Lloyd's market messages
Today Lloyd’s presented their market messages, led by the new Head of Markets, Patrick Tiernan.
Whilst we are still digesting all the implications, our initial assessment is very positive. There were five key messages:
- The market needs to be positioned for a sustainable future. This means profitability through managing expenses, achieving rate adequacy and readying the market for future trends and developments.
- Lloyd’s believes the market is at an inflection point for profitable growth. Much remedial work has been completed and the fruits are starting to be enjoyed.
- Performance remains Lloyd’s number one priority
- There will be an increased differentiation between the strong and poor performers.
- Thematic focus areas for the market will include cyber, Covid, reducing operational expenses and ESG (environmental, social and governmental).
The positive news was that in 2020, 86% of all syndicates achieved a normalised net combined ratio of under 100%, up from 31% in 2018. As a result of the overall uplift across the market, Lloyd’s has confirmed that the light-touch concept will remain in place and that standard syndicates can fast-track their business plans for 2022 should they hit certain key performance indicators such as an improving combined ratio. On the other hand, poor performers will face even greater scrutiny including board-level engagement with Lloyd’s, a requirement for a strict 3-year plan to move the syndicate into acceptable performance. Further the syndicate must hit jointly agreed milestones and there will be “clear consequences” which will be “existential” if they fail to do so. Patrick Tiernan also confirmed that these measures are “non-negotiable”.
Argenta comment: We welcome the main messages shared with the market this morning. Lloyd’s is striking a balance between supporting the better syndicates and forcing the poorer performers to improve. Business planning is now starting in earnest and we will see how syndicates are responding to these messages and will keep clients updated.