Pioneer Underwriters has decided to put its Lloyd’s Syndicate 1980 into run-off after completing an examination of “strategic and capital options for 2020.”
Pioneer said it will be working with Asta, the managing agency of Syndicate 1980, to ensure a smooth run-off of the syndicate, and it will work with brokers and clients to facilitate business transfer to replace capital providers where needed. (Asta is a London-based third-party managing agent).
The company’s strategic review has resulted in the withdrawal from certain lines of business over the past 12 months, which is already providing encouraging results, said a statement from London-based Pioneer, which is the MGA unit within Minova Insurance Holdings.
Further, Pioneer’s core operations, its managing general agency business (MGA), has been restructured to provide increased focus on business where Pioneer can provide differentiated value through expertise and distribution.
The run-off decision was made, despite the fact that Syndicate 1980’s underwriting performance has improved with a forecast combined ratio of 96% for the 2019 underwriting year of account, compared to 130% in 2018, and Lloyd’s approved the syndicate’s business plan with a small increase in underwriting capacity.
However, Pioneer determined that the cost of capital within the syndicate structure is no longer economically efficient compared with its other capital platforms. As a result, the board has decided not to proceed with the syndicate for 2020.
As an MGA, Pioneer underwrites on behalf of more than 20 Lloyd’s and non-Lloyd’s capital providers.
Renewal of these facilities is underway, said Pioneer, noting that the largest facility has been finalized, and commitment of support has been achieved in many other cases.
Supported by both renewal and new capital, replacing a significant proportion of Syndicate 1980 capacity across a number of classes, Pioneer plans to write in excess of £200 million gross written premium in 2020.
Pioneer said it is continuing to work with Canaccord Genuity as the business explores capital options for future growth, and is in advanced discussions with a number of potential investors who are attracted to the underwriting services organization. (Canaccord Genuity Group Inc. is a global, full-service investment banking and financial services company that specializes in wealth management and brokerage in capital markets, according to Canaccord’s Wikipedia entry).
Earlier in the year, several news reports indicated that Pioneer was being sold, which has not been confirmed by the company.
Andrew McMellin, group chief executive said: “As a result of this work, Pioneer is leaner and focused on providing the value to capital necessary to generate superior returns through the core underwriting services platform (MGA). In our view, customers, employees and shareholders are better served by Pioneer as a focused underwriting services organisation and we look forward to a successful 2020.”
Source: Pioneer Underwriters
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