Lloyd’s premium growth in 2020 will be heavily skewed towards better-performing syndicates as the Corporation seeks to incentivise the bottom quartile to improve performance and push the whole market towards more robust profitability. 

The outcome of the 2020 planning process is the strongest signal yet that the reality is matching the rhetoric on differentiated regulation of managing agents.

As this publication reported last week, the performance management directorate (PMD) has permitted a measured level of exposure growth for the coming year in the aggregate, with planned premiums a few points higher than the current projected risk-adjusted rate rise of 5 percent.

However, the 15 outperformers in the light-touch cohort – which gain automatic plan approval – will grow significantly more than the rest of the market.

Slides used by the PMD in the presentation show that the light-touch cohort will book 14 percent growth in 2020 planned premium, compared to just 3 percent for the rest of the market.

More than three quarters of light-touch growth will also come from increased exposure, while the rest of the market will actually reduce their exposure by 26 percent and achieve their premium growth via rate increase.

The rest of the market includes the high-touch cohort, which holds around 20 syndicates and accounts for around 45 percent of market premium. It is made up of both underperforming syndicates and those which are deemed material to the market – either due to their size or cat exposure.

The planned premium projections allay fears PMD would prevent syndicates from capitalising on rate momentum after taking a hardline stance last year.

However, it’s clear that only those who tick all the boxes on underwriting and operational excellence, including success against long-term performance standards, can fully embrace the current growth opportunities.

The long-term success of differentiated oversight will depend on how the PMD decides to triage syndicates, and too crude a methodology could risk choking smaller syndicates of the growth they need to underwrite profitably, given the structural expense issues at Lloyd’s. It will also depend upon the light-touch syndicates retaining their discipline now that they are operating with reduced oversight.

After the closure of three Lloyd’s syndicates since the start of the month – Vibe 5678, Pioneer 1980, and Acappella 2014 – there are plenty of reasons to feel bearish about smaller Lloyd’s players.  

These three syndicates suffered from a toxic cocktail of access-to-business problems reflecting poor competitive positioning, soft market growth and cost issues brought to bear by Lloyd’s expenses, their lack of scale and the Corporation’s cap on growth.

As if that wasn’t enough, there are structural shifts that make the future look bleak for small players: the move towards passive following capacity and the pending changes to the Lloyd’s lead-follow structure.  

With all of this bearing down on them, it is not surprising that the three syndicates suffered from persistently weak underwriting performance, and that they were not perceived by capital providers as a good short- or long-term bet. 

Some believe we are witnessing the dying days of small syndicates.  

But despite the closure of these three players, other syndicates faced similar challenges and yet managed to secure capital for another year.

Dale Underwriting Partners kept ProAssurance on board with a reduced line, and was able to add three new trade capital backers.

Probitas secured capital backing for 20 percent pre-emption, while Apollo, Agora, Verto and DTW 1991 were finalising their Funds at Lloyd’s as of last week.

Securing capital for 2020, of course, does not mean all those structural pressures and tough market conditions vanish overnight. It is, however, a sign that the situation is more nuanced than the “big is beautiful” cheerleaders may suggest. 

Perhaps it is not impossible for small syndicates to survive. There are other syndicates out there that do good business without the advantages that scale brings, with MAP, Ark and Atrium all consistently among the best performers in Lloyd’s.  

On the flip-side, there are larger businesses for whom it has not all been plain sailing.  

MS Amlin was in September obliged to shut down nine lines of business as part of a fresh round of remediation work. The firm’s Lloyd’s syndicate has not made an underwriting profit since 2015.

Similarly, Axa XL’s flagship Syndicate 2003, which wrote $3bn in gross premium in 2018, booked a loss $302mn last year – larger than the prior year’s loss of $259.2mn – and reported a combined ratio of 115.6 percent. 

The challenges faced by these businesses show that scale isn’t everything. 

A loss ratio problem is a loss ratio problem if you wrote £250mn or £2.5bn. 

And conversely, a business with good risk selection, intelligent portfolio construction and well designed outwards protections, should be able to continue to outperform on the loss ratio. 

It may be harder than it used to be and it may continue to get harder. But it’s just possible that the best entrepreneurial businesses will continue to thrive at Lloyd’s. 

In Brief

IG offers 5% rate rise as it switches to two-year deal

The International Group has offered 5 percent increases on the key layers of its programme, as it seeks to move the entire $3bn open market placement to a two-year deal, The Insurance Insider revealed.  

The IG has also notified the market that it expects the Golden Ray claim to come in as low as $115mn, while the Maersk Honam also experienced sizeable loss development within the most recent policy period. Against the backdrop of a turning marine market, and with fears of creep on the Golden Ray, (re)insurers have given a lukewarm reception to the deal, which incepts on 20 February 2020, particularly given the attempt to lock down two years of capacity. 

Swiss Re reports ‘strong’ corporate solutions pricing momentum

Swiss Re said pricing momentum in its corporate solutions unit  remains strong, with the greatest growth in loss-affected property lines, after the division achieved 10 percent rate growth in the year to date. 

In an investor presentation the reinsurer said it has cut $60mn of operating costs from its corporate solutions unit so far this year as it restructures the division to achieve a combined ratio to 98 percent by 2021, down from 110 percent in 2018. It is focusing on “de-commoditising” the corporate solutions business it writes, while growing its exposure in large property transactions, credit and surety, and accident and health. In the presentation Swiss Re also said it expects a casualty reinsurance combined ratio of 97 percent this year, down 1 point year on year, after cutting back in US liability and US commercial motor. 

Munich Re exposed to Chile riot claims through Suramericana treaty

Munich Re is among reinsurers facing riot losses in Chile due to a property treaty it leads for one of Latin America’s largest insurers, The Insurance Insider reported. 

Suramericana is facing at least $150mn in claims from civil unrest in Chile over the past six weeks, the company has confirmed. A representative from Suramericana said the company is continuing to monitor the situation. Munich Re owns an 18.9 percent stake in Suramericana, with the rest of the equity held by Colombian financial services business Grupo Sura. 

DTW Syndicate 1991 inches closer to 2020 capital deal

DTW Syndicate 1991 is in the final stages of securing capital for the 2020 underwriting year with around a week to go until the coming-into-line deadline, The Insurance Insider reported. 

Sources told this publication the Coverys-managed syndicate had secured business plan approval from Lloyd’s with a circa 10 percent reduction in top line, and the details are now being finalised on the capital arrangements after a challenging renewal. In a statement, Coverys confirmed DTW 1991 was in the process of finalising its 2020 underwriting capacity arrangements ahead of the 29 November deadline and said it is “grateful for the support of our capital providers and are confident in delivering on the syndicate’s 2020 plan”. 

CAC Specialty launches environmental liability group

Cobbs Allen arm CAC Specialty has appointed a trio of brokers and established an environmental liability division.  

The operation will be led by Gregory Schilz who joins the business from Marsh JLT’s San Francisco office, where he was an executive vice president. Grant Nichols and Brian Lu also join from Marsh JLT and become vice presidents at the new division. Nichols is based in Miami while Lu works from New York. 

Job Summary

The main responsibility of this role is to ensure that accounting processes and reporting (including Lloyd’s and group financial returns) requirements are completed for all managed syndicates. The role will involve liaising with the offshore finance team and other departments.

 MAIN DUTIES / ACCOUNTABILITIES

• Produce Lloyd’s finance returns (including Solvency II) on a timely and accurate basis.
• Review of returns prepared by the offshore finance team
• Evaluation of changing Lloyd’s requirements for returns and building models in order to facilitate the meeting of these requirements
• Analytical review/sense checking of accounting data
• Liaison with the offshore finance team to help ensure a smooth monthly close is achieved
• Complete / oversee monthly balance sheet reconciliations for managed syndicates
• Provide information to the reinsurance accounting and actuarial teams and review output
• Liaison with auditors
• Production of statutory accounts for managed syndicates
• Provide cover within the wider finance team (including monthly close processes)
• Produce board and committee packs as required
• Review and improve accounting and reporting processes
• Deputise for Syndicate Finance Manage
• Support the supervision and development of the Syndicate Accountant and Assistant Syndicate Accountant

Salary level l £90,000 + bonus + benefits including 10% pension

To manage the production of syndicate and statutory accounts, returns to  Lloyd’s and other regulatory organisations

Key Responsibilities & Accountabilities:

• To manage the production of all regulatory returns, syndicate and statutory accounts  to ensure accuracy and completeness.
• To regularly review the Syndicate balance sheet and to advise the Syndicate Finance team of adjustments that are required.
• To establish and maintain contacts within regulatory organisations in order to resolve queries swiftly and accurately.
• To liaise with external auditors and actuaries, providing appropriate information as required.
• To liaise with the Lloyd’s Compliance Office and keep up to date with Lloyd’s regulations and bulletins and incorporate changes as required.
• To prepare all necessary Lloyd’s business forecasts.
• To manage the preparation of the Syndicate Report & Accounts.
• To ensure appropriate training opportunities are provided to enable the Team to have the necessary job knowledge and professional qualification.
• To complete regular performance reviews and maintain development/training plans for each Team member.

Technical Knowledge & Skills:

• Strong grasp of UK Insurance GAAP.
• Understanding of Lloyd’s syndicate accounting (desirable).
• Lloyd’s regulations, byelaws and reporting requirements (an advantage).
• Microsoft office applications – in particular advanced excel.
• Sun accounts, TM1 and Vision.
• Lloyd’s systems applications.

Qualification/Experience:

• ACA/ACCA/CIMA accountancy qualification with excellent academic credentials.
• Insurance experience a pre-requisite, especially Lloyd’s.
• Good man management and motivational skills and has a track record of managing small professional teams.

Major City based Insurance Company requires a Qualified Accountant to be responsible for all accounting areas of Client’s live syndicates, including review of data input and liaising with underwriters and actuaries.

The role also prepares internal and external financial reports, including group company reporting and all Lloyd’s regulatory returns, and associated management information. The role is also responsible for the preparation of the analytical tools and reports to support the information produced.

• Accounting of insurance technical and non-technical transactions in the relevant ledgers of the Syndicates.
• All operational aspects of the production of ledgers, including the preparation of account reconciliations and analysis of balance sheet and profit & loss items.
• Preparation of all outputs of syndicates, including QMA, QMB, QMC, SII, US Reporting, Canadian Reporting, FCA/PRA reporting, statutory accounts, Distribution files, taxation reporting amongst others.
• Preparation of statutory accounts for group companies, including corporate members.
• Production of analytical tools and analytical memos supporting individual reports.
• Interaction with underwriters, actuaries and treasury to develop the understanding of the figures.
• Liaising with internal and external auditors, ensuring that all the information required is produced and the audits are completed on time.
• Responsible for the development of process improvements and system enhancements, typically within a formal project framework, to ensure the efficient and accurate production of data.

Role requires a Qualified Accountant with exposure to the Lloyd’s Market as an accountant or Auditor.

Lloyd’s accounting experience, UK GAAP / US GAAP. Advance experience of using Excel.

Hugely successful London market insurer are looking for a Syndicate Accountant to undertake regulatory and monthly management reporting in respect of certain Lloyd’s entities in support of the Syndicate Finance manager, as required.

To build knowledge and experience to be able to develop further responsibility for syndicate accounting roles, as necessary.

Key Tasks:

• Review of input data and preparation, filing of all Lloyds Regulatory returns for Lloyd’s Syndicates, including Annual returns, Quarterly returns, US and Canadian Reporting (Including schedules F&P), US and Canadian SIS
• Prepare Syndicate board reports, P&L attribution and answer requests for finance information from Capital Modelling Actuaries.
• Planning and production of Syndicate annual report and accounts, management information and financial schedules
• Planning and preparation of monthly and quarterly accounting information, as required.
• Contribute to the development of systems for syndicate reporting with regard to FRS102/103 and Pillar 3
• Assist in the migration of key tasks to syndicate personnel and monitor the accuracy of their work
• Liaise with management, auditors and actuaries as necessary
• Assume responsibility for the management and execution of specified controls/action plans relating to risks, working closely with Risk Owners and the Risk Management team. This includes ensuring that control design is appropriate to the risk(s), the control operates as intended and reporting any issues to the Risk Owner

Key Technical Skills

• Qualified ACCA or equivalen
• Up to date experience of Lloyd’s syndicate reporting within an established Lloyd’s managing agency
• Proven ability in the preparation and completion of Lloyds Core Market returns and overseas reporting
• A knowledge of the requirements of FRS102/103 and Pillar 3
• Basic report writing and process documenting skills
• Sound knowledge of IT systems within clients accounting function: especially Microsoft Excel, Vision PMQA, Sun 6 Accounts.

Job Description

Job Purpose:

Assisting with production of all Lloyd’s, PRA and other external reporting requirements

Key Responsibilities:

• Completion of syndicate Quarterly Monitoring Returns (A) & (B) so that business complies with Lloyd’s of London requirements
• To assist in the preparation of the Insurance PRA Returns for (UK Branch).
• NAIC reporting to Group, specifically completion of Schedule F Part 1 and T to be consolidated into Group return.
• Assist in the preparation of Solvency II reporting requirements for the syndicate including QMC, TPD, GQD, QAD and AAD
• Ensure all UK GAAP ledger entries relating to the syndicate are complete so that external reporting requirements can be met
• Run and update syndicate reporting packs on a quarterly basis so that the quarterly returns can be completed
• Assist with the analysis of profit and loss and balance sheet variances for syndicates
• Complete quarterly syndicate UK GAAP and US GAAP reconciliations and all other reconciliations
• Prepare audit files and liaise with external auditors so that the year-end and half-year audit for the Syndicate is successfully completed
• Liaise with the investment management team in the US , and investment managers to ensure that investment data is complete and available for syndicate reporting purposes
• Provide the Legal Entity reporting team with syndicate data so that Syndicate Annual Reports and Accounts can be completed accurately and in a timely manner
• Preparation of Syndicate Information Statements (SIS) in respect of US tax requirements
• Assist with the completion and submission of other annual returns such as TRIA and NAIC IID returns to comply with Lloyd’s of London requirements.
• Assist with queries from Lloyd’s, management, actuaries etc
• Review and update syndicate accounting processes.
• Other duties include liaising with internal audit and actuaries, providing data to management, and ad-hoc duties such as involvement in projects including the Solvency II project.

Job Requirements

Skills and Experience Specification:

• Knowledge of the insurance industry specifically within a finance department
• Strong experience of Lloyds accounting (3-5 years)
• Accounting qualification or part qualification
• Strong organisational and analytical skills
• Confident in MS Word and Excel

• Good communications skills
• Professional approach and delivery of work product
• Ability to multi-task and meet critical deadlines
• Knowledge of PeopleSoft desirable but not essential
• Professional, positive attitude, reliable, team player, adaptable, committed, self-motivated

Our client, a Lloyd’s Syndicate, are looking to recruit an experienced FP&A Manager to join their City based team. This role will report to the Syndicate Finance Director, and would suit someone with previous FP&A experience gained within the Lloyd’s or wider company Market.

 Responsibilities

•  Development of the Financial Model  
• Coordinating with actuaries and underwriting functions in relation to the business plan process
• Business plan projections
• Syndicate Business Forecast (SBF)
• Coordinating with capital model actuaries ensuring consistency of assumptions and figures
• Peer analytics 
• Overseeing the outsourced Finance function on accounting and reporting, investments and expenses
• Actual vs. forecast analytics on a GAAP and year of account basis 
• Reporting on investment returns and cash flows 
• Production of Board papers

Our client, a Lloyd’s Syndicate, are looking to recruit a Corporate Accountant to join their City based team.

Reporting into the Financial Director this role will include:

•  Setting up of financial processes,
• Day to day accounting,
• Periodic management and statutory reporting and MI. 
• Maintenance of corporate treasury and purchase ledger process in co-ordination with current managing agency, who will continue to be the outsourced syndicate finance team.

This role will suit an individual with previous Tax and VAT experience, someone with partnership accounting experience and who has an understating of the insurance industry.  Preference for an ACCA / ACA / CIMA qualified accountant.

Successful P&C insurer looking to recruit an ACCA / ACA / CIMA qualified Financial Controller (Projects) to support the CFO in the development of finance related Projects and Solvency II reporting capability across the group.

The successful candidate will have extensive accounting and reporting experience gained within the Lloyd’s or London market with an understanding of Lloyd’s Syndicate regulatory reporting.

Knowledge of Solvency II,  UK and US GAAP, QMA/QMB/QMC, SBF, SOX processes, projects, systems implementations and control knowledge.