Lloyd’s: An Overview of the Market
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Transcript of Lloyd’s: An Overview of the Market
© Lloyd’s 1
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© Lloyd’s 1
Lloyd’s: An Overview of the Market
Keith Stern: UK Regional ManagerOctober 2014
© Lloyd’s2
Agenda• History• Market Structure• Financial Strength• Financial Results• Global Reach• Uk insurance market &
Lloyd’s• Accessing the market• Coverholders• Events • questions
© Lloyd’s 2012
< Picture to go here >History
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From Coffee House…
First known reference to Edward Lloyd’s coffee house in Tower Street(London Gazette 18-21 February 1688)
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…To every type of Insurance
1877 1911 19691906
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PIPER ALPHA1988
EXXON VALDEZ
1989
HURRICANES1989
ASBESTOS1980s- 1990s
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…and an appetite for unusual risks requiring innovative solutions
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The Lloyd’s market is known for its specialist expertise…
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Market Structure
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► Lloyd’s is a market, not a company
► The Lloyd’s market insures complex and specialist risks and SME business
► London based international business (UK is our second largest market = £3.5bn)
► Regulated by the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA)
► Products are distributed via Lloyd’s brokers, coverholders and syndicate service companies.
Lloyd’s Key Characteristics
© Lloyd’s
Lloyd’s market structure
Members
Policyholders Direct
Reinsurance
56Managing
Agents
Management
91Syndicates
Underwriting
200 Lloyd’s Brokers
Service Companies
BUSINESS FLOW (£26,106m) CAPITAL PROVISION (£60,782m)
Corporate
Individual
Corporation of Lloyd’s
www.lloyds.com/directories
Coverholders
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A DYNAMIC AND DIVERSE MARKETPLACEAt December 31st 2013, the Lloyd’s marketplace was home to 56 “live” managing
agents that manage 91 syndicates
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Financial Strength
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INDEPENDENTLY ASSESSED
In the eyes of leading ratings agencies,Lloyd’s is viewed as enjoying robust capital reserves:
Standard and Poor’s: ‘A+’ (strong)
Fitch Ratings: ‘AA-’ (very strong)
A.M. Best: ‘A’ (excellent)
` Lloyd’s Annual Report 2013
Lloyd’s Ratings
Figures correct as at December 2013
OUR CHAIN OF SECURITY
• LINK ONE:SYNDICATE ASSETS(£42,342m)
• Before writing business, a syndicatemust put up funds to cover their own share of claims
• These funds are the first port of callwhen paying policyholder claims
• LINK TWO:MEMBERS’ FUNDS AT LLOYD’S(£15,242m)
• Every member (corporate or individual) must provide sufficient capital to support their underwriting
• These funds are held in trust for the benefit of policyholders and used only if the syndicate assets have been exhausted
Figures correct as at December 2013
OUR CHAIN OF SECURITY
• LINK THREE:LLOYD’S CENTRAL FUND(£3,198m)
• The Central Fund includes members’ annual contributions and funds issued by the Corporation of Lloyd’s
• If a syndicate has failed to meet its liabilities and the two previous links proved insufficient, the Central Fund can provide a final reserve to cover those outstanding liabilities
Figures correct as at December 2013
OUR CHAIN OF SECURITY
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Financial Results
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Strong U/W Results
2009 2010 2011 2012 2013
Gross written
premiums (mns)
35,376
£21,973
35,469
£22,592
36,389
£23,477
40,545
£25,000
$43,698
£26,106
Combined ratio
86.1%
93.3% 106.8% 91.1% 86.8%
Investment return 2,848
£1,769
1,975
£1,258
1,528
£955
2,084
£1,311
$1,406
£839
Result before tax
(mns)
6,227
£3,868
3,446
£2,195
(800)
(£516)
4,517
£2,771
$5,734
£3,205
Return on capital
(pre-tax) %
23.9 12.1 (2.8) 14.8 16.2
Source: Lloyd’s Annual Report 2013. All figures as at 31 December 2013
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Source: Lloyd’s 2013 Annual Results (March 2014) Claims in foreign currency translated at the exchange rate prevailing at the date of loss
2013 major claims Significantly below long term average
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Lloyd’s outperforms peers
21
Combined ratio
Source: Lloyd’s pro forma financial statements, Dec 2013Peer group formed of 11 companies operating in the US, European and Bermudan markets
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< Picture to go here >Global Reach
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Europe (including UK [18%])
33%
Other Americas
8%
Central Asia & Asia Pacific
12%Rest of
the World
4%
US (including Canada)
43%
US & Canada
41% 2012
44% 2011
43% 2010
45% 2009
13% 2012
12% 2011
10% 2010
9 % 2009
Other Americas
8% 2012
8% 2011
7% 2010
6% 2009
Europe + UK
15% + 18% = 33% 2012
16% + 18% = 34% 2011
16% + 20% = 36% 2010
16% + 20% = 36% 2009
Sources: Lloyd’s Annual Reports (2008 – 2013): http://www.lloyds.com/Lloyds/Investor-Relations
2013 Lloyd’s Premiums by region
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1
1
1
1
222
2
33
3 3
33
33
1 1
1
1 1
4
44
33
3
32
4Local underwriting with co-located syndicates(or via a Lloyd’s regulated entity); Country Manager with Market Development Role
Europe
3 Country Manager with Market Development Role
2 Legal Representative for regulatory requirements
1 Legal Representative for minimum regulatory requirements
Type Market Development Scope Territories
Europe
Austria, Denmark, Norway, Portugal, LithuaniaArgentina, Belize, Chile Namibia, Zimbabwe, US Virgin Islands
Cyprus, Greece, Israel, Malta,New Zealand, India
South Africa,
Australia, Hong Kong (SAR)Benelux, France, Germany, Ireland, Italy, Poland, Spain, Sweden, Switzerland
Brazil
ChinaJapanSingapore
North America
www.lloyds.com/AMERICA 3
UK
Canada, US Northeast, US Southeast, US Central & US West
2
2014 Lloyd’s Office Network
1
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Uk insurance market & Lloyd’s
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Chart: Insurance Market Leaders (2012) (based on ABI Statistics; UK domestic business only, excluding Lloyd’s; in billion GBP)
Almost 75% of the market is dominated by these 11 players
4.9
3.4
3.4
3.2
3.1
2.5
2.0
1.7
1.7
1.7
1.4
0.0 2.0 4.0 6.0
Uk insurance market
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Lloyd’s Premium Income 2008-2013 by Class of Business
Split %Direct: RI 59:41 55:45 54:46 53:47 51:49
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2008 2009 2010 2011 2012 2013
Accident & Health
Aviation
Casualty
Casualty Treaty
Energy
Marine
Overseas Motor
Property (D&F)
Property Treaty
UK Motor
55:45
Lloyd’s UK Premium income
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Swot analysis
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Accessing the market
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Via Local Service Company Lloyd’s Managing Agent
Syndicate(s)
Contact local Country Manager>www.lloyds.com/offices
Access Service Company details in the Coverholder Directory> www.lloyds.com/directories/coverholders
Access to Lloyd’s for EU BrokersThis roadmap is for local Brokers who are seeking access to the Lloyd’s Market for a local client
Via Local CoverholderLocal Broker / MGA with binding authority, Underwriting Agency
Lloyd’s Managing Agent – direct or via a Lloyd’s Broker
Syndicate(s)
Contact local Country Manager> www.lloyds.com/offices
Access the Coverholder Directory> www.lloyds.com/directories/coverholders
Via Eu Service Company (crossborder)
Lloyd’s Managing Agent
Syndicate(s)
Contact local Country Manager> www.lloyds.com/offices
Access Service Company details in the Coverholder Directory> www.lloyds.com/directories/coverholders
Via Eu Coverholder (crossborder)local Broker / Agent with binding authority, Underwriting Agency
Lloyd’s Managing Agent – direct or via a Lloyd’s Broker
Syndicate(s)
Contact local Country Manager> www.lloyds.com/offices
Access the Coverholder Directory> www.lloyds.com/directories/coverholders
Via Lloyd’s Broker Lloyd’s Managing Agent
Syndicate(s)
Contact local Country Manager> www.lloyds.com/offices
Access Directory of Lloyd’s Registered Brokers www.lloyds.com/directories/brokers
Become a coverholderIn countries with established licence – approval via Delegated Authority Approval Process (contact Managing Agent and Lloyd’s Broker)
Lloyd’s Managing Agent – via a Lloyd’s Broker or direct
Syndicate(s)
Contact local Country Manager> www.lloyds.com/offices
Access information for prospective Coverholders> www.lloyds.com/coverholders
Become a managing agent approved brokerBecome a non Lloyd’s Registered Broker - approval via individual Managing Agent registration process (direct contact)
Lloyd’s Managing Agent
Syndicate(s)
Contact local Country Manager> www.lloyds.com/offices
Access information on Managing Agents – non Lloyd’s Brokers> www.lloyds.com/nonlloydsbrokers
Become a Lloyd’s registered broker - approval via Lloyd’s Broker Approval Process
Lloyd’s Managing Agent
Syndicate(s)
Contact local Country Manager> www.lloyds.com/offices
Access information on becoming a Lloyd’s Registered Broker> www.lloyds.com/brokerregistration
Placement Risk Carrier How to access this channel
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< Picture to go here >coverholders
© Lloyd’s
Prior to July 2010►No applicant coverholder had been visited by a Lloyd’s representative
►No Lloyd’s networking opportunities for coverholders
►Restricted access to the Lloyd’s brand
►Lack of best practice guidelines
►UK Population: 700 coverholders
Today►Visited all applicants (ex-City of London) since 2010 - 95% have been approved
►Held coverholder conferences
►A number of enhancements have already been made - faster turnaround times, branch approvals, broker sponsored approvals, and more informative welcome packs
►Greater access to the brand, a coverholder toolkit and enhanced guidelines online.
►Monitoring how we compare to the companies market (‘gap’ analysis) and enhancements to the rules on sub-delegation/internet trading
►UK Population: 1600 coverholders (‘grand-fathered’ 600 restricted coverholders this year)
Improvements to the coverholder model
© Lloyd’sSource: Market Intelligence based on: Lloyd’s Delegated Authorities
Number of Service CompaniesAugust 2014: Total 90
Number of CoverholdersAugust 2014: Total 1649
Coverholders (& Service Companies): Regional Distribution www.lloyds.com/directories
© Lloyd’s
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Events where can you meet lloyd’s
underwriters & brokers?
© Lloyd’s
► Compass Broker Services (Whittlebury Hall) – 25th/26th February 2015 – 4 underwriters
► BIBA (Manchester) – 13th/14th May – 10 underwriters
► AIRMIC (Liverpool) – 15th/16th/17th June – 22 underwriters and brokers
► Broker Expo West (Bristol) – 24th Sept 2015 – 4 underwriters
► Lloyd’s Meet the Market (Birmingham) – October – 100 market practitioners
► Broker Expo North (Coventry) – 12th November – 5 underwriters
► BIBA Scotland – November – 4 underwriters
► Contact me at [email protected]
2015 events schedule
© Lloyd’s
Questions?
© Lloyd’s