A swath of natural catastrophes and the Russia-Ukraine war made 2022 a tough year for some managing agents at Lloyd’s of London, according to S&P Global Market Intelligence.
Blenheim Underwriting reported the year’s highest combined ratio of 106%, stemming from its sole syndicate, Syndicate 5886, though this was an improvement on the 109% it reported in 2021. A combined ratio above 100% denotes an underwriting loss (see (Re)Insured Losses for Ukraine War & Ultimate Industry Loss Outlook).
Catastrophes, including Hurricane Ian and the Russia-Ukraine war, added 37.4 percentage points to the ratio, which, while lower than the 38.4 point catastrophe contribution to the 2021 ratio, was “more than expected
Peter Scales, director at Blenheim Underwriting
2022 and 2021 were very heavy catastrophe years that would be in the top five highest years for natural catastrophe losses.
Natural and man-made catastrophes also led to Lancashire Holdings’s Lloyd’s managing agent, Lancashire Syndicates, reporting the second-highest combined ratio of the year of 104.1%.
Syndicate 2010’s combined ratio jumped to 114.7% in 2022 from 106.3% in 2021. This was partly offset by a profitable 87.2% at Syndicate 3010, although this was also a deterioration from the 71.4% reported in 2021.
Brighter future and heavy reinsurers’ losses
While 2022 was a challenge, both Blenheim and Lancashire predict better times ahead. Several years of heavy losses have resulted in rising prices and tightening terms and conditions in many lines of the specialty and reinsurance business for which Lloyd’s insurers are best known (see how War in Ukraine Slows Growth of Global Re/Insurance Market).
Blenheim’s Syndicate 5886 has not made an underwriting profit since it started writing in 2017. The company expects it to make a bottom-line profit in 2021 and 2022 under Lloyd’s three-year accounting system.
Given how radically most of our trading lines have positively moved in 2023, it bodes well going forward.
Peter Scales, director at Blenheim Underwriting
Lancashire’s Syndicate 2010 boosted its underwriting capacity to £400 million for 2023 from £345 million a year ago, and Syndicate 3010 has increased its capacity to £375 million from £250 million.
Other managing agents, however, were comfortably in underwriting profit — with a little help from run-off specialist Enstar Group — in what was a better year overall for Lloyd’s from an underwriting perspective.
Probitas Managing Agency reported the best underwriting performance of 2022 as Syndicate 1492 reported a combined ratio of 71.8%, down from 78.4% in 2021. The underwriting results were helped by a loss portfolio transfer of its 2018 and prior years of account to Enstar Syndicate 2008. Without the transaction, the 2022 combined ratio would have been 79.2%.
Probitas’ exposure to the Russia-Ukraine war is not material as it has minimal live exposure in the territories and does not cover war or aviation risks. The company also writes very little business in the US — a big source of natural catastrophe claims.
Change in fortunes in underwriting performance
The year 2022 marked a big turnaround in underwriting performance for Aspen Insurance Holdings’s Lloyd’s operation Aspen Managing Agency and its sole syndicate, 4711. Having reported a combined ratio of 117.4% in 2021, the highest that year at managing agent level, Aspen Managing Agency produced the second-lowest ratio of 75.4% for 2022 in the sample.
Largest rises, falls Lloyd`s premiums by managing agent groups
As with Probitas, Syndicate 4711’s underwriting result benefited from a loss portfolio transfer transaction with a subsidiary of Enstar, this time for the 2019 and prior accident years. And after boosting reserves by $41 million in 2021 because of uncertainty around its financial and professional lines business, the syndicate was able to release $28 million in 2022 because of reducing uncertainty in that business.
The company also saw another big increase in premium following a further transfer of business from sister company Aspen Insurance UK, making Aspen Managing Agency the second-fastest growing managing agency in 2022.
TOP 10 managing agent groups of Lloyd’s syndicates by GWP
While acknowledging that it benefited partly from the loss portfolio transfer and reserve releases, Aspen said in an emailed statement that portfolio management and the discipline of its underwriting teams had been a key driver of the improvement.
Our results in 2022 reflect our efforts on refocusing and reshaping the business, as well as Aspen’s decision to make Syndicate 4711 its core platform in the UK.
Aspen
Overall, the individual managing agent performances are in keeping with the trend of growth and improving underwriting performance at Lloyd’s as a whole.
In 2022, only four managing agents reported combined ratios above 100%, and only two managing agents — AXA XL Underwriting Agencies and Sirius International Managing Agency — reduced gross written premium in 2022.
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AUTHORS: Ben Dyson, Hassan Javed, Jason Woleben – S&P Global market intelligence contributors
Fact checked by Oleg Parashchak
