Lancashire (LON:LRE) executives told investors they delivered “resilient results” in full-year 2025 despite what management described as one of the largest catastrophe losses in the company’s history, while also positioning the group for a more competitive—though still attractive—market environment in 2026.
2025 performance and shareholder returns
Group CEO Alex Maloney said 2025 demonstrated the “strength and durability” of Lancashire’s model, which he described as blending disciplined underwriting, active cycle management, and efficient capital management. Maloney pointed to an undiscounted combined ratio of 93.1%, a 7% investment return, and return on equity (ROE) of nearly 21%.
Underwriting results and a softening market backdrop
Group CEO Paul Gregory said 2025 produced strong underwriting performance, delivering an insurance service result of $381 million, “marginally more than last year,” despite increased catastrophe and large losses and a higher combined ratio. Gregory said this reflected the benefit of a more diverse and capital-efficient portfolio, adding that the company has produced more than $1.14 billion of insurance service result over the past three years and achieved ROE above 20% in each of those years.
Gregory said Lancashire posted 5.1% year-over-year growth in 2025, describing it as the eighth consecutive year of premium growth in excess of rate. He said the company remains “equally split between insurance and reinsurance” and grew both segments during the year.
Management said the rating environment softened for the first time since 2017, but emphasized that the market is “softening, but importantly, not soft.” Maloney said the portfolio secured at the 1 January renewals remained “one of the best we have ever had in terms of rate adequacy,” and Gregory said the group is still “close to peak rating.”
Looking ahead, Gregory said the company expects portfolio-level rate reductions in the high single digits in 2026, with variation by line. He said casualty classes should be relatively stable, while property and specialty insurance and reinsurance lines are generally seeing rate reductions. Despite that, Lancashire expects its top line to remain broadly stable in 2026, supported by cycle management and portfolio diversification.
Reinsurance program and catastrophe exposure
Gregory highlighted reinsurance as a key offset to margin pressure, saying the softening market also improves the efficiency of the protection Lancashire buys. He said the company was pleased with its own 1 January reinsurance renewals and has “better tailored the structure” of reinsurance to manage earnings volatility.
As an example, he said aggregate catastrophe products renewed with a lower attachment point and more limit, which he said provides more certainty of underwriting results in an active catastrophe loss year. On costs, Gregory told analysts the company expects reinsurance spend in dollar terms to be “broadly stable compared to 2025,” noting that savings from cheaper reinsurance were partly used to build more comprehensive protection.
Gregory also said Lancashire’s net catastrophe footprint will likely be “marginally lower” in 2026. He attributed that to shrinking the inward retro portfolio, alongside benefits from a more efficient reinsurance program, even as the company assumed more catastrophe risk with an increased share of Syndicate 2010.
Financial detail: earnings, investments, claims, and reserves
Kershaw reported profit after tax of $293.4 million, down from $321.3 million in 2024. She said that with a consistent insurance service result and stronger investment returns, the decline was driven by higher operating expenses and the impact of discounting.
Insurance revenue rose 5.4%, ahead of underlying written premium growth (excluding RIPS) of 3.3%, which she said reflected earning through prior years’ premium expansion. Reinsurance premium allocated was $423.5 million, slightly lower than 2024, and fell to 22.8% of insurance revenue from 24.9%, which Kershaw attributed to improved efficiency as the portfolio scaled and diversified.
On investments, Kershaw said the portfolio generated a 7% return, driven by investment income from high yields and valuation gains from falling Treasury rates and modest tightening in credit spreads. She added that private credit funds and other risk assets contributed positively, and that the weakening U.S. dollar added around 50 basis points of return related to non-U.S. dollar portfolios.
Operating expenses increased by $44 million, adding around 3 points to the combined ratio, which Kershaw said reflected targeted investments in talent and infrastructure. She also cited approximately $13 million of one-off charges related to impairments and consultancy fees. The net discounting benefit was $33 million in 2025 versus $56 million in 2024, as growth in reserves increased initial discounting but the reduction in discount rates through 2025 was adverse.
Loss activity remained elevated but within modeled expectations, Kershaw said. Total undiscounted net catastrophe weather and large loss claims were $277 million, up from $215 million in 2024. The figure included $163 million from California wildfires and $92 million from “large risk losses across several lines of business,” which she said were not individually material.
Prior year development was favorable by $123 million, which she linked to reserving prudence and positive development on prior-year catastrophe events, including hurricanes Milton and Helene from 2024. She also said the company increased net reserves related to the Ukraine conflict by $33 million after refining assumptions to account for potential future geopolitical uncertainty and extended legal proceedings.
On reserves, Kershaw reiterated Lancashire’s “prudent approach,” including setting catastrophe loss reserves on a client-by-client basis, and said the company has never had a year of overall adverse reserve development since inception. She said the disclosed reserving confidence level was 85% and management expects that figure to remain within an 80%–90% band unless risk appetite changes.
Capital strength, tax position, and 2026 outlook
Kershaw said Lancashire’s solvency ratio was 240%, which she said underscored the strength of the capital base and flexibility to deploy capital while returning excess to shareholders. She also referenced a modeled “one in 100” Gulf wind event of $337 million and said it demonstrated resilience under stress.
Management repeatedly said its capital management strategy is unchanged, emphasizing matching capital to underwriting opportunities while maintaining headroom for future market shifts. In the Q&A, Kershaw said there is not a single BSCR target the company works toward, describing 170% as a floor after a large catastrophe event.
For 2026, Maloney said the company anticipates delivering an ROE in the “high teens,” reiterating that margins remain favorable at the net level when factoring in reinsurance costs. Gregory said the U.S. operation will continue to mature and contribute to diversification, while Maloney also flagged potential talent opportunities that can arise during consolidation phases in the market cycle.
On tax, Kershaw said Lancashire is not required to pay Bermuda’s 15% corporate income tax until 2030 due to its limited geographical spread, and told analysts that modeling tax would not be necessary until that point.
About Lancashire (LON:LRE)
Lancashire Holdings Limited, together with its subsidiaries, provides specialty insurance and reinsurance products in London, Bermuda, Australia, and the United States. The company operates through two segments, Reinsurance and Insurance. It offers property direct and facultative, property political risk and sovereign risk, and property terrorism and political violence insurance products; and aviation AV52, aviation consortium, airline hull and liability, and satellite insurance products. The company also provides Marine Builders Risk, marine hull, total loss and war, mortgagees interests insurance, mortgagees additional perils, excess protection and indemnity, marine war, and builder's risks; and energy insurance products covering upstream operational, downstream and onshore operational, and upstream construction all risks business.
