Lloyd’s Syndicate Results 2017 (38): QBE Syndicate 2999 & sub syndicates

With the 2017 numbers for the Lloyd’s syndicates now in, IMN over the next few weeks will report on the marine numbers for those syndicates with a significant interest in this area.

The Syndicate comprises four trading units, or sub-syndicates, with Colin O’Farrell and Jonathan Parry as joint Active Underwriters. The sub-syndicates and associated classes of business for 2017 are:

  • 566: Reinsurance: property; aviation; casualty treaty; personal accident; and marine
  • 1036: Marine insurance: hull; energy; liability; specie; cargo; war; and political risks
  • 1886: Non-marine general liability; professional and financial lines; motor; specialty and; marine P&I
  • 5555: Multi-line facility business

Gross written premium for 2017 were £1.169bn, up from £1.073bn in 2016.

Syndicate 2999 recorded a loss of £12.11m in 2017, equating to a combined ratio of 111.2%. This compared with a loss of £10.62m in 2016, equating to a combined ratio of 102.0%.

The active underwriters said that the year had been dominated by two principal themes:

  • continued pricing pressure across all lines
  • exceptional catastrophe loss experience, including hurricanes Harvey, Irma and Maria (HIM).

Gross written premium growth of 9% relative to 2016 was predominantly due to a significant weakening of sterling, offsetting shortfalls in London market business, particularly Energy.

Overall rate changes of minus 1.4% for the year were better than planned, driven primarily by Ogden discount rate changes and some positive post-HIM reaction, “albeit too late in the year to have a material impact”.

The Syndicate experienced significant catastrophe losses from HIM, resulting in a higher overall gross catastrophe claims experience relative to the 2017 plan. However, this was within risk tolerance and was materially mitigated by the Syndicate’s reinsurance protections.

The Syndicate’s ultimate reserve estimates remain both in line with initial estimates and within reinsurance limits.

In addition the Syndicate suffered a higher incidence of large losses (greater than $2.5m) relative to plan, contributing to an overall net underwriting loss of £88.71m. Although HIM losses occurred too late to have any material impact on premium rates for the 2017 year, the expectation for the 2018 year was for an improved rating environment, particularly on loss-impacted portfolios.

The underwriters said that syndicate 2999 continued to maintain its lead profile and as a consequence expected to benefit from the improved rating environment. The Syndicate pre-empted its stamp capacity by £80m (plus 7.8%) from £1.02bn to £1.1bn.

The focus for 2018 remained on further improving the Syndicate’s already strong business, with particular emphasis on pricing discipline and rectification of poor performing portfolios.” As we move towards 2019, considerable energies will be expended in ensuring our post-Brexit platform continues to meet our regulatory and customer needs”, the syndicate said.

In the segmental accounts, Marine Aviation and Transport booked GPW of £135.8m in 2017 for a total loss of £5.987m. This compares with GPW in MAT of £124.55m in 2016, generating a profit of £25.24 m.