Syndicate results 2021 #57 Syndicate 4711 Aspen

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.

Active underwriter   S Stanford

Overall premium for the year increased to £494.2m (2020: £349.4m), generating a loss for the financial year of £34.3m (2020: £53.0m loss). This reflected an increase in current and prior year reserves, mainly driven by Accident & Health, D&O, Professional Indemnity, Technology Liability, Credit & Political and Financial Institutions.

During 2021 Aspen undertook a strategic group restructuring and transferred certain business from Aspen Insurance UK Ltd into the Syndicate. This accounts for the increase in premiums written compared to 2020.

Marine and Energy Insurance Gross written premium increased to £61.6m, from £52.1m in 2020. Aspen said that “overall, this segment is loss making, with Marine Liability (ceased writing in 2020) being the main driver”.

Apart from the also loss-making Aviation division, the remaining lines were profitable for the year.

KPIs

£m 2021 2020
Gross written premium 494.2 349.4
Net earned premium 199.0 122.2
Loss for the financial year (34.3) (53.0)

The Syndicate has a 20% whole account quota share for the years of account 2009 to 2020, and 35% on 2021 YOA. This reinsurance is placed with Aspen Bermuda Ltd.

For the 2015 to 2021 underwriting years of account, all MEC business written by the Aspen Group was agreed to be written by the Syndicate and an additional 50% quota share was purchased to reduce volatility. This quota share was purchased with AIUK. Its ultimate holding co is Aspen Insurance Holdings Ltd.

In March 2020 the Group, with the Syndicate as a named party, entered into an adverse development reinsurance agreement (ADC) with a wholly-owned subsidiary of Enstar Group Ltd. Under this agreement the Group will reinsure losses incurred on or prior to December 31st 2019.

Enstar’s subsidiary will provide $770m of cover in excess of $3.805bn retention up to an aggregate limit of $4.575bn, and an additional $250 million of cover in excess of $4.815bn, up to $5.065bn.

The premium payable and recoverables receivable under this contract were allocated across the various operating subsidiaries within the Aspen Group, based on risk-adjusted reserve run-off projections. The Syndicate’s share of both premium and in-the-money recoveries were $77.0m, equating to 10% of the reinsurance agreement. Recoveries due to the Group from the out-of-the-money layer are $68.15m, of which $6.81m has been allocated to Syndicate (using the same allocation approach).

The Aspen Group has entered into a ground-up Loss Portfolio Transfer with Enstar during 2022 (subject to certain closing conditions). The existing ADC would be assumed under the LPT which would cover all business from 2019 and prior accident years, which would mean some development on the 2019 Underwriting Year would not be reinsured.

The existing ADC would continue until the deal is closed.

The new contract would ensure that the Group, and therefore the Syndicate, are substantially covered against further deterioration on the 2019 and prior accident years.

The Syndicate’s capacity for 2022 has increased to £900m (2021: £725m).

Aspen said that the January 1st 2022 renewals demonstrated some continued hardening of rates across the market, with planned rate increases expected across a number of lines of business. However, the increases were to a lesser extent than experienced in 2021.

Segmental analysis

2021 £000s GPW GPE GCI Op Exps Reins Bal Total
Direct MAT 9,663 8,528 (2,032) (2,564) (1,609) 2,323
Total direct 288,804 234,575 (202,525) (76,646) 29,705 (14,891)  
Reinsurance 205,349 160,587 (152,054) (55,473) 27,301 (19,639)
Total 494,153 395,162 (354,579) (132,119) 57,006 (34,530)
2020 £000s GPW GPE GCI Op Exps Reins Bal Total
Direct MAT 8,660 12,414 (10,894) (3,056) 7,186 5,650
Total Direct 201,232 224,075 (207,706) (70,999) 10,624 (44,006)
Reinsurance 148,156 140,601 (121,978) (52,272) 13,831 (19,818)
Total 349,388 364,676 (329,684) (123,271) 24,455 (63,824)

The majority of premiums were underwritten in the UK, with a small amount written in Singapore. For 2021, the amount in Singapore was £3.9m (2020: £3.4m)

The active underwriter received the following aggregate remuneration charged to the Syndicate.

£000s 2021 2020
Emoluments 624 620

https://assets.lloyds.com/media/379fdcd9-c161-454c-a5cb-f2baea01296f/SRA4711a.pdf