Active underwriters, R Littlemore, L Prato Jaen
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.
Syndicate 2003 underwrites general insurance and reinsurance business. The main lines of business are Accident and Health, Aviation, Casualty, Marine and Offshore Energy, Equine, Specie, Crisis Management, Political Risks, Property and Construction.
CUAL, the managing agent of the Syndicate, is a company registered in England and Wales. CUAL is a wholly-owned subsidiary of its ultimate parent, France-registered AXA SA.
Catlin Syndicate Limited is the sole member of Syndicate 2003. The direct holding company of Catlin Syndicate Limited is Catlin (North America) Holdings Ltd. The ultimate parent undertaking and controlling party is AXA SA.
The Syndicate is wholly-aligned with capital provided by AXA XL, a division of AXA SA, through a subsidiary Catlin Syndicate Limited.
|Total recognized result for year||(333.9)||26.9|
|Claims ratio (%)||95.4||71.5|
|Expense ratio (%)||38.4||38.5|
|Combined ratio (%)||133.8||110.0|
|Inv return (%)||3.6||6.0|
Syndicate GWP fell by 19.9% in 2020 to £1,676.2m, from £2,091.4m in 2019.
The syndicate said that GWP fell because of reduced economic activity following the Covid-19 pandemic, plus remedial action to reduce less profitable business and withdrawals from uneconomic classes. This was offset partially by rate increases on renewals. The Syndicate said that the overall reduction in GWP was in line with the 2020 plan.
The underwriting result for 2020 was a loss of £444.0m, compared with an underwriting loss of £165.5m in 2019. The combined ratio deteriorated from 110% to 133.8%.
The Syndicate said that the underwriting result in 2020 was significantly affected by losses relating to Covid-19 which resulted in £523m of net claims. These mainly impacted the Crisis management, Accident & Health and Business interruption classes.
The Syndicate was also impacted by catastrophe events in the second half of the year, including Hurricane Laura, Delta, Zeta, Sally and Thunderstorm Derecho.
The Syndicate benefits from external catastrophe reinsurance protection and a whole-account stop loss agreement with XL Bermuda Ltd – another member of the Axa group.
The underwriting result was also impacted by adverse developments on prior year claims, estimated at £98m.
The most significant contributors were the International Financial Lines, International Casualty, Accident & Health and Wholesale Casualty. These were offset by favourable movements on Marine, Aerospace, Crisis management and Wholesale Property.
During 2020 the action taken to remediate underperforming businesses included the withdrawal from the International Financial Lines and Portfolio Deals.
The total recognized loss for 2020 was £334m, down from a gain of £27m in 2019.
The overall investment return for the year was £123m, down from £186m the previous year. With effect from January 1st 2020 the Syndicate decided to change presentational currency from US Dollars to Sterling. The Directors said they believed that the presentation currency change would “allow greater comparability with other syndicates and operational simplicity”.
The stamp capacity for the 2021 underwriting year is £1,163m.
|TECHNICAL ACCOUNT GENERAL BUSINESS $000’s||2020||2019|
|Gross premiums written||1,676,221||2,091,390|
|Outward reinsurance premiums||(543,569)||(537,531)|
|Net premiums written||1,132,652||1,553,859|
|Earned premiums, net of reinsurance||1,313,953||1,652,948|
|Allocated investment return||82,688||142,524|
|Total technical income||1,396,641||1,795,472|
|Gross claims paid||(1,361,056)||(1,684,409)|
|Claims incurred, net of reinsurance||(1,253,366)||(1,181,651)|
|Net operating expenses||(504,539)||(636,785)|
|Balance on the technical account for general business||(361,264)||(22,964)|
|2020 $’000s||GPW||GPE||Gross Claims||Gross Op exps||Reins. Bal.||Total|
|2019 $’000s||GPW||GPE||Gross Claims||Gross Op exps||Reins. Bal.||Total|
The Syndicate has no direct employees. Staff working on the affairs of the Syndicate are employed by a group service company, XL Catlin Services SE, an approved Central Bank of Ireland regulated intermediary. The recharge of the expenses from the service company to the Syndicate is through a recharge model across the international network, including UK-domiciled entities. The recharge of the costs is dependent on the nature of the service performed for the Syndicate.
The Active Underwriters received the following aggregate remuneration charged to the Syndicate:
|Aggregate emoluments and other benefits||282||339|