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Investing.com -- Lancashire Holdings (LON:LRE) on Thursday reported stronger-than-expected results for the first quarter of 2025, with premium growth outpacing analyst forecasts and investment returns showing resilience despite a modest decline in rate changes across its portfolio.
The group posted gross written premiums of $712 million for the quarter, up 13% from $632 million a year earlier.
The figure was ahead of RBC’s estimate of $657 million. The increase was primarily driven by reinsurance, which recorded a 21% year-over-year rise to $482 million. Underlying premium growth, excluding the impact of reinstatement premiums, stood
at 7% year-over-year. Insurance gross written premiums slightly declined to $230 million from $232 million in the same period last year.
Insurance revenue for the quarter rose 9% year-over-year to $459 million, compared to $422 million in the first quarter of 2024.
The uptick was attributed to the continued earn-through of higher premiums written in previous underwriting years.
Reinsurance revenue increased to $220 million from $202 million, while insurance revenue climbed to $239 million from $220 million.
Despite the gains, overall pricing trends weakened. The company reported a 3% rate decline in the quarter, contrasting with a 1% increase in the same period of 2024.
RBC analysts noted that while this marks a reversal from the firming rates seen in recent years, Lancashire maintained that its pricing levels remained "more than adequate."
Catastrophe losses were limited during the period, with no new events materially impacting results.
The previously disclosed California wildfire losses remained within the estimated range of $145 million to $165 million.
Investment income also contributed positively, with a return of 1.9% for the quarter. The company’s book and market yields both stood at 4.8%, slightly up from a book yield of 4.7% at the end of 2024. The average duration of investments held steady at two years.
The company reiterated its full-year guidance for a mid-teens ROE, accounting for anticipated catastrophe losses.
RBC’s 16.8% ROE forecast for the year is slightly above the 15.8% consensus. The Bermuda-based insurance company’s outlook for low-single-digit growth in gross written premiums contrasts with RBC’s 4% projection and the 5% consensus.
While Lancashire’s share price has underperformed year-to-date, the quarterly update is expected to support investor sentiment, according to analysts at RBC Capital Markets.