Syndicate results 2019 #2 Beazley Furlonge Ltd 623, 2623, 3623, etc

A P Cox Active underwriter

Beazley reported that most of the lines of business underwritten in its marine (MAT) division, led by Tim Turner, had seen significant price erosion over a number of years; recent rate rises had not yet proved sufficient to reverse the damage.

For 2019 the division recorded a combined ratio of 105% (2018: 92%) on premiums that increased by 7% to $65.3m (2018: $61.1m).

Beazley said that the increase in gross premiums written was due to the division increasing its indemnity appetite, notably in lines such as aviation and marine cargo. NWP were impacted by the syndicate’s decision to reinsure the run-off of the trucking portfolio, resulting in a year-on-year decrease.

The aviation market, which accounts for approximately 10% of the division’s premiums, had seen the most dramatic rate rises over the past two years. Prices for the business the syndicate writes had risen 39% since 2017 and it plans to increase its participation in this business significantly in 2020.

Marine cargo rates also rose sharply – by 12% – in 2019, prompting the syndicate to re-forecast it’s underwriting for this class of business upwards during the course of the year.

The capacities of the syndicates managed by Beazley Furlonge Ltd are as follows:

Syndicate Number Capacity 2019 Capacity 2018
2623 £1,624.0m £1,554.0m
623 £366.2m £351.0m
3623 £69.3m £213.0m
6107 £67.6m £55.1m
3622 £25.0m £23.0m
5623 £63.1m £22.5m

Rates were reported to have increased by 6% in general and by 11% in marine.

For the syndicates as a whole, Marine’s performance was:

Marine (MAT) 2019 $m 2018 $m
GPW 65.3 61.1
NPW 46.8 54.6
Earned premiums, net of reinsurance 46.9 54.3
Claims incurred, net of reinsurance (26.4) (29.0)
Net operating expenses (22.8) (21.3)
Technical result (2.3) 4.0
Claims ratio 56% 53%
Expense ratio 49% 39%
Combined ratio 105% 92%
Renewal rate change 11% 3%

The 2019 result for Beazley Furlonge’s largest syndicate, 2623, was a profit of $164.8m (2018: $92.3m).

The syndicate’s combined ratio for 2019 was 99% (2018: 96%).

The claims ratio deteriorated to 62% in 2019 (2018: 58%).

During 2019 the syndicate released prior year reserves of $15.9m (2018: $110.0m).

There was a reserve strengthening in marine of $6.7m. US trucking was the main driver of the marine division’s increase.

Marine made up 13% of syndicate 2623’s premiums last year, as it did in 2018.

Syndicate 2623

2019 Marine (MAT) $m Total $m
GWP 297.4 2361.9
NWP 213.1 1945.5
Gross earned premiums 300.7 2258.0
Earned premiums net of reinsurance 213.4 1845
Technical result (9.6) 25.8
Profit financial year (10.1) 164.8
Claims Ratio 57% 62%
Expense Ratio 48% 37%
Combined Ratio 105% 99%
2018 Marine (MAT) $m Total $m
GWP 278.5 2178.4
NWP 248.8 1840.7
Gross earned premiums 276.0 2067.2
Earned premiums net of reinsurance 247.4 1731.6
Technical result 18.3 71.4
Profit financial year 18.3 92.3
Claims Ratio 54% 58%
Expense Ratio 40% 38%
Combined Ratio 94% 96%

https://www.lloyds.com/investor-relations/financial-performance/syndicate-reports-and-accounts/2006/06/0623

https://www.lloyds.com/investor-relations/financial-performance/syndicate-reports-and-accounts/2006/06/2623