Syndicate results 2021 #16 Ascot 1414

The Lloyd’s syndicates have now published their results for 2021 and, in some cases, added detail and an outlook for 2022. Some have stuck to the bare bones. As last year, IMN is summarizing the results from all syndicates that have a marine interest, which have provided some information on the marine side.

CEO   Andrew L Brooks

Active Underwriter   Mark L Pepper

The managing agent of Syndicate 1414 is Ascot Underwriting Ltd (AUL) of 20 Fenchurch Street. AUL is a wholly owned subsidiary of Ascot Underwriting Group Limited (AUGL), which is also the parent of Ascot Corporate Names Ltd (ACNL).

AUL owned two subsidiaries during the year, Ascot Underwriting Asia (Private Limited) (AUA) a platform allowing Syndicate 1414 to underwrite Lloyd’s Asia risks which is currently in run-off and expected to be closed during 2022, and Ascot Insurance Services Limited (AIS) a service company for Syndicate 1414 providing services between the Syndicate and businesses who are acting as coverholders for the Syndicate.

KPI

  2021 2020
Combined Ratio 89.6% 89.4%
GPW £1,043.8m £824.3m
NWP £724.3m £493.4m
Claims Paid Gross £343.4m £333.4m
Claims Paid Net £199.9m £194.5m
Profit £55.7m £68.2m

The 27% increase in GWP was driven by a combination of rate increases seen in 2020, which continued into 2021, and the onboarding of new business lines and teams during the period. These included Professional Indemnity and Binders Liability.

Following the rate increases achieved by many classes during 2020, Syndicate 1414 achieved an average rate increase of 9.4% in 2021, against a plan of 11.6%, and prior year of 12.8%.

2021 was another challenging year in the insurance and reinsurance market given the above average natural catastrophe bill, the Syndicate said, noting that this “most certainly reinforces the view that property pricing needs to increase further in 2022, with markets recognizing that current levels are not respecting non-modelled risk and the increased effects of climate change”.

During 2021 the current year accident loss ratio was impacted by Winter Storm Uri (gross loss of £48.6m and net £29.8m); European Floods (gross loss of £36.6m and net £22.6m); Hurricane Ida (gross loss of £68.5m and net £3.3m); US Tornados (gross loss of £19.5m and net £9.0m) and Amplify Energy (gross loss of £20.8m and net £6.0m).

The impact to the Syndicate result across these events was a gross loss of £194.0m and net loss of £70.7m, representing 11.8% of the current accident year ratio.

The non-catastrophe current accident year loss ratio for 2021 of 38.5% compared favourably with the prior year of 43.6%, and was driven by the improved rating environment, offset by the increased frequency and severity of medium and larger losses that had been prevalent for the past five years, alongside the fact that 2020 experienced a record number of named hurricanes.

Of the 5.4% prior accident year loss ratio, 4.0% came from catastrophe events, most notably on Hurricane Laura and 2010 New Zealand Earthquake. The 2021 income statement impact for these events was a gross loss impact of £14.4 and £10.0m respectively, and a net deterioration of £11.7m and £10.0m respective.

The Syndicate had planned for most classes to witness a third year of increases in 2022, albeit at lower levels than the past couple of years. The Syndicate also noted the “compound effect”, with a smaller percentage of a larger base sum often being the same in absolute terms as bigger percentage increases from a lower base.

The Syndicate warned that “Covid-19 is still not behind us as a market as many claims are still being negotiated or are awaiting court/arbitration dates, these have been held up due to their extended closure”. Therefore the Syndicate was still categorizing Covid 19 as a “live cat”. It hoped that more progress could be made on the claims in 2022.

Outwards reinsurance renewals were termed “somewhat challenging”, but the Syndicate was pleased to report that it achieved full coverage of the core programme, with essentially the structures and retentions being the same as those previously set in 2021.

AUL CEO Andrew Brooks said that “It is great that Lloyd’s will return to profitability in 2021 but the market must not consider that this is job done. We must expect the threat of heightened natural catastrophe losses as part of the way we business plan and price business. With the likely result to be a mid-nineties combined ratio we do not view this as a “hard market” result and the underwriters at Ascot will do all they can to continue to push rate and terms/conditions.”

Segmental Information

2021 £’000s GPW GPE GCI GOE Reins. Bal Net Tech Res
Direct MAT 192,692 184,898 (85,516) (50,213) (16,003) 33,166
Total Direct 655,856 592,077 (345,645) (167,303) (18,229) 60,900
Reins. Acceptances 387,897 320,995 (223,313) (68,176) (28,082) 1,424
Total 1,043,753 913,072 (568,958) (235,479) (46,311) 62,324
2020 £’000s GPW GPE GCI GOE Reins. Bal Net Tech Res
Direct MAT 184,398 170,184 (68,747) (47,596) (19,031) 34,810
Total Direct 549,931 492,902 (258,433) (145,767) (50,093) 38,609
Reins Acceptances 274,364 268,122 (87,282) (50,815) (121,047) 8,978
Total 824,295 761,024 (345,715) (196,582) (171,140) 47,587

The active underwriter and the highest paid director, received the following remuneration which was charged to the syndicate:

£’000s 2021 2020
Remuneration of active underwriter 129 179
Remuneration of highest paid director 267 247

https://assets.lloyds.com/media/adced28f-502a-41da-bd4f-462be0846c84/SRA1414a.pdf