The Lloyd’s syndicates have now published their results and, in some cases, added detail and an outlook for 2021. As in the past three years, IMN is summarizing the results from all syndicates that have a marine interest which have provided some information on the marine side.
The Syndicate’s principal activity continued to be the transaction of general insurance and reinsurance business across property, casualty and specialty lines.
The Syndicate capacity for the 2020 year of account was £529.8m and continued to show growth. The capacity for the 2019 year of account was £488.4m.
Covid-19
The management has concluded that the pandemic does not pose material risk to the Syndicate. The Syndicate is operating a ‘working from home’ model with meetings taking place via conference call and staff accessing IT systems remotely. The Syndicate said that staff and systems were responding well and ‘business as usual’ was being maintained.
Results
For the year ended December 31st 2020 the Syndicate generated an underwriting loss of £20.8m, compared with a gain of £10.6m the previous year (before deduction of administrative expenses and addition of investment return).
The underwriting loss was impacted by the Weather Related Large Loss events and loss estimates recorded in relation to the Coronavirus Pandemic. The overall result, after the inclusion of administrative expenses, profits/losses on exchange and investment income, was a loss of £29.2m, compared with a loss of £2.9m the previous year.
| KPIs £m | 2020 | 2019 | Change |
| Gross premiums written | 743.8 | 685.4 | 8.5% |
| Loss for the financial year | (29.2) | (2.9) | |
| Total comprehensive loss | (29.0) | (0.5) | |
| Combined ratio | 117.0% | 105.9% | 11.1pp |
| Investment return | 3.8% | 3.5% | 0.3pp |
GWP of £743.8m represented a 8.5% increase on 2019. The growth in GWP was primarily from property lines that benefited from a hardening market.
Outward reinsurance premiums for the year reached £423.8m, representing a 39.4% increase on 2019. This was primarily as a result of a new Adverse Development Cover that was purchased in the year, protecting the Casualty classes on the syndicate for the 2017 and prior underwriting years. The increase was also driven by growth in ceded spend, broadly in line with the gross increase and primarily from the impact of the whole account quota share covering the 2019 and 2020 underwriting years.
The Syndicate’s net loss ratio for the year was 71.3%, up from 71.1% the previous year. The key drivers of this were:
- Impact of £88.6m loss from the 2020 Weather-Related Large Loss Events and from the loss estimates on the Coronavirus Pandemic. This compared with a 2019 net loss of £32.9m from Weather-Related Large Loss Events. The 2020 Weather Related Large Loss Events included Hurricane Laura, Hurricane Sally and PCS 2016 Wind and Thunderstorm.
- Favourable development of £6.6m on prior accident year losses. The favourable development was primarily from reductions in loss estimates for the 2017-19 Weather Related Large Loss Events. This compared with an unfavourable development of £37.9m the previous year.
Reinsurers’ share of claims outstanding as at 31 December 2020 rose to £660.6m from £416.9m as at the prior year. The increase in reinsurers’ share of claims outstanding was primarily from recoveries on the new Casualty Adverse Development Cover that was purchased by the Syndicate during the year.
The increase was also attributable to recoveries on the Weather Related Large Loss Events and Coronavirus Pandemic loss estimates.
Part of the credit risk arising on recoverables from reinsurers is mitigated by collateral held in trust for certain balances.
Gross technical provisions increased to £1,620.5m, from £1,376.1m. This includes an increase in unearned premiums and claims outstanding, principally as IBNR, attributed to increased gross premiums in the year. In addition, the claims outstanding also includes the reserves for the Weather Related Large Loss Events and loss estimates on the Coronavirus Pandemic incurred during the financial year.
Sectors
| 2020 £ | Gross premiums written | Gross premiums earned | Gross claims incurred | Gross operating expenses | Reinsurance balance | Total |
| Direct MAT | 6,891,502 | 9,650,112 | (10,768,344) | (2,717,289) | 2,961,718 | (873,803) |
| Total | 492,105,146 | 458,586,326 | (393,181,376) | (145,953,540) | 56,490,073) | (24,058,517) |
| Reinsurance | 251,694,756 | 263,727,889 | (195,536,484 | (60,088,842) | (35,379,160) | (27,276,597) |
| Grand Total | 743,799,902 | 722,314,215 | (588,717,860) | (206,042,382) | 21,110,913 | (51,335,114) |
| 2019 £ | Gross premiums written | Gross premiums earned | Gross claims incurred | Gross operating expenses | Reinsurance balance | Total |
| Direct MAT | 11,922,816 | 10,556,765 | (9,065,959) | (1,613,272) | 1,481,416 | 1,358,950 |
| Total | 420,431,259 | 375,270,992 | (247,355,367) | (118,655,617) | (26,635,257) | (17,375,249) |
| Reinsurance | 264,996,745 | 277,950,671 | (155,225,686) | (58,494,939) | (70,610,898) | (6,380,852) |
| Grand Total | 685,428,004 | 653,221,663 | (402,581,053) | (177,150,556) | (97,246,155) | (23,756,101) |
Emoluments
The following aggregate remuneration pertaining to the active underwriter role was charged to the Syndicate and is included within net operating expenses:
| £ | 2020 | 2019 |
| Emoluments | 546,106 | 655,896 |