Lloyd's of London has warned that the insurers operating on its marketplace are slated to lose money on their 2016 underwriting activities and warned them to keep their plans under continued review in 2017 because of tough market conditions.
The underwriting market has shown "strong performance" in 2016 despite the surprises of the Brexit vote and U.S. elections, Chairman John Nelson and CEO Inga Beale said in their year-end message to the market. But this belies a "deteriorating and worrying" trend, they warned: "that current year underwriting is not profitable in aggregate at the moment. This is a matter of great concern."
Lloyd's has decided to lower market subscriptions for 2017 by 10% given the difficult conditions, will make changes to its organizational structure at the start of 2017 and will make further adjustments in the future, Beale and Nelson said.
Lloyd's will continue to push the U.K. government to maintain existing trading rights with the EU, but is also working on alternative trading options, the note said. Lloyds plans to share its conclusions on trading post-Brexit in early 2017.
The company is looking to grow its presence in new markets, and hopes to be fully operational in India in 2017. Discussions with Malaysian regulators for a reinsurance license continue and the business has been growing in China, where Lloyds has 32 syndicates, the note said.