Lloyd’s members keep up the bidding, buy next £77m in capacity auction

Lloyd's members placed another £937.7 million in bids for syndicate capacity in the second round of 2022 auctioning, securing £76.7 million in the 18 syndicates in focus in current year bidding.

Demand slipped very little after the prior week’s first round of bidding, with total bids off by just £84 million or 8.2%. In both rounds this year, bids have beaten prior year levels by in excess of 12%.

With tendered capacity off by nearly half, the bid to offer ratio rose to 8.84 from 5.14 in round one, both well below the double-digit ratios posted throughout the prior year auction.

That predominance of demand didn't tip the pricing scales. On the whole, prices did their usual downward move versus round one, with the average price down 29.4% to 24.79p. The only notable price increases vs round one came on poorly traded syndicates. Amongst heavily traded syndicates, only Lancashire 2010 and Tokio Marine 510 held their pricing.

Beazley’s syndicate 623 remains a top-traded syndicate, now with £56 million in capacity having changed hands. Round two buyers, chiefly corporate members and managers, got in at 27.18p, 22% below the first-round pricing.

Action remained comparatively heavy around Tokio Marine syndicate 510 where £11 million in capacity in round two added to over £32 million in round one. Prices held firm between the two rounds. Tokio Marine Underwriting was listed in the major transaction list as having picked up £8.2 million.

Argenta syndicate 2121 emerged from the shadows in round two to account for over a quarter of total trade with per pound capacity prices down at one of the steepest rates amongst syndicates versus round one. Argenta Underwriting No. 3 picked up the full £20 million.

Lancashire syndicate 2010 remains well traded overall, with prices having firmed by a mild 1.6% between rounds. Corporate member/candidate Cathedral Capital picked up the full £6.1 million.

The two-day sale was the second of three auctions to be held in October/November 2022. Buyers and sellers will face off for a final round November 9-10.

In the first round of bidding through October 27, £133.28 million of capacity from 17 syndicates traded hands for £46.77 million, an average price of 35.09p per pound. Buyers placed £1.02 billion in bids against the £198.80 million in tendered capacity.

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