© Lloyd’s 2012 1

© Lloyd’s 2012

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LLOYD’S – Local Global Insurer

Adrian Humphreys Managing Director - Lloyd’s Australia

February 2014

© Lloyd’s 2012

AG

EN

DA

1 Disneyland for brokers

Can Lloyd’s pay?

Policies in and claims out

Are Lloyd’s local?

Current market

2

3

4

5

Australia vs London 6

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© Lloyd’s 2012

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© Lloyd’s 2012

1688: Edward Lloyd’s coffee house is first mentioned in the London Gazette. It

is frequented by ship owners and merchants seeking shipping news, which

attracted those providing insurance for ships and cargo – the underwriters

325 Years of Lloyd’s

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Lloyd’s modern Market Structure

Australian Broker

Direct

Reinsurance

54

Managing

Agents

Management

89

Syndicates

Underwriting

BUSINESS FLOW CAPITAL PROVISION

Members

Agents

Members

• Corporate

• Individual

CORPORATION OF LLOYD’S

191

Lloyd’s

Brokers

Service

Companies*

Coverholder

Source: Lloyd’s Relationship

Management, January 2013. Includes

11 Special Purpose syndicates

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Lloyd’s Business > Subscription market

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Can Lloyd’s pay?

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“Insurance is a promise to pay”, understanding the security behind your policies is vital when securing your clients future.

LLOYD’S > Chain of security

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Financial results (in USD million)

Gross written premiums 37,563 40,500

Combined ratio 106.8% 91.1%

Investment return 1,528 2,084

(Loss) / Profit before tax (800) 4,517

Return on capital (pre-tax) (2.8)% 15%

Source: Lloyd’s pro forma financial statements, 30 June 2012

Dec 2011 Dec 2012

Fitch Ratings

A+ (strong)

Standard & Poor’s

A+ (strong)

A+

A

A.M. Best

A (excellent)

Market ratings re-

affirmed and apply to

each policy issued by

lloyd’s

Disciplined underwriting with modest rate

improvements in 2012

© Lloyd’s 2012

Lloyd’s strengthened position is recognised by the rating agencies

Core strength > Security rating

Sources: Source: AM Best, Fitch and S&P, 2009

Upgraded

Unchanged

Downgraded

Negative outlook

S&P rating actions since January 2002 - Lloyd’s IFS rating has

been upgraded to A+, despite downgrades in the wider market

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Routes to the Lloyd’s market

Lloyd’s Business > Market Access

Source: Lloyd’s Australia, (2013)

Australian

Broker

(Direct or

Re-insurance)

57

Insurance

Companies

Management

88

Syndicates

Underwriting

London Broker

Underwriting

Agency

Po

licyh

old

er

Service

Companies

Arch

Beazley

Catlin

Sportscover

Ironshore

Newline

Starr

Acct &

Settlement Xchanging

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Routes to the Lloyd’s market

Lloyd’s Business > Paying claims

Australian

Broker

(Direct or

Re-insurance)

57

Insurance

Companies

Management

88

Syndicates

Underwriting

Lloyd’s Broker

Underwriting

Agency or TPA

Po

lic

yh

old

er

Source: Lloyd’s Australia, (2013)

Service

Companies

Acct &

Settlement Xchanging

Local claims

handling

ECF and

segmentation

Arch

Beazley

Catlin

Sportscover

Ironshore

Newline

Starr

© Lloyd’s 2012

LLOYD’S > Claims

Nine out of 10 Nat Cat and all in the last eight years

Year Event US$ bn

2005 Cyclone ‘KRW’ – US & Gulf of Mexico 8.0

2001 Terrorism WTC – US 3.0

2012 Superstorm Sandy 2.5

2011 Thailand Floods 2.2

2008 Cyclone ‘Ike’ – US & Gulf of Mexico 2.1

2011 Japan Earthquake & Tsunami 1.95

2005 Cyclone ‘Rita’ – US & Gulf of Mexico 1.5

2010 Chile Earthquake 1.4

2011 New Zealand Earthquake 1.4

2005 Cyclone ‘Wilma’ – US 1.0

2010 Australian floods 0.4

Source: Lloyd’s Australia, (2013)

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US major claims events > dominate 2012

Source: Lloyd’s pro forma basis. Indexed to December 2012

Claims in foreign currency translated at the exchange rate prevailing at the date of loss

2,290

4,703

1,816

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

£m

LLOYD’S MAJOR CLAIMS: NET ULTIMATE CLAIMS

US Non-US

15 YEAR AVERAGE

£1,436m

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Are Lloyd’s local?

© Lloyd’s 2012

Lloyd’s is ranked as 5th in terms of Gross Signed Premium and

Australia is 3rd largest market for Lloyd’s globally

Lloyd’s is local

• Licenced General Insurer

• Principal Strategic Partner of UAC

• Board member: Insurance Council of

Australia

• Insurance Code of Practice

• Insurance Advisory Committee (FSL)

Aon 2012 Survey (350 Companies) Lloyd’s ranked:

• Top insurer for >$1bn revenue

companies

(up 7 places), takes top spot from Allianz

• 2nd for mid-sized ($100m - $1bn) companies

(up 4 places)

• 3rd for smaller companies, (up 3 places)

LLOYD’S Australia > key facts

Source: Aon Survey and J.P. Morgan General Insurance Industry Survey (2012); APRA, (2012); Company Annual Reports, (2013); Exchange rates as per Appendix

2012 MARKET PLAYERS: TOP 7 General Insurers

(Excluding global business; *Includes subsidiaries)

Others*

2012 Non Life

Insurance premiums

US$ 40.1bn GWP

(US$ 29.8bn NWP)

**On a country of

origin basis. May differ

from APRA statistics.

Please see Appendix

for further details

1.2

1.3

2.0**

3.2

4.6

6.6*

6.8*

4.6

© Lloyd’s 2012

Property Treaty

Source: Market Intelligence calculation on Xchanging figures. Rates of exchange calculated as per Appendix

2008 – 2011 LLOYD’S PREMIUMS: BY CLASS

Overseas Motor

PA & Health

Marine

Aviation

Energy

Gross Signed Premiums in: million US$

Lloyd’s premiums are dominated by Property and Liability classes.

Accident & Health experienced the most significant % growth during 2011, more than doubling to US$ 242m

Lloyd’s data is based on Xchanging “REG 258”, (2010); unaudited figures based on country of origin and processing by calendar year; please refer to Appendix for detailed summary of Lloyd’s Data Limitations. !

Casualty Treaty

Casualty

Property (D&F)

56.5 70.6 85.5 112.7 241.0

449.2 455.2 505.1

629.4

774.2

45.4 64.3

50.5

50.9

66.0

49.0 60.4

58.3

79.7

86.3

216.9

239.5 231.5

302.6

349.9

78.6

98.3

126.8

158.1

285.2

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2007 2008 2009 2010 2011

© Lloyd’s 2012

Australian Territorial Extensions

SOURCE: Lloyd’s Australia, (March 2012)

Lloyd’s > Agency Overview

2007 – 2011 Number of Binder by Class

Lloyd’s data is based on Xchanging “REG 258”, (2011); unaudited figures based on country of origin and processing by calendar year; please refer to Appendix for detailed summary of Lloyd’s Data Limitations.

SOURCE: Lloyd’s, Delegated Authority, (2012)

244

250

271

230 240 250 260 270 280

2009

2010

2011

2007 2008 2009 2010 2011

Aviation 0 0 0 0 3

Casualty 98 134 202 206 189

Energy 4 4 4 2 8

Marine 24 29 41 28 35

Motor 9 8 13 13 19

PA & Health 23 29 40 26 57

Property 120 129 132 136 121

Grand Total 278 333 432 422 432

2009-2012 Total GSP for U/w agencies

SOURCE: Market Intelligence based on Gross Signed premiums; Xchanging (2012)

79

0

25

50

75

100

2009 2010 2011 2012

99 85

424

614

865

0

300

600

900

2009 2010 2011

107

817

2012

2009-2012 Total # of Individual U/w agencies

SOURCE: Lloyd’s, Delegated Authority, (2012)

© Lloyd’s 2012

LLOYD’S AUSTRALIA > Underwriting Agencies

Source: Lloyd’s Delegated Authority, (February 2013)

Number of Coverholders

Number of active coverholders by region

0 64

Number of Binders

Number of active binders by region

0 140

149 Total Number of Coverholders 304 Total Number of Binders

64

35

26

9

14

0

1

140

74

45

14

26

0

5

© Lloyd’s 2012

LLOYD’S AUSTRALIA > Underwriting Agencies

AFA

Affinity Risk Partners Brokers

AIS Insurance Brokers

Altiora Insurance Solutions

Aon Risk Services

Arch Underwriting at Lloyd’s

Asia Mideast Insurance & Reins.

ASR Underwriting Agencies

ATC Insurance Solutions

Austagencies

Australian Income Protection

Australian Insurance Agency

Pool

Australian Reinsurance U/w Svs

Australis Group Underwriting

Austruck Insurance

Axis Underwriting Services

Beazley Underwriting

Bizcover

Blue Sky

Brooklyn Underwriting

Brooks Inglis Insurance Brokers

Catlin

CBD Underwriting

CEMAC

Cerberos Brokers

Cerberus Special Risks

Cheap Travel

PI Direct Insurance Brokers

Professional Risk U/w

QBE Placement Solutions

Resource Underwriting Pacific

Richard Oliver

Southern Cross Underwriting

Suresave

Transcorp Underwriting

Tasman Underwriting

Sterling Insurance

Savannah Insurance Agency

SLE Worldwide

Sportscover

SRS Underwriting Agency

Starr Underwriting

Strathearn

Specialist Underwriting

Agencies

Trafalgar Risk Management

Travel Insurance Direct

Trident Insurance Group

Trinity Pacific U/w Agencies

Willis

Windsor Income Protection

Winsure Insurance Group

Woodina Underwriting

World Nomads

Cinesure

CKA Risk Solutions

Columbus Direct Travel Ins.

Coverforce Underwriting

Coversure

Dolphin Insurance

Dual Australia

East West Insurance Brokers

Elkington Bishop Molineaux

Epsilon Insurance Broking

Services

Fenton Green & Co

FP Marine

Fitton Insurance Brokers

Freeman McMurrick

General Security Insurance

Brokers

Go Unlimited

Gow-Gates Insurance Brokers

Guardian Underwriting Services

High Street Underwriting Agency

H W Wood

IBL (Planned Professional Risks)

Insurance Advisernet

Insurance Facilitator

Insure That

Ironshore Australia

IRS Steadfast

Jardine Lloyd Thompson

JMD Ross Insurance Brokers

JUA Underwriting Agency

Latitude

Lawsons Underwriting Australasia

Leisureinsure

Logan Livestock Insurance Agency

London Underwriting

Macquarie Underwriting

Magic Millions Insurance Brokers

Mansions of Australia

Manufactured Homes Ins Agency

Marsh

Millennium Underwriting

Miller & Associates Ins Broking

Miramar Underwriting Agency

Mobius Underwriting

National Underwriting Agencies

Nautilus Marine Insurance Agency

Newline Insurance

Newmarket Insurance Brokers

Nova Underwriting

OAMPS Australia

Online Insurance Brokers

Panoptic (Midas)

Pantaenius

Parmia

Source: Market Intelligence based on: Lloyd’s Delegated Authority Team 2013

Lloyd’s agencies and service companies you may recognise…..

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Soft market + low returns

=

Year of account Combined ratio ROE

1985 106 – 108% 12%

2001 98 – 101% 12%

2012 84.5 - 88.7% 12%

Managing the cycle, Costs

& look for growing markets

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Europe

(including UK)

33%

Other

Americas

8%

Central Asia

& Asia Pacific

13%

Rest of

the World

5%

US & Canada

41%

(Total US &Canada)

41% 2011

43%2010

45% 2009

46% 2008

49% 2007

12% 2011

10% 2010

9% 2009

8% 2008

7% 2007

8% 2011

7% 2010

6% 2009

5% 2008

4% 2007

Lloyd’s gross written premium >2012

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© Lloyd’s 2012

Strategy and Regulation

32