Syndicate results 2018 #26 Argo Global Syndicate 1910

The Lloyd’s syndicates have now published their results and, in some cases, added detail and an outlook for 2019. As last year, IMN is summarizing the results from all syndicates that have a marine interest which have provided some information on the marine side.

Syndicate 1910 (Argo) (Active underwriter M Wilken) reported a profit of £7.9m for 2018, down from £23.8m the previous year. “Total comprehensive income” for 2018 was £3.9m, compared to £0.5m in 2017. Gross written premiums increased from £341.1m in 2017 to £364.0m in 2018. The combined ratio increased from 85.5% to 95.2%.

Chairman Tony Latham said that, following the major loss events of 2017, the syndicate had anticipated a material increase in the rating environment for reinsurance, but “this did not materialize as strongly as we had planned”.

The performance for 2018 was impacted by a series of catastrophic events in the second half of the year. Latham noted that hurricanes Florence and Michael, together with the Californian wildfires cost the industry an estimated $80bn, making 2018 the fourth costliest year on record. Outside of the US, typhoons Trami, Jebi and Mangkhut added to gross losses.

The Syndicate also experienced a number of large losses in the year, including the Lurssen shipyard fire, Onshore energy losses in the final quarter and Power outage losses. The impact of catastrophe losses on Syndicate 1910 net of reinsurance recoveries added 13.2% (2017:18.2%) percentage points to the combined ratio.

Latham said that, as was the case in 2017, the net impact of these events was managed due to the effectiveness of the reinsurance and retrocessional programme purchased to protect against such large events.

“I am pleased to report a profit to capital providers from the 2016 and Prior Years of Account of £28.7m a 23.7% return (an increase from that forecast last year at 11.9%)” said Latham.

He said that the lack of an adequate pricing response from the market for 2018 was disappointing, while the full impact of 2018 losses on renewals was yet to be seen. “However we are not anticipating a significant change to underlying market dynamics”, Latham said.

In 2018 Argo combined its Bermuda reinsurance platforms, such that all property treaty business written by Argo Re in Bermuda was brought into Syndicate 1910 either directly or via a quota share reinsurance.

Following the decision taken early in 2018 to centralize the US Property business in both Syndicates 1200 and 1910 under the management of Bob Hansberry, Argo decided for 2019 to rationalize the nature of its product offering across both its Syndicates.

£m20182017Change
Gross written premium364.0341.16.7%
Profit for the financial year7.923.8(66.8%)
Total comprehensive income3.90.5680.0%
Claims ratio70.8%60.1%10.7pp
Expense ratio24.4%25.4%(1.0pp)
Combined ratio95.2%85.5%9.7%

Marine is included with “other” in the segmental analysis:

Some indication of the size of the business can be gleaned from the fact that gross outstanding claims liabilities for 2018 for marine and aviation were £18.1m, with net liabilities after reinsurance of £6.3m.

2018 £mGross premiums writtenGross premiums earnedGross claims incurredGross operating expenses Reinsurance balanceTotal
Direct Other13.19.1(12.4)(1.0)2.8(1.5)
Total Direct78.875.5(64.6)(8.0)5.18.0
Reinsurance acceptances285.2281.1(270.6)(26.7)15.1(1.1)
Total364.0356.6(335.2)(34.7)20.26.9

 

2017 £mGross premiums writtenGross premiums earnedGross claims incurredGross operating expenses Reinsurance balanceTotal
Direct Other6.04.9(0.6)(0.7)(0.5)3.1
Total Direct56.056.0(33.0)(9.8)1.514.7
Reinsurance acceptances285.1287.7(315.7)(43.1)77.26.1
Total341.1343.7(348.7)(52.9)78.720.8

https://www.lloyds.com/investor-relations/financial-performance/syndicate-reports-and-accounts/2017/1910