Syndicate Results 2019 #45 Syndicate 1884 Charles Taylor

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 1884 (“the Syndicate”) was launched on April 1st 2015, writing primarily marine classes. In October 2018 the CTMA Board (“the Board”) took the decision to place the Syndicate into run-off with effect from January 1st 2019.

The Syndicate said that it had made good progress in pursuing these objectives through 2019:

  • Management of staffing levels and use of appropriate retention arrangements have ensured key skills have been retained and that policyholder service levels were maintained.
  • The forecast spot result had deteriorated over the year, primarily due to a number of large losses on the Energy and Political risk classes, partially mitigated by reinsurance protection. The negative underwriting result was partially offset by higher than previously forecast written premium.
  • Reinsurance arrangements were reviewed and renewed where necessary, with additional cover placed with lower retentions, providing additional protection to the net underwriting result in 2020. The cost of additional reinsurance purchases was within budget and within risk appetite. The Syndicate’s agreed capital requirement had reduced through the year.
KPIs £m 2017 pure year of account 2018 pure year of account
Gross premium written 108.8 110.6
Earned premium, net of reinsurance 82.3 82.8
Run-off provision* (5.2) (4.0)
Result on the technical account for the year of account** (54.8) (45.3)
Claims ratio 105.3% 88.1%
Acquisition ratio 32.6% 33.4%
Expense ratio 28.7% 33.2%
Combined ratio 166.6% 154.7%

*Costs that would otherwise have been borne by future years of account, or as a direct result of going into run-off.

** Result on the technical account includes risk premium & run-off provision, excludes investment return and currency gains/losses.

2017 and prior year of account:

The 2017 and prior year was closed with a loss of £52.0m (52.0% loss on capacity).

2018 year of account:

The forecast ultimate result for the 2018 YOA is a loss of £44.7m (44.7% loss on capacity).

The key drivers of the underwriting result were:

  • Better than previously forecast written premiums, primarily arising from the cargo class
  • Gross reserve strengthening in the year arising from the cargo, energy and political risk classes, partially offset by reserve releases on the marine liability and cyber classes
  • Several specific large losses arising from downstream energy exposures
Calendar Year Result £000s 2019 2018
Gross premium written 26,949 104,176
Earned premium, net of reinsurance 45,805 89,368
Loss on the technical account for the year (22,936) (53,029)
Claims ratio 90.4% 103.9%
Acquisition ratio 35.6% 31.2%
Expense ratio 25.0% 24.5%
Combined ratio 151.0% 159.6%

Sectors

2019 £000s GPW GPE GCI Op exps Reins Bal Total
Direct MAT 8,541 22,486 (16,834) (11,988) (5,402) (11,738)
Total Direct 22,474 53,968 (50,809) (23,261) (107) (20,209)
Reinsurance 4,475 11,259 (6,337) (4,021) (4,108) (3,207)
Grand Total 26,949 65,227 (57,146) (27,282) (4,215) (23,416)
2018 £000s GPW GPE GCI Op exps Reins Bal Total
Direct MAT 38,219 43,458 (40,682) (19,596) (10,810) (27,630)
Total Direct 84,041 86,235 (65,502) (38,460) (21,388) (39,115)
Reinsurance 20,135 24,349 (18,111) (11,323) (9,037) (14,122)
Grand Total 104,176 110,584 (83,613) (49,783) (30,425) (53,237)

https://www.lloyds.com/investor-relations/financial-performance/syndicate-reports-and-accounts/2016/1884