Syndicate Results 2019 #51 Syndicate 1686 Axis

Active Underwriter Alistair Robson

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.

AXIS Syndicate 1686 is a Lloyd’s Syndicate of AXIS Capital Holdings Ltd, the Bermuda-based holding company for the AXIS group of companies.

The Syndicate is managed by AXIS Managing Agency Ltd. ACHL is the Syndicate’s sole capital provider.

The Syndicate commenced underwriting for contracts incepting from January 1st 2014 onwards. For the financial year ended December 2019 the Syndicate recorded  gross written premiums of $1.143bn, up 172% from 2018. This was driven by the renewal of AXIS Syndicate 2007 business into the Syndicate in order to streamline AMAL’s platform use at Lloyd’s for ongoing business.

The larger, more diverse Syndicate writes a balanced portfolio with more than 25 individual classes of business. No single line comprises more than 15% of total gross premium.

During the year the Syndicate continued to reconfigure its portfolio to improve underwriting performance. It made “the difficult decision” to exit from four lines of business in response to poor trading conditions. This included Marine Hull.

The Syndicate said that 2019 continued an upward trend in rate movement, building on the momentum of 2018. Rate increases were evident in almost all lines of business which sought to arrest the reductions of the most recent soft market.

The overall rate movement for the Underwriting Year 2019 was 3.6%, against a plan of 2.2%. “However, results for the year demonstrate that there remains work to be done both for the Syndicate and industry at large to achieve consistent and sustainable financial performance”, the Syndicate said.

For 2019, the Syndicate produced a loss of $70.0m (2018: loss of $43.7m). This actually represented an improved combined ratio, because of the larger GWP, but the Syndicate conceded that it had “clearly not delivered its planned financial result”. The loss primarily resulted from a continued frequency of large losses, particularly from the Direct Aviation (Aviation), Commercial D&O (Professional) and Hull (Marine) portfolios (which have all been exited by the Syndicate) as well as the Aviation Reinsurance (Aviation) class.

The Syndicate result was also influenced by the AXIS intra-group reinsurance philosophy and the consequential placements have performed as expected, to the continued benefit of the Group.

Following Syndicate 2007 being placed into run-off, all new and renewing AXIS Lloyd’s sourced business was transacted through Syndicate 1686 during 2019. Syndicate 2007 continues to be managed by AMAL.

KPIs $000s 2019 2018 Change
Gross written premium 1,142,575 420,079 172.0
Net earned premium 518,987 243,352 113.2
Net technical loss (70,056) (43,713) (60.3)
CR (excluding inv inc and FX) 113.5% 118.0%  

Sector

2019 £000s GPW GPE GCI Op exps Reins Bal Total
Direct Marine 59,319 41,985 (32,733) (16,881) (1,555) (9,184)
Direct Energy marine 17,611 17,470 (2,204) (5,192) (6,427) 3,647
Total Direct insurance 753,936 547,765 (374,316) (196,322) (21,735) (44,608)
Reinsurance 388,639 241,522 (142,717) (68,975) (55,278) (25,448)
Grand Total 1,142,575 789,287 (517,033) (265,297) (77,013) (70,056)
2018 £000s GPW GPE GCI Op exps Reins Bal Total
Direct Marine 4,301 4,629 (2,804) (1,256) (901) (332)
Direct Energy 6,232 14,035 (1,786) (2,624) (5,237) 4,388
Total Direct 245,130 256,576 (180,591) (56,208) (31,232) (11,455)
Reinsurance 174,949 174,496 (152,947) (32,838) (20,969) (32,258)
Grand Total 420,079 431,072 (333,538) (89,046) (52,201) (43,713)

https://www.lloyds.com/investor-relations/financial-performance/syndicate-reports-and-accounts/2018/1686