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Lloyd’s syndicates hit by further loss creep

17th August 2018 - Author: Luke Gallin

Data from the specialist Lloyd’s of London insurance and reinsurance marketplace, reveals that the most recent syndicate projections for the 2017 year of account (YoA) includes further loss deterioration in Q2, at the mid-point.

Lloyd's of London insurance and reinsurance marketAccording to the data, which details Lloyd’s syndicates’ capacity for the 2017 YoA and both the best and worst case estimate result (as a percentage of capacity), overall, the marketplace has experienced loss deterioration of just under £400 million in the second-quarter of 2018, at the mid-point.

At the end of the first-quarter of 2018, the best case estimated result for the 2017 YoA was a £1.51 billion loss and the worst case estimated result was a £3.33 billion loss, resulting in a mid-point of £2.42 billion.

Lloyd’s has now reported 18 month out syndicate projections for the 2017 YoA, so as at the end of the second-quarter of 2018. The best case estimated result for the 2017 YoA is now a loss of £1.91 billion, while the worst case estimated result is a loss of £3.73 billion. This results in a mid-point of £2.82 billion, which represents loss deterioration of £400 million, or roughly 17% from the end of Q1.

While it’s not specified, it’s likely that the loss deterioration is largely due to hurricanes Maria and Irma, but could also be related to some impacts from the late 2017 California wildfires.

The Lloyd’s market fell to a £2 billion pre-tax aggregated loss across the market in 2017, due to the impact of the major catastrophe loss events.

Loss creep from 2017 events continues to impact insurers and reinsurers in all parts of the world, and clearly the Lloyd’s market is feeling the impacts. It will be interesting to see how the loss creep develops at Lloyd’s through the remainder of the year, and if further deterioration takes place in the final two quarters of 2018.

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