Lancashire shares fall as interim profit and combined ratio disappoint
Shares in Lancashire Holdings Ltd faltered on Wednesday after half-year profit and its combined ratio fell short of expectations.
The Hamilton, Bermuda-based insurer said pretax profit rose to USD151.0 million in the six months ended June 30 from USD118.6 million the year prior, missing USD174 million company consensus.
Gross premiums written eased to USD1.32 billion from USD1.36 billion while insurance revenue was flat at USD930.0 million.
The discounted combined ratio stood at 80.7% compared with 87.4% a year ago, worse than the 77.6% consensus. On an undiscounted basis, the combined ratio was 90.8% compared with 97.8% a year ago, missing 85.8% consensus.
A lower combined ratio is better for an insurer because it generally means higher underwriting profit, better cost control, and stronger financial health.
Lancashire said the "stable" top line and "strong" combined ratio, were in line with its expectations.
Nonetheless, shares fell 5.6% to 623.00 pence each, making Lancashire the worst performing stock on the FTSE 250.
Lancashire said exposure to losses arising from the Middle East war remains "manageable" with expected claims to date not material to the group.
"Looking ahead, we remain on track to deliver our guidance given at the start of the year of a high-teens [return on equity] for 2026 and we are well positioned to manage the next phase of the cycle, in which we expect rates will continue to reflect the excess capacity in the industry," the firm said.
An unchanged interim dividend of 7.5 US cents per share was declared.
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