Aon Benfield Analytics Releases Report on Lloyd’s

July 29, 2014

Aon Benfield Analytics’ Market Analysis team has launched its latest Lloyd’s Update report, covering the market’s business position in 2014, strategy over the next three years and financial results in 2013.

The “key findings” in the report include the following:
– The Lloyd’s market began 2014 with 93 active syndicates (including six new entrants) and record underwriting capacity of £26.4 billion [$44.84 billion], up 6 percent on the prior year.
– One mid-year syndicate launch and three M&A transactions completed so far in 2014, demonstrate the continued attractiveness of the Lloyd’s platform.
– New leadership has brought a fresh approach to the delivery of the Vision 2025 agenda, which aims to increase Lloyd’s premium income in high-growth economies.
– A three year strategic plan released in April 2014 placed increased emphasis on growing insurance business, through the establishment of a local presence where required.
– Lloyd’s has acknowledged the impact ‘alternative’ capital is having on the reinsurance market and is looking at how best to access it in support of indemnity-based products.
– Operating performance remains strong: pre-tax profit rose by 16 percent to £3.2 billion [$5.435 billion] in 2013, representing a return on capital employed of 16.2 percent.
– The combined ratio improved by 4.3 percentage points to 86.8 percent, driven by reduced major losses and more favorable development of prior year reserves.
– Lloyd’s balance sheet is strong: overall investment allocation remains relatively conservative, capital resources are at an all-time high and legacy issues appear contained.
– Fitch upgraded its rating of Lloyd’s by one notch to ‘AA-’ in June 2014 and A.M. Best and Standard & Poor’s both maintain positive outlooks on their ratings of the market.

Mike Van Slooten, international head of Aon Benfield Analytics’ Market Analysis team, commented: “Market conditions are challenging but the underlying strengths of the Lloyd’s platform are coming to the fore in this environment and are only likely to become more apparent over time. Achieving profitable growth in emerging markets will not be easy, but Lloyd’s is clearly focused on delivering its Vision 2025 agenda. We expect Lloyd’s to benefit from the tailwind of rating upgrades in the run-up to Monte Carlo.”

Source: Aon Benfield Analytics

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