Lancashire growth slows in 2025, flags flat outlook for 2026
Bermuda-based re/insurer Lancashire ended 2025 with just over 5% top-line growth, slightly ahead of guidance despite a contraction in the fourth quarter, and warned that premium growth could be flat in 2026 as market conditions continue to shift.
Expect “stable top line premiums and insurance revenue” from a company that now considers itself “strongly placed into next part of the underwriting cycle,” management said in its full-year 2025 financial results.
Gross written premium in FY2025 rose 5.1% year-on-year to $2.26 billion. The sum is led by 8.1% growth in reinsurance, well ahead of the 1.9% posted by primary insurance.
That 5.1% gain exceeded the low single digit pace management had felt likely when it first looked at the 2025 softening market, but management proceeded to count out the impact of reinstatement premiums and called the adjusted tally “in line.”
For the full year, reinsurance rates were said to have “softened marginally” with a Lancashire renewal pricing index down 3%. With “rating adequacy remaining very healthy, we took the opportunity to grow,” management said. For primary insurance, a majority of product lines were said to have remained “very well priced” despite softening that took 5% off the group’s renewal price index.
But the revenue trajectory pointed down by Q4: group gross written premium was down 3.5% year-on-year in Q4, calculations between the 12M and previously released 9M figures indicated. Primary was down 5.2% year on year while reinsurance GWP slipped a fractional 0.3%.
Margins slipped in 2025 putting an undiscounted combined ratio up 4 points to 93.1% for the year.
Net losses on cats, weather and major events hit $277 million for the year, up 28.7% with $163 million from California wildfires taking more than all the blame for the increase. Favourable prior year reserve development added $123 million to the profit tally, up 32% from the prior year. The 9M data required to single out Q4 performance had not been made available.
On the resulting fractional increase in underwriting profits for the year, Lancashire added a 34% increase in investment earnings, but still saw its bottom line undercut by a rise in other operating expenses it traced to headcount gains. Full-year net profits of $293.4 million were down 8.7% year-on-year for a return on equity of 20.9%.
Expect ROE to deteriorate lightly in 2026: management is eyeing a result in the high teens.
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