Lancashire Hldgs reports 214% Net Income growth in 2019
13 Feb 2020 • About Lancashire Hldgs (
$LRE) • By InTwits
Lancashire Hldgs reported 2019 financial results today. Here are the key drivers of the company's long term financial model:
- Lancashire Hldgs has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.1%.
- The company has potentially unprofitable business model: ROIC is 4.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Lancashire Hldgs's Revenue increased on 8.1%. Revenue decline was slowing down on average by 5.9 pp per annum in the last 5 years.
Net Income margin surged on 15.9 pp from 8.3% to 24.2% in 2019. During the last 5 years Net Income margin bottomed in 2017 at -14.6% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.23% in 2019. Lancashire Hldgs's CAPEX/Revenue showed almost no change from 2016 to 2019. Average CAPEX/Revenue for the last three years was 0.13%.
Return on investment
The company operates at low ROIC (4.9%) and ROE (10.4%). ROIC increased on 2.6 pp from 2.2% to 4.9% in 2019. ROE increased on 7.0 pp from 3.4% to 10.4% in 2019. During 2015-2019 ROIC bottomed in 2017 at -1.7% and was growing since that time. During 2015-2019 ROE bottomed in 2017 at -6.1% and was growing since that time.
Leverage (Debt)
Debt increased on 6.5% while cash surged on 107%.
Lancashire Hldgs has no short term refinancing risk: cash is higher than short term debt (12,816.0%).
Management team
The company's CEO Alexander Maloney "Alex" is a founder and has spent 5 years with the company. Lancashire Hldgs's CFO Elaine Whelan has spent 9 years with the company.
Financial and operational results
FY ended 31 Dec 2019
Lancashire Hldgs ($LRE) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 612.7 | 542.9 | 485.9 | 451.3 | 487.7 | 8.1% |
| Net Income | 181.1 | 153.8 | -71.1 | 37.5 | 117.9 | 214.4% |
Balance Sheet
|
|---|
| Cash | 291.8 | 308.8 | 256.5 | 154.6 | 320.4 | 107.2% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 2.5 | |
| Long Term Debt | 322.3 | 320.9 | 326.3 | 324.3 | 342.9 | 5.7% |
Cash flow
|
|---|
| Capex | 0.0 | 0.4 | 0.6 | 0.2 | 1.1 | 450.0% |
Ratios
|
|---|
| Revenue growth | -19.3% | -11.4% | -10.5% | -7.1% | 8.1% | |
|
|---|
| Net Income Margin | 29.6% | 28.3% | -14.6% | 8.3% | 24.2% | 15.9% |
| CAPEX, % of revenue | 0.0% | 0.1% | 0.1% | 0.0% | 0.2% | 0.2% |
|
|---|
| ROIC | 6.6% | 6.2% | -1.7% | 2.2% | 4.9% | 2.6% |
| ROE | 14.1% | 12.7% | -6.1% | 3.4% | 10.4% | 7.0% |
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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Arab Insurance Group(Arig) ($AGRD) | -14.9% | -14.5% | 1.2% | 10.3% | |
| Marsh & Mclennan Cos Inc ($MHM) | | 2.5% | 6.2% | 6.6% | 11.4% |
| Beazley ($BEZ) | | 6.0% | 7.9% | 5.7% | 22.1% |
| |
|---|
| Median (3 companies) | 0.8% | 4.3% | 6.0% | 6.6% | 16.7% |
|---|
| Lancashire Hldgs ($LRE) | | -11.4% | -10.5% | -7.1% | 8.1% |
Top companies by EBITDA margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 22.0% | 23.5% | 23.8% | 21.8% | 20.0% |
| |
|---|
| Median (1 company) | 22.0% | 23.5% | 23.8% | 21.8% | 20.0% |
|---|
Top companies by CAPEX/Revenue, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 2.5% | 1.9% | 2.2% | 2.1% | 2.5% |
| Arab Insurance Group(Arig) ($AGRD) | 0.3% | 0.2% | 0.3% | 0.1% | |
| Beazley ($BEZ) | 0.1% | 0.2% | 0.1% | 0.1% | 0.2% |
| |
|---|
| Median (3 companies) | 0.2% | 0.3% | 0.3% | 0.1% | 1.4% |
|---|
| Lancashire Hldgs ($LRE) | 0.0% | 0.1% | 0.1% | 0.0% | 0.2% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 22.0% | 23.6% | 23.3% | 20.5% | 14.9% |
| Beazley ($BEZ) | 4.8% | 4.8% | 2.8% | 1.5% | 3.8% |
| Arab Insurance Group(Arig) ($AGRD) | -0.7% | 1.1% | 0.9% | -5.4% | |
| General Accident ($GACB) | 0.6% | 0.4% | 0.7% | | |
| Rsa Insurance Group ($RSAB) | 1.2% | 2.7% | 2.8% | | |
| |
|---|
| Median (5 companies) | 0.6% | 1.4% | 2.2% | 1.5% | 9.3% |
|---|
| Lancashire Hldgs ($LRE) | 6.6% | 6.2% | -1.7% | 2.2% | 4.9% |
Top companies by Net Debt / EBITDA
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 1.1x | 1.2x | 1.3x | 1.5x | 3.9x |
| |
|---|
| Median (1 company) | 1.1x | 1.2x | 1.3x | 1.5x | 3.9x |
|---|
