Syndicate Results 2018 #3: Syndicate 382 – Hardy Underwriting

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.

HUA is wholly owned by Hardy Underwriting Group plc, which is in turn wholly owned by Hardy Underwriting Bermuda Ltd. Hardy Underwriting Ltd, another wholly owned subsidiary of HUG is a corporate member of Lloyd’s and is the sole provider of underwriting capacity to Syndicate 382. HUA is wholly owned by The Continental Corporation, a wholly owned subsidiary of CNA Financial Corporation, which, in turn, is controlled by Loews Corp.

Syndicate 382 reported a loss for the 2018 financial year of £15.2m, down from a loss of £34.2m in 2017.

The calendar year combined ratio in 2018 was 105.1% (2017: 116.3%).

The Syndicate reported strong growth in gross written premiums of 16.6% for the year, to £372.6m, up from £319.6m for 2017.

Increases were recorded across the majority of the Syndicate’s lines of business, but were most significant in the Specialty and Healthcare lines. The growth was driven partly by favourable premium emergence from of prior years of account.

Net written premiums in 2018 of £321.3m represented an increase over the prior year of £279.5m as a result of business growth partly offset by increased expenditure on reinsurance. The Syndicate increased its reinsurance expenditure during the year on certain lines of business in order to lower retentions and reduce overall volatility.

The Syndicate reported an underwriting loss for the year of £16.5m compared to a loss of £43.0m in 2017.

20182017
 £m£m
Gross written premiums372.6319.6
Net written premiums321.3279.5
Loss for the financial year(15.2)(34.2)
Loss ratio67.8%78.2%
Expense ratio37.3%38.1%
Combined ratio105.1%116.3%

During 2018, targeted underwriting actions were taken to return the underperforming operations within the Syndicate to profitability. These actions included both reinsurance and underwriting actions. Effective October 1st 2018, the Syndicate stopped underwriting property treaty, marine hull and construction all risk/erection all risk.

Hardy said that, while these three classes combined represented a relatively small component of the Syndicate’s business, when combined with the strategic decision to cease underwriting business through its Singapore and Lloyd’s China channels it would result in lower premiums for 2019.

20182017
£’000£’000
Gross written premiums372,562319,553
Outward reinsurance premiums(51,218)(40,031)
Premiums written, net of reinsurance321,344279,522
Claims paid – gross amount96,095181,237
– reinsurers’ share(31,234)(29,345)
Claims incurred, net of reinsurance218,580205,984
Net operating expenses120,153100,397
Balance on the technical account for general business(16,549)(42,966)
Loss for the financial year(15,155)(34,175)

For the year ended 31 December 2018:

Gross written premiumsGross premiums earnedGross claims incurredNet operating expensesReinsurance balance
£’000£’000£’000£’000£’000
Direct Insurance MAT2650029345(27174)(10484)(585)
Energy marine & non-marine98468440(5742)(4197)(416)
Total direct2528660225999(210651)(71469)(4341)
Assumed reinsurance143902144550(37573)(48684)(14380)
Total372,562370,549(248,224)(120,153)(18,721)

For the year ended 31 December 2017:

Gross written premiumsGross premiums earnedGross claims incurredNet operating expensesReinsurance balance
£’000£’000£’000£’000£’000
Direct Insurance MAT16,53624,169(30,743)(5,551)1,737
Total direct 59,336159,815(208,836)(51,371)30,301
Assumed reinsurance160,217148,003(73,702)(49,026)1,850
Total319,553307,818(282,538)(100,397)32,151

https://www.lloyds.com/investor-relations/financial-performance/syndicate-reports-and-accounts/2006/06/0382