Lloyd’s had worst year since 1990s: Stonybrook

Against a backdrop of high expense ratios, attritional losses and underperforming business, the Lloyd’s market had its worst year in 2017 since the 1990s, according to Stonybook Capital’s first edition ‘Property & Casualty Insurance Review’.

As attritional losses crept upwards from 53.3 percent in 2016 to 58.9 percent in 2017, the report states that many lines of underperforming businesses as well as the market in general are now being closely monitored.

Stonybrook Capital expects the number of new entrants to Lloyd’s to decrease for 2019, and the market to implement stricter reviews of syndicates’ business plans.

The report noted that only a handful of the 94 syndicates are expected to a show a profit for the 2017 year of account.

Losses from hurricanes Harvey, Irma and Maria all contributed to high losses and a very difficult year across the US and globally. Lloyd’s posted its second loss in 10 years.

Partly triggered by the heavy losses of 2017, Lloyd’s is in the process of conducting a profitability review of underperforming syndicates and lines of business.

Amid this, Lloyd’s has appointed John Neal, formerly group CEO of QBE, as its new CEO, to replace outgoing chief Inga Beale.

Although 2017 had been one of the worst years on record, Stonybrook said that insurance industry stocks as a whole remained stable.

The reinsurance market experienced consolidation, but capital levels had remained constant and might have even increased, according to the report. It added that the hardening the market in recent years was very short-lived, showing that a prolonged hardening is unlikely or will occur due to non-cat related reasons.

Stonybrook expects rates to increase through 2019 as insurers seek to regain profitability. Pricing had remained relatively constant through June, and a quiet first half of the year allowed combined ratios to improve, the report noted. However, reinsurance pricing remained soft as there is plenty of capital in the market.