Syndicate results 2021 #23 Canopius Syndicate 1861

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.

Joint Active Underwriters

C Jarvis

S A Willmont

Syndicate 1861 is a syndicate at Lloyd’s managed by Canopius Managing Agents (CMA). The Syndicate did not underwrite on the 2021 year of account. The capacity for the 2020 year of account was £550m, which was written on a split stamp basis with Syndicate 4444, another syndicate managed by CMA. Under this arrangement Syndicate 1861 has underwritten 35% of the joint operations.

A pooling of capacity with Syndicate 4444 meant that 4444 underwrote all risks from the 2021 year of account onwards.

Effective January 1st 2021 the 2018 year of account closed externally into the 2021 year of account of Premia Managing Agency Ltd’s Syndicate 1884, following the completion of an RITC agreement on February 18th 2021.

In December 2021 CMA entered into a Loss Portfolio Transfer Reinsurance (LPT) agreement with RiverStone Managing Agency Ltd covering the majority of classes of business no longer written by Syndicates 4444 (2020 & prior years of account) and 1861 (2020 year of account only).

Under the terms of the agreement the syndicates purchased reinsurance from RiverStone’s managed syndicate 3500 to provide loss portfolio reinsurance on the agreed policies.

The results for the year include the premium ceded to RiverStone of £14m under the contract, of which £4m will earn through in future calendar years, while the reinsurers’ share of the change in provisions for claims includes the recoveries due on the business reinsured under the agreement.

As at the year end the full premium due to RiverStone was included in reinsurance payable. The net impact to the Syndicate under the LPT was a 0.3pp improvement on the combined ratio.

KPI £m 2021 post LPT 2021 Pre LPT 2020
Gross premiums written 91.9 91.9 526.4
Earned premiums, net of reinsurance 215.2 225.1 517.5
Investment return (0.8) (0.8) 4.9
Profit / (Loss) for the year 2.6 1.7 (175.8)
Total comprehensive income/(loss) 3.1 2.2 (163.0)
Gross claims ratio 62.0% 62.0% 95.7%
Net claims ratio 56.1% 58.4% 91.5%
Acquisition ratio 37.9% 36.3% 36.1%
Administrative Expense ratio 4.6% 4.4% 7.0%
Combined operating ratio 98.6% 98.9% 134.5%
Investment return, on average invested balances (0.2%) (0.2%) 1.5%

Following the pooling of capacity between syndicates 4444 and 1861, GWP for Syndicate 1861 during the 2021 calendar year reduced significantly to £91.9m (2020: £526.4m). The net loss ratio improved by 35.4pp to 56.1% in 2021; 2020 had been heavily impacted by the Covid-19 pandemic and a high frequency of natural catastrophe events. Despite further Covid-19 enforced restrictions in 2021, the Syndicate has had favourable movement in Covid-19 losses of £1.3m.

Syndicate 1861’s investment portfolio generated a loss of £0.8m in 2021 (2020: positive £4.9m). The swing to a loss was primarily due to significant increases in yields during the period, resulting in mark-to-market losses on the investment-grade short-duration bond portfolio held within the syndicate, and a reduced investment portfolio due to the external reinsurance to close of 2018 and prior YOA to Syndicate 1884 at the beginning of the year.

The 2019 year of account of Syndicate 1861 closed with a reported loss of £116.7m, representing a loss of 23.3% on managed capacity. The 2020 year of account is forecast to make a loss of 3.0% of managed capacity

Segmental Information

2021 £000s GPW GPE GCI Net op exps Reins Bal. Total
Direct Energy 2,158 7,231 (6,819) (1,928) (1,118) (2,634)
Direct MAT 5,525 14,817 (2,232) (4,082) (3,215) 5,288
Total Direct 80,492 218,028 (138,030) (76,117) (6,100) (2,219)
Reinsurance inwards 11,387 52,692 (29,925) (15,384) (2,232) 5,151
Total 91,879 270,720 (167,955) (91,501) (8,332) 2,932
2020 £000s GPW GPE GCI Net op exps Reins Bal. Total
Direct Energy 13,185 15,818 (15,593) (4,207) 2,356 (1,626)
Direct MAT 19,825 22,856 (22,101) (6,061) 4,214 (1,092)
Total Direct 372,280 483,088 (420,280) (171,949) 9,505 (99,636)
Reinsurance inwards 154,147 175,575 (210,084) (50,631) 6,028 (79,112)
Total 526,427 658,663 (630,364) (222,580) 15,533 (178,748)

The Active Underwriters received the following remuneration charged as a syndicate expense:

£000s 2021 2020
Emoluments 58 661

https://assets.lloyds.com/media/948d9f60-f296-4ee5-9de6-73601a2016b3/SRA1861a.pdf