Lancashire Holdings Limited – 2024 Financials

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"With the diversification of our portfolio we have been focused on adding the right opportunities at the right time in the cycle. We have grown in areas where we have the expertise, or have been able to attract the best talent, to capitalise on those opportunities for us."

Alex Maloney

Group Chief Executive Officer

The delivery of a strong and consistent profit after tax of $321.3 million has resulted in an excellent retuon equity. This reflects the Group's impressive expertise in both underwriting and investment management during the year, notwithstanding multiple catastrophe and large loss events.

The Group has delivered an excellent combined ratio for 2024, which supports our long-term strategy to manage the market cycle and deliver strong, profitable growth through our diversified insurance portfolio. The combined ratio (undiscounted) of 89.1% is a strong result in a year with over $145 billion of insured natural catastrophe events estimated for the industry, and $214.1 million (undiscounted, including reinstatement premiums) of natural catastrophe, weather and large losses for the Group.

Total investment return

5.0%

Total shareholder return

22.1%

The Group's investment portfolio, including realised and unrealised gains and losses, returned 5.0% during 2024. The impressive returns were primarily driven by $144.8 million of interest and dividend income, as the investment portfolio continued to benefit from higher yields.

The Group's shares continued to perform broadly in line with the FTSE 250 during 2024. The improved total shareholder retuof 22.1% was supported by exceptional special dividends of $1.25 per share, and increased ordinary dividends of $0.225 per share, during the year. This continues to demonstrate Lancashire's proven track record of returning excess capital to shareholders over time.

The Group's insurance service result of $379.9 million represents an excellent underwriting result for a year of heavy natural catastrophe and large loss activity. Insurance revenue grew 16.1% to $1,765.1 million, driven by premium growth within both the Group's reinsurance and insurance segments. The Group is particularly pleased with the increased profitability in the property and specialty reinsurance classes, and the development of the new Lancashire Insurance US operation.

During 2024, Lancashire Insurance US commenced underwriting, and further growth is expected from this operation during 2025. The Group will continue to expand and diversify its underwriting portfolio across all strategic areas, and also take advantage of rate increases and underwriting opportunities where applicable.

What were your perceptions of Lancashire before taking up the role of Chair?

I was aware of Lancashire due to its FTSE listing, but my previous experience has not been directly in the P&C (re)insurance sector, so my knowledge of the business was somewhat limited.

However, as I began to meet the management team, and members of the Board, it quickly became clear what a great business Lancashire is.

I was immediately struck by the strength of the management team and their focus on diversification of income and tight capital controls.

The strong emphasis on quality and disciplined underwriting, and the efficient running of the business, really came across in my conversations with Alex, Natalie and Paul.

This all became very persuasive for me to accept the role, which is my first as a FTSE Chair.

Lancashire is a relatively easy business to understand, with a simple and effective structure and a clear strategy.

I bring a complementary skill set to the business through my broader financial industry experience beyond the P&C (re)insurance sector. That is not uncommon, and a Chair can bring value to the role through different insights.

What has excited you most about Lancashire in your first year and have your expectations of the role changed?

The more I have got to know people across the Lancashire Group, the more I have enjoyed it.

It is an exciting time for Lancashire and the results for 2024 demonstrate that the growth and diversification strategy of the past five years has been the right one.

This last year has demonstrated that the business can now absorb large losses, such as the MV Dali / Baltimore bridge collision, and the weather-related events, and still generate returns for investors. In that context, the positive change in DBVS of 23.4% is an excellent result for the business and for our shareholders.

So, my expectations haven't changed - it's just better than I thought. I had a very thorough induction process, between November 2023 and March 2024, and I met more than 40 people from around the Group during that time.

What was clear was that there was cohesion across the business, with a focus on quality underwriting and maintaining a strong culture.

How have the strategic priorities for the business developed in your first year?

The priority for the Board and the management team has been continuing to deliver what we said we would do and making the most of the underwriting opportunities that we see in the market.

The launch of the US business has gone very well, and we have seen that develop during the first eight months of its operations.

Lancashire has quickly established a strong US team, and we are planning for more progress and growth in the US over the next few years.

The Board is fully supportive of what the business is doing, and our priority is to maintain underwriting and pricing discipline.

The growth and diversification in the Group's underwriting, in particular longer tail casualty lines, has enabled us to grow the size of our investment portfolio and enhance our income in a better investment retuenvironment.

The Board is pleased that the Group's underwriting operations and investment returns have made significant contributions to profitability over the year.

How does the Board engage with company culture and how important is this to the business?

All members of the Board enjoy meeting people across the Group, and we take that engagement seriously.

I have been pleased to take part in town hall sessions and other events with employees to introduce myself, to discuss my career and background, and to hear feedback directly from people working in the business.

The Company events I have attended tend to feel less corporate than others I have been to, and that is because Lancashire has a uniquely open and meritocratic culture and one that is genuine, authentic and not forced.

The Directors place great value in listening to people informally and formally and enjoy those personal interactions. Lancashire is a relatively small organisation, and the Directors regularly have the opportunity to meet people across the business.

Financial statements

How does the Board think about the Company's dividend policy and capital management decisions?

The Board takes a proactive approach to capital management and it's a regular topic of discussion at our meetings.

The profitable performance and improved resilience of the business during 2023 and 2024 enabled the Board to commit to increasing the Company's usual ordinary interim and final dividend by 50% to $0.075 and $0.15, respectively.

The Board's dividend policy is focused on ensuring that the Company has the capital it requires to support its underwriting plans and to remain resilient.

We actively debate how best to deploy our capital, and we are always open to returning capital when there is excess for our business purposes.

The Board was pleased to pay two exceptional special dividends during 2024 in total amounting to $1.25 per common share. Full details of these dividends are set out on page 109.

For the full-year 2024, the Board declared a final ordinary dividend of $0.15 per common share, subject to shareholder approval, and a special dividend of $0.25 per common share.

In February 2025, the business reported on the impact of the devastating California wildfires.

As Natalie notes in her review on page 15, the business remains strongly capitalised and well-positioned to deliver attractive future returns.

What are the Board's priorities for 2025?

The priority is really more of the same - and that is not a weakness.

The (re)insurance sector is not one in which you see rapid pivots and the Board understands that this is a long-term cyclical business.

The Board will be focusing on continuity and growth, where it makes sense, and continuing to be supportive of management in what they do.

There are further opportunities for Lancashire in the US in terms of capacity and pricing, and to accelerate growth in that market.

How do you view Lancashire's performance in 2024?

2024 was another superb year for Lancashire across all our key strategic priorities as we continued to deliver on what we said we would do when we refocused the business in 2018.

We are in great shape, having grown materially at the right time in the underwriting cycle.

We have utilised our capital more efficiently, diversified our underwriting portfolio to reduce volatility, and broadened our talent base by attracting good people who fit our culture.

This achievement was possible due to the hard work of everyone across the Group and their commitment and support in helping to build a stronger and more robust business.

The result of this work is that in 2024, gross premiums written increased by 11.3%, and insurance revenue increased by 16.1%, compared to the prior year. Our insurance service result was $379.9 million.

Our strong underwriting performance is seen through a combined ratio (undiscounted) of 89.1%. This is despite 2024 being a very active year in terms of the loss environment.

We have demonstrated both a robust and disciplined underwriting performance and returns for our investors - with two special dividends totalling $1.25 per common share paid during the year.

Returning excess capital that we do not need to our shareholders has always been a core part of Lancashire's DNA, and we remain well-capitalised to fund the future growth opportunities that we see.

How has Lancashire's strategy contributed to this strong performance in 2024?

Our strategy has always been to actively manage the market cycle and grow when the conditions are right. After investing in the business over the past few years, we are now achieving results that support more sustainable outcomes across the cycle.

Our strong and disciplined underwriting, with expert teams across our product classes, and effective capital management, have always been part of who we are.

As our underwriting portfolio continues to benefit from a more balanced risk profile, our retuprofile has strengthened and allowed us to use our capital more efficiently.

We have always retained an entrepreneurial mindset, which means that we quickly evaluate opportunities and act on them if the conditions are right.

You've mentioned managing the market cycle. How does Lancashire approach this?

Right from inception, Lancashire has focused on cycle management. It is fundamental to how we run the business, our day-to-day focus, and how we manage our capital resources.

This has meant that we take advantage of positive market conditions and re-balance if the profitability outlook changes, reducing our exposures, and returning capital if we do not need it for underwriting.

With the diversification of our portfolio over the past few years, we have been focused on adding the right opportunities at the right point in the cycle.

We have grown in areas where we have the expertise, or have been able to attract the best talent, to capitalise on those opportunities for us.

How has Lancashire evolved in the past few years?

Looking back, Lancashire grew strongly as the market cycle turned more positive in 2018, and we have more than tripled gross premiums written and more than doubled the number of product classes that we now write.

We have also always focused on building deep relationships with brokers and clients, positioning ourselves as a solution-oriented business. Those relationships give us increased optionality at different points in the cycle.

Ultimately, managing the cycle means being alert to changes in the market and retaining our discipline. We are now in a stronger position than ever before, with the ability to use all the underwriting levers at our disposal to effectively manage volatility and deliver a better risk and retuprofile for investors.

What are your expectations for Lancashire's US business?

We believe there are excellent opportunities for Lancashire in the US. We are attracting great talent from across the industry to join us, and we are building a strong franchise on the ground.

We will continue to look at the broader opportunities to grow in product areas that fit our appetite.

We were clear from the start that we saw an opportunity in the US to write excess and surplus lines business that we could not access through our other platforms with new customers.

Financial statements

The team has done a fantastic job hitting the ground running, and we are pleased to be on the ground in the US at this time offering products where we have deep expertise. That gives us confidence in the long-term prospects of this venture.

How has Lancashire retained its strong purpose and culture following this period of growth?

Becoming an employer of choice in the market is one of our core strategic priorities.

To do this we need to continue to attract and retain the best talent in the sector. It is very important to me that all our people - wherever they work across the Group - understand both what we are trying to achieve and also how we want to achieve it.

Everyone has a role to play in our success and a responsibility to help drive the business forward.

We believe that the way we behave and approach our work day-to-day is what makes us unique and creates a positive experience for our people and those we do business with.

During 2024, we launched The Lancashire Way, a set of core behaviours and expectations that capture how we operate and areas we want our people to prioritise. These include an emphasis on the value of constructive challenge and being straight- talking, collaboration and sharing knowledge, owning our individual responsibility for the Company's success, and being positive ambassadors for Lancashire.

None of this is rocket science, as we have always been a business that values its people.

How does Lancashire support the development of its people and help them thrive?

We always look for employees who share our values and purpose, and who want to develop rewarding careers in a supportive environment.

Despite our recent growth, we remain a relatively small business in terms of employee numbers, and this means we can ensure our people's progress in a more bespoke manner.

Of course, there is always more we can do, and we will continue to prioritise training and development in 2025 and the coming years.

I am always keen to promote from within and provide the best career opportunities for our people.

Having a strong team with a range of talents means that we can more readily do that.

I am also very proud that people see Lancashire as a place they want to spend large portions of their careers. We don't take that for granted and always look at ways to make our work environment and culture the most supportive they can be.

In 2025, Lancashire celebrates its 20th anniversary, which will be an opportunity to take stock of what we have achieved and to thank our employees for their role in our success.

What opportunities do you see for Lancashire in 2025?

I am very excited for the future of our business and what we can do. What we have done over the past five years in terms of driving the business forward has been phenomenal.

We will always continue to be led by the market conditions, but we have built a much more robust business that is better able to withstand external shocks.

As I look to 2025, I would expect a large part of our organic growth to come from the continued development of our US business. Additionally, as our clients and business partners continue to face an uncertain world, demand for our products should remain resilient. Aligned with our purpose, we will continue to offer risk solutions that shield against the impact of uncertain loss events.

Away from our day-to-day work, there are also further opportunities for Lancashire and its employees to make a positive impact on society, particularly through the Lancashire Foundation.

Most importantly, across the Group, I am pleased to say that we are well-positioned to address the prevailing market conditions, and we have the talent and the passion to continue to make Lancashire an even better business.

Group premium development 2006 to 2024

Having the right vision and the right people to deliver it is always the goal, and I am excited that we have both of those going into 2025.

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

1

Deliver bespoke risk solutions that protect our clients and support economies, businesses and communities in the face of uncertain loss events.

See page 10

2

Manage our risk exposures and capital resources to generate returns for our investors.

See page 23

3

Support our people and work with our stakeholders, fostering a positive, sustainable and open business culture to the benefit of society.

See page 38