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.
Syndicate 2623 Active Underwriter A P Cox
This year IMN will be splitting the reports for Syndicates 623 and 2623. Beazley Furlonge’s several other syndicates do not have a marine interest.
The Active Underwriter’s comments applied to both syndicates and were published yesterday with the figures for Syndicate 623.
| Syndicate Number | Capacity 2020 | Capacity 2019 |
| 2623 | 1932.4 | £1,624.0m |
| 623 | 422.6 | £366.2m |
| 3623 | 71.9 | £69.3m |
| 6107 | 69.5 | £67.6m |
| 3622 | 25.9 | £25.0m |
| 5623 | 83.5 | £63.1m |
Syndicate 2623 Rating environment
The active underwriter said that the loss activity during 2018 and 2019 had a continued positive effect on the rating environment, with rates increasing by 15% in 2020 across the portfolio, compared with a 6% increase in 2019. Most lines saw increases in rates compared to 2019, with marine increasing by 16%, property increasing by 15%, reinsurance rates increasing by 13%, specialty lines increasing by 15% and cyber & executive risk increasing by 18%. Rates on renewals in the political, accident & contingency division also increased by 4%.
The syndicate’s combined ratio for 2020 was 110%, up from 99% the year before, driven by the increase in the loss ratio.
The claims ratio deteriorated to 75% in 2020, from 62% the previous year, as the syndicate was heavily impacted by the volume of Covid-19-related claims.
The rest of the comments were the same as those included in syndicate report 623, published yesterday.
Syndicate net claims in 2020 rose to $1,555.8m, from $1,130.4m the year before.
During 2020 the syndicate released prior year reserves of $75.1m, up from $15.9m the year before.
Action taken in the Marine division to remediate selected areas of the account, including the UK Marine portfolio in January 2020, resulted in a release of $8.6m in the division.
Specialty lines and cyber & executive risk had releases of $37.5m and $7.0m respectively. Both specialty lines and cyber & executive risk have been impacted over the past few years by the increased claims seen on their liability books, resulting in decreased releases.
Both the property and reinsurance divisions have benefitted from releases on some of the 2019 natural catastrophe events, namely Storm Dorian in the US and Typhoons Hagibis and Faxai in Japan.
The claims impact of the Covid-19 global pandemic is not included in the prior-year reserve movement
Outlook
The managing agents said that the 2019 year of account was currently forecast to close at a loss on capacity of 2.5%, due in the main to the challenging claims environment driven by the Covid-19 pandemic losses.
Cox said that the year demonstrated the importance of flexibility and the need for a clear and consistent strategy. “The strength of our diversified business and significant growth in many classes in 2020 is a testament to the expertise of our people and a long term strategic underwriting approach. We anticipate the favourable rating environment will continue throughout 2021 and we will continue to pursue growth in areas where we can deliver consistent value for brokers and clients while managing our claims and expenses”, he wrote, continuing: “Despite the harsh effects of the pandemic and a deep global recession, we are optimistic that the positive market change of the last 12 months and the resilience that we have demonstrated puts us on a strong financial and operational footing to support our clients and to grow profitably in 2021. We expect to deliver a low-90s combined ratio for 2021 assuming average claims experience”.
Syndicate 2623
| 2020 | Marine (MAT) $m | Total $m |
| GWP | 321.3 | 2687.5 |
| NWP | 293.6 | 2227.2 |
| Gross earned premiums | 310.4 | 2482.4 |
| Earned premiums net of reinsurance | 282.7 | 2076.8 |
| Technical result | 32.0 | (207.5) |
| Profit financial year | 32.0 | (109.4) |
| Claims Ratio | 54% | 75% |
| Expense Ratio | 35% | 35% |
| Combined Ratio | 89% | 110% |
| 2019 | Marine (MAT) $m | Total $m |
| GWP | 297.4 | 2361.9 |
| NWP | 213.1 | 1945.5 |
| Gross earned premiums | 300.7 | 2258.0 |
| Earned premiums net of reinsurance | 213.4 | 1845 |
| Technical result | (9.6) | 25.8 |
| Profit financial year | (10.1) | 164.8 |
| Claims Ratio | 57% | 62% |
| Expense Ratio | 48% | 37% |
| Combined Ratio | 105% | 99% |
Staff costs Syndicate 2623:
All UK staff are employed by Beazley Management Limited, with the majority of these costs incurred in sterling. The following amounts were recharged to the syndicate in respect of staff costs:
| 2020 $m | 2019 $m | |
| Wages and salaries | 54.5 | 51.0 |
| Short-term incentive payments | 11.1 | 21.2 |
| Social security costs | 11.7 | 12.9 |
| Pension costs | 10.6 | 11.6 |
| Total | 87.9 | 96.7 |
The Active Underwriter’s emoluments were $0.5m in 2020, down from $1.7m in 2019.
Syndicate 3623 underwrites personal accident and sports insurance and market facilities at Lloyd’s and reinsurance business ceded from Beazley’s US admitted insurance company, Beazley Insurance Company, Inc. The syndicate retained 10% of these risks in 2019 and 2020, while reinsuring 64.75% to syndicate 5623 through a quota share arrangement. The syndicate acts as the host syndicate for syndicate 5623. The remaining 25.25% was reinsured with external reinsurers. It has no marine interests.
Syndicate 5623 was established in 2018 as a special purpose arrangement syndicate to write market facility business via a quota share from syndicate 3623. It has no marine interest.
Syndicate 3622 underwrites life insurance and reinsurance. It has no marine interest.
Syndicate 6107 writes a share of the property reinsurance business and a share of certain cyber business written by syndicates 623 and 2623. It has no marine interest.
Syndicate results 2020 #8 Beazley Furlonge Ltd 2623 https://www.lloyds.com/about-lloyds/investor-relations/financial-performance/syndicate-reports-and-accounts/2006-2623