Syndicate results 2019 #25 Syndicate 4472 Liberty

Active Underwriter Peter Smith

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.

Syndicate 4472’s underwriting result after expenses, excluding investment return, was a loss of $82.9m (2018: $14.4m profit. The combined ratio increased to 108% (2018: 99%).

Overall the result for the calendar year was a profit of $165.2m (2018: $9.1m loss) driven by an investment return of $239.3m. This was partially offset by natural catastrophes and large losses compounded by adverse impacts on the syndicate’s liability book of business from US social inflation.

KPIs $m 2019 2018
Gross Premiums Written 1,687.2 1,837.7
Net Earned Premium 1,094.3 1,028.7
Underwriting Result (82.9) 14.4
Profit/(loss) for the Financial Year 165.2 (9.1)
Claims ratio 75% 60%
Expense Ratio 33% 39%
Combined Ratio 108% 99%

Gross written premiums in 2019 fell by 8% year on year. This was due to the renewal of some lines of business on LSM’s company platform, Liberty Mutual Insurance Europe SE (LMIE) rather than by the syndicate.

Despite the transfer of some European business to LMIE, predominantly from within reinsurance classes, Syndicate 4472 found new opportunities in two of its most profitable lines, London Market Risks and Treaty Property.

The underwriting result for 2019 represented a deterioration of $97.3m on 2018, due to an increase in net incurred claims of $200.9m.

2019 loss experience was a mixture of large losses, including deterioration on the liability portfolio and on a number of catastrophe losses. Typhoons Hagibis and Faxai were two significant 2019 events for syndicate 4472.

The prior years experienced adverse development on Typhoon Jebi, although this was offset in part by reserve releases on Typhoon Manghut and Hurricanes Harvey, Irma and Maria.

The improved performance of the syndicate’s investment portfolios in 2019 generated an incremental return of $228.0m. This was the major contributor to the overall profit for the financial year.

The fall in risk-free rates, together with narrowing credit spreads, generated significant unrealized gains for the syndicate’s fixed income portfolios.

Overall, total investment return increased to $239.3m (2018: $11.3m) driven by the fall of US yield curves in the early part of the year.


2019 $m Gross premiums written Gross premiums earned Gross claims incurred Gross operating expenses Reinsurance balance Total
Direct MAT 128.2 137.8 (103.1) (45.1) 9.8 (0.6)
Total 815.4 811.2 (763.8) (243.8) 62.8 (133.6)
Reinsurance 871.8 922.5 (715.6) (275.6) 119.4 50.7
Grand Total 1,687.2 1,733.7 (1,479.4) (519.4) 182.2 (82.9)
2018 $m Gross premiums written Gross premiums earned Gross claims incurred Gross operating expenses Reinsurance balance Total
Direct MAT 140.6 150.9 (79.7) (35.6) (17.6) 18.0
Total 839.2 929.5 (672.8) (181.0) (160.9) (85.2)
Reinsurance 998.5 1,014.8 (616.9) (451.4) 153.1 99.6
Grand Total 1,837.7 1,944.3 (1,289.7) (632.4) (7.8) 14.4