21st Mar 2006 07:03
Lancashire Holdings Limited21 March 2006 Lancashire Holdings Limited March 21, 2006 LANCASHIRE HOLDINGS LIMITED ANNOUNCES AUDITED RESULTS FOR THE PERIOD FROM OCTOBER 12, 2005 (DATE OF INCORPORATION) TO DECEMBER 31, 2005 Lancashire Holdings Limited ("Lancashire" or "the Group") today released itsaudited financial results for the period between incorporation and 31st December2005. Lancashire was incorporated on 12th October 2005 to take advantage of thefavourable underwriting conditions expected to arise from the large insuredlosses incurred by the reinsurance and insurance industry in 2004 and 2005.Lancashire was admitted to the London Stock Exchange's AIM market on December16, 2005. The Group commenced underwriting operations prior to 31st December2005; however its main focus was on the January renewal season. The results forthe period from incorporation to December 31, 2005 therefore largely reflectset-up costs and operating expenses with little underwriting activity. Resultsare as follows: $'000 Gross premiums written 2,638Net premiums earned 18Interest income 2,073Total expenses (9,973)Operating loss (7,882)Finance costs (3,670)Net loss for the period (11,552)Basic earnings (loss) per share (dollars per share) ($0.24)Diluted earnings (loss) per share (dollars per share) ($0.24) Lancashire's financial statements are prepared in accordance with InternationalFinancial Reporting Standards ("IFRS"), as endorsed by the European Commission,and are presented in United States dollars. The Group's Balance Sheet, IncomeStatement and Cash Flow Statement are set out below. The consolidated financialstatements were approved by the Board of Directors on March 9, 2006. Financial Results A discussion of the financial results prior to December 31, 2005 lacks substancedue to the short period covered by the financial statements and the limitedamount of business written. The focus of the underwriting team since thecapitalization of the Group was on the January renewal season. Business writtenup to and including to December 31, 2005 was incidental. Going forwards, theCompany will publish reports for the six month interim period to 30 June, 2006and for the full year to 31 December, 2006, the latter of which will be sent toshareholders. The loss for the period was substantially due to expensing the vested portion ofcertain warrants. The remainder relates to financing and incorporation costs. As noted in the AIM Admission Document, Lancashire has issued warrants tocertain founding shareholders, a financial advisor and certain members of seniormanagement. Warrants issued to founding shareholders were treated as a capitaltransaction and the associated fair value was charged to the share premiumaccount. The fair value of warrants issued to the financial advisor, forassistance with incorporation and other start-up services, is treated as aformation expense with a corresponding credit to share premium with no impact onshareholder's equity. Management warrants are recognized as an operating expensein the income statement pro-rata over the vesting period of the instrument witha corresponding offsetting credit to shareholder's equity. The total amount tobe expensed is determined by reference to the fair value of the awards estimatedat the grant date. Finance costs incurred comprised debt issuance costs as part of the initialfinancing for the Group plus interest incurred. Loan notes denominated in USdollars and Euros were issued. Interest is based on a margin over Libor andEuribor respectively. Outlook Lancashire writes a diversified portfolio of insurance, reinsurance andretrocession business on a worldwide basis, via its Bermuda subsidiary,Lancashire Insurance Company Limited, with an emphasis on retrocession, marineand energy and property classes. The classes written by Lancashire include thosemost impacted by Hurricanes Katrina, Rita and Wilma in 2005. The Group issued a Trading Statement on 21st February, 2006 commenting thatLancashire had been anticipating significant upward pricing adjustments andimproved terms and conditions. This continues to be borne out, with overalltrading conditions as expected and in certain areas better than expected at thetime of Lancashire's Initial Public Offering in December 2005 in lines that theGroup has chosen to write. Lancashire Holdings LimitedConsolidated Balance SheetAs at December 31, 2005 $'000 Assets Property, plant and equipment 404Intangible assets: software 305Deferred acquisition costs 515Other receivables 2,025Insurance balances receivable 2,118Cash and cash equivalents 1,072,383Total assets 1,077,750 LiabilitiesUnearned premium 2,620Long-term debt 125,420Accrued interest payable 431Other payables 2,185Total liabilities 130,656 Shareholders' equity Share capital 97,857Share premium account 860,789Retained deficit (11,552)Total shareholders' equity attributable to shareholders 947,094 Total liabilities and shareholders' equity 1,077,750 The consolidated financial statements were approved by the Board of Directors onMarch 9, 2006. Lancashire Holdings Limited Consolidated Income Statement For the period from October 12, 2005 (date of incorporation) to December 31,2005 $'000Revenue Gross premiums written 2,638Premium ceded to reinsurers - Net premiums written 2,638 Gross change in unearned premiums (2,620) Net premiums earned 18 Interest income 2,073 Total revenue 2,091 ExpensesAcquisition costs (5)Employee benefits expense (8,645)Depreciation and amortization (19)Other operating expenses (1,304)Total expenses (9,973) Operating loss (7,882) Finance costs (3,670) Net loss for the period attributable to shareholders (11,552) Basic earnings (loss) per share (dollars per share) ($0.24)Diluted earnings (loss) per share (dollars per share) ($0.24)Book value per share (dollars per share) $4.84 Lancashire Holdings Limited Consolidated Cash Flow Statement For the period from October 12, 2005 (date of incorporation) to December 31,2005 $'000 Cash flows from operating activitiesLoss before interest income and expense (13,194)Interest income 2,073Interest expense (431)Loss after interest income and expense (11,552) Adjustments for non cash items:Employee benefits expense 8,437Depreciation and amortisation 19Foreign exchange losses on financing items (285) Changes in operational assets and liabilities:Deferred acquisition costs (515)Other receivables (2,025)Insurance balances receivable (2,118)Unearned premium 2,620Accrued interest payable 431Other payables 1,242 Net cash flows used in operating activities (3,746) Cash flows from investing activitiesPurchase of property, plant and equipment (414)Purchase of intangible assets: software (314)Net cash flows used in investing activities (728) Cash flows from financing activitiesProceeds from issue of share capital 978,549Transaction costs from issue of share capital (12,178)Formation expenses (15,220)Proceeds from issue of long-term debt 125,709Net cash flows received from financing activities 1,076,860 Net increase in cash and cash equivalents 1,072,386Cash and cash equivalents at beginning of period -Effect of exchange rate fluctuations on cash and cash equivalents (3)Cash and cash equivalents at end of period 1,072,383 Lancashire Holdings +1 441 278 8950Neil McConachie Financial Dynamics +44 (0)20 7269 7200Rob Bailhache www.lancashire.bm About Lancashire Lancashire was established in 2005 as a new insurance and reinsurance businessto take advantage of the favourable underwriting conditions expected to arisefrom the large insured losses incurred by the industry in 2004 and 2005. Lancashire was admitted to AIM on 16 December 2005 following an Offer of CommonShares to investors. The Common Shares trade on AIM under the ticker symbol LRE. NOTE REGARDING FORWARD-LOOKING STATEMENTS CERTAIN STATEMENTS MADE IN THIS ANNOUNCEMENT OR ON THE CONFERENCE CALL THAT ARENOT BASED ON CURRENT OR HISTORICAL FACTS ARE FORWARD-LOOKING IN NATUREINCLUDING, WITHOUT LIMITATION, STATEMENTS CONTAINING WORDS "BELIEVES","ANTICIPATES", "PLANS", "PROJECTS", "INTENDS", "EXPECTS", "ESTIMATES","PREDICTS", "MAY", "WILL", "SEEKS", "SHOULD" OR, IN EACH CASE, THEIR NEGATIVE OR COMPARABLE TERMINOLOGY. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTSINCLUDING, WITHOUT LIMITATION, THOSE REGARDING THE GROUP'S FINANCIAL POSITION,RESULTS OF OPERATIONS, LIQUIDITY, PROSPECTS, GROWTH, BUSINESS STRATEGY, PLANSAND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS (INCLUDING DEVELOPMENT PLANSAND OBJECTIVES RELATING TO THE GROUP'S INSURANCE BUSINESS) ARE FORWARD-LOOKINGSTATEMENTS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,UNCERTAINTIES AND OTHER IMPORTANT FACTORS THAT COULD CAUSE THE ACTUAL RESULTS,PERFORMANCE OR ACHIEVEMENTS OF THE GROUP TO BE MATERIALLY DIFFERENT FROM FUTURERESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCHFORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS ATTHE DATE OF THIS ANNOUNCEMENT OR OTHER INFORMATION CONCERNED. LANCASHIREHOLDINGS LIMITED EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING (SAVE ASREQUIRED TO COMPLY WITH ANY LEGAL OR REGULATORY OBLIGATIONS (INCLUDING THE AIMRULES)) TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKINGSTATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGES IN THE GROUP'S EXPECTATIONSWITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ONWHICH ANY SUCH STATEMENT IS BASED. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Lancashire Holdings