidence level for the Group’s margin adjusted reserves.

KPMG LLP conducted a detailed re-projection of the Group’s loss

reserves as part of the annual financial statement audit.

Having reviewed and challenged these areas, the Committee concurred

with management’s valuation of the Group’s loss reserves and the

relevant disclosures around loss reserving and related assumptions

in the Group’s consolidated financial statements.

Assessment of premium allocation approach

(“PAA”) eligibility

The Committee’s work in this area relates to the implementation of

the IFRS 17 accounting standard. IFRS 17 includes an option to apply

the premium allocation approach, which is designed to simplify the

measurement of insurance and reinsurance contracts. Judgement is

applied when performing the PAA eligibility assessment on insurance

and reinsurance contracts with a coverage period of more than 1 year.

The Committee discussed and agreed with management the basis on

which the Group would apply judgment in determining that it is eligible

to apply the PAA measurement model to its portfolios and groups of

contracts as the measurement of the liability for remaining coverage

and asset for remaining coverage is not reasonably expected to differ

materially from that calculated under the general measurement model.

This assessment was made following detailed modelling of the Group’s

insurance contracts under IFRS 17.

Risk culture and controls and

financial reporting

Other key areas of review and challenge by the Committee were in areas

of the effectiveness of the business’s control environment; the continued

integrity of external financial reporting; and the oversight of corporate

and risk culture through the reporting of the internal audit and risk

management functions.

Going concern basis of accounting and

longer term viability

The Audit Committee reviewed and challenged the going concern

assessment prepared by management at both its July 2023 and March

2024 meetings, with particular consideration of capital management,

the current underwriting and loss environment, the composition

and liquidity of the investment portfolio, long-term debt financing

arrangements, strategic and financial forecasts over the business

planning horizon, and stress and scenario testing (including climate-

change risk scenarios). These factors are also relevant in providing

assurance to the Board on the longer term viability of the Group’s

business strategy.

Having reviewed and challenged these areas, the Committee concurred

with management’s going concern assessment, together with the

relevant disclosures in respect of going concern and longer term

viability within the Group’s consolidated financial statements.

Summary of key areas of Audit Committee challenge

Committee reports continued

84 Lancashire Holdings Limited | Annual Report & Accounts 2023

How the Committee discharged its responsibilities

Financial and narrative reporting

Committee

responsibility Committee activities

Monitors the integrity of

the Group’s consolidated

financial statements,

including its annual and

half-yearly reports, annual

reporting arising under

applicable supervisory rules,

interim management

statements, preliminary

announcements and any

other formal statements

relating to the Group’s

financial performance.

Reviews and reports to

the Board on significant

financial reporting issues

and judgements contained

in the consolidated

financial statements.

At each meeting the Committee reviewed the Group’s management accounts, including the annual

consolidated financial statements, as well as the Annual Report and Accounts, and other public financial

disclosures for the purpose of recommending their approval by the Board. The Group’s annual regulatory

reports, prepared in accordance with the BMA’s reporting requirements, were reviewed in April 2023 at the

Audit Committee meeting prior to their recommendation to the Board for approval. The Committee also

monitored the activities of the Group’s Disclosure Committee and reviewed the Group’s financial releases

and accompanying earnings call investor presentations.

During 2023, the Committee received, discussed and challenged regular and ad hoc reports and presentations

from management in the following areas.

• Loss reserving, and developments to the Group’s reserving process (see the Summary of key areas of Audit

Committee challenge section above).

• The implementation of IFRS 17 and IFRS 9 and the related enhancements to the Group’s finance procedures

and IT framework.

• Discussing financial reporting related changes arising from the implementation of IFRS 17 and IFRS 9 and

other new or significant accounting treatments (including related party transactions).

• Developments in accounting and financial reporting requirements impacting the consolidated financial

statements.

• The new Bermuda corporate income tax rules established in 2023.

• Changes made to APMs due to implementation of IFRS 17.

• The activities of the finance team.

• The 2023 assessment of the Group’s ability to continue as a going concern and the longer term viability

of the business (see narrative above and page 120 for further details).

• Key risk and controls including those relating to information security as part of regular risk controls

reporting, together with quarterly confirmatory compliance statements from the Group’s legal and

compliance function.

• The activities of LHL’s subsidiary companies boards and audit committees.

• Reports from the external auditors and discussion with them, covering audit planning, the results of

the external auditor assessment of key financial statement judgements and estimates, control testing,

misstatements identified and other audit and accounting matters.

The Committee also attended a training session delivered by the management team to the Board on the

Group’s implementation of the IFRS 17 and IFRS 9 accounting standards.

The Audit Committee continued its practice of holding engagement sessions with the Group CFO, the Group

Head of Internal Audit, the Group Chief Actuary and the External Auditor without management present.

Judgements and estimation in the consolidated financial statements

The Committee gave detailed consideration to the areas of significant judgement and estimation uncertainty

applied in preparing the consolidated financial statements involving a range of views and challenge from the

Committee members, the management team and the external auditors. See the summary on the significant

areas of judgement and estimation uncertainty applied by management on page 84.

Reviews the content of

the Annual Report and

Accounts and advises the

Board on whether, taken as

a whole, it is fair, balanced

and understandable, and

provides the information

necessary for shareholders

to assess the Group’s

performance, business

model and strategy.

The Committee reviewed the early drafts of the 2023 Annual Report and Accounts in order to keep apprised

of its key themes and messages. Ahead of presentation to the Committee, a thorough review process of the

Annual Report and Accounts was conducted to help ensure disclosures were balanced and accurate. The

Committee carefully reviewed the Group’s performance and reporting in light of the principal and emerging

risks. The Committee carefully reviewed the clarity of the new disclosures made in accordance with IFRS 17

and IFRS 9, and relating to APMs, including consideration of the overall presentation of APMs to ensure that

they are properly explained, reconciled and not given undue prominence. The Committee reviewed the final

draft of the 2023 Annual Report and Accounts at the March 2024 Audit Committee meeting, together with

the external auditor’s report. The Committee advised the Board that, in its view, the 2023 Annual Report and

Accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for

shareholders to assess the Group’s performance, business model and strategy.

85Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

How the Committee discharged its responsibilities continued

External audit oversight

Committee

responsibility Committee activities

Oversees the relationship

with the Group’s external

auditors, approves their

remuneration and terms of

engagement, and assesses

annually their independence

and objectivity, taking into

account relevant legal,

regulatory and professional

requirements, together with

the Group’s relationship

with the external auditors

as a whole. This includes an

annual assessment of the

qualifications, expertise

and resources, and

independence of the

external auditors and the

effectiveness of the external

audit process.

The Committee considered the appropriateness of the annual external audit plan, and whether appropriate

professional scepticism was applied by KPMG LLP to key accounting judgements such as reserving. The

committee noted that KPMG LLP’s work included a detailed re-projection of the Group’s loss reserves.

Following its review, the Committee was satisfied that the external audit plan was appropriate and hence

did not need to request changes to this plan. Following the Committee’s approval of the external audit plan

the Committee received regular reports from the external auditors, including an ongoing assessment of the

effective delivery of the audit compared to the plan.

KPMG LLP’s terms, scope of engagement and fees were discussed, challenged and subsequently approved by

the Committee during the year.

Following the 2022 year-end audit, the Committee performed an assessment led by the Committee Chair,

of the effectiveness of the external audit process. This year the evaluation focused on the following areas:

independence, professional scepticism and culture; the quality of audit expertise; auditor quality control; audit

planning; and audit performance and evaluation. The assessment was discussed at the April 2023 Audit

Committee meeting. The process identified a number of potential areas for enhancement that were factored

into the audit planning process for 2023. Overall, the Committee was able to conclude that the external audit

process was operating effectively, both with respect to the service provided by KPMG LLP and management’s

continued support of the audit process.

The Committee reviewed a letter from the external auditor to the management team setting out certain

findings and recommendations in respect of the control environment observed during the 2022 audit, together

with management responses in each area identified.

The Committee reviewed the independence of the external auditors at the half-year and year-end meetings,

taking into account any non-audit services provided and related fee arrangements. The Committee concluded

that KPMG LLP remain independent.

The development and

implementation of a formal

policy on the provision of

non-audit services by the

external auditors, taking

into consideration any

threats to the independence

and objectivity of the

external auditors.

Pursuant to its annual review process, the Committee received a recommendation from management and

approved and adopted a formal non-audit services policy in April 2023. The policy stipulates the approvals

required for various types of non-audit services that may be provided by the external auditors, as well as those

from which the external auditors are excluded, and is made available on the Group’s website. During 2023,

KPMG LLP provided $0.6 million of non-audit services to the Group relating to the half-year reporting review,

PRA Solvency II and Lloyd’s regulatory returns. The Committee gave careful consideration to the nature of the

non-audit services provided, the suitability of KPMG LLP as the supplier of the non-audit services and the level

of fees charged and has determined that they do not affect the independence and objectivity of KPMG LLP

as auditors.

Makes a recommendation

to the Board, to be put to

shareholders for approval

at the AGM, in relation

to the appointment,

re-appointment or

removal of the Group’s

external auditors.

The 2023 financial year was the seventh financial year in which KPMG LLP acted as the Group’s external

auditors. The incumbent lead audit partner is Salim Tharani, who assumed this role in February 2022 and

has now completed two full years as the designated KPMG LLP lead audit partner. In conformance with the

required rules, provisions and good corporate governance, the Group will be required to tender for the external

audit ahead of the 2027 year end. The Committee will consider in due course its plan for the tender process.

The external audit fee arrangements across the Group were agreed after discussion between the Committee,

management, and KPMG LLP.

The Committee and the Board are recommending the re-appointment of KPMG LLP as external auditors at

the 2024 AGM.

The Committee monitored the developing corporate governance and regulatory landscape relating to the

governance, delivery and conduct of the external audit.

Committee reports continued

86 Lancashire Holdings Limited | Annual Report & Accounts 2023

How the Committee discharged its responsibilities continued

Internal audit oversight

Committee

responsibility Committee activities

Monitors and assesses the

role and effectiveness of

the Group’s internal audit

function in the overall

context of the Group’s

risk management system,

ensuring it has unrestricted

scope, and the necessary

resources and access to

information to enable

it to fulfil its mandate

in accordance with

appropriate professional

standards.

The Group’s internal audit function reports directly to the Committee. The Committee oversaw the

appointment of a new Head of Group Internal Audit during the year. The Group Head of Internal Audit

presented the annual internal audit strategy and plan to the Committee for review, discussion and approval.

The internal audit plan considers current and emerging risks which impact the business and adopts a risk

weighted approach.

The Committee received reports from the Group Head of Internal Audit summarising the status of the

internal audit plan; findings from internal audits conducted in the period; and the status of actions taken

by management to implement recommendations arising. The internal audit programme also covers the

assessment of the Group’s culture, including risk culture, for each audit undertaken. An overall summary

of observations identified in respect of the Group’s culture is presented to the Committee and discussed

in open and closed Committee sessions.

The Committee reviewed and approved the Internal Audit Charter, which can be viewed on the Group’s

website. The Chair of the Committee undertook an annual review of the effectiveness of the internal audit

function and its activities. At its November 2023 meeting, the Committee discussed the report and its findings

and concluded that the internal audit function had operated effectively in the overall context of the Group’s

risk management system, has appropriate standing within the Group, and that the Group Head of Internal

Audit has the appropriate reporting lines to maintain independence.

Internal controls and risk management systems

Reviews the adequacy and

effectiveness of the Group’s

internal financial controls

systems that identify,

assess, manage and monitor

financial risks, and other

internal control and risk

management systems.

Reviews and approves the

statements to be included

within the Annual Report

and Accounts concerning

internal control, risk

management, including

the assessment of principle

and emerging risks, and the

statements regarding going

concern and viability.

The Board has ultimate responsibility for ensuring the maintenance of a robust framework of internal control

and risk management systems across the Group and has delegated the monitoring and review of these systems

to the Committee. The Committee reviewed and challenged the Group’s control environment, the results of

the risk and control affirmation review and testing work performed and the ongoing effective operation of

key controls.

At each meeting the Committee is presented with a report from the Group Head of Internal Audit, and reviews

findings relating to the control environment and management responses. In addition, the Committee received

from the Group Head of Internal Audit an annual assessment of the effectiveness of the Group’s governance,

risk and control framework for discussion, together with an analysis of themes and trends from the internal

audit work performed and their impact on the Group’s risk profile. The Group Head of Internal Audit gave

explicit consideration to management’s fraud risk assessment as part of this work. Fraud risk and the associated

controls were, otherwise, ordinarily considered by the Group internal audit function as part of the planning

phase for each audit conducted. The Committee and Board were satisfied that the governance, risk and

control framework continue to remain strong and appropriate for the Group, whilst noting those areas for

enhancement, action and improvement which had been identified through the Group’s established processes,

or internal audit and risk and controls monitoring. The Committee assisted the Board in determining the

appropriateness of adopting the going concern basis of accounting and in performing the assessment of

the viability of the group, as more fully described in the Directors’ Report at page 120.

87Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

How the Committee discharged its responsibilities continued

Compliance, speaking up and fraud

Committee

responsibility Committee activities

Reviews for adequacy

and security the Group’s

compliance, speaking

up and fraud controls.

The Committee conducted an annual effectiveness review of the Group’s policies and procedures relevant to

financial controls, and recommended the adoption by the Board of updated policies and procedures in respect

of: anti-money laundering; the prevention of bribery and financial crime (including the detection of fraud);

conflicts of interest; whistleblowing arrangements; and sanctions monitoring. The operation of the controls

that are documented in these policies and procedures are reported to the Committee on a quarterly basis in

the form of confirmatory compliance statements from the Group’s legal and compliance function, members

of which include the Group’s Money Laundering Reporting Officers and Group Data Protection Officer. The

Committee also keeps under review the adequacy and effectiveness of the Group’s legal and compliance

function, and receives regular updates on compliance training delivered to employees across the Group.

The Group’s whistleblowing policy and procedures provide an internal mechanism for the reporting,

investigation and remediation of any workplace wrongdoing, with arrangements in place that allow for the

independent investigation of such matters and appropriate follow-up action. A whistleblowing champion

has been appointed to each of the Group’s principal operating subsidiaries, as well as at a parent company

level, with the Chair of the Audit Committee serving in such capacity. The appointed whistleblowing champions

have responsibility for ensuring and overseeing the integrity, independence and effectiveness of the Company’s

policies and procedures on whistleblowing. The Group places a high priority on employees’ understanding of

this process to enable them to speak out with confidence when appropriate. This message, as well as the

arrangements that are in place, is regularly communicated to all employees.

Priorities for 2024

• To maintain the focus on the effectiveness of the Group’s control environment, the operation of the business’s financial reporting systems

and the integrity of external financial reporting;

• To continue to monitor and embed aspects of positive business culture in quarterly reporting, in particular regarding the Group’s financial

and risk control environment;

• To continue to monitor emerging practice in IFRS 17 reporting to enable the Committee to consider whether further refinements could

be made to the Group’s reporting; and

• To continue to monitor developments and implement recommendations relating to anticipated changes in the corporate governance,

corporate reporting, audit practice landscape, ESG, sustainability and climate reporting.

Committee reports continued

88 Lancashire Holdings Limited | Annual Report & Accounts 2023

Committee membership

The majority of the Nomination, Corporate Governance and

Sustainability Committee members are independent Non-Executive

Directors. The Committee Chair is Peter Clarke, who is also the Chair

of the Board.

Committee members Meetings attended

Peter Clarke (Chair) 4/4

Michael Dawson 4/4

Sally Williams 4/4

Irene McDermott Brown 4/4

Nomination, Corporate Governance

and Sustainability Committee

“ The Committee has had a very active year, engaging fully with the

processes for Board and Chair succession. We appointed Bryan Joseph

asan independent Non-Executive Director in April 2023 and, under

the leadership of Rob Lusardi as our Senior Independent Director, the

Committee monitored and managed the process for the identification

and engagement with a range of potential candidates to join the Board

as its Chair designate. This culminated in the appointment of Philip

Broadley in November 2023. As I reach the end of my tenure as Board

and Committee Chair, I am confident that the Board benefits from

a broad diversity and has the right balance of skills and perspectives

to deliver strong, challenging, engaged and supportive governance

for our business for the years ahead.”

Peter Clarke

Chair of the Nomination, Corporate Governance and Sustainability Committee

Principal responsibilities of the Committee

• Reviews the structure, size and composition (including the skills,

knowledge, independence, experience and diversity) of the Board

and oversees Board engagement with the workforce;

• Considers succession planning for the Directors and other senior

executives;

• Nominates candidates to fill Board vacancies;

• Makes recommendations to the Board concerning Non-Executive

Director independence, membership of Committees, suitable

candidates for the role of Senior Independent Director, and the

re-election of Directors by shareholders;

• Reviews the Company’s corporate governance arrangements

and compliance with the Code;

• Monitors and makes recommendations to the Board regarding

the environmental, social and governance responsibilities of the

Company; and

• Makes recommendations to the Board concerning the charitable

and corporate social responsibility activities of the Company and

donations to the Lancashire Foundation.

89Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

How the Committee discharged its responsibilities

Corporate governance

Committee

responsibility Committee activities

Chair succession The Committee approved the appointment of Spencer Stuart as the independent external recruitment

consultancy to carry out a search for candidates for the role of Board Chair, to succeed Peter Clarke in that role

following the conclusion of the 2024 AGM. The Chair search process was led by the Board’s Senior Independent

Director (SID) Robert Lusardi.

The Committee agreed a detailed specification, which was structured with regard to the requirements of both

the Chair role and broader Board succession considerations, and held regular meetings with representatives

of Spencer Stuart during the course of 2023. Numerous meetings were held between Directors, members of

management and the candidates. The Company Secretary assisted in conducting due diligence and in giving

advice around governance requirements for candidates under consideration. All Directors were involved in

meeting and approving the principal candidates emerging from the search process.

The Committee considered questions of experience, skills, fitness and a formal paper on independence

(with due regard to the requirements of the Code) in recommending to the Board the appointment of Philip

Broadley. The Board determined Mr Broadley to be independent in character and judgement on appointment.

The Committee and Board paid close regard to the agreed role specification and noted Mr Broadley’s 40 years’

experience in the insurance and financial services sectors, including as executive and non-executive director on

a number of UK listed boards. The Committee and the Board concluded that Mr Broadley brings a wealth of

strategic and leadership skills to Lancashire’s Board and is a suitable candidate for the role of Board Chair.

Mr Broadley was appointed as a Non-Executive Director with effect from 8 November 2023, and, subject

to shareholder approval at the 2024 AGM, will assume the role of Board Chair following the 2024 AGM

on 1 May 2024. A detailed induction programme has been arranged for Mr Broadley.

Committee reports continued

90 Lancashire Holdings Limited | Annual Report & Accounts 2023

How the Committee discharged its responsibilities continued

Corporate governance

Committee

responsibility Committee activities

Board and Committee

composition and

effectiveness and succession

The Committee discussed in its meetings the balance of skills and experience on the Board and its Committees.

The Committee regularly discussed Board succession and skills planning over the year and monitored the

diversity of the Board members.

The Committee formally considered the questions of independence, the skills and fitness in recommending to

the Board the appointment of Bryan Joseph, who was appointed as a Non-Executive Director with effect from

26 April 2023. The Committee paid close regard to the agreed role specification and noted Mr Joseph’s many

years’ experience as an actuary in the global insurance and reinsurance industry and his wider board experience,

including his service as director, audit committee chair and chair of an insurance company within the Axa XL

group and his knowledge and expertise within the insurance and reinsurance third party capital sector.

The Committee also approved the appointment of Mr Joseph to the Underwriting and Underwriting Risk

Committee and the Audit Committee.

During the year, the Committee also oversaw the appointment of Jack Gressier as a member of the Audit

Committee.

The Committee reviewed the composition of the Board at its November 2023 meeting, and it considered that

the balance of skills, knowledge, independence, experience and diversity continues to be appropriate for the

Group’s business to meet its strategic objectives. The Committee noted in its discussions that the Board had

met its Parker review objective for the Board of having at least one director from a minority ethnic background.

The Committee has also noted that, due to the appointment of two male Non-Executive Directors during

2023, the gender balance of the Board has decreased slightly. The Committee and Board remain committed

to an objective of having at least 40% female membership of the Board and intends to address this as part

of its succession planning over the next couple of years.

The Committee oversaw the process for the year-end review of the effectiveness of the Board, the Committees

and each of the Directors, which was facilitated internally by the Company Secretariat team, and led by the

Chair of the Board. The Committee and the Board were satisfied that the Board and each of its Committees

were operating effectively. Further details of the 2023 performance evaluation process and its outcomes can

be found on page 77.

In accordance with the provisions of the Code, all of the Directors are subject to annual (re)election by

shareholders. With the exception of Bryan Joseph and Philip Broadley who were appointed after the April

2023 AGM, all of the Group’s current Directors were elected or re-elected by shareholders at the 2023 AGM.

With the exception of Peter Clarke, who will not submit himself for election or re-election having completed

nine years’ service as a Director, all other serving Directors will be submitted for election or re-election at the

2024 AGM.

The Committee reviewed the Group’s fit and proper policy for Board appointments.

UK Code compliance The Committee keeps under review the Company’s corporate governance arrangements, particularly the

Company’s compliance with the Code. The Committee reviewed the Company Secretariat’s checklist record

of the Company’s compliance with the Code on a quarterly basis.

Governance documentation Each Committee considered its Terms of Reference as part of the 2022 year-end evaluation process and has

recently completed a similar exercise as part of the 2023 evaluation. In light of this work the Committee

recommended a change to the Audit Committee Terms of Reference, relating to oversight of cyber, data and

IT security risks and controls, and a minor change to the Investment Committee Terms of Reference to capture

requirements for ESG and carbon data reporting for the investment portfolio. The Committee concluded that

the Terms of Reference for all the Committees were fit for purpose. The Committee reviewed and approved

changes to the Company’s Bye-Laws which were recommended to shareholders and which were approved at

the April 2023 AGM. In August 2023, the Committee reviewed and recommended to the Board minor revisions

to both the Board’s Schedule of Reserved Matters and to the document describing the division of

responsibilities between the Group CEO and the Chair.

91Lancashire Holdings Limited | Annual Report & Accounts 2023

ESG – Governance

How the Committee discharged its responsibilities continued

Corporate governance

Committee

responsibility Committee activities

Management and staff

appointments and

succession planning

The Committee reviewed and recommended the approval and adoption by the Board of the Group’s succession

plan and talent management and development programme for the senior management population in

November 2023. The business has the objective of fostering a skilled and diverse workforce to meet the needs

of the business. The Committee engaged with Sarah Rogers, the newly appointed Group Chief HR Officer and

discussed with her plans for the enhancement of data collection and reporting for employees. The Committee

reviewed training and development proposals for a number of key employees across the Group as part of the

succession planning process.

Workforce engagement With regard to its arrangements for workforce engagement the Board does not use the suggested methods

set out in the Code, but an alternative arrangement involving the designation of non-executive directors on a

rotating basis. During 2023, the Group continued the practice of the Group CEO holding ‘town hall’ meetings

with employees following the announcement of the Group’s quarterly results. In order to further enhance

arrangements for engagement between the Non-Executive Directors and members of the workforce, the

Committee arranged for these town hall meetings to be attended by the Chair of the Board or another

Non-Executive Director. In addition to Mr Clarke, the Non-Executive Directors participants in the town hall

meeting held during 2023 were Simon Fraser, Sally Williams and Bryan Joseph. The Board and Committee

also received the results of an employee engagement survey undertaken during 2023 which covered topics

including staff satisfaction and engagement (see page 33 for further details of the survey). The Directors

once again had the opportunity to meet with employees less formally at lunches and other social gatherings

organised around the time of the Board’s regular meetings in Bermuda. The Committee considered these

and other tools for workforce engagement at its November 2023 meeting and discussed arrangements

for workforce engagement during 2024. The Committee, and the Board, consider that the mechanisms

for workforce engagement and feedback have an appropriately high profile and this, in turn, informs

debate within the relevant Committees, the Board and the wider Group.

Legal, regulatory

and governance

developments reform

The Committee monitored developments in the areas of law, regulation and guidance relevant to the Group

and its operation. Topics covered included proposals for reform to corporate reporting requirements for UK

listed entities, developments in audit market reform and guidance, UK guidance with regard to ethnicity pay

data and developments in ESG regulation and practice.

Subsidiary boards The Committee and Board monitored the composition and appointments and changes to the Group’s

subsidiary boards.

Sustainability

Sustainability and ESG

reporting

The Committee received regular reports from Jelena Bjelanovic as Chair of the management ESG Committee

regarding the current and developing ESG regulatory landscape as well as the Group’s progress in these areas.

The Committee has continued to monitor developments in the area of the Group’s ESG responsibilities,

including the climate change risk management, data collection and reporting within the business

throughout its work in 2023. The Committee received feedback on the work of the Group’s newly

appointed sustainability manager, the activities of the Lancashire Employee Network and the Group’s

DE&I working group. The Committee noted the FCA consultation regarding the adoption of sustainability

disclosures reporting standards.

Committee reports continued

92 Lancashire Holdings Limited | Annual Report & Accounts 2023

Priorities for 2024

• To continue to ensure that the Company is able to effectively

discharge its governance responsibilities and to monitor and

report its compliance with the UK Corporate Governance Code;

• To support management in the development of the talent pipeline

and training and retention tools within the business;

• To review developments with regards to the Company’s

sustainability and ESG activities including management of

climate change risk and opportunity; and

• To monitor the Company’s progress on diversity and to consider

the Board’s objectives for female and ethnic minority membership

of the Board as part of its succession planning.

How the Committee discharged its responsibilities continued

Environment

Committee

responsibility Committee activities

Climate change risk and

opportunity and nature-

related risk

The Committee also periodically reviews developments in the areas of environmental sustainability and

climate change, and the management of related risks and opportunities. The Committee and Board reviewed

and ratified the Group’s 2023 CDP response and the Group’s ClimateWise submission. For more information

on these matters, please see the 2023 TCFD report starting on page 49. The Committee noted

recommendations with regard to a reporting framework produced by the Taskforce on Nature-related

Financial Disclosures (TNFD).

Social responsibility

Diversity, equity and

inclusion

For data regarding the gender and ethnicity of the Board and executive management please refer to page 38.

The Chair’s introduction on page 41 covers the Board’s disclosures under the UK listing rules with regard to the

Company’s diversity targets. The Committee recommended approval of an updated Board diversity policy,

which is posted on the Company’s website, and covers the Board and each of its committees. The gender

makeup of each committee is included in the relevant committee reports. The Committee was pleased

that during 2023 the Board was able to meet its Board level Parker review objective for minority ethnic

representation. The Committee also discussed the option of the adoption of a Parker Review target for

the executive management group and its reports, which is an option which the Committee and Board will

keep under review pending enhancements to the Group’s data collation and management capabilities. The

Committee noted the drop in gender diversity on the Board and intends to address this as part of