Syndicate forecasts as at 30 June 2017
Lloyd’s has released syndicate forecasts for all syndicates that traded with unaligned capacity for the 2015 and 2016 years of account.
Although nine syndicates have reduced their forecasts, the result for the Lloyd’s market has improved by 0.4 percentage points to a profit at midpoint of 4.6% of capacity. In general, forecast results are better for Argenta clients, and the improvement in the last quarter has widened the gap between the Lloyd’s average and the average for Argenta clients. The Argenta clients’ average result is now a profit of 7.2% of allocated capacity, up 0.7 percentage points in the quarter.
The forecast for Syndicate 958 has deteriorated to a midpoint loss of 8.4% of capacity from a midpoint profit in the previous quarter. This follows increased claims’ advices to the syndicate’s motor excess of loss account in the wake of the reduction in the discount rate used by the UK courts to settle the most serious compensation cases for bodily injury and long term care cases – the so-called Ogden rate.
Sixteen syndicates improved their forecasts for the 2015 account. The largest increases were for the most part for syndicates that were already forecasting a good return for the year, including catastrophe specialists Hiscox 6104 (up 5 points to midpoint 35%) and Beazley 6107 (up 5 to midpoint 40%), and nuclear Syndicate 1176 (up 5 to midpoint 40%). In addition there were encouraging improvements in the forecasts for two liability syndicates, QBE 386 up 4.7 points to midpoint 8.3% and Asta 2525 (up 5 points to midpoint 2.5% loss).
Managing agents begin to reassess reserve adequacy on closed years of account at the mid-year forecast and we anticipate that some of these movements will include forecast releases on prior years. We will comment further in our annual compendium of syndicate profiles sent to clients in October
2016 remains a more marginal year. The worst case for twenty-five of the thirty-five syndicates with a published forecast is a loss. Of these, only six are forecasting a loss at the best case, with the range for nineteen syndicates straddling a loss at worst and a profit at best. The best forecasts are again for the catastrophe and nuclear specialists, a list headed by nuclear Syndicate 1176 at a 20% profit at midpoint followed by Hiscox and MAP SPAs (6104 and 6103 respectively). Nine syndicates have reduced their forecasts, the largest negative movement being Apollo Syndicate 1969 which moves from a midpoint breakeven to a 5% loss.
The 2016 account remains on risk, and many syndicates will hold catastrophe loads pending the outcome of the Atlantic windstorm season, especially for property business written under binding authorities. Recent years, which have experienced little in the way of catastrophic loss, have improved following the removal of redundant catastrophe loads.