Tokio Marine Kiln Syndicates Limited has provided us with the following press release detaling the syndicate forecasts for the 2016 and 2017 years of account as at 31 March 2018.

Tokio Marine Kiln announces latest Lloyd’s syndicate results and forecasts

Highlights

•    Syndicates 510 and 557 have shown small improvements on the 2016 year of account following a benign quarter

•    Syndicates 510 and 557 remain forecasting a loss for the 2017 year of account reflecting the US hurricane losses

•    Syndicate 308 is loss making on both 2016 and 2017 years of account, with the 2017 year of account reflecting the impact of the run-off book

Tokio Marine Kiln Syndicates Limited today released updated forecasts for the 2016 and 2017 years of account for its three non-aligned syndicates.

Charles Franks, Chief Executive Officer of Tokio Marine Kiln, said “We’ve seen a relatively quiet quarter which has given more stability to the 2017 year of account forecasts with Syndicate 510 remaining flat and an improvement in the position of Syndicate 557. We have also made significant progress with paying claims arising after the hurricanes Harvey, Irma and Maria.”

 “Whilst the rating environment is positive in certain classes, the market remains highly competitive across much of our account.  We continue to pursue good opportunities that are in line with our strategic business areas and priorities.

 “We also report here on the forecasts relating to the cessation of our Life syndicate 308. The figures reflect the position as we run off the business and allow for increased expenses and other costs involved in its closure.”

The previous forecasts, which were announced in February 2018, have been rebased to the same exchange rates (US$1.40 and C$1.81). The forecasts set out below take into account all managing agency and Lloyd’s charges.

2016 year of account forecasts   

 

Syndicate

Capacity £m

Forecast range

Previous forecast

510

 1,062

  -3.0% to 2.0%

   -3.8% to 1.2%

557

 35

    12.0% to 17.0%

    10.6% to 15.6%

308

 32

   -16.0% to -11.0%

   -14.6% to -9.6%

Syndicate 557 has had little exposure to catastrophes on the 2016 year of account and as a result, the syndicate remains on course to make a good profit with an improvement in the quarter. Syndicate 510 had a quiet quarter, with favourable claims experience leading to a small improvement in the forecast range. Syndicate 308 saw an increase in incurred claims on a key binder.

2017 year of account forecasts   

 

Syndicate

Capacity £m

Forecast range

Previous forecast

510

 1,131

  -12.3 to -7.3

    -12.3 to -7.3

557

 34

    -36.3 to -31.3

   -41.3 to -36.3

308

 31

  -54.8 to -49.8

  -54.9 to -49.9

The impact of an active catastrophe environment in the second half of the 2017 financial year is reflected in the forecasts for Syndicates 510 and 557. The 2017 year of account for both 510 and 557 experienced losses on Hurricanes Harvey, Irma and Maria, the Mexican earthquakes and the Californian wildfires, all of which had a substantial impact on the forecast ranges. A relatively stable quarter has seen the forecast range for Syndicate 510 remain flat whilst 557 has seen its forecast range improve.

Argenta Comment

As Tokio Marine Kiln explains in its press release, it restates the previous quarter's forecasts at the most recent rate of exchange. This means that any improvements in the forecasts are owing to underwriting improvements rather than to exchange gains. TMK has also reduced the range from worst to best on the 2017 account from ten percentage point to five. The comparative forecasts using the historic rates of exchange are as follows:

Syndicate 510

 

year of account

Revised forecast Range

Previous Forecast
Range

Change at
Midpoint

2016

-3.0% to 2.0%

-3.7% to 1.3%

0.7 points better

2017

-12.3% to -7.3%

-14.9% to -4.9%

0.1 points better

Syndicate 557

 

year of account

Revised forecast Range

Previous Forecast
Range

Change at
Midpoint

2016

12.0% to 17.0%

11.2% to 16.2%

0.8 points better

2017

-36.3% to -31.3%

-45.0% to -35.0%

6.2 points better

Syndicate 308

 

year of account

Revised forecast Range

Previous Forecast
Range

Change at
Midpoint

2016

-16.0% to -11.0%

-14.6% to -9.6%

1.4 points worse

2017

-54.8% to -49.8%

-54.5% to -49.5%

0.3 points worse