Market messages presentation – 16 July 2020

At the Lloyd’s market messages meeting this morning, a key phrase for business planning for 2021 was unveiled.  Syndicate plans must be “logical, realistic and achievable”.

Against this backdrop, John Neal, the Lloyd’s CEO, led the presentation to the market which sets the scene for the 2021 business planning process.  He stressed that profitability will continue to take priority over growth.  Nevertheless, those light-touch syndicates which have demonstrated a track record of superior performance will be permitted to grow.  At the other end of the scale, those syndicates which have consistently delivered losses on normalised, GAAP and actual bases have already been contacted by Lloyd’s to ensure that their plan for 2021 returns the syndicate to profitability.

From a capital basis, Burkhard Keese, the Lloyd’s CFO, explained that Lloyd’s ability to reload capital promptly helps to support the market’s favourable credit rating.  A robust capitalisation of the market is essential and he confirmed that “like-for-like, more capital will be needed next year for the same risk”.

It was confirmed several times that the trading conditions in the market are the most favourable for years, perhaps since 2002.  However, Lloyd’s will not be releasing the handbrake for everyone, a differentiated approach will be employed based on the quality of a syndicate’s prior performance.  For those better, more profitable syndicates, their performance is comparable with the best insurers in the world.  The top performers – such as MAP, Beazley and Atrium – will have their ambitions supported by Lloyd’s.  At the other end of the scale, underperforming syndicates will need a plan that delivers a profit.  In all instances, the plans will need to be logical, realistic and achievable.

We have started engaging with managing agents and will assess their plans through the lens of these market messages. 

More communications will follow as syndicate plans are developed.

Slides from the presentation are available on Lloyd's website here.