Lloyd’s of London’s Bruce Carnegie-Brown and Inga Beale have underlined the divergent two halves of 2017 for the sector, and praised the market for its ability to provide £3 billion of additional capital following Q3 catastrophe events and changes in capital requirements.
The message comes from the Lloyd’s Chairman, Carnegie-Brown and its Chief Executive Officer (CEO), Beale, as part of their 2017 end of year email to the market.
The pair describe 2017 as a “year of two halves,” where challenging market conditions and re/insurance industry headwinds from 2016 persisted in the first half of the year, ultimately driving down the profitability of an already stressed sector.
Then the third-quarter arrived, bringing with it a series of intense hurricanes and powerful earthquakes, as well as other catastrophe events, driving estimated insured losses of $100 billion or more, which, combined with the Northern and Southern California wildfires is anticipated to result in a fairly costly year for reinsurers, in terms of catastrophe losses.
In the wake of recent events, the Lloyd’s executives were eager to point out the “phenomenal” market response, underlined by collaboration to pay claims, with claims totalling almost $2 billion being paid out so far for hurricanes Harvey, Irma, and Maria.
“I would also like to thank the market for the way it has approached recapitalisation and made it seem as close to business as usual. Approximately £3bn of additional capital has been provided to restore capital resources to the level prior to the Q3 2017 loss events and to cover changes in capital requirements for 2018 underwriting. No syndicate has ceased trading due to the storms and there is zero impact on the Central Fund,” said Carnegie-Brown and Beale.
The response from the market and its ability to raise roughly £3 billion (US$4bn) of additional capital, “is a powerful demonstration of the value of insurance,” and one the Lloyd’s market is aiming to promote more in 2018.
“To help us do this, last month we launched a claims campaign, which provides brokers and managing agents with promotional material, and information about the market’s claims performance along with some case studies. You can find further information here,” said the Lloyd’s executives.
Looking forward to the 2018 renewals and beyond, and Carnegie-Brown and Beale anticipate some firming of prices, but warns that this isn’t going to fix the challenges that continue to test the marketplace.
“The good work on underwriting discipline, modernisation and improved efficiency which was delivered in 2017 to close the performance gap needs to continue throughout 2018,” said Carnegie-Brown and Beale.