Syndicate forecasts as at 31 March 2021
Lloyd’s has released updated forecasts for syndicates’ 2019 years of account and initial estimates for the 2020 year. The forecasts are based on data as at 31 March 2021 and are therefore at the ninth and fifth quarters of development respectively.
There has been a small overall improvement in the forecast for the 2019 year of account, with eleven syndicates improving their midpoint estimate. The best improvement comes at Cincinnati Syndicate 318, which has more than halved its forecast loss to less than 3% of capacity, while top performer Chaucer Nuclear Syndicate 1176 has increased its forecast to 25% of capacity. The 2 point improvement for Hiscox Syndicate 33 to a forecast midpoint loss of 4.3% of capacity gives hope that a small surplus is not beyond the bounds of possibility.
At the other end of the scale, there are eight syndicates where the midpoint is now worse than three months ago. Blenheim Syndicate 5886 crosses from a small profit into loss, while Syndicate 1991, now in runoff, reports a further deterioration.
In aggregate, the 2020 account is forecast to be in a very small overall surplus for our clients. These early estimates need to be treated with a large degree of caution, as business remains on risk for much of the 2021 calendar year. Forecasts from reinsurance syndicates, including TMK 557 (15% forecast loss), and Hiscox 6104 (24% loss) are disappointing and reflect the active hurricane season in 2020, while syndicates with large US open market businesses including Cincinnati 318, Lancashire 2010, Blenheim 5886 and Beat 4242 are forecasting losses at present due to the frequency of medium sized catastrophe losses.
Given the immaturity of the account at this stage, a number of managing agents cast their forecasts in a wide range; these include a 30 point range for Beazley SPA 6107, 20 point ranges for Beazley 623, Meacock 727 and Chaucer 1176 and 15 point ranges for Lancashire 2010 and Asta 2525. The ranges are reduced over time. Only four syndicates are unequivocally in profit, with a positive outcome forecast even at the worst end of the range, including well supported third party syndicates QBE 386 and Atrium 609 and perennial high performer Chaucer 1176. A majority of syndicates provide a range which covers a loss at worst case and a profit at best case.
A complete schedule of forecast results is available here. We will be providing more comment for Argenta clients in the coming weeks including by newsletter and at our forthcoming webinar. Syndicate forecasts will be updated on the basis of data to 30 June 2021, with the forecasts released by Lloyd’s on 18th August.