The Lloyd’s syndicates have now published their results for 2022 and, in some cases, added detail and an outlook for 2023. Some have stuck to the bare bones. As in the previous few years, IMN is summarizing the results from all syndicates that have a notable marine interest, if they have provided some information on the marine side.
Former Directors who served during the year and prior to date of signing:
S J Postlewhite Resigned 13 June 2022
The Syndicate comprises four trading units, or sub-Syndicates. The Syndicate was headed by Peter Burton, Executive Director of Insurance Markets and Steve Postlewhite, Managing Director of QBE’s Reinsurance division, as joint active underwriters up to June 13th 2022. Lloyd’s approval was received for the appointment of Christopher Killourhy to replace Steve Postlewhite on September 7th 2022.
The sub-Syndicates and associated classes of business for 2022 are as follows:
Sub-Syndicate Classes of business
566 Reinsurance: property; aviation; casualty treaty; personal accident; and marine
1036 Marine insurance: hull; energy; liability; specie; cargo; war; ports; and political risks
1886 Non-marine general liability; professional and financial lines; motor; specialty; marine P&I
5555 Multi-line facility business
|Gross written premium||1,815.5||1,483.3|
|Net earned premiums||1,305.0||1,109.7|
|Other net operating expenses||(58.1)||(59.5)|
|Net underwriting profit||20.5||38.3|
|Investment (loss) / return||(121.0)||3.9|
|Non-technical account income / (expense)||3.9||(24.7)|
|Total (loss)/profit for the year||(96.6)||17.5|
|Commission and expense ratio||32.6%||33.7%|
|Combined operating ratio||98.4%||96.5%|
The COVID-19 pandemic remained an area of focus for management during 2022. Uncertainty following the UK Supreme Court judgment in 2021 regarding the FCA Test Case has been reduced following the High Court judgements in the Corbin & King v AXA and the Stonegate v Amlin litigation in 2022, but there remained some uncertainties, particularly in relation to the Stonegate appeal and the “at the premises” claims. The Syndicate noted that it had in place a comprehensive reinsurance programme that would significantly reduce the net exposure to the losses related to COVID-19 for the Syndicate. In addition, the Syndicate participated in the Trade Credit reinsurance scheme established by the UK Government during the current and prior years.
The Active Underwriters noted that the 2022 financial year produced a total loss of £96.6m (2021 £17.5m profit) and a combined operating ratio of 98.4% (2021 96.5%). Overall gross written premium of £1,815.5m (2021 £1,483.3m) was up by about 11.5% on the previous year (at a constant rate of exchange). This reflected the continued improvement in market conditions across all major product lines, with actual rate experience for the Syndicate’s 2022 underwriting year concluding at +6.7%, versus +4.4% approved plan.
In 2022 the market also witnessed the fourth highest incidence of global insured catastrophe losses at $122bn (2021 $130bn), including $7bn of man-made catastrophe losses. Hurricane Ian was the most significant natural disaster, with other secondary peril events contributing more than half of the total natural catastrophe losses for the market, as wealth accumulation and climate change effects in disaster-prone areas drive claims.
With losses from Hurricane Ian and the war in Ukraine, the Syndicate’s net catastrophe loss experience was marginally worse than expectation. It was manageable due to a favourable rating environment that coincided with a beneficial reinsurance programme. This restricted the net claims ratio to 65.8% (2021 62.8%).
In addition, prior accident year reserves, mainly in liability and casualty lines, have been uplifted for inflation loadings. The investment losses of £121m equated to a negative 6.7% return (2021 £3.9m profit or positive 0.4% return). They were impacted by increases in market yields on fixed income holdings. Fixed income represents about 96% of the Syndicate’s overall portfolio and produced a negative 7.0% return for the year, materially offsetting the positive 0.4% return from the small allocation of growth assets – which was driven by financial market optimism during the second half of the year.
The non-technical account gain of £4m principally comprises a foreign exchange gain arising from the revaluation of nonmonetary balances.
Looking ahead, the underwriters said that there had been “a promising start” to 2023, with January renewal rate increases in excess of approved plan across most product lines, particularly property. Hurricane Ian and the relative absence of new capital had accelerated the required correction in reinsurance markets.
Whilst the outwards reinsurance treaty renewals were successful, QBE said that it had experienced increased retentions and pricing relative to plan, particularly for property catastrophe. “The outwards retro environment was especially challenged, with many providers choosing to restrict capacity”. While the cost of protection increased significantly, QBE was successful in securing additional capacity, with high quality providers, and a more simplified structure.
In addition to fully leveraging the supportive rating environment, QBE said that it had undertaken a deliberate re-positioning of its inwards reinsurance portfolio to help manage earnings’ volatility, with a decision to exit inwards retro business in respect of peak perils at January 1st.
|2022 £m||GPW||GPE||GCI||Op Exps||Reins Bal||Total|
|2021 £m||GPW||GPE||GCI||Op Exps||Reins Bal||Total|
The Directors of QUL and the Active Underwriters received the following aggregate remuneration charged to the Syndicate and included within net operating expenses:
|Directors of the Managing Agent||2.1||2.2|