Lloyd’s treaty reinsurance decline ‘unresolved’ after remediation: Aon

The recapture of Lloyd’s lost market share in treaty reinsurance remains a key “unresolved question” in a Lloyd’s turnaround that has otherwise shined, analysts at global brokerage  Aon have said in a call for new growth.

“Unresolved questions remain,” Aon’s top analysts said in a report on the Lloyd’s market. Near the top of the list: “how Lloyd’s plans to address the loss of treaty reinsurance market share observed over the last decade.”

Treaty reinsurance fell to 15% of the account in 2022, down from 20% in 2013, Aon noted.

That trend has only accelerated of late. Just in 2022, growth of gross premium in reinsurance of 7.7% notably trailed primary GPW growth of 26%, data quoted by Aon showed.

Comments by Lloyd’s CEO John Neal that Lloyd’s could “sensibly and capably” be 50% larger in treaty reinsurance leave Aon “encouraged”.

In a report signed off by Aon’s chief of reinsurance solutions in the UK, Rupert Moore, the global brokerage sounds eager to piggyback on any Lloyd’s market growth.

“We will be working with the leadership team to find ways to support this [growth target] and recapture market share and market leadership.”

Across the remainder of metrics during Lloyd’s remediation, performance and capital have looked "strong," leaving the market better positioned for the current market challenges, Aon believes.

Lloyd’s third-party capital initiatives could prove key. London Bridge 2, called “much more flexible" than the initial vehicle, is hailed for "the potential for significant new capital”. The new vehicle is able to write collateralised quota share reinsurance and excess of loss coverages.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.