Summary - to see full reports click here

 

INCEPTION TO DATE (1)

2018 2019 2020 2021 2022

CHANGE IN FULLY CONVERTED BOOK VALUE PER SHARE (FCBVS) (PREVIOUSLY TERMED RETURN ON EQUITY)

16.5% (2)
2.4% 14.1% 10.2% -5.8% -6.7%

NET PREMIUMS WRITTEN

$597.9m (3) $417.7m $424.7m $519.4m $816.1m $1,188m

COMBINED RATIO (INCLUDING G&A)

79.7%

92.2% 80.9% 107.8% 107.3% 97.7%

NET LOSS RATIO

40.2%

40.0% 30.8% 59.6% 67.6% 58.3%

TOTAL INVESTMENT RETURN

2.4% (4)

0.8% 4.9% 3.9% 0.1% -3.5%

TOTAL SHAREHOLDER RETURN

17.1% 

-12.7% 34.3% -1.4% -25.8% 11.7%

CAPITAL MANAGEMENT

$2,957.3m (6) of capital returned; 302.2% of IPO capital raised returned $70.2m of dividends paid; No shares repurchased $30.2m of dividends paid; No shares repurchased $340.3m of capital raised; $32.3m of dividends paid; No shares repurchased $450.0m long-term debt refinancing; $36.4m of dividends paid;  $6.9m shares repurchased $36.2m dividends paid; $23.3m shares repurchased

 

(1) Period from 12 December 2005 to 31 December 2022 unless otherwise stated

(2) Compound annual change in FCVBS

(3) Average annual net premiums written from 1 January 2006 to 31 December 2022

(4) Average annual return on investments to 31 December 2022

(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 final dividend of $0.10

The negative change in FCBVS is primarily due to the upwards trend in U.S. interest rates which resulted in $93.2 million of unrealised losses on our fixedmaturity investment portfolio.

For the 2023 accounting year we will rename ‘Change in FCBVS’ to ‘Change in Diluted Book Value Per Share’. This has no impact on theunderlying calculation, given the Group has no warrants in issuance.

 

Net premiums earned have grown to $988.4 million compared to $696.5 million in the prior year. The profitable growth of our non-catastrophe lines of business has enabled Lancashire to mitigate the impact of the 2022 natural catastrophe loss events such as hurricane Ian and the Australian floods. The combined ratio of 97.7% demonstrates how our recent disciplined growth helps deliver more balanced returns over the longer term and improves our ability to return an underwriting profit even in a year of significant losses.

 

Lancashire reported a total net investment return of negative 3.5% for the year ended 31 December 2022. This was primarily driven by unrealised losses on our fixed maturity portfolio as a result of significant interest rate hikes by the U.S. Federal Reserve. Given the short duration of our investment portfolio we should benefit from the higher interest rate environment going forward.

 

  

In 2022 there has been an overall stock market decline driven by the ongoing conflict in Ukraine, supply chain and inflationary pressures, a rapidly changing interest rate environment, exchange rate volatility and general economic uncertainty. This weighed on our total shareholder return for much of the year with a recovery in Q4 2022. We see further opportunities for profitable underwriting growth into 2023 and will continue to deliver on our strategy and manage the cycle.

 

The Group has made a comprehensive loss of $92.6 million in 2022 primarily driven by unrealised investment losses of $93.2 million on our fixed maturity available for sale investment portfolio. We remain strongly capitalised to deliver on our long-term strategy and continued to deploy excess capital into the business to fund growth opportunities. We paid ordinary dividends of $36.2 million and repurchased shares of $23.3 million.

The Group continues to expand and diversify its underwriting portfolio taking advantage of a period of sustained rate increases across a number of lines of business. The Group’s corporate member has also acquired additional syndicate participation rights in Syndicate 2010, which takes the Group’s share of the 2023 year of account to 69.3%.

Bold text refers to GAAP measures

The dotted lines in the charts refer to the Five-year average