The Lloyd’s syndicates have now published their results for 2023 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.
Active underwriter S Stanford
The principal activity of the Syndicate is the transaction of general insurance and reinsurance business at Lloyd’s. The Syndicate is Aspen Group’s primary platform for insurance and reinsurance business in the UK
In Specialty the syndicate covers:
- Crisis Management: the portfolio is comprised of five main product lines: Terrorism & Political Violence, Kidnap & Ransom, Piracy, Active Assailant and Marine War. These lines were said to be non-correlating.
- Credit & Political Risks: the team offers three main products: Credit, Contract Frustration and Political Risk. Business is predominantly direct insurance, with a small proportion of facultative reinsurance. 90% of this business is non-renewing and therefore, is written anew each year.
- Natural Resources & Construction: the account is comprised of: Heavy Industries (includes mining and mineral processing; pulp and paper manufacturing; and metal making), Power Generation, Construction, Upstream Energy, Midstream and Renewables. A diverse variety of companies are insured, ranging from small to large end accounts.
- Specie: the account consists of four products: Fine Art, General Specie, Cash in Transit (CT) and Jewellers’ Block. The main focus is on Fine Art and General Specie.
In reinsurance specialty the account consists of a wide range of products that do not fit naturally into Casualty or Property portfolios, including but not limited to Agriculture, Engineering, Marine, Energy, Terror and Tech Lines (Nuclear, Downstream Energy, Contingency, Product Recall, Film Finance and Engineering). The Syndicate exited Cyber, Aviation, Space and Bloodstock during 2022.
2023 Performance:
GWP for the year decreased to £806.3m (2022: £838.6m), with a profit for the financial year of £61.1m (2022: £35.1m profit). The Syndicate operates a whole account quota share reinsurance agreement with a fellow Aspen Group subsidiary, Aspen Bermuda Ltd.
Gross written premium came in under plan expectations as a result of conscious decisions not to follow down changing market conditions in the Financial and Professional Lines classes, plus continued efforts to reduce exposure to Cyber. The overall result was a profit across all segments.
In Specialty, GWP increased to £167.0m from £146.3m in 2022. This was mostly due to growth in the Crisis Management portfolio, driven by market conditions. The Syndicate said that “overall, this portfolio is profit-making despite continued activity in Russia, Ukraine and more recently Israel, which continues to be reflective of active portfolio management across all classes of business”.
In reinsurance, Overall premium for the year decreased to £255.8m, from £338.2m in 2022. Premium reduction was driven by the decision to close the Australian service company, with Property Reinsurance business being nonrenewed on the Syndicate, combined with exiting Aviation, Space and Bloodstock as part of further optimization and portfolio management. The Syndicate said that this segment made a profit in line with prior year.
Prior year reserves were subject to only marginal movement in the year post loss portfolio transfer (LPT) recoveries in aggregate.
KPIs
| £m | 2023 | 2022 | 2021 |
| Gross written premium | 806.3 | 838.6 | 494.2 |
| Net earned premium | 335.3 | 318.2 | 199.0 |
| Profit for the financial year | 61.1 | 35.1 | (34.3) |
The Syndicate has reinsurance covers in place for the majority of its classes of business with unrelated reinsurers. In 2023 the outwards reinsurance structure remained substantially the same, with a mixture of proportional and non-proportional treaties.
The Syndicate also has a 35% whole account quota share for the 2021 and post years of account. This was previously a 20% quota share, to protect the net retained account. This reinsurance is placed with ABL, a subsidiary within the Aspen Group.
The terms of this quota share arrangement were renegotiated for the 2023 year of account to more closely align the economics of this reinsurance arrangement with the economics of the underlying portfolio. The quota share arrangement provides a cede commission to contribute to the expenses of the Syndicate. In 2023 the cede commission is recognized in line with the underlying expenses to align with contractual terms rather than being deferred commensurate with premiums.
For the 2015 to 2021 underwriting years of account, all Marine, Energy and Cargo (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 Aspen Insurance UK Limited (AIUK), another subsidiary within the Aspen Group whose ultimate holding company is AIHL.
In Q2 2022 the Aspen Group closed on a ground-up LPT with a wholly-owned subsidiary of Enstar. Although closing in 2022, the LPT has an effective date of 1 October 2021. The previous adverse development cover also entered into with Enstar in 2020 was assumed under the LPT.
The LPT covers all business on the 2019 and prior accident years, which means some development on the 2019 Underwriting Year is not reinsured. The LPT provides the Aspen Group with $450m adverse development cover on Group reserves of $3.12bn at the effective date.
As at 31 December 2023 the Group is within the LPT limit of $450m.
Subject to this Group limit, any deterioration on 2019 and prior accident year reserves in the Syndicate due to inflation or other reasons, are fully recoverable. In the current year the contract had a favourable impact on the prior year underwriting loss of £9.3m (2022: favourable impact of £44.6m) which decreased the 2023 combined ratio by 2.8pp to 86.7% from 89.5% (2022: combined ratio decreased by 14pp to 75.4% from 89.4%).
The LPT operates on a cash withheld basis until September 2025, and therefore the Syndicate pays an interest charge on the withheld funds through this period, with interest in the current year amounting to £1.1m (2022: £2.7m). In addition, the responsibility and expense of handling the 2019 and prior gross claims was transferred to the wholly-owned subsidiary of Enstar.
Segmental analysis
| 2023 £000s | GPW | GPE | GCI | Op Exps | Reins Bal | Total |
| Direct MAT | 11,694 | 10,470 | (469) | (3,388) | (5,918) | 695 |
| Total Direct | 550,509 | 497,701 | (315,401) | (159,472) | 4,041 | 26,869 |
| Reinsurance | 255,779 | 276,297 | (176,780) | (74,094) | (7,848) | 17,575 |
| Total | 806,288 | 773,998 | (492,181) | (233,566) | (3,807) | 44,444 |
| 2022 £000s | GPW | GPE | GCI | Op Exps | Reins Bal | Total |
| Direct MAT | 9,600 | 9,504 | (226) | (2,575) | (1,097) | 5,606 |
| Total Direct | 500,431 | 455,397 | (289,656) | (134,232) | 28,318 | 59,827 |
| Reinsurance | 338,168 | 255,618 | (168,541) | (90,708) | 22,039 | 18,408 |
| Total | 838,599 | 711,015 | (458,197) | (224,940) | 50,357 | 78,235 |
| 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) |
The active underwriter received the following aggregate remuneration charged to the Syndicate.
| £000s | 2023 | 2022 | 2021 |
| Emoluments | 677 | 560 | 624 |
https://assets.lloyds.com/media/fe9aa286-ece2-40df-8775-283a14b71fa6/SRA4711a.pdf