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Lloyd's asks syndicates for more quarterly information amid profit push

Lloyd's of London is asking managing agents to provide more quarterly information so it can track performance against plans as part of its continuing effort to improve syndicate profitability.

The market in a Jan. 17 bulletin said it is also requiring "increased engagement" where syndicates have strayed from their agreed business and performance improvement plans. Syndicates or classes of business may be forced to cease underwriting if the market fails to see "credible" paths to sustainable profits in the near term.

It emerged in June 2018 that Lloyd's had embarked on a three-pronged crackdown on unprofitable business, focusing on syndicates that had been unprofitable for three consecutive years, syndicate classes of business that were the "material drivers" of underperformance, and the worst-performing 10% of premium at each syndicate in the market. The third part of the review is known as "Decile 10."

In each case, Lloyd's required syndicates to provide plans to return the relevant classes or entire syndicates to "sustainable profit over the near term."

In its latest bulletin, Lloyd's said it is following up to verify that agreed-upon actions are being taken, focusing on actual versus planned performance for the relevant syndicates and classes and ensuring that actions taken in 2019 are embedded into 2020 business plans.

Lloyd's is requiring syndicates to provide data on gross ultimate claims, split into attritional, large and catastrophe claims, for the business classes within the scope of the profitability review.

Syndicates must also submit additional narrative on the relevant classes of business in a "structured format" to help Lloyd's understand progress against improvement plans and explain variances from the plans. The market said syndicates have to provide the first set of this information with their quarterly monitoring return for the fourth quarter of 2018, which is due Feb. 14. Further submissions will be aligned to the quarterly monitoring return schedule.

Lloyd's said it will provide "feedback and challenge" following the receipt of the information, which would be "at least" on a quarterly basis. Further guidance on its expectations for portfolio management and how it links to the Decile 10 approach will be revealed later in the first quarter.