The Marine market continues to adjust to the efforts of the Lloyd’s of London market to improve profitability, and as dedicated marine syndicates continue to close, Marsh JLT Specialty has questioned what is at stake should pricing remain at current levels.
In response to falling profits driven in part by underperforming members of the Lloyd’s marine unit, the Lloyd’s Performance Management Directorate was announced in an effort to identify and assess failing syndicates.
In recent months, a number of syndicates have ceased operations, some by choice and others by the Lloyd’s hand, a trend which is ongoing, and which is expected to drive improved results across certain parts of the marine sector.
Discussing the marine market in a recent report, Marsh JLT Specialty underlined the fact that the marine industry is still adjusting to the Lloyd’s review of syndicates profitability, adding, “with the unfortunate closure of more dedicated marine syndicates concentrating the mind as to just what is at stake if pricing remains at current levels.”
The report highlights that over the last month, a further reduction in the amount of available hull capacity has resulted in less available carriers, and, has served as a reminder that management teams are still analysing their portfolios, and that those lines of business that are found to be underperforming will not receive the same sympathy as years gone by.
“The constant erosion of the premium base in the soft cycle has naturally taken its toll, which, as we are seeing has led to reduced returns on investment and a retraction of capacity,” explains Marsh JLT Specialty.
As well as a reduction in capacity, there’s also evidence of firms taking a more stringent approach to their renewal books. The majority, explains the report, are looking to impose minimum premium levels for their lines of business, while at the same time withdrawing from specific vessel types in an effort to grow their premium base and stop claims from vessel types that are underperforming.
“Insurers are using data to review and analyse their core book down to a very granular level,” says Marsh JLT Specialty.
Following a strategic review, insurer AmTrust announced in June 2018 plans to exit its marine lines of underwriting business in order to focus on more profitable areas of its book. In March of this year, marine insurer Skuld announced plans to cease underwriting business from its Lloyd’s Syndicate 1897 from 1 July 2019, in an effort to improve profitability. While other Lloyd’s players, such as Argo, have also taken steps to improve the profitability of their syndicates in respect to marine business.