Aon Benfield Analytics’ Market Analysis team has released its latest Lloyd’s Update report, which assesses the market’s 2014 financial performance and latest developments.
Key findings in the report include:
- The Lloyd’s market began 2015 with 92 active syndicates and slightly reduced underwriting capacity of £26.0 billion [$40.4 billion].
- This includes over £0.5 billion [$0.8 billion] of “sidecar” quota share capacity provided by 14 special purpose syndicates (SPSs).
- Eight Lloyd’s managing agents now oversee more than £1.0 billion [$1.6 billion] of capacity, namely Catlin, Tokio Marine Kiln, Beazley, Hiscox, Amlin, QBE, Brit and Liberty.
- Including sidecar support, the capacity of the 10 largest syndicates aggregates to £11.1 billion [$17.3 billion] in 2015, or 42 percent of the total market. Average syndicate capacity stands at £331 million [$514.7 million].
- China Re Syndicate 2088, a former SPS, now operates on a standalone basis; Syndicate 1884 was launched on April 1, backed by The Standard Club.
- SPSs continue to be a popular entry route for new and existing investors, with four new vehicles established so far in 2015. Backers include Credit Suisse Asset Management and Korean Re.
- Four Lloyd’s operations gained new owners in the first half of 2015 (Ariel Re, Brit, Catlin and Sportscover) and three further deals await customary approvals (Pembroke, Montpelier and HCC).
- Gross premiums written totaled £25.3 billion [$39.3 billion] in 2014, up 2 percent at constant exchange rates. Reinsurance volumes fell by 10 percent to £8.5 billion [$13.2 billion], driven by lower property catastrophe pricing.
- Underwriting profit of £2.3 billion [$3.6 billion], (compared with £2.6 billion in 2013), equated to a combined ratio of 88.1 percent (86.8 percent in 2013). Prior year reserve releases were stable at £1.6 billion [$2.5 billion], providing 8.0 percentage points of benefit.
- The total investment return rose by 25 percent to just over £1.0 billion [$1.6 billion] in 2014, a yield of 2.0 percent (2013: 1.6 percent), driven by unrealized gains on longer duration bonds.
- Overall operating performance remains strong. Pre-tax profit was almost unchanged at £3.2 billion [$5.0 billion] in 2014, representing a return on capital employed of 14.7 percent (2013: 16.2 percent).
- Overall net resources (capital, reserves and subordinated liabilities) grew by 11 percent to a record level of £23.5 billion [$36.5 billion] at December 31, 2014.
- Lloyd’s has been liaising closely with the UK regulators over its preparations for the implementation of the Solvency II regime and these are nearing completion.
Source: Aon Benfield Analytics
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