Lancashire reports stronger premium growth, smaller annual profit

5th Mar 2026 11:39

(Sharecast News) - Lancashire Holdings reported a decline in annual profit for 2025 on Thursday despite stronger premium growth, underwriting performance and investment returns, as the specialty insurer delivered a return on equity of more than 20% and announced further capital returns to shareholders.

The FTSE 250 Bermuda-based group posted profit after tax of $293.4m for the year ended 31 December, down from $321.3m in 2024, while diluted earnings per share fell to $1.17 from $1.30.

Diluted book value per share edged slightly lower to $6.01 from $6.03, while return on equity, measured by the change in diluted book value per share, was 20.9% compared with 23.4% a year earlier.

Gross premiums written increased 5.1% to $2.26bn from $2.15bn in 2024, while insurance revenue rose 5.4% to $1.86bn.

The group generated an insurance service result of $381.1m, broadly unchanged from $379.9m a year earlier, with a discounted combined ratio of 83.7% and an undiscounted combined ratio of 93.1%.

Chief executive Alex Maloney said the results reflected another strong year for the business.

"The excellent results we are reporting today are the outcome of another successful 12 months for Lancashire, with strong underwriting profit supported by healthy investment returns."

Growth was driven in part by the reinsurance segment, where premiums increased 8.1% year-on-year to $1.19bn as the group expanded relationships with core clients despite a marginal softening in the rating environment.

In the insurance segment, premiums rose 1.9% to $1.07bn as the group selectively expanded its footprint amid still favourable pricing conditions.

Overall pricing softened slightly, with the group reporting a renewal price index of 96%, including 97% in reinsurance and 95% in insurance.

During the year, Lancashire recorded net losses from catastrophe, weather and large risk events totalling $277.0m, compared with $215.2m in 2024.

Catastrophe and weather losses amounted to $184.7m, largely reflecting the impact of California wildfires, which generated a net loss of $163.4m for the group.

The insurer also reported favourable prior accident year reserve development of $122.8m, mainly reflecting releases on the 2023 and 2024 underwriting years, partially offset by additional reserves of $32.9m linked to direct and indirect losses from the Ukraine conflict.

Investment performance improved during the year, with total net investment return rising to $218.0m from $162.2m in 2024.

The investment portfolio delivered a total return of 7.0%, up from 5.0% a year earlier, driven by higher yields, rising asset prices as US Treasury rates fell, and modest tightening in investment-grade credit spreads.

Maloney said the results highlighted the progress made in diversifying the business.

"Our results for 2025, a year that marked 20 years since Lancashire was founded, demonstrate the strategic progress we have made in refocusing the business to become more diversified across product lines and geographies.

"We have increased our resilience and significantly reduced volatility in our earnings."

The group continued to invest in its underwriting platform, including the development of Lancashire US and the buy-out of underwriting capacity for Syndicate 2010, meaning it now provides all the capacity for both of its Lloyd's syndicates.

Maloney said the business remained well positioned despite expectations of a more competitive market environment.

"Looking ahead, while we expect 2026 to be more competitive, we are still in a healthy place when it comes to rate adequacy."

Lancashire's capital position remained robust, with total capital of about $2.0bn at the end of 2025, including $1.5bn of shareholders' equity and $0.5bn of long-term debt.

Tangible capital stood at approximately $1.7bn.

Its board proposed a final ordinary dividend of 15 cents per share, subject to shareholder approval at the company's annual meeting on 29 April, which would result in an aggregate payment of around $36.0m.

The group also declared a special dividend of 50 cents per share, worth about $121.0m.

Total dividends relating to the 2025 financial year amount to $357.0m, including the final ordinary dividend and special distribution.

Maloney said the capital returns reflected the group's long-standing approach to shareholder distributions.

"The group's robust capital position and excellent operating performance meant we were both able to invest in the business and return capital to our shareholders," he said, adding that since its inception Lancashire had returned more than $3.7bn to shareholders.

At 1116 GMT, shares in Lancashire Holdings were down 4.15% at 623p.

Reporting by Josh White for Sharecast.com.