Syndicate results 2019 #24 Syndicate 4444 Canopius

Active Underwriters S A Willmont and C Jarvis

The Lloyd’s syndicates have now published their results and, in some cases, added detail and an outlook for 2020. As in the past two years, IMN is summarizing the results from all syndicates that have a marine interest which have provided some information on the marine side.

In 2019, Syndicate 4444 recorded a profit of £5.5m (2018: £74.1m Loss) with a combined ratio of 103% (2018: 108%).

There was a 6.1% year-on-year reduction in the net claims ratio, which contributed to a lower combined operating ratio.

The Syndicate said that underwriting discipline continued to be exercised, with some business being declined where rate or profitability expectations had not been met. Overall gross written premiums increased by 9.1% year on year to £1,363.8m (2018: £1,249.3m), primarily driven by growth in Specialist Consumer Products, North American Facilities and Credit and Political Risk.

Catastrophe experience in 2019 was more favourable than in 2018, which contributed to the improvement in the net claims ratio. However, the 2019 results did include catastrophe costs for Storm Dorian (£5.4m); Typhoon Faxai (£5.3m) and Typhoon Hagibis (£6.2m).

The positive impact of the relatively benign catastrophe experience was offset in part by some strengthening of reserves in non-catastrophe classes of business, following adverse claims experience.

Total operating expenses at £439.0m were lower than in 2018 (£444.6m), which the Syndicate said reflected continued close management of acquisition and administration costs. The expense ratio increased from 42.9% in 2018 to 44.1%, following a year on year reduction in earned premium.

Syndicate 4444’s investment portfolio achieved a return of £41.1m in 2019 (2018: £2.8m), with the Syndicate benefiting from increased income returns and unrealized gains on the fixed income portfolio (following a number of interest rate cuts in the US and a reduction in bond yields).

The investment portfolio remained “defensively positioned”, which the directors said they considered appropriate “given the continuing volatility in investment markets”.

  • The 2017 year of account of Syndicate 4444 closed with a reported loss of £151.0m.
  • The 2018 year of account is forecast to make a loss of 2.7% of managed capacity.
  • The 2019 year of account is forecast to make a profit of 5.3% of managed capacity.

During 2019, Canopius Managing Agency assumed the management of Lloyd’s syndicates 1861, 5820, 1206 and 44 as a result of a related company merging its Lloyd’s business with the AmTrust at Lloyd’s division of AmTrust International. Syndicate 4444’s allocated capacity for the 2020 year of account is unchanged from 2019 (£1,048m).

The 2020 year of account will operate on a split stamp basis between syndicate 4444 and syndicate 1861. The Syndicate said that this arrangement would allow both syndicates to benefit from the increased scale of the combined platform, with £1.6bn of capacity under management, as well as the increased operational efficiency of underwriting both syndicates on a fully consistent basis. All other syndicates managed by CMA are now closed or in run off.

Key Perfomance Indicators

KPIs £m 2019 2018
Gross premiums written 1,363.8 1,249.3
Earned premiums, net of reinsurance 995.7 1,036.0
Investment return 41.1 2.8
Profit / (Loss) for the year 5.5 (74.1)
Gross claims ratio 53.2% 68.5%
Net claims ratio 58.5% 64.6%
Expenses ratio 44.1% 42.9%
Combined Ratio 102.6% 107.5%
Investment return 3.8% 0.4%

Sector

2019 £000s Gross written premiums Gross premiums earned Gross claims incurred Net operating expenses Reinsurance Balance Total
Direct Marine & Energy 93,337 76,709 (51,577) (24,701) (6,395) (5,964)
Marine, aviation and transport 70,819 78,190 (33,514) (28,100) (4,570) 12,006
Total Direct 909,193 781,687 (398,560) (329,035) (77,632) (23,540)
Reinsurance inwards 454,618 378,367 (218,421) (109,985) (51,940) (1,979)
Grand Total 1,363,811 1,160,054 (616,981) (439,020) (129,572) (25,519)
2018 £000s Gross written premiums Gross premiums earned Gross claims incurred Net operating expenses Reinsurance Balance Total
Direct Energy 89,220 92,420 (64,943) (25,941) (6,884) (5,348)
Marine, Aviation & Transport 81,144 88,611 (57,231) (31,776) 5,266 4,870
Direct Total 913,215 860,305 (545,118) (350,443) (16,019) (51,275)
Reinsurance inwards 336,090 332,149 (272,211) (94,176) 7,442 (26,796)
Grand Total 1,249,305 1,192,454 (817,329) (444,619) (8,577) (78,071)

https://www.lloyds.com/investor-relations/financial-performance/syndicate-reports-and-accounts/2006/06/4444