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Syndicate results 2023 #1 Hiscox 33 (and 6104)

The Lloyd’s syndicates have now published their results for 2023 and, in some cases, added detail and an outlook for 2024. 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.

Hiscox Syndicates Limited (HSL) is the managing agent of composite Syndicate 33, aligned Syndicate 3624 and Special Purpose Arrangement (SPA) 6104. HSL is an indirectly wholly owned subsidiary of Hiscox Ltd.

Active Underwriters:

Syndicate 33 – P A Lawrence

Syndicate 33 and 6104 – A Dolphin

The result for Syndicate 33 in calendar year 2023 was a profit of $402.3m (2022: $194.3m). The Syndicate said that it had been “outperforming expectations”, with strong rates in property and growth in marine and energy.

Significant catastrophes events, including the Hawaii wildfires, Hurricane Idalia, Canada wildfires and the Morocco earthquake, were all within the Syndicate’s modelled range. Notable non-catastrophe losses included an abnormal frequency of space satellite losses, but these were offset by favourable prior-year development.

The Syndicate reported a higher expense ratio, largely caused by higher commission expense related to profit commission (PC), which reflected the increase in profits.

The result also benefitted from positive investment returns during the year, with higher coupon income and the reversal of prior-year mark-to-market investment losses.

The Syndicate’s key financial performance indicators during the year were as follows:

$m20232022% change
Gross premiums written2,348.02,072.313.3
Gross premiums earned2,288.82,046.411.8
Net premiums earned1,375.61,174.617.1
Total recognized profit for the year402.3194.3107.1
Claims ratio3939
Commission ratio2123(2)
Expense ratio19154
Combined ratio79772

Marine and energy provides cover for marine hull and war, cargo, marine and energy liability, and energy property risks comprising upstream, midstream, downstream, power and renewables.

The division grew in 2023 across all lines, with the Syndicate taking advantage of another positive year of rate. Energy property saw the most notable growth, with both an increased linesize and a new team which was “able to write a broader spread of business specifically across the power and renewables line”.

Geopolitical instability, along with macroeconomic challenges, continued to be external factors influencing the division, but the Syndicate said that “we have been able to successfully navigate this throughout 2023”.

The Reinsurance division covers the Syndicate’s non-marine property reinsurance business (catastrophe excess of loss including retrocession, risk excess and pro-rata reinsurance), marine and aviation reinsurance, and specialty business. The Syndicate underwrites business for itself and for third-party capital providers such as insurance companies, other syndicates (especially Syndicate 6104) and capital market investors.

The division experienced gross premium growth during the year, driven by significant rate rises across reinsurance lines after 2022’s Hurricane Ian and a subsequent capital withdrawal. The Syndicate noted that several competitors had exited the property reinsurance space and ILS capacity affected by collateral locking and redemptions. “Our own funds were also affected by this withdrawal, leading to lower cessions to ILS, but we took advantage of the hardest market in property reinsurance since at least 1993 by increasing our net underwriting appetite, more than compensating for any shortfall on the funds”.

2023 had been a benign year for claims activity, despite another year of significant industry-wide losses, showing the effectiveness of recent underwriting action on the portfolio, the Syndicate said, without making any specific reference to marine.

Divisional performance

$m2023 gross premium written2023 profit2022 gross premium written2022 profit
Reinsurance519.7137.8496.730.2
Property599.173.5465.413.9
Specialty378.354.4340.444.3
Marine and energy427.071.8322.064.0
Casualty343.553.2389.428.2
Art and private client80.411.658.413.7
Total2,348.0402.32,072.3194.3

Segmental performance

2023 $000Gross premiums writtenGross premiums earnedGross claims incurredNet operating expensesReinsurance balanceUnderwriting profit/(loss)
Marine aviation and transport209,367191,946(114,060)(59,382)(11,445)7,059
Reinsurance663,241672,820(110,590)(99,298)(337,450)125,482
Total2,348,0402,288,757(838,944)(554,734)(607,120)287,959

 

2022 $000Gross premiums writtenGross premiums earnedGross claims incurredNet operating expensesReinsurance balanceUnderwriting profit/(loss)
Marine aviation and transport163,226168,399(45,861)(43,179)(9,096)70,263
Reinsurance634,232602,966(257,597)(97,261)(203,115)44,993
Total2,072,2772,046,357(929,126)(444,419)(405,186)267,626

Underwriters emoluments

2023£1,183,000
2022£1,032,000
2021£1,112,000

https://assets.lloyds.com/media/e35f5364-b803-497a-b1ec-74d41ee94a57/SRA0033c.pdf