Syndicate results 2020 #2 – Cincinnati Global 318

The Lloyd’s syndicates have now published their results for 2020 and, in some cases, added detail and an outlook for 2021. Some have stuck to the bare bones. As was the case last year, IMN is summarizing the results from all syndicates that have a marine interest, which have provided some information on the marine side.

Cincinnati Global 318

Active underwriter NM (Nick) Chalk

Syndicate 318 had previously underwritten in two core business areas of International and US Property and Aviation.

The Aviation business was predominantly from smaller airlines, as well as some general aviation business.

In 2020 the syndicate began a process of diversifying into a more composite nature, with the objective of reducing the volatility to the results caused by natural catastrophe events.

To this end, the Syndicate has added new lines of business in Credit and Political Risk, Political Violence (Tom Gardner Senior Underwriter War, Terrorism and Political Violence), and Specie (Ian Seakens Head of Specie)

The Syndicate has also hired a team to underwrite Contingency business in 2021.

In the early part of 2020, the Syndicate ceased underwriting Aviation business, following the negative impact on the market owing to the COVID-19 pandemic.

The syndicate said that the improvement in the rating environment continued to gain momentum in 2020, particularly in the Direct and Facultative segment of the Property account. The Syndicate concentrated premium growth in this area as the rate increases on risks accepted under binding authorities have been lower.

The Syndicate has adopted a relatively conservative approach to building the new classes of business, with the objective of growing organically and profitably over time. GWP  increased to £179.2m for the year ended 31 December 2020, from £167.4m in the comparative period the year before.

It was a difficult year for the Syndicate, with a particularly high incidence of catastrophe events. Not only was it an extremely active windstorm season, but there were also major losses from the Covid-19 pandemic, and civil unrest related claims in the US. These losses affected the Property account. These losses were mitigated to some extent by prior year releases which continued to be a positive part of the Syndicate’s result.

Significant non-marine losses for the syndicate for the 2020 year of account were:

Loss Gross £m Net £m
Hurricane Laura 14.0 13.2
Hurricane Sally 11.2 10.9
Hurricane Delta 5.1 5.0
Hurricane Zeta 4.4 4.3
Covid-19 2.1 2.1
Protest on racial injustice 1.8 1.8
Total 38.6 37.3

Key Performance Indicators

KPI 2020 2019
Gross premiums written £179.2m £167.4m
Reinsurance ceded £28.6m £28.8m
Profit/(loss) for the year £(17.2m) £24.1m
Gross loss ratio 74.8% 53.2%
Net loss ratio 83.0% 54.8%
Operating expense ratio 30.6% 33.3%
Combined ratio 113.6% 87.8%
Annual investment yield 1.6% 2.8%
Syndicate capacity £233m £234m

The composition of the account has changed to quite a large extent from last year as the Syndicate has ceased writing Aviation business, which had returned premiums in the year.

The new classes of business written in the year have changed the business mix.

The percentage allocation for 2020 and 2019 were:

Gross written premiums 2020 (%) 2019 (%)
Aviation (0.3) 5.0
Property – Direct and Facultative 67.0 62.0
Property – Binding Authorities 27.9 33.0
Credit and Political Risk 1.5
Political Violence 2.5
Specie 1.4
Total 100% 100%

Sectors 2020

2020 Gross premiums written £000  Gross premiums earned £000 Gross claims incurred £000 Net operating expenses* £000 Reinsurance balance £000 Total £000
MAT (698) 2,008 (36) 72 (15) 1,258
Total 179,210 171,304 (128,208) (48,836) (18,707) (19,447)

Sectprs 2019

2019 Gross premiums written £000  Gross premiums earned £000 Gross claims incurred £000 Net operating expenses* £000 Reinsurance balance £000 Total £000
MAT 4,020 4,398 (5,185) (1,843) 744 (1,886)
Total 167,420 174,753 (92,955) (48,159) (16,474) 17,164

All staff are employed by the intermediate parent company of the Managing Agency. The following amounts were recharged to the Syndicate in respect of salary costs:

  2020 £000 2019 £000
Wages and salaries 6,372 5,195
Social security costs 814 654
Other pension costs 427 463
Total 7,613 6,312