A number of Lloyd’s of London syndicates have been reporting updated forecasts for their results on the 2017 and 2018 years of account in recent days and there are signs of some deterioration.
The performance of Lloyd’s syndicates has been a focus over the last year, of course, as the market dealt with the ongoing impacts from catastrophe losses, as well as so-called social inflationary pressures and also business lines that have proven to be far less profitable than hoped.
As ever, it’s not a clear-cut picture of the market’s health, or otherwise, with some Lloyd’s syndicates also forecasting improving results for the 2017 and 2018 year’s of account.
But a number of the forecasts suggest more underlying issues in the profitability of those underwriting years, with some of them being syndicates that are more focused on casualty lines than other areas of the insurance and reinsurance market.
One of the syndicates showing a more significant level of deterioration is QBE’s syndicate 386, which has adjusted its forecast result for both the 2017 and 2018 year of account down to below the range it had reported at September 31st 2019.
Based on the mid-point of forecasts, QBE’s syndicate 386, which is casualty and non-marine liability focused, revised down the 2017 year of account result by 4.5 points to a 9.1% return on capacity, while the 2018 year of account was ratcheted down 7.7 points and is now forecast for a -1.2% to 3.8% return on capacity.
Meanwhile, Beazley’s syndicate 623 is now forecasting a 2.4% loss on capacity for the 2017 year of account, having previously forecast a result in the -5.0% to +5.0% range.
Beazley’s syndicate 6107 is forecasting a 27.9% loss on the 2017 year of account, almost 3 points down on the mid-point of its previous forecast of -35.0% to -15.0%.
Other syndicates that have published worsening forecasts include Asta 1729 whose latest forecast for 2017 is 3 points lower than its previous mid-point forecast result.
There are a number of other syndicates that have forecast 2017 and 2018 results at a slightly lower level than they had at the end of September.
It reflects a worsening of the profit outlook for these two years of accounts across a swathe of the Lloyd’s market, seemingly with a number of factors perhaps at play.
There could be elements of loss creep from catastrophes still at play, as well as casualty lines inflation and worsening of other loss positions. In addition there may be some impacts from large man-made loss activity denting a few of the forecasts outlooks as well.
There are more syndicate forecasts to come and it will be interesting to see how the overall market’s result outlook for 2017 and 2018 has moved at the end of 2019.
Not everyone is experiencing a worsening of results. One of the more positive movers was Tokio Marine Kiln’s syndicate 510, whose forecast is now 2 points better than it had been.
It’s also interesting to note that syndicates have been very accurate in delivering forecasts in the recent years, often conservatively estimating so that improvements are seen when updated forecasts are delivered.
Now that seems to have reversed, in some cases. It’s important to realise, though, that while results are deteriorating for some, the actual results are not all that bad in most cases, just worse than had initially been forecast.