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Tokio Marine Kiln announces latest Lloyd’s syndicate results and forecasts

Highlights

•    Syndicates 510 and 557 delivered profits for the 2015 year of account, with 557 achieving its highest return   on capacity in recent years
•    Improved rating prospects for 2018 following significant losses arising from 2017 catastrophe activity
•    Creating our own opportunities through customer service, innovation and collaboration, complemented by underwriting discipline
•    Life Syndicate 308 has been placed into run-off due to competitive challenges

Tokio Marine Kiln Syndicates Limited (TMKS) today released the final results for its three non-aligned syndicates for the 2015 year of account, updated forecasts for the 2016 year of account and initial forecasts for the 2017 year of account.

Charles Franks, Chief Executive Officer of Tokio Marine Kiln, said:

“The succession of severe catastrophic events in the second half of 2017 have resulted in significant forecast losses for Syndicates 510 and 557 in the 2017 year of account. While it is disappointing to report a loss, our performance is in line with modelled expectations for these types of event, and such losses serve as a reminder of the critical role insurers play in supporting our customers in times of need.

“We have seen some improvements in the rating environment following Hurricanes Harvey, Irma and Maria, particularly in loss-affected areas, after several years of rate reductions. While competitive challenges remain, we are creating our own opportunities rather than waiting for the market to do that for us, and we are seeing  encouraging signs for what lies ahead. Our focus on enabling our customers to thrive through service, collaboration and innovation, including embracing digital distribution through our online platform and supporting market modernisation initiatives, is complemented by strict underwriting discipline.

“I am pleased to report that we have delivered a very good set of results from our non-life syndicates 510 and 557 for the closing 2015 year of account.”

The previous forecasts, which were announced in November 2017, have been rebased to the same exchange rates (US$1.35 and C$1.70). The forecasts set out below take into account all managing agency and Lloyd’s charges.

2015 year of account results   
Syndicate     Capacity £m  Result (% of capacity) Previous forecast range as at November 2017 %
510 1,063 11.1    7.6 to 12.6
557 35    29.9    26.1 to 31.1
308 32   -6.3    -11.8 to -6.8


Syndicates 510 and 557 each achieved very good results, with the 2015 year of account benefiting from relatively benign catastrophe experience, together with prior year reserve releases. Syndicate 557 in particular had a strong final quarter and delivered the best result the syndicate has seen since the 2006 year of account.

Despite showing improvement in the quarter, Life Syndicate 308 delivered a poor result for the 2015 year of account due to several large claims on key binders.

2016 year of account forecasts   
Syndicate     Capacity £m  2016 year of account forecast range % Previous forecast range as at November 2017 %
510 1,062  -3.7 to 1.3    -3.4 to 1.6
557 35    11.2 to 16.2    9.9 to 14.9
308 32   -14.6 to -9.6   -14.5 to -9.5

Syndicate 557 has had little exposure to HIM catastrophes on the 2016 year of account and as a result, the syndicate remains on course to make a good profit with an improvement in the quarter. The forecast ranges for Syndicates 510 and 308 remain stable.

2017 year of account forecasts
Syndicate  Capacity £m                   
2017 year of account forecast range %
510 1,131  -14.9 to -4.9
557 34 -45.0 to -35.0

 
At this early stage, the impact of an active catastrophe environment in the second half of the year is reflected in the forecasts for Syndicates 510 and 557.

The 2017 year of account has been affected by losses arising from Hurricanes Harvey, Irma and Maria, the Mexican earthquakes and the Californian wildfires, all of which had a substantial impact on the forecast ranges. In response to these events, the rating environment, particularly in loss-affected areas, has shown some improvements.

Lloyd’s has approved the cessation of Life Syndicate 308. Syndicate 308’s 2017 forecast will be released at a later date following approval by Lloyd’s of a revised 2017 SBF and run-off plan, which factor in the additional business and costs resulting from the cessation decision.

ENDS

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