Analysts at Insurance Capital Markets Research (ICMR) have found that larger Lloyd’s of London syndicates were far more likely to report profitable results in 2019 than their smaller peers.
The insurance and reinsurance marketplace reported a pro-forma profit of £2.5 billion last year, but its underwriting performance was unprofitable, with a combined ratio of 102.1%.
According to ICMR, most of the £2.5 billion came from the implied return on Funds at Lloyd’s (£1.657 billion) and investment income on central assets (£213 million), as the aggregated results of the syndicates was only £690m.
In 2019 there were 110 syndicates, including special purpose arrangements (SPA), of which 105 stated positive GWP, with 56 breaking even or generating a profit.
The aggregated result of all profitable syndicates amounted to £1.635 billion, while the aggregated loss of the remaining syndicates was -£945 million.
Looking at the breakdown of aggregated result by syndicate shows that all but one large syndicates were able to generate a profit in 2019.
Hiscox 33 was the only exception to the trend, as it wrote more than £1 billion and incurred a small loss.
Profits relied on investment income in some cases, notably for the two biggest syndicates Catlin 2003 and MS Amlin 2001, but also Liberty 4472 was able to turn a combined ratio of 108% into a bottom line profit.
Overall, ICMR noted that only about one third of syndicates reported an underwriting profit with a combined ratio less than 100%.
