Analysts at Lloyd’s managing agent Argenta believe that Lloyd’s syndicates could still provide “respectable” returns to capital for underwriting members for the 2022 year, despite the impacts of Hurricane Ian.
The comments came as part of Argenta’s analysis of Lloyd’s syndicate forecasts for the 2020 and 2021 years of account, which were updated as of September 30th.
The firm notes that there is a small deterioration at the aggregate level evident on the 2020 account, relating to the continuing volatility in investment markets reducing forecast investment returns in 2022 calendar year.
Also, in many cases, syndicates are forecasting an investment loss on the 2020 underwriting year, although the underlying insurance elements, including premiums, claims, expenses and prior year releases, have broadly been positive in the quarter.
By contrast, the 2021 account has improved slightly, although analysts had been hoping to see a more material improvement in the quarter, Argenta said.
Nevertheless, it continues to believe that the final result on the 2021 year of account will be better than the current forecasts, which it considers to be on the “conservative side” given the incurred loss ratios for the underwriting year.
Currently, there are no formal forecasts for the 2022 year of account at this stage and the first estimates will not be released until the account reaches the fifth quarter in March next year.
However, results will clearly be impacted by Hurricane Ian, which caused historic levels of re/insured losses after landfalling in Florida with 150mph winds in September.
That said, Argenta notes that Lloyd’s syndicates generally have a lower than average market footprint in Florida, which, coupled with the strong rating environment across almost all lines of business, means that the 2022 year could still yield “respectable” returns for the market.
The next set of results will be the year end results, which will include the final result for the 2020 year of account and an update on 2021 alongside annually accounted results for the syndicates.
These are expected to start to arrive in early February next year, with Lloyd’s reporting the results for the market at the end of March.