trending Market Intelligence /marketintelligence/en/news-insights/trending/3zZSCha6DOvJcn0qtQv5Cw2 content esgSubNav
In This List

Market share boost for top Lloyd's players in 2015


No disruption on the road to digitization

Climate Credit Analytics: Milestones Achieved


Essential IR Insights Newsletter - April 2023


Practical steps to achieve net-zero underwriting – Set a baseline, define targets and take action

Market share boost for top Lloyd's players in 2015

managingagents are using a range of tactics to fight for relevance in a highlycompetitive marketplace where buyers of insurance and reinsurance seem to havea negotiating advantage.

Low claimslosses over recent years have allowed many insurers and reinsurers to reportgood results, prompting more capital to enter the market. But that hasdiminished the ability of the industry to push against demands from buyers ofinsurance and reinsurance for lower prices and more generous terms andconditions. To stay relevant, many managing agents have seen fit to merge withlarge foreign groups willing to pay top dollar for a foothold at 1 Lime St.;others have sought aggregation benefits in different ways.

Datacompiled by SNL Financial, an offering of S&P Global Market Intelligence,shows how M&A deals have allowed the bigger players to grab a greater shareof the market.

's of , a deal that closedin May 2015, helped Lloyd's largest managing agent increase its market share to9.37% from 8.62%. Theacquisition of AmlinPlc by MS&ADInsurance Group Holdings Inc., which earlier this year, resulted inthe group having a presence at Lloyd's of 7.49% of the total as at year-end2015; Amlin had 5.95% in 2014.

Followingthe other big deal of recent times, Fairfax Financial Holdings Ltd.'s of , the group had a presence atLloyd's of 5.78%, compared to Brit's 5.04% in 2014.

EamonnFlanagan, an analyst at Shore Capital, pointed out in an interview that scalealso allows insurers and reinsurers to cede risk on better terms.

"Tobe able to go to a client and put down a bigger line is important. … That's oneaspect," Flanagan said. "And when you go yourself [to cede risk],your buying power is much greater in terms of your reinsurance cover purchaseor retrocessional purchase."

In the current soft market — characterized by relativelycheap insurance premiums and more generous coverage — the impetus for growth inorder to achieve economies of scale is heightened.

SNL Image

Some firms have opted for novel solutions, seeking thebenefits of aggregation without going through a full merger. , long as a potential M&A target,has teamed up with MunichRe in a bid to improve their offering in cyber insurance, forexample.

Thisclass of business is widely expected to grow markedly in the coming years, inthe wake of high-profile cyber attacks on Ashley Madison, the online dating servicethat encouraged affairs, telecommunications firm TalkTalk and electronics giantSony, among others. But it is little understood, and so far the industry hasstruggled to construct products that are appealing to potential customers. Thejoint Beazley/Munich Re offering will focus on providing tailor-made solutionsto clients' needs and significantly increase Beazley's maximum cover.

"The[independent] players aren't stupid," Flanagan said. "They don'tnecessarily want to be part of the consolidation that's going on. They'repunching clever [and] are very reactive."

More M&A on horizon

Thefactors pulling many players toward M&A have not diminished, however.

"Ithink you could well see more M&A with outside insurance groups buying aLloyd's provider," Standard & Poor's analyst Mark Nicholson said in aninterview. "Despite the profitability problems — rates are very low at themoment and market conditions are tough — we could see connections betweenLloyd's providers, but I think it's more likely we'll see an outside insurerbuying into the Lloyd's platform because it's a lot easier than starting upyour own venture."

Despitethe problems causedby the possibility of a Brexit, experts say that the depth of underwritingexpertise in the Lloyd's market means that certain types of specialty risk willalmost certainly continue to be written there. And recent large losses, such asthe explosions inTianjin, China, have underlined the need for that expertise.

"Tianjinwoke up many authorities from that part of the world," Flanagan said."Chinese reinsurance companies went bust that night. There isn't a lot oflocal expertise to deal with these complex huge losses. I think there's arecognition there that there is a center of global excellence in [the Lloyd's]marketplace. Not only can you access the capital base of Lloyds, you also canaccess the intellectual capital. I don't see that dynamic changing whatsoever."

SNL Image

 S&PRatings and Global Market Intelligence are owned by McGraw Hill Financial Inc.

SNL Image

Type in the syndicate number in the search bar at the top of the page and select the syndicate from the list of matches to view complete data.

Click here for a peer analysis template using syndicate financial data and here for a list of syndicates and managing agents found in our product.

Click here for a webinar on SNL’s Lloyd's syndicates coverage.