trending Market Intelligence /marketintelligence/en/news-insights/trending/J7HmWn17I1zbhH1dIy1EGA2 content esgSubNav
In This List

Premiums written at Lloyd's US syndicates tick up in '16 despite headwinds


Anticipate the Unknown: Does Supply Chain Disruption Lead to Increased Credit Risk?


Data Stories: Data insights to help alleviate business complexity amid geopolitical risks


Expand Your Perspective: Data & Distribution Q&A


Street Talk | Episode 90: Banks should not wait on the Fed to put cash to work

Premiums written at Lloyd's US syndicates tick up in '16 despite headwinds

Despite a moderate uptick in gross written premiums in 2016, the underwriting climate for Lloyd's syndicates in the U.S. may be less rosy than it appears at first glance.

Lloyd's of London in 2016 wrote $16.3 billion in U.S. premiums, according to a Lloyd's spokesperson, up 7.9% from the previous year. Premiums for Lloyd's U.S. syndicates have now increased in each of the last six years.

But the increase in premiums written comes amid a challenging backdrop which Lloyd's attributed to claims from Hurricane Matthew and the Fort McMurray wildfire in Canada, along with continued downward pricing pressure. Lloyd's combined ratio globally rose to 97.9% in 2016, up from 90.0% a year earlier. Of a group of 100 active syndicates RBC Capital Markets measured in a recent study, just 51% made recorded underwriting profits last year, down from 70% in 2015.

Fluctuations in the foreign exchange market in the latter half of 2016 appears to have played a larger role on Lloyd's U.S. gross written premiums than it has in most years, according to RBC. For the year, more than 60% of Lloyd's premiums were transacted in U.S. dollars, bolstered somewhat by the depreciation of the British pound, RBC said in its report.

Consequently, a handful of Lloyd's managing agents with exposure to the U.S. saw year-over-year aggregate U.S. gross written premiums rise in excess of 30%, led by XL Group Ltd. Fresh off a 2015 acquisition of Catlin Group Ltd., XL Group more than doubled gross written premiums among U.S. syndicates in 2016 to £1.14 billion, data compiled by S&P Global Market Intelligence shows.

Under the group's post-acquisition operating model, all business previous underwritten by XL Catlin Co.'s Lloyd's Syndicate - 1209 (Catlin Underwriting Agencies Ltd.) shifted to Lloyd's Syndicate - 2003 (Catlin Underwriting Agencies Ltd.), according to an annual accounts report. XL Catlin also cited new initiatives such as the Aon Plc client treaty placement to the syndicate for contributing to a pickup in business, offset slightly by continued softening on rates.

In total, nine of the top 10 managing agents of Lloyd's syndicates with U.S. exposure posted double-digit annual gains by aggregate gross written premiums.

SNL Image

Tokio Marine Holdings Inc., which reported a 15.3% year-over-year increase in U.S. aggregate gross written premiums, continues to post profits in spite of difficult market conditions, CEO Charles Franks said May 11 in the company's latest syndicate forecasts. Tokio Marine's Lloyd's Syndicate 510 looks to have recorded an underwriting profit in fiscal year 2016, and Lloyd's Syndicate - 557 (Tokio Marine Kiln Syndicates Ltd.) demonstrated improvement from the previous year thanks to favorable claims experience, according to company forecasts. The forecast range for the company's Lloyd's Syndicate - 308 (Tokio Marine Kiln Syndicates Ltd.), however, fell slightly due to higher adverse claims experience levels.

For instances when a dollar-to-pound sterling conversion was needed, S&P Global used an average annual exchange rate when computing the rankings.

Lloyd's U.S. syndicates also expanded offerings in its specialist coverage in 2016, including cyber coverage, CEO Inga Beale said in Lloyd's annual report. Ransomware attacks rose 35% year over year in the first quarter, according to an April report from Beazley Breach Insights. Beazley Plc has yet to release additional figures on ransomware trends worldwide since May's WannaCry global data breach, a company spokesman told S&P Global Market Intelligence.

SNL Image

From a longer-term perspective, three Lloyd's syndicates, Lloyd's Syndicate - 4444 (Canopius Managing Agents Ltd.), Hiscox Ltd.'s Lloyd's Syndicate 3624 and Lloyd's Syndicate - 1458 (RenaissanceRe Syndicate Management Ltd.), delivered a five-year compound annual growth rate above 30% for U.S. gross written premiums. The RenaissanceRe syndicate wrote $303.3 million in gross premiums in 2016, producing a 5-year CAGR of about 37.9%.

SNL Image

SNL offers a variety of tools to analyze underwriting performance of insurance companies and syndicates.

Click here for a template showing summary income statement, balance sheet, investment detail and other exhibits for a selected publicly traded insurance company. Click here for a list of all syndicates and managing agents on SNL web and here for a webinar on SNL's Lloyd's syndicates data.