Active Underwriter J D Spence
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.
Lancashire Syndicates Limited (LSL) was formerly Cathedral Underwriting Ltd and is the managing agent for Syndicate 3010.
The main lines of business for the Syndicate are marine cargo, energy, aviation all risks including deductible and hull war, terrorism, power utility and marine hull.
|KPIs $000s||2017 account||2018 account||2019 account||31 December 2019||31 December 2018|
|Gross premiums written||359||15,353||113,154||128,866||84,691|
|Gross premiums earned||4,766||53,593||46,379||104,738||67,415|
|Net premiums earned||3,580||41,580||27,009||72,169||49,842|
|Profit for the financial year||3,039||11,520||(7,358 )||7,201||1,675|
|Loss ratio (%)||(36.1)||42.3||65.8||47.2||43.0|
|Expense ratio (%)||40.4||30.7||62.3||43.0||54.6|
The combined ratio excludes managing agent’s profit commission and is the basis used throughout these accounts.
Gross written premiums for the calendar year rose by 52.2% to $128.9m (2018: $84.7m). The Syndicate increased the amount of premium income written across existing divisions, comprising a combination of new business and increased pricing on renewal business. The new classes that were added in 2018 were Power, Marine Hull and Aviation Deductible, all of which made valuable contributions.
The Syndicate said that the rating environment improved materially (“at last”). It said that the Lloyd’s performance actions and Decile 10 approach led to some competitors withdrawing from various classes and some syndicate closures. “The result was a very different landscape for some of our classes”, it said.
Reinsurance premiums ceded in the year increased by 84.0% to $39.7m (2018: $21.6m). The increased programme spend reflected the extended coverage of the new classes and increased income.
The underwriting result was impacted by losses from T1 Power Holdings and Talen Energy. The Korea National Fire Agency H225 Helicopter loss also had an impact. As with previous years, losses from major catastrophes had little impact.
The net loss ratio for the 2019 calendar year was 47.2% (2018: 43.0%).
The Syndicate said that the well-publicized performance drive initiated by Lloyd’s during 2018 and 2019 had resulted in the closure of some syndicates and the withdrawal of some syndicates from classes in which they were underperforming. This had resulted in a very changed marketplace in these classes.
Lancashire Syndicate said that its underwriters were now able to set pricing at levels that were “adequate” and were able to amend terms and conditions to eradicate terms and conditions “creep”.
The Syndicate said that the demise of many lineslips permitted its underwriters to underwrite risks selectively. With the income of the Syndicate increasing, it was benefiting from economies of scale; the expense ratio was reducing.
For 2020 income was planned to increase through organic growth of the Cargo, Aviation and Power classes. The syndicate anticipated the continuation of improved rating conditions that would contribute further to this growth. The Energy and Terrorism accounts were both showing early signs of improvement.
The Syndicate capacity for the 2020 year of account is increased to £150m from £100m.
|2019 $000s||Gross premiums written||Gross premiums earned||Gross claims incurred||Net operating expenses||Reinsurance balance||Total excluding investment return||Net technical provisions|
|Direct MAT||55,443||45,062||(20,505)||(16,069)||(7,934 )||554||36,035|
|Direct Total||74,522||60,571||(26,901)||(19,403)||(10,664 )||3,603||45,814|
|Reinsurance acceptances||54,344||44,167||(21,308)||(12,017)||(7,778 )||3,064||41,787|
|Grand Total||128,866||104,738||(48,209)||(31,420)||(18,442 )||6,667||87,601|
|2018 $000s||Gross premiums written||Gross premiums earned||Gross claims incurred||Net operating expenses||Reinsurance balance||Total excluding investment return||Net technical provisions|
|Direct MAT||30,544||24,733||(13,093)||(10,482)||(3,006 )||(1,848)||35,233|
|Direct Total||48,221||40,692||(13,819)||(16,550)||(6,822 )||3,501||43,717|
|Reinsurance acceptances||36,470||26,723||(14,201)||(11,238)||(4,156 )||(2,872)||28,849|
|Grand Total||84,691||67,415||(28,020)||(27,788)||(10,978 )||629||72,566|