Lancashire Hldgs reports 153% Net Income growth in 2018
14 Feb 2019 • About Lancashire Hldgs (
$LRE) • By InTwits
Lancashire Hldgs reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Lancashire Hldgs is a company in decline: 2018 revenue growth was -7.1%, 5 years revenue CAGR was -5.9%
- Lancashire Hldgs has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.3%.
- The company has potentially unprofitable business model: ROIC is 2.2%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.7x while industry average is 1.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 7.1%. During 2014-2018 Revenue growth bottomed in 2015 at -19.3% and was accelerating since that time.
Net Income margin jumped on 22.9 pp from -14.6% to 8.3% in 2018. During 2014-2018 Net Income margin bottomed in 2017 at -14.6%.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 0.044%. The company's CAPEX/Revenue showed almost no change from 2015 to 2018. It's average level of CAPEX/Revenue for the last three years was 0.080%.
Return on investment
The company operates at low ROIC (2.2%) and ROE (3.4%). ROIC increased on 3.9 pp from -1.7% to 2.2% in 2018. ROE increased on 9.6 pp from -6.1% to 3.4% in 2018. During 2014-2018 ROIC bottomed in 2017 at -1.7%. During the last 5 years ROE bottomed in 2017 at -6.1%.
Leverage (Debt)
Debt decreased slightly on 0.61% while cash dropped on 39.7%.
The company has no short term refinancing risk: short term debt is zero.
Management team
Alexander Maloney "Alex" is a the company's CEO. Alexander Maloney "Alex" is a founder and has spent 5 years with the company. Elaine Whelan is a the company's CFO. Elaine Whelan has spent 9 years at the company.
Financial and operational results
FY ended 31 Dec 2018
Lancashire Hldgs ($LRE) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 759.0 | 612.7 | 542.9 | 485.9 | 451.3 | -7.1% |
| Net Income | 229.3 | 181.1 | 153.8 | -71.1 | 37.5 | |
Balance Sheet
|
|---|
| Cash | 303.5 | 291.8 | 308.8 | 256.5 | 154.6 | -39.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 326.6 | 322.3 | 320.9 | 326.3 | 324.3 | -0.6% |
Cash flow
|
|---|
| Capex | 8.7 | 0.0 | 0.4 | 0.6 | 0.2 | -66.7% |
Ratios
|
|---|
| Revenue growth | 24.1% | -19.3% | -11.4% | -10.5% | -7.1% | |
|
|---|
| Net Income Margin | 30.2% | 29.6% | 28.3% | -14.6% | 8.3% | 22.9% |
| CAPEX, % of revenue | 1.1% | 0.0% | 0.1% | 0.1% | 0.0% | -0.1% |
|
|---|
| ROIC | 7.9% | 6.6% | 6.2% | -1.7% | 2.2% | 3.9% |
| ROE | 16.3% | 14.1% | 12.7% | -6.1% | 3.4% | 9.6% |
Peers in Nonlife Insurance
Below we provide Lancashire Hldgs benchmarking against other companies in Nonlife Insurance industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Randall & Quilter Invt Hldgs Ltd ($RQIH) | 20.7% | 10.0% | 22.1% | 110.7% | |
| Helios Underwriting ($HUW) | 47.9% | 12.8% | 54.8% | 18.4% | |
| Beazley ($BEZ) | | 1.1% | 6.0% | 7.9% | 5.7% |
| Marsh & Mclennan Cos Inc ($MHM) | | -0.4% | 2.5% | 6.2% | 6.6% |
| F.B.D.Hldgs ($FBH) | 1.1% | 0.8% | -6.5% | 5.8% | |
| |
|---|
| Median (8 companies) | 21.4% | 0.8% | 4.3% | 6.0% | 6.6% |
|---|
| Lancashire Hldgs ($LRE) | | -19.3% | -11.4% | -10.5% | -7.1% |
Top companies by EBITDA margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 20.8% | 22.0% | 23.5% | 23.8% | 21.8% |
| |
|---|
| Median (1 company) | 20.8% | 22.0% | 23.5% | 23.8% | 21.8% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F.B.D.Hldgs ($FBH) | 7.0% | 5.2% | 3.7% | 2.3% | |
| Marsh & Mclennan Cos Inc ($MHM) | 2.8% | 2.5% | 1.9% | 2.2% | 2.1% |
| Arab Insurance Group(Arig) ($AGRD) | 0.2% | 0.3% | 0.2% | 0.3% | 0.1% |
| Randall & Quilter Invt Hldgs Ltd ($RQIH) | 1.1% | 0.3% | 3.5% | 0.3% | |
| Rsa Insurance Group ($RSAB) | 0.5% | 0.2% | 0.4% | 0.3% | |
| |
|---|
| Median (8 companies) | 0.3% | 0.2% | 0.3% | 0.3% | 0.1% |
|---|
| Lancashire Hldgs ($LRE) | 1.1% | 0.0% | 0.1% | 0.1% | 0.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 21.0% | 22.0% | 23.6% | 23.3% | 20.5% |
| F.B.D.Hldgs ($FBH) | 0.2% | -9.0% | 0.9% | 4.5% | |
| Beazley ($BEZ) | 4.5% | 4.8% | 4.8% | 2.8% | 1.5% |
| Rsa Insurance Group ($RSAB) | -0.1% | 1.2% | 2.7% | 2.8% | |
| Randall & Quilter Invt Hldgs Ltd ($RQIH) | -3.4% | -2.1% | 1.7% | 1.7% | |
| |
|---|
| Median (8 companies) | 1.0% | 0.6% | 1.4% | 2.2% | 1.5% |
|---|
| Lancashire Hldgs ($LRE) | 7.9% | 6.6% | 6.2% | -1.7% | 2.2% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 0.5x | 1.1x | 1.2x | 1.3x | 1.5x |
| |
|---|
| Median (1 company) | 0.5x | 1.1x | 1.2x | 1.3x | 1.5x |
|---|
