LRE.L - Lancashire Holdings Ltd

[nwoodman]

Q3 Results out

http://www.lancashiregroup.com/lre_group/media/rns/rnsitem?id=3808737&t=popup

Sorry for the cut and paste but I reckon they summed up their quarter perfectly and the use of capitals is justified 


"GROWTH IN FULLY CONVERTED BOOK VALUE PER SHARE, ADJUSTED FOR

DIVIDENDS, OF 7.9% IN Q3 2010, 15.9% YEAR TO DATE;

COMBINED RATIO OF 39.2% IN Q3 2010, 65.1% YEAR TO DATE;

SPECIAL DIVIDEND OF $1.40 PER COMMON SHARE"



The Lancashire Board of Directors has declared a special dividend to be paid out of retained earnings of $1.40 per common share (approximately £0.86 per common share at the current exchange rate), which results in an aggregate payment of approximately $213.0 million (the "Special Dividend"). The Special Dividend will be paid in pounds sterling on 19 January 2011 (the "Special Dividend Payment Date") to shareholders of record on 10 December 2010 (the "Record Date") using the GBP£/US$ spot market exchange rate at the close of business in London on the Record Date. 

[Myth465]

Glad I added  .

I expected a low combined ratio but thats nuts. Still wondering what im missing a year later but glad im not watching from the sidelines.

Thanks again TWA.

Q4 should be just as good if not better due to releases. I am glad I hold in my Roth and look forward to the dividend. Very interesting.

[rranjan]

Myth - If I remember correctly you hold LCSHF.PK and not LRE.L. Pardon my ignorance but is there any practical difference between holding one over another? I have never bought anything listed at non-us exchange so I will appreciate any information related with tax issue.

[Bronco]

The pinkies don't seem very liquid.  I tried to buy Lancashire thru etrade and couldn't get a purchase. 

[rranjan]

Broco - That's true. Thats why I was wondering about the implications of buying any securities at non-usa exchange. I know that you might get foreign tax ( on dividend??) but you can claim it back while filing your annual tax subjected to certain limitations. Since I have not looked into it at all, I an not sure about all advantages and disadvantages.

[Myth465]

Myth - If I remember correctly you hold LCSHF.PK and not LRE.L. Pardon my ignorance but is there any practical difference between holding one over another? I have never bought anything listed at non-us exchange so I will appreciate any information related with tax issue.

I dont know of any difference. Similar to holding FFH or FBK pinks. I was very skeptical. I do get my dividend and did get cash for the rights offering shares which were automatically sold for FBK. From a tax perspective I dont believe there is a difference. I know Canadian companies tend to take 15% back for tax purposes and you can claim these when you need to. I dont think the UK does anything like that. I get the Div without any tax hit unless its rolled in.

Also someone just bought. It sucks because they arent very liquid and on good news you will just have to pay up to get the shares you want. Its why I bought above book and prior to the release. They will pull back at some point though.

[Bronco]

I guess Etrade would let you buy on the London Exchange, but that is too complex for a hick like me.

[twacowfca]

Glad I added  .

I expected a low combined ratio but thats nuts. Still wondering what im missing a year later but glad im not watching from the sidelines.

Thanks again TWA.

Q4 should be just as good if not better due to releases. I am glad I hold in my Roth and look forward to the dividend. Very interesting.

We're on island time right now for a reinsurance continuing education seminar.  Have gained a better understanding of why our favorite company's better market niches are less attractive to competitors.  Prefer not to blab all the details, but it's basically about the institutional imperative.  Therefore, all their little, apparently shallow moats may be much deeper than it seems, and their edge generally lasting and not ephemeral.  

[Myth465]

I see I have gleaned a bit from the last investor day. Honestly it sounds like a combination of brass balls and good old fashion customer service.

They seem to really pick their spots and serve their key customers. A good example is with Energy. They feel the best assets are the ultra deep water semis because hurricanes go right over them. Next best is drillships because they can move, and worse jackets.

They will work with key customers to get a disproportionate amount of semis and take on a relatively low amount of jackups. They will also work and deal with key customers - giving them breaks when they need to and basically taking care of them. With energy they also rushed in after DWH when many were probably sucking their thumb and calculating risks. This leads to high pricing with probably less risk because operators would likely be much safer on a go forward basis. Most of the other lines are contracting right now.

So that points to me that they really just pick their spots and service key customers. I think its a sustainable moat as long as they stay small. Which is why the focus on non empire building and staying nimble.

Thats my take, I am sure yours is much more sophisticated.

[twacowfca]

I see I have gleaned a bit from the last investor day. Honestly it sounds like a combination of brass balls and good old fashion customer service.

They seem to really pick their spots and serve their key customers. A good example is with Energy. They feel the best assets are the ultra deep water semis because hurricanes go right over them. Next best is drillships because they can move, and worse jackets.

They will work with key customers to get a disproportionate amount of semis and take on a relatively low amount of jackups. They will also work and deal with key customers - giving them breaks when they need to and basically taking care of them. With energy they also rushed in after DWH when many were probably sucking their thumb and calculating risks. This leads to high pricing with probably less risk because operators would likely be much safer on a go forward basis. Most of the other lines are contracting right now.

So that points to me that they really just pick their spots and service key customers. I think its a sustainable moat as long as they stay small. Which is why the focus on non empire building and staying nimble.

Thats my take, I am sure yours is much more sophisticated.

You've got it!  Why make it complicated.    

Most of the rest of what they do is merely tweaking the basic concept.  For example, on Deepwater Horizon, they liked the elemental risk (storm risk) better than the non elemental risk, perhaps because the owner and the operator did not have an outstanding safety record.  This may have been one reason why they reinsured a big chunk of the non elemental risk.  Thus, they were still able to serve the client without taking on undue risk.