Lancashire Holdings 2nd Quart
LANCASHIRE HOLDINGS LIMITED
Fully converted book value grows 3.1% in Q2 2008, 8.3% year to date
Combined ratio 72.3% in Q2 2008, 66.4% year to date
Hamilton, Bermuda, 5 August 2008
Lancashire Holdings Limited ('Lancashire' or 'the Company') today announces its results for the second quarter of 2008 and the six month period ended 30 June 2008.
Despite a higher than normal frequency and severity of industry losses, together with weakening investment markets, Lancashire has grown book value per share 8.3% in the first half of 2008 - an excellent result.
Financial highlights for the second quarter of 2008:
-
Return on equity of 3.1%, measured as the growth in fully converted book value per share plus dividends;
-
Gross written premiums of $196.7 million. Net written premiums of $182.4 million;
-
Loss ratio of 45.7% and a combined ratio of 72.3%;
-
Total annualised investment return of 0.5%, including net investment income, realised gains and losses, and unrealised gains and losses;
-
Net income after tax of $51.2 million, or $0.27 diluted earnings per share;
-
Repurchased 5.683 million shares at an average cost of $6.20, or approximately 316 pence.
Financial highlights for the first half of 2008:
-
Return on equity of 8.3%, measured as the growth in fully converted book value per share plus dividends. Compound annual return on equity since inception of 21.4%;
-
Gross written premiums of $383.4 million. Net written premiums of $324.3 million;
-
Loss ratio of 42.1% and a combined ratio of 66.4%;
-
Total annualised investment return of 2.7%, including net investment income, realised gains and losses, and unrealised gains and losses;
-
Net income after tax of $135.8 million, or $0.72 diluted earnings per share.
Richard Brindle, Group Chief Executive Officer, commented:
'I am delighted to report another very strong performance by Lancashire. Following our 5.0% growth in book value per share in the first quarter of 2008 we have followed with a further 3.1% in the second quarter, compounding to a total of 8.3% for the first half of a very difficult year for the property and casualty sector. We are very proud that our cautious approach in a softening market has produced a combined ratio of 72.3% in the second quarter, and 66.4% for the year to date.
As expected, and as previously advised, premiums in the second quarter were significantly lower than the prior year as we took a disciplined stance on renewals. While a significant proportion of deals renewed at acceptable rates, we stuck to the Lancashire strategy of turning away business which doesn't meet our return requirements. Much of the catastrophe exposed energy accounts renew in the second quarter and pricing was materially lower than in 2007. Despite this, we are still finding plenty of attractive deals.
The three months to 30 June 2008 saw a continuation of the higher than normal frequency and severity of industry losses experienced in the first quarter, most notably in the property risk and property catastrophe classes. Notable industry losses in the second quarter were the fire at Universal Studios in California, with an estimated loss of over half a billion dollars and a string of property catastrophe losses estimated at over six billion dollars in total. There were also a number of significant energy losses totaling approximately one billion dollars. As was the case in the first quarter, Lancashire successfully avoided most of the material events in Q2, restricting exposure to a modest participation on the Universal loss and to a small number of other property and energy events. Our net loss ratio in the second quarter was 45.7% or 47.9% excluding the small impact of prior year positive development. It is worth noting that our reported loss ratio reflects a strong accident year performance which is not significantly Impacted by prior period reserve releases.
We constantly examine sectors on a micro level and adjust our tactics accordingly. Between a combination of underwriting discipline, nimble repositioning of our focus, and a relatively normal loss environment, we are confident Lancashire can continue to produce healthy profits in a softening market.'
Neil McConachie,
Chief Financial Officer and Chief Risk Officer, commented:
'Despite negative returns in bond and equity markets, Lancashire's highly conservative investment portfolio has produced a positive total return in the second quarter of 2008. This follows a strong return in the first quarter. Our investment strategy remains the same: 'Rule number one: Don't lose your money'. We are doubly pleased to have maintained that philosophy in 2008. Not only have we reduced the downside investment risk more than most - we have generated a better return so far as well. We do, however, anticipate that investment returns will remain low for the rest of the year.'
Underwriting results
Gross written premiums decreased by 27.4% in the second quarter of 2008 compared to the same period in 2007. In 2008 to date, gross written premiums decreased by 15.1% compared to the first six months of 2007.
The decline in written premiums, both for the quarter and the year to date, is largely attributable to significant reductions in the Gulf of Mexico energy account. This has mostly been driven by inadequate pricing. Gross premiums written are lower in most classes, reflecting the broad softening of pricing across the insurance and reinsurance markets. Renewal price rates in 2008 compared to 2007 in the major sectors written by Lancashire are as follows: Property 88.0%; Energy 79.7%; Marine 95.3%; Aviation (AV52 only) 87.6%; Overall 85.7%.
Significantly less premium was ceded in the second quarter of 2008 compared to the second quarter of 2007. Ceded premium fell from $69.3 million to $14.3 million. For the year to date, ceded premium reduced from $75.4 million in the six months to 30 June 2007 to $59.1 million for the same period in 2008. In 2007, a large proportion of the total reinsurance program was protection against natural disasters, most commonly for Atlantic hurricanes. In 2008, less reinsurance was purchased for natural catastrophe events. The quota share cession to the Lancashire sponsored energy sidecar, Sirocco Re, was also cancelled at the end of 2007. These reductions were partially offset by an increase in reinsurance purchased to mitigate losses from events other than natural disasters, most of which was purchased in the three months to 31 March 2008.
Net written premium decreased 9.5% and 13.8% for the quarter and year to date, respectively, compared to the same periods in 2007. This was chiefly due to lower gross written premiums, offset somewhat by lower purchases of reinsurance.
Net earned premiums as a proportion of net written premiums were 81.4% in the second quarter of 2008 compared to 75.4% in the same period in 2007. Net earned premiums as a proportion of net written premiums were 97.9% in the six months to 30 June 2008 compared to 77.7% in the same period in 2007. The increases reflect that, after reaching the third year of operations, Lancashire has built a mature portfolio of business whereas in 2007 the portfolio was still in a growth phase.
The net loss ratio of 45.7% for the second quarter and 42.1% for the six months to 30 June 2008 represents a very good underwriting performance despite the unusually large number of industry losses. Net reserve releases were $3.3 million for the quarter and $6.5 million in 2008 to date. The positive net development in the second quarter was net of deterioration of $11.2 million experienced on one 2007 energy claim.
Investments
Net investment income was $12.9 million for the second quarter, a decrease of 30.6% from the second quarter of 2007. Net investment income was $30.6 million in the six months to 30 June 2008, a decrease of 13.3% over the same period in 2007. The decrease in net investment income is primarily due to lower yields on the bond portfolio. The lower yields were driven to a large extent by reductions in U.S. interest rates in the first quarter of 2008 together with the tactical decision to exit certain higher yielding fixed income classes, including all non-agency structured products, in the fourth quarter of 2007.
Total investment return, including net investment income, net realised gains and losses and net change in unrealised gains and losses, was $2.4 million in the quarter and $24.1 million for the year to date. Total investment return was negatively impacted in the quarter by weak bond and equity markets. Despite poor market returns in the second quarter and the six months to June 30, 2008, Lancashire achieved a positive result in each quarter. This was achieved by the strategy of holding an overweight position in cash and by maintaining a high quality, short duration bond portfolio with underweight allocations to structured products and the financial sector. The modest Lancashire equity allocation has produced a negative absolute return but an excellent return relative to the benchmark. The equity portfolio was down 1.5% in the first half of 2008 versus a negative S&P 500 return of 11.9%.
At 30 June 2008 the fixed income portfolio plus managed cash had a duration of 1.3 years, a credit quality of AA+ and a market yield of 3.3%. The portfolio was comprised of 56.1% fixed income, 4.5% equities and 39.4% cash. Lancashire does not hold any alternative investments.
Capital
At 30 June 2008 total capital was $1.441 billion, comprising shareholders' equity of $1.306 billion and $134.9 million of long-term debt. Leverage was 9.4%.
Outlook
Lancashire aims to achieve a cross-cycle return of 13% above a risk free rate. This is unchanged from previous guidance.
Further detail of our 2008 second quarter results can be obtained from our Financial Supplement. This can be accessed via our website www.lancashiregroup.com.
Investor Presentation and Earnings Call
There will be an investor conference call on the results at 15:30 UK time / 10:30 EST on Tuesday 5 August 2008. This call will be hosted by Richard Brindle, Chief Executive Officer; Simon Burton, Deputy Chief Executive; and Neil McConachie, Chief Financial Officer and Chief Risk Officer. The call can be accessed by dialing +44 (0)20 7138 0835/+1 718 354 1172 with the passcode 7927940.
The call can also be accessed via webcast, please go to our website (www.lancashiregroup.com) to access.
A replay facility will be available for two weeks until Tuesday 19 August 2008. The dial in number for the replay facility is +44 (0)20 7806 1970/ +1 718 354 1112 and the passcode is 7927940#. A replay facility can also be accessed at www.lancashiregroup.com .
For further information, please contact:
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Lancashire Holdings
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+ 44 (0)20 7264 4000
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Jonathan Creagh Coen
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Financial Dynamics
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+44 (0)20 7269 7114
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Robert Bailhache
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Nick Henderson
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Investor enquiries and questions can also be directed to investors@lancashiregroup.com or by accessing the Company's website www.lancashiregroup.com.
consolidated balance sheet
|
|
|
|
|
unaudited june 30, 2008 |
|
|
audited december 31, 2007 |
|
|
|
|
|
$m |
|
|
$m |
|
assets |
|
|
|
|
|
|
|
|
cash and cash equivalents |
|
|
764.7 |
|
|
737.3 |
|
|
accrued interest receivable |
|
|
7.8 |
|
|
9.8 |
|
|
investments |
|
|
|
|
|
|
|
|
- fixed income securities |
|
|
|
|
|
|
|
|
- available for sale |
|
|
1,022.5 |
|
|
1,069.7 |
|
|
- at fair value through income |
|
|
20.9 |
|
|
23.5 |
|
|
- equity securities, available for sale |
|
|
83.0 |
|
|
71.6 |
|
|
- other investments |
|
|
4.0 |
|
|
4.4 |
|
|
reinsurance assets |
|
|
|
|
|
|
|
|
- unearned premium on premium ceded |
|
|
38.6 |
|
|
19.6 |
|
|
- reinsurance recoveries |
|
|
10.1 |
|
|
3.6 |
|
|
- other receivables |
|
|
- |
|
|
8.2 |
|
|
deferred acquisition costs |
|
|
68.8 |
|
|
57.8 |
|
|
inwards premium receivable from insureds and cedants |
|
|
226.0 |
|
|
198.2 |
|
|
investment in associate |
|
|
- |
|
|
22.9 |
|
|
other assets |
|
|
29.7 |
|
|
8.1 |
|
|
total assets |
|
|
2,276.1 |
|
|
2,234.7 |
|
|
|
|
|
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
|
insurance contracts |
|
|
|
|
|
|
|
|
- loss and loss adjustment expenses |
|
|
304.6 |
|
|
179.6 |
|
|
- unearned premiums |
|
|
407.6 |
|
|
381.8 |
|
|
- other payables |
|
|
15.9 |
|
|
16.5 |
|
|
amounts payable to reinsurers |
|
|
32.8 |
|
|
5.7 |
|
|
deferred acquisition costs ceded |
|
|
4.3 |
|
|
3.1 |
|
|
other payables |
|
|
70.3 |
|
|
300.1 |
|
|
long-term debt |
|
|
134.9 |
|
|
132.3 |
|
|
total liabilities |
|
|
970.4 |
|
|
1,019.1 |
|
|
|
|
|
|
|
|
|
|
|
shareholders' equity |
|
|
|
|
|
|
|
|
share capital |
|
|
91.1 |
|
|
91.1 |
|
|
treasury shares |
|
|
(35.5) |
|
|
- |
|
|
share premium |
|
|
50.8 |
|
|
49.5 |
|
|
contributed surplus |
|
|
754.8 |
|
|
754.8 |
|
|
fair value and other reserves |
|
|
9.1 |
|
|
20.7 |
|
|
dividends |
|
|
0.1 |
|
|
(239.1) |
|
|
retained earnings |
|
435.3 |
538.6 |
||||
|
total shareholders' equity attributable to equity shareholders |
|
|
1,305.7 |
|
|
1,215.6 |
|
|
|
|
|
|
|
|
|
|
|
total liabilities and shareholders' equity |
|
|
2,276.1 |
|
|
2,234.7 |
|
|
|
|
|
|
|
|
|
|
|
basic book value per share |
|
|
$7.39 |
|
|
$6.67 |
|
|
fully converted book value per share |
|
|
$6.91 |
|
|
$6.38 |
|
consolidated income statement
(unaudited)
|
|
|
|
quarter 2 2008 |
|
quarter 2 2007 |
|
ytd 2008 |
|
ytd 2007 |
|
|
|
|
|
$m |
|
$m |
|
$m |
|
$m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
gross premiums written |
|
196.7 |
|
270.8 |
|
383.4 |
|
451.5 |
||
|
outwards reinsurance premiums |
|
(14.3) |
|
(69.3) |
|
(59.1) |
|
(75.4) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
net premiums written |
|
182.4 |
|
201.5 |
|
324.3 |
|
376.1 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
change in unearned premiums |
|
(29.0) |
|
(100.8) |
|
(25.8) |
|
(128.4) |
||
|
change in unearned premiums on premium ceded |
|
(4.9) |
|
51.2 |
|
19.0 |
|
44.4 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
net premiums earned |
|
148.5 |
|
151.9 |
|
317.5 |
|
292.1 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
net investment income/(losses) |
|
12.9 |
|
18.6 |
|
30.6 |
|
35.3 |
||
|
net realised gains and impairments |
|
(1.4) |
|
2.6 |
|
6.1 |
|
4.4 |
||
|
share of profit (loss) of associate |
|
(0.1) |
|
1.5 |
|
(0.2) |
|
2.8 |
||
|
net foreign exchange gains |
|
- |
|
0.4 |
|
0.3 |
|
1.8 |
||
|
net other investment gains/(losses) |
|
0.5 |
|
(0.4) |
|
(0.7) |
|
(0.5) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
total net revenue |
|
160.4 |
|
174.6 |
|
353.6 |
|
335.9 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
insurance losses and loss adjustment expenses |
|
73.1 |
|
52.8 |
|
140.0 |
|
84.8 |
||
|
insurance losses and loss adjustment expenses recoverable |
|
(5.2) |
|
(0.5) |
|
(6.4) |
|
(0.5) |
||
|
net insurance acquisition expenses |
|
24.5 |
|
20.9 |
|
50.5 |
|
41.2 |
||
|
equity based compensation |
|
2.8 |
|
2.7 |
|
1.3 |
|
6.4 |
||
|
other operating expenses |
|
15.0 |
|
12.8 |
|
26.7 |
|
26.8 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
total expenses |
|
110.2 |
|
88.7 |
|
212.1 |
|
158.7 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
profit before tax and finance costs |
|
50.2 |
|
85.9 |
|
141.5 |
|
177.2 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
finance costs |
|
0.4 |
|
3.1 |
|
5.3 |
|
6.1 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
profit before tax |
|
49.8 |
|
82.8 |
|
136.2 |
|
171.1 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
tax |
|
|
(1.4) |
|
0.3 |
|
0.4 |
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
profit after tax |
|
51.2 |
|
82.5 |
|
135.8 |
|
170.4 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
net loss ratio |
|
45.7% |
|
34.4% |
|
42.1% |
|
28.9% |
||
|
net acquisition cost ratio |
|
16.5% |
|
13.8% |
|
15.9% |
|
14.1% |
||
|
administrative expense ratio |
|
10.1% |
|
8.4% |
|
8.4% |
|
9.2% |
||
|
combined ratio |
|
72.3% |
|
56.6% |
|
66.4% |
|
52.2% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
basic earnings per share |
|
$0.28 |
|
$0.42 |
|
$0.75 |
|
$0.87 |
||
|
diluted earnings per share |
|
$0.27 |
|
$0.40 |
|
$0.72 |
|
$0.83 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
change in fully converted book value per share |
|
|
3.1% |
|
5.4% |
|
8.3% |
|
13.0% |
|
|
consolidated cash flow statement |
|
|
|
unaudited six months 2008 |
|
unaudited six months 2007 |
|
audited twelve months 2007 |
|
|
|
|
|
$m |
|
$m |
|
$m |
|
cash flows from operating activities |
|
|
|
|
|
|
|
|
|
profit before tax |
|
|
|
136.2 |
|
171.1 |
|
391.9 |
|
tax paid depreciation |
|
|
|
(0.6) 0.6 |
|
- 0.7 |
|
(2.4) 1.4 |
|
interest expense interest and dividend income amortisation of fixed income securities |
|
|
|
5.1 (29.4) (0.6) |
|
5.6 (36.1) (0.7) |
|
11.6 (79.3) (0.7) |
|
employee benefit expense |
|
|
|
1.3 |
|
6.4 |
|
14.4 |
|
foreign exchange |
|
|
|
1.4 |
|
(1.3) |
|
(3.1) |
|
share of loss (profit) of associate |
|
|
|
0.2 |
|
(2.8) |
|
(6.2) |
|
net unrealised losses on other investments |
|
|
(6.1) |
|
(4.4) |
|
(9.1) |
|
|
net realised gains and impairments on investments |
|
|
|
(0.3) |
|
0.8 |
|
3.3 |
|
net fair value losses on investments at fair value through income |
|
|
1.0 |
|
(0.3) |
|
(0.4) |
|
|
unrealised loss on interest rate swaps |
|
|
|
(0.4) |
|
(0.9) |
|
1.3 |
|
reinsurance assets |
|
|
|
|
|
|
|
|
|
- unearned premium on premium ceded |
|
|
|
(19.0) |
|
(44.4) |
|
(0.5) |
|
- reinsurance recoveries |
|
|
|
(6.5) |
|
(0.5) |
|
(3.5) |
|
- other receivables |
|
|
|
8.1 |
|
- |
|
(8.2) |
|
deferred acquisition costs |
|
|
|
(11.0) |
|
(12.3) |
|
(6.3) |
|
other receivables |
|
|
|
(22.9) |
|
(6.3) |
|
2.4 |
|
inwards premium receivable from insureds and cedants |
|
|
|
(26.3) |
|
(77.2) |
|
(23.8) |
|
insurance contracts |
|
|
|
|
|
|
|
|
|
- losses and loss adjustment expenses |
|
|
|
124.2 |
|
82.7 |
|
140.0 |
|
- unearned premiums |
|
|
|
25.8 |
|
128.4 |
|
56.2 |
|
- other payables |
|
|
|
(0.6) |
|
2.6 |
|
11.3 |
|
amounts payable to reinsurers |
|
|
|
27.1 |
|
57.8 |
|
4.9 |
|
deferred acquisition costs ceded |
|
|
|
1.2 |
|
4.6 |
|
0.5 |
|
other payables |
|
|
|
18.0 |
|
(1.1) |
|
25.8 |
|
net cash flows from operating activities |
|
|
|
226.5 |
|
272.4 |
|
521.5 |
|
cash flows used in investing activities interest and dividends received |
|
|
|
31.4 |
|
33.1 |
|
77.0 |
|
purchase of property, plant and equipment |
|
|
|
(0.1) |
|
(1.0) |
|
(1.3) |
|
dividends received from associate |
|
|
|
22.7 |
|
4.6 |
|
6.5 |
|
purchase of fixed income securities |
|
|
|
(1,416.1) |
(942.5) |
(2,143.3) |
||
|
purchase of equity securities |
|
|
|
(20.0) |
|
(15.1) |
|
(30.9) |
|
proceeds on maturity and disposal of debt securities |
|
|
|
1,459.8 |
|
595.4 |
|
1,960.4 |
|
proceeds on disposal of equity securities |
|
|
|
8.6 |
|
23.0 |
|
36.9 |
|
net proceeds on other investments |
|
|
|
0.7 |
|
2.1 |
|
5.1 |
|
net cash flows used in investing activities |
|
|
|
87.0 |
|
(300.4) |
|
(89.6) |
|
|
|
|
|
|
|
|
|
|
|
cash flows used in financing activities interest paid dividends paid shares repurchased |
|
|
|
(5.3) (238.2) (43.6) |
|
(5.6) - - |
|
(11.6) - (89.3) |
|
net cash flows used in financing activities |
|
|
|
(287.1) |
|
(5.6) |
|
(100.9) |
|
|
|
|
|
|
|
|
|
|
|
net decrease in cash and cash equivalents |
|
|
|
26.4 |
|
(33.6) |
|
331.0 |
|
cash and cash equivalents at beginning of period |
|
|
|
737.3 |
|
400.1 |
|
400.1 |
|
effect of exchange rate fluctuations on cash and cash equivalents |
|
1.0 |
|
1.2 |
|
6.2 |
||
|
cash and cash equivalents at end of period |
|
|
|
764.7 |
|
367.7 |
|
737.3 |
About Lancashire
Lancashire, through its UK and Bermuda-based insurance subsidiaries, is a global provider of specialty insurance products. Its insurance subsidiaries carry the Lancashire group rating of A minus (Excellent) from A.M. Best with a stable outlook. Lancashire has capital in excess of $1 billion and its Common Shares trade on AIM under the ticker symbol LRE. Lancashire is headquartered at Mintflower Place, 8 Par-La-Ville Road, Hamilton HM 08, Bermuda. The mailing address is Lancashire Holdings Limited, P.O. Box HM 2358, Hamilton HM HX, Bermuda. For more information on Lancashire, visit the company's website at www.lancashiregroup.com
NOTE REGARDING FORWARD-LOOKING STATEMENTS:
CERTAIN STATEMENTS AND INDICATIVE PROJECTIONS MADE IN THIS ANNOUNCEMENT AND ON THE CONFERENCE CALL THAT ARE NOT BASED ON CURRENT OR HISTORICAL FACTS ARE
FORWARD-LOOKING IN NATURE INCLUDING WITHOUT LIMITATION, STATEMENTS CONTAINING WORDS 'BELIEVES', 'ANTICIPATES', 'PLANS', 'PROJECTS', 'FORECASTS', 'GUIDANCE', 'INTENDS', 'EXPECTS', 'ESTIMATES', 'PREDICTS', 'MAY', 'CAN', 'WILL', 'SEEKS', 'SHOULD', OR, IN EACH CASE, THEIR NEGATIVE OR COMPARABLE TERMINOLOGY. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDING, WITHOUT LIMITATION, THOSE REGARDING THE GROUP'S FINANCIAL POSITION, RESULTS OF OPERATIONS, LIQUIDITY, PROSPECTS, GROWTH, CAPITAL MANAGEMENT PLANS, BUSINESS STRATEGY, PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS (INCLUDING DEVELOPMENT PLANS AND OBJECTIVES RELATING TO THE GROUP'S INSURANCE BUSINESS) ARE FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE GROUP TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO: THE NUMBER AND TYPE OF INSURANCE AND REINSURANCE CONTRACTS THAT WE WRITE; THE PREMIUM RATES AVAILABLE AT THE TIME OF SUCH RENEWALS WITHIN OUR TARGETED BUSINESS LINES; THE ABSENCE OF LARGE OR UNUSUALLY FREQUENT LOSS EVENTS; THE IMPACT THAT OUR FUTURE OPERATING RESULTS, CAPITAL POSITION AND RATING AGENCY AND OTHER CONSIDERATIONS HAVE ON THE EXECUTION OF ANY CAPITAL MANAGEMENT INITIATIVES; THE POSSIBILITY OF GREATER FREQUENCY OR SEVERITY OF CLAIMS AND LOSS ACTIVITY THAN OUR UNDERWRITING, RESERVING OR INVESTMENT PRACTICES HAVE ANTICIPATED; THE RELIABILITY OF, AND CHANGES IN ASSUMPTIONS TO, CATASTROPHE PRICING, ACCUMULATION AND ESTIMATED LOSS MODELS; LOSS OF KEY PERSONNEL; A DECLINE IN OUR OPERATING SUBSIDIARIES' RATING WITH A.M. BEST COMPANY; INCREASED COMPETITION ON THE BASIS OF PRICING, CAPACITY, COVERAGE TERMS OR OTHER FACTORS; A CYCLICAL DOWNTURN OF THE INDUSTRY; THE IMPACT OF A DETERIORATING CREDIT ENVIRONMENT CREATED BY THE SUB-PRIME AND CREDIT CRISIS; A RATING DOWNGRADE OF, OR A MARKET DECLINE IN, SECURITES IN OUR INVESTMENT PORTFOLIO; CHANGES IN GOVERNMENTAL REGULATIONS OR TAX LAWS IN JURISDICTIONS WHERE LANCASHIRE CONDUCTS BUSINESS; LANCASHIRE OR ITS BERMUDIAN SUBSIDIARY BECOMING SUBJECT TO INCOME TAXES IN THE UNITED STATES OR THE UNITED KINGDOM; AND THE EFFECTIVENESS OF OUR LOSS LIMITATION METHODS. ANY ESTIMATES RELATING TO LOSS EVENTS INVOLVE THE EXERCISE OF CONSIDERABLE JUDGMENT AND REFLECT A COMBINATION OF GROUND-UP EVALUATIONS, INFORMATION AVAILABLE TO DATE FROM BROKERS AND INSUREDS, MARKET INTELLIGENCE, INITIAL TENTATIVE LOSS REPORTS AND OTHER SOURCES. JUDGMENTS IN RELATION TO FLOOD LOSSES INVOLVE COMPLEX FACTORS POTENTIALLY CONTRIBUTING TO THIS TYPE OF LOSS, AND WE CAUTION AS TO THE PRELIMINARY NATURE OF THE INFORMATION USED TO PREPARE ANY SUCH ESTIMATES.
THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF PUBLICATION OF THIS DOCUMENT. LANCASHIRE HOLDINGS LIMITED EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING (SAVE AS REQUIRED TO COMPLY WITH ANY LEGAL OR REGULATORY OBLIGATIONS (INCLUDING THE AIM RULES)) TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN THE GROUP'S EXPECTATIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.
This information is provided by RNS
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