Return on Equity:

Return on Equity – 14.1% RoE, including dividends declared 2019.
 

 

Aim:
The Group’s aim is to maximise risk-adjusted returns for our shareholders across the cycle.

Measurement: 
The return on equity is measured by management as the internal rate of return of the change in fully converted book value per share in the period, adjusted for dividends.

Combined Ratio:

Combined Ratio – 80.9% combined ratio achieved in 2019.
 

 

Aim:
The Group aims to price its business to ensure that the combined ratio across the cycle is significantly less than 100%.

Measurement: 
The combined ratio is the ratio of costs to net premiums earned and is a measure of an insurance company’s operating performance.  It is calculated as the sum of the net loss ratio,  the net acquisition cost ratio and the expense ratio. These ratios are defined in our glossary.

Total Investment Return:

Total Investment Return – 4.9% total return on investments in 2019.

 

 

Aim:
The Group’s primary investment objectives are to preserve capital and provide adequate liquidity to support the Group’s payment of claims and other obligations. Within this framework we aim for a degree of investment portfolio return.

Measurement:
Total investment return measures investment income and net realised and unrealised gains  and losses produced by the Group’s managed investment portfolio.

 

  

Total Shareholder Return:

Total Shareholder Return – 34.3% total shareholder return in 2019.  
 

 

Aim:
The Group’s aim is to maximise RoE over the longer term, and we would expect that to be reflected in our share price and multiple. This is a long-term goal, recognising that the cyclicality and volatility of both the insurance market and the financial markets in general will impact management’s ability to maximise the RoE in the immediate term.

Measurement: 
Total shareholder return is measured in terms of the internal rate of return of the increase/decrease in share price in the period, measured in U.S. dollars and adjusted for dividends.

Comprehensive Income Returned to Shareholders:  

Percentage of Profit Returned to Shareholders – 20.7% of comprehensive income returned to shareholders in 2019.

 

Aim: 
The Group aims to carry the right level of capital to match attractive underwriting opportunities, utilising an optimal mix of capital tools. Over time, through proactive and flexible capital management across the cycle, we aim to maximise risk-adjusted returns for shareholders.

Measurement: 
The percentage of comprehensive income returned to shareholders equals the total capital returned to shareholders through dividends and share repurchases paid in a given year, divided by the Group’s comprehensive income.

Dividend Yield:

Dividend Yield – 1.5% dividend yield in 2019.  

 

 

Aim:
The Group aims to maintain a strong balance sheet whilst maximising risk-adjusted return for shareholders across the cycle. Lancashire’s dividend yield demonstrates our ability to operate nimbly through the cycle through the active capital management that underpins our business model. We aim to pay annual ordinary dividends, and when we decide not to retain our profits as additional underwriting capital, we return them to shareholders by way of special dividends.

Measurement: 
Dividend yield is measured by dividing the annual dividends per share by the share price on the last day of the given year.

Summary - to see full reports click here

 

INCEPTION TO DATE (1)

2017 2018 2019 H1 2020
RETURN ON EQUITY (WARRANT ADJUSTED) 17.4% (2)
-5.9% 2.4% 14.1% 7.2%

NET PREMIUMS WRITTEN

$546.4m (3) $398.0m $417.7m $424.7m $282.5m

COMBINED RATIO (INCLUDING G&A)

70.8%

124.9% 92.2% 80.9% 106.9%

NET LOSS RATIO

34.7%

78.4% 40.0% 30.8% 57.4%

TOTAL INVESTMENT RETURN

2.9% (4)

2.5% 0.8% 4.9% 1.3%

TOTAL SHAREHOLDER RETURN

18.4% (5)

9.4% -12.7% 34.3% -0.4%

CAPITAL MANAGEMENT

$2,830.6m (6) of capital returned;
289.3% of IPO capital raised returned

$29.9m of dividends paid; No shares repurchased $70.2m of dividends paid; No shares repurchased $30.2m of dividends paid; No shares repurchased $340.3m of capital raised; $20.2m of dividends paid; No shares repurchased

 

(1) Period from 12 December 2005 to 30 June 2020 unless otherwise stated

(2) Compound annual rate of return on equity

(3) Average annual net premiums written from 1 January 2006 to 30 June 2020

(4) Average annual return on investments to 30 June 2020

(5) TSR is calculated as compound annual return using IRR from date of inception

(6) The inception to date percentage is calculated on a paid basis, including the interim dividend of $0.05