Syndicate results 2021 #22 IQUW 1856

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.

Syndicate Active Underwriter, David Message (appointed May 1st 2021), previously Alex Shepherd

IQUW Syndicate Management Limited is the managing agent of Syndicate 1856.

Following Lloyd’s approval, the managing agent responsibility for the Syndicate was novated, effective September 1st 2021. from Arch Managing Agency Ltd to IQUW SML.

IQUW said that the 2021 result was materially impacted by losses from the 2020 underwriting year. The key drivers of these losses in the year included winter storm Uri (£12.9m), hurricane Ida (£1.8m), Measat (£0.4m) and adverse development on 2020 losses, including Covid losses (£8.2m) and the Iowa Derecho (£2.3m).

These losses more than offset the profits from the 2021 underwriting year, which benefited from the remediation and repurposing of the Syndicate after its acquisition by IQUW.

The result for the 2021 underwriting year in calendar year 2021 was a profit of £6.3m. The result for the 2020 and prior underwriting years in calendar year 2021 was a loss of £16.1m.

KPI

Financial Year £’000 2021 YOA Only 2020 & Prior YOAs 2021 Total 2020 Total
Gross premium written 193,259 (3,268) 189,991 78,958
Gross earned premium 108,299 41,036 149,335 76,217
Net earned premium 88,955 34,521 123,476 34,115
Net incurred claims (48,816) (36,269) (85,085) (54,541)
Investment income (4) 59 55 984
Operating expenses (33,926) (15,110) (49,036) (31,520)
Movements on foreign exchange 138 726 864 1,083
Profit/(loss) for the financial year 6,347 (16,073) (9,726) (49,879)
Claims ratio* 54.9% 105.1% 68.9% 159.9%
Expense ratio 38.1% 43.8% 39.7% 92.4%
Combined operating ratio 93.0% 148.9% 108.6% 252.3%

The Syndicate was remediated and repurposed in 2021 after its acquisition by IQUW Bermuda Holdings Limited and its subsidiaries as part of the group’s strategy to expand from its core motor business and enter specialty commercial lines and reinsurance.

The capacity of the Syndicate for the 2021 underwriting year of £188.0m (2020: £109.2 million) was backed entirely by IQUW Corporate Member Ltd.

The 2020 and prior underwriting years continue to be supported by Iris Low Volatility Plus Corporate Member Ltd, Iris Balanced Corporate Member Ltd, and Humboldt Corporate Member Ltd.

The Syndicate now underwrites a mixture of reinsurance, property, marine, energy and professional lines business, as well as a range of specialty lines that include terrorism and political risks.

Existing lines of business were substantially re-underwritten with the outwards reinsurance protection materially restructured. The repurposing and diversification of the Syndicate included the addition of new lines of business for marine, political risk, political violence terrorism and war, and professional lines. Gross premium income in the year was £190.0m (2020: £79.0m).

The 2021 result for the 2021 underwriting year was affected by losses arising from winter storm Uri, hurricane Ida, European floods, Kentucky tornadoes and several other smaller property catastrophe events.

Segmental analysis

2021 £000’s GPW GPE GCI NOE Reins.Bal Total
Direct Marine 1,719 963 (554) (302) (0) 107
Energy-Marine 2,653 1,470 (264) (659) (317) 230
Total Direct 108,573 81,070 (57,009) (26,572) 98 (2,413)
Reinsurance 81,418 68,265 (56,360) (22,464) 2,327 (8,232)
Total 189,991 149,335 (113,369) (49,036) 2,425 (10,645)
2020 £000’s GPW GPE GCI NOE Reins.Bal Total
Direct MAT 13,116 10,161 (9,532) (2,575) (2,339) (4,285)
Energy-Marine 438 1,443 (1,072) (309) (331) (269)
Total Direct 67,534 59,960 (54,865) (14,948) (13,952) (23,805)
Reinsurance 11,424 16,257 7,008 (16,572) (34,834) (28,141)
Total 78,958 76,217 (47,857) (31,520) (48,786) (51,946)

Marine liability

This new account provides cover for marine liability and energy liability risks. The marine liability book has a strong USA bias, focusing on offshore and brown water sectors and the associated industries supporting their operations. It includes P&I, shoreside liabilities, marine employee liability, and other vessel liability risks. IQUW said that market conditions were currently the strongest they had been for many years in both marine liability and energy liability.

Marine cargo

This new account provides cover for marine cargo and specie risks. The specie account focuses on fine art with elements of cash in transit, jewellers block and general specie. The cargo account consists of transit, storage/stock and excess stock. “Improving conditions and hardening rates in the marine cargo market have supported the Syndicate’s premium growth in its first year of operation in this class”, IQUW said.

Marine liability

The Syndicate’s marine liability and energy liability offerings provide cover to protect shipping-related and energy-related businesses against physical loss or damage to third parties or injury to crew. The marine liability book has a strong USA bias, focusing on offshore and brown water sectors and the associated industries supporting their operations. These risks are typically exposed to natural catastrophe, large loss events or attritional claims arising from conventional hazards such as collision, fire, and flooding. During 2021, the maximum gross line size was $35m.

Marine cargo

The Syndicate provides cover for marine cargo and specie risks. The specie account focuses on fine art with elements of cash in transit, jewellers block and general specie. The cargo account consists of transit, storage/stock and excess stock. These risks are typically exposed to natural catastrophe, large loss events or attritional claims arising from conventional hazards such as collision, fire, and flooding. During 2021, the maximum gross line size was $20m.

Specialty reinsurance

This new account brings together several specialist lines such as aerospace, terror, marine, energy, cyber, and composite reinsurance business. The book focuses on excess of loss business to avoid clashing and competing with other IQUW accounts. The Syndicate said that target markets had seen hardening rates over the course of the year.

IQUW SML said that it saw opportunity for good growth in 2022, both from a first full year of trading of the repurposed Syndicate and in classes where rating was robust, following material changes in market rates and terms, and conditions.

The Syndicate said that there were exposures to the Ukrainian war, and connected events, in this account through the reinsurance of clients war and related writings. Exposures were more limited for this part of the business and any net impact to the Syndicate would benefit from retrocessional reinsurance purchased: on marine composite reinsurance claims this would lead to a retention of $5m (plus reinstatements premium) and for aviation reinsurance claims a retention of $2.5m (plus reinstatement premium).

Emoluments £000’s 2021 2020
Active underwriter 262 0

https://assets.lloyds.com/media/4861b1c4-9ed9-4990-b778-c5cecee90cf0/SRA1856a.pdf