Lloyd’s syndicate planning upended by macro & market flux

Lloyd’s syndicates may be forced back at the drawing board yet again to craft 2023 business plans as market and macro conditions “without recent precedent” changed beyond what could have been forecast when planning began, Lloyd’s chief of markets Patrick Tiernan has said.

“Recent weeks have demonstrated a level of dislocation in the property and specialty insurance and reinsurance markets that is beyond what was reasonable for you to forecast when you submitted your plans in September,” Tiernan said.

“These are extraordinary times,” Tiernan said, with a confluence of high inflation, rising interest rates, “elevated” cat loses and “uncertain” capital flows proving “without recent precedent.”

An inability to secure the initially planned reinsurance cover could additionally motivate amendments to the 2023 plans, Tiernan admitted.

Added forays into the property and property cat field could be somewhat restricted by syndicate. “We will continue to support those with the capacity, capability and expertise to lean into that opportunity,” Tiernan said.  “Well considered submissions” might fit into lingering “headroom” in Lloyd’s cat appetite.

Syndicates hoping or needing to revise are encouraged to step forward quickly, with hope that Lloyd’s can move equally quickly towards a hopeful ratification.

“We will be challenging ourselves to demonstrate speed and commercial pragmatism, ... allowing syndicates to capitalise on the market opportunities and avoid underwriting paralysis around 1.1,” Tierna said, vowing simultaneously that Lloyd’s “will not compromise” on prudential risk assessment.

“We will not be softening our rules, we won't be waving due process or showing forgiveness for any capital shortfalls,” Tiernan vowed.

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