Results of Lloyd’s syndicates boosted by limited catastrophes

The limited number of catastrophe events in 2015 helped syndicates in the London-based Lloyd's insurance market deliver another strong set of results in 2015, according to a new Standard & Poor’s (S&P) report.

Claims on casualty lines that were lower and less frequent than average, also boosted the results. Across the market, the average combined ratio reported was 90 percent.

The industry is under growing pressure from strong competition, excess capacity, and softening rates, according to the report. These have taken their toll on some individual syndicates, said S&P.

S&P analysed syndicates' public annual reports to identify the strongest and weakest by underwriting performance. It found the underperformers included new syndicates, which are typically burdened by high start-up expenses when they enter the Lloyd's market.

In contrast, top performers were mostly cautious and proactive in terms of cycle management, with good underwriting discipline.

94 syndicates that operated in both 2014 and 2015 were analysed and S&P discovered that 29 disclosed that their combined ratios rose by more than 5 percentage points in 2015, compared with 2014.

The biggest syndicates, those with an allocated capacity of over $1 billion, all reported combined ratios below 100 percent, with their average combined ratio at 88 percent.

Syndicates reporting underwriting losses represented only about 12 percent of the Lloyd’s market’s overall 2015 allocated capacity of £26.1 billion.

The number of syndicates reporting combined ratios above 100 percent rose to 22 (23 percent), from 17 (18 percent) in 2014, according to the data. Of these, nine syndicates reported a combined ratio of over 115 percent in 2015, which is defined as a disastrous year. The number of syndicates reporting a disastrous year rose by two from 2014.

S&P said the enhanced central oversight has aided syndicates in avoiding disastrous years over the past decade.