Syndicate results 2021 #8 Chaucer 1084

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

E Lines (to December 31st 2021)

K Hunt (from January 1st 2022)

KPI

$m 2021 2020
Gross written premium 1,753.2 1,490.3
Net written premium 1,320.3 1,089.7
Net earned premium 1,215.4 975.9
Underwriting result 128.1 (47.0)
Investment return (9.5) 54.4
Technical profit for the financial year 118.6 7.4
Non-technical account for the financial year 10.4 (18.4)
Profit/(Loss) for the financial year 129.0 (11.0)
Combined ratio 89.2% 104.5%
Amount due from member 111.4 207.7

The increase in gross written premiums for the Syndicate by 17.6% in 2021 to $1,753.2m, with growth in both the Direct Insurance and Reinsurance elements of the portfolio, was attributed to favourable market conditions in most classes. Significant growth was anticipated in the Syndicate’s business plan for 2021. Rates on renewal business continued the improvement which began in 2019, with the cumulative year-on-year strengthening providing sufficient margin in business which had either previously been declined or non-renewed due to pricing concerns.

2021 also saw “a healthy flow of attractive new business opportunities”.

The growth in net written premiums in 2021 by 21.2% to $1,320.3m (2020: $1,089.7m) was largely driven by the increase in GWP and revision to some proportional reinsurance arrangements.

The profit of $128.1m in the underwriting result represented an improvement of $175.1m on 2020. Net earned premiums increased by $239.5m (24%) to $1,215.4m, while at the same time net incurred losses remained stable. A key factor here was that catastrophe losses in 2021 reduced compared to 2020.

During 2021 the Syndicate experienced losses from natural catastrophes Hurricane Ida, US winter storm Uri and European Floods Bernd, and also from the civil unrest in South Africa. The previous year had seen significant losses arising from the Covid-19 pandemic and the associated global economic slump, in addition to Hurricanes Laura, Zeta, Sally and Delta and the Midwest Derecho.

Attritional loss experience also improved year-on-year due to the strengthening rating environment.

The profit for the year was $129.0m (2020: $11.0m loss), and the combined ratio improved to 89.2% (2020: 104.5%). The improvement in the combined ratio was attributed to the favourable market conditions in most lines of business, and the absence of any unprecedented loss events such as Covid-19.

Financial assets continued to grow in 2021, reaching $1,626.6m by the end of the year (End-2020: $1,446.6m).

The majority of Syndicate assets are held in fixed income securities, which were significantly impacted by rising bond yields throughout 2021 as markets began to price in the unwinding of accommodative monetary policy, and in particular the increase of interest rates.

The Syndicate’s fixed income portfolio has a duration in line with liabilities, which it said enabled it to take a longer-term view on total return.

The 2022 Business Plan saw capacity increased by a further 9% to £1.25bn, which the Syndicate said reflected its “firm belief that profitable growth continues to be achievable”.

The Syndicate will also continue to underwrite through the Lloyd’s Brussels platform in accordance with the updated operating model, as this allows underwriters to access EEA business and then reinsure it back to Syndicate 1084.

Effective January 1st 2022 the Syndicate accepted the reinsurance to close (RITC) of the liabilities of Syndicate 2088 for the 2019 Year of Account.

The Syndicate said that it was too early to accurately estimate the impact of the Ukraine and Russia conflict on the Syndicate’s future results. The Managing Agent’s risk management and underwriting teams completed a preliminary review of potential exposures and would continue to monitor the exposure as the conflict develops. Current underwriting exposures were concentrated in the Political Risk, Credit and Political Violence segments, the Syndicate noted all benefited from extensive reinsurance programmes. As such the net potential loss to the syndicate was not expected to be material. The impact of sanctions on premiums or investment holdings was expected to be minimal, but was being monitored. At the time of writing the Syndicate said that there were no material reported losses as a result of the conflict

Segmental analysis

2021 $m GPW GPE GCI GOE Reins Bal Total Net tech provs
MAT 107.2 98.8 (36.6) (34.5) (9.6) 18.1 113.1
Total Direct 622.0 570.9 (229.3) (223.6) (79.3) 38.7 1,061.2
Reinsurance 1,131.2 1,064.0 (506.4) (270.9) (197.3) 89.4 1,390.9
Total 1,753.2 1,634.9 (735.7) (494.5) (276.6) 128.1 2,452.1
2020 $m GPW GPE GCI GOE Reins Bal Total Net tech provs
MAT 91.6 87.0 (36.3) (49.1) (9.3) (7.7) 127.3
Reinsurance 592.1 558.8 (379.4) (234.8) (16.2) (71.6) 976.6
Total 1,490.3 1,377.9 (829.5) (419.3) (176.1) (47.0) 2,225.0

During 2021 the Syndicate released $105.2m of technical reserves in respect of prior periods (2020: $74.5m), arising predominantly from the Treaty, Marine and Energy divisions (2020: predominantly from the Marine, Energy and Treaty divisions). These releases were due to favourable claims development on prior year losses during 2021.

The Directors of Chaucer Syndicates Limited received the following aggregate remuneration for services rendered to the Syndicate:

$m 2021 2020
Directors of Chaucer Syndicates Limited 2.2 1.7
Active Underwriter 0.5 0.4

https://assets.lloyds.com/media/336050b8-2e60-4548-ba6b-6a4e11b9225a/SRA1084a.pdf