What is Lloyd`s?

Lloyd’s:
Insurance
Market to the
World
AAMGA University East – Part 1
Rodney Smith, Southeast Regional Director
Lloyd’s America, Inc.
March 2012
1. What is Lloyd’s?
2. How are we unique?
3. Lloyd's in the U.S.
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© Lloyd’s
What is
Lloyd’s?
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The world’s leading specialist insurance market
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See the Lloyd’s market in action
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Lloyd’s broker in the market
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Lloyd’s underwriters in action
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The Corporation of Lloyd’s
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Lloyd’s - key characteristics
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Lloyd’s is a market, not a company
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We have a long history of risk taking, dating back to 1688
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The Lloyd’s market insures complex and specialist risks
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London based international business
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Lloyd’s appetite for risk is tempered by 323 years of experience and a
Performance Management Directorate that mandates responsible
risk taking
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A wide variety of insurers are within a
stone’s throw of the Lloyd’s building…
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… as are many of the world’s leading
brokers
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A colorful history
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Key milestones in our history
1688
1925
1880
1920 – 30s
1906
1939
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How is Lloyd's
unique?
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Business streams at Lloyd’s
Capital flow
Business flow
Corporation
of Lloyd’s
Insured
Coverholder/
Wholesale
broker
Retail
broker
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Managing
agents
Lloyd’s
broker
85
Syndicates
Members
Corporate and
Non-corporate
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Lloyd’s syndicates - backed by some of the
best known names in global insurance
Individual members
(unlimited liability),
Individual members
(limited liability),
4%
9%
Worldwide
insurance industry,
24%
Bermudian
insurance industry,
UK insurance
industry and other
corporate ,
10%
36%
US insurance
industry,
17%
Source: Lloyd’s Annual Report 2010. All figures as at 31 December 2010
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The Lloyd’s market is known for its specialist expertise…
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…and an appetite for unusual risks requiring innovative solutions
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Market & Corporation priorities
2012- 2014
Market Priorities:
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A resolute focus on underwriting discipline and risk management
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To maintain and develop the attractiveness of the Lloyd’s market
Corporation Priorities:
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Market oversight
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Solvency II
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Claims Transformation Program
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Market Operations Review
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How does Lloyd’s manage underwriting
performance?
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The Lloyd’s Performance Management Directorate (PMD) oversee the
performance of the market against agreed business plans. Objectives
include:
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Lloyd’s underwriting standards
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Syndicate business plans
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Individual Capital Assessments
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Manage risks
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Facilitate performance
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Realistic Disaster Scenarios
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Careful management of catastrophe risk is a business
imperative at Lloyd’s
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Global reach
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Lloyd’s total business by region
Canada
6%
UK
20%
Europe
16%
U.S.
37%
Central Asia
Rest of
the World
Other
Americas
4%
& Asia Pacific
10%
7%
Source: Lloyd’s Annual Report 2010. All figures as at December 31, 2010.
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Insurance solutions provided for some
of the biggest organisations
z
z
97% of Dow Jones industrial average
84% of Fortune 500 US companies
Lloyd’s accepts business from over
territories worldwide
200 countries and
Source: Lloyd's customer data provided by Xchanging 2010
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Financial position
& security
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Ratings
AA
+
Fitch Ratings
A+ (strong)
A.M. Best
A 15 (excellent)
Standard & Poor’s
A+ (strong)
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Lloyd’s Chain of security
Lloyd’s unique capital
structure provides excellent
financial security to
policyholders and capital
efficiency to members.
First
Link
Syndicate level assets
$61,263m
Several
assets
Second
Link
Members Funds at Lloyd’s
$21,716m
Central Fund $2,017m
Corporation $254m
Mutual
assets
Third
Link
Callable
layer
$1,104m
Subordinated debt/
securities $1,460m
Source: Lloyd’s Annual Report 2010. All figures as at December 31, 2010
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U.S. Trust Funds
Additional security is provided to
our U.S. policyholders through
the Lloyd’s U.S. Trust Funds.
Credit for Reinsurance Trust
Surplus Lines Trust Funds
$3,141m
Joint Asset Trust Funds
$219m
Illinois Trust Fund
$540m
Kentucky Trust Fund
$211m
Total as of December 2011
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$7,869m
Funds
$11.980 bn
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Lloyd’s investments continue to be held in
cash and investment grade bonds
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The impact of
claims
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Large claims impact results…
£m
Dec 2010
June 2010
June 2011
Gross written premiums
22,592
13,490
13,534
Combined ratio
93.3%
98.7%
113.3%
Investment return1
1,258
597
548
Result before tax
2,195
628
(697)
12.1%
7.0%
(8.1%)
Return on capital (pre-tax)2
Source: Lloyd’s pro forma financial statements
Notes: 1) Return on syndicates’ assets, members’ funds at Lloyd’s and central assets, 2) Half year RoC annualised
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… and combined ratios across the industry
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An unprecedented level of catastrophes…
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Our expertise in the
world of risk has
minimized emerging
threats for 323 years
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New risks provide new opportunities
Primary class of business in 1680’s
Classes of business in 2010
Reinsurance
37%
Property
22%
Casualty
20%
Marine
7%
Energy
6%
Motor
5%
Aviation
3%
Source: Lloyd’s 2010 Annual Report
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© Lloyd’s
Driving the debate
in emerging risks
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Emerging risks at Lloyd’s
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Lloyd’s has a dedicated emerging risks team
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Aim to ensure that Lloyd’s market is aware of potentially significant
emerging risks
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Use variety of methods to track, monitor and analyse emerging risks
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Horizon scanning
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Quarterly meeting of Lloyd’s market experts
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Develop relationships with experts and share knowledge
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Science of Risk Prize (to encourage stronger links with academia
and stimulate research into emerging risks)
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Research reports
Visit www.lloyds.com/emergingrisks
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Emerging Risk research reports
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Climate Change and Security
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Managing Digital Risk
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Global Water Security
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Globalisation and risks for business
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Sustainable energy security
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Pandemics
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Behaviour
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Climate change liability
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Synthetic Biology
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Nanotechnology
lloyds.com/emergingrisk
lloyds.com/360
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Changing
Views on
Risk
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Lloyd’s Risk Index 2011
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First survey undertaken in 2009 against 41 risks
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2011 – over 500 global business leaders surveyed against 50
risks
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Respondents’ priority and preparedness scores analysed
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Published on 6 December 2011 and available at
www.lloyds.com
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2010 and 2011 natural hazards
2011
2010
Will get clearer image
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Top ten global risks
TOP 25
RISKS
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Bottom ten global risks
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Lloyd’s Risk Index 2011 – Top 3
regional and global risks
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Lloyd’s in the U.S.
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Lloyd’s position in the U.S.
Excess &
surplus
Lines
Admitted
Lloyd’s writes
surplus lines
business in 49
states and is
Ranked the #1
surplus lines
insurer in the U.S.
Lloyd’s writes
admitted business
in Illinois,
kentucky and the
US Virgin Islands
Reinsurance
Lloyd’s writes Reinsurance in all 50 states
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Premium breakdown
The U.S. represented 37% of Lloyd’s global premium in 2010
2010 Direct vs Re
2010 Re segments
2010 Distribution
8%
32%
58%
USD
12.0bn
42%
27%
USD
5.0bn
58%
68%
8%
Reinsurance
Direct
USD
12.0bn
Direct
Treaty
Non-prop Treaty
Facultative
Brokers
Coverholders
Source: Market Intelligence calculations based on Xchanging REG 258
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2010 Classes of Business
(Direct and Reinsurance)
Property (D&F)
3%
3% 1%
Property Treaty
5%
Casualty
31%
9%
Energy
USD
12.0bn
Marine
9%
Accident & Health
Overseas Motor
16%
Aviation
23%
Casualty Treaty
Source: Market Intelligence calculations based on Xchanging REG 258
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Lloyd’s - E&S class of business analysis
Lloyd’s writes a leading share of the E&S market in Texas, Florida, Louisiana and Georgia,
and continues to provide significant catastrophe exposure protection in these states.
2010 Lloyd’s Market Share of State Premium
30%
18%
21%
17%
23%
19%
23%
27%
31%
23%
1,100
1,000
2010 GSP ( USD mn)
900
800
700
600
Property
500
Energy
Liability
400
Prop + Liab
300
200
100
Texas
California
Property (D&F)
Florida
New York
Liability
Louisiana
Energy
New
Jersey
Georgia
Marine
North
Carolina
Accident & Health
South
Carolina
Motor
Excludes Reinsurance
GSP stands for Gross Signed Premiums as registered by the US reporting system in 2010
Source: Market Intelligence calculations based US Reporting system and SNL Financial
Virginia
Aviation
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E&S Market – Key Players
Lloyd’s wrote 20% of the $28 billion US E&S market segment in 2010
Top 10 players E&S market 2010 (Premium in USD bn)
% Change 09/10
5,766
6,083
4,549
Steadfast Ins. Co.
1,048
-5%
1,004
-5%
1,099
1,053
784
Specialty
Columbia Casualty
790
713
731
-1%
E&S market year
on year change
-3%
– 5.3%
608
Specialty
14 %
533
522
Illinois Union Ins.
19 %
439
511
2010
314
Landmark American
Source: SNL Financial 2010
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508
581
-5%
- 16 %
5,398
2009
63 %
- 13 %
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Lloyd’s Coverholders in the U.S.
Total premium written by Lloyd’s coverholders (MGA’s) in 2010 was approximately $2 billion. Joint outreach
to this key distribution force by London and Lloyd‘s America remains a priority in 2012.
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-
-
9
1
1
15
10
4
5
8
56
64
15
9
15
11
3
17
9
8
105
5
65
8
1
7
15
10
2
11 (RI)
23 (CT)
15 (MD)
3 (DC)
11
22
6
5
25 23
59
28
28
11
11 1
11
15
10
41
39
11
14
3
4
2
10
44
5
2
3
3
12
1
3
-
104
65
1
13
1
1 (DE)
15 23
22
20
42
24
39
16
34
6
REGIONS
90
34
- -
-
96
4
Northeast
Æ 221
Southeast
Æ 216
Central
Æ 191
West
Æ 283
Source: Lloyd's Delegated Authorities Team as at May 2011
NB Southeastern Region includes 2 coverholders in Puerto Rico and 14 Coverholders in USVI not shown on the map
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Reinsurance market - Key players
Lloyd’s writes reinsurance in all 50 states and has maintained a leading position among
global reinsurers in the facultative and treaty segments despite soft market conditions.
2010
2009
2008
GWP US$ bn
0
1
2
3
4
5
6
Source: RAA Reinsurance Underwriting Reports
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Lloyd’s America regional structure
Locations
1
Atlanta, GA
2
Chicago, IL
3
Frankfort, KY
4
Los Angeles, CA
5
New York, NY
6
U.S. Virgin Islands
Pat Talley
Central Regional Director
Kentucky
Joseph Gunset
General Counsel
New York
19
5
-
4
13
7
5
5
1
39
-
2
14
28
4
3
64
10
15
9
4
3
10
8
3
6
11
2
1
6
22
11
Tony Joseph
Western Regional Director
Los Angeles
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Hank Watkins
President
New York
5 23
65
11
15
15
23
11
23
Rodney Smith
Southeast Regional Director
Atlanta
1 16
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34
6
Hank Feuerzeig
Lloyd's Attorney in Fact
US Virgin Islands
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© Lloyd’s
Lloyd’s America – Our role
Ensure that Lloyd’s is regarded as the preferred market for specialist
property and casualty, energy, marine and aviation risks by
policyholders, brokers (retail, wholesale and reinsurance) and capital
providers.
Key activities include:
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Facilitating access to Lloyd’s
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Working with managing agents and London brokers
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Providing relevant market intelligence
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Ensuring a well-informed Lloyd's profile within the U.S.
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Managing Lloyd's relationships with regulators
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Lloyd’s – key industry event participation
• P/C Joint Industry Forum, New York NY
January 2012
• St. John’s University Insurance
Leader of the Year Dinner, New York NY
January 2012
• RIMS Annual Conference, Philadelphia, PA
April 2012
• AAMGA Annual Conference, San Antonio TX
May 2012
• IRU Spring Conference, Miami FL
April 2012
• CIAB Leadership Forum, Colorado Springs CO
October 2012
• NAPSLO Annual Conference, Atlanta GA
October 2012
• PCI Annual meeting, Dana Point CA
October 2012
• PLUS Annual Conference, Chicago IL
November 2012
Throughout the year, the U.S. team also participates at surplus lines
association meetings and regularly presents at individual broker offices.
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We participate in and support many educational, business and
philanthropic organizations associated with the insurance industry
School of Risk Management
© Lloyd’s
any questions?
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Lloyd’s – Our strengths
1.
Market Oversight
2.
Brand and Reputation
3.
Access to business
4.
Capital Efficiency and the Chain of security
5.
Mutuality – market working together
6.
Underwriting expertise and innovation
7.
Ratings
8.
Global Licenses
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© Lloyd’s
© Lloyd’s