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Important Information About Syndicate Reports and Accounts Access To Important information about Syndicate Reports and Accounts Access to this document is restricted to persons who have given the certification set forth below. If this document has been forwarded to you and you have not been asked to give the certification, please be aware that you are only permitted to access it if you are able to give the certification. The syndicate reports and accounts set forth in this section of the Lloyd’s website, which have been filed with Lloyd’s in accordance with the Syndicate Accounting Byelaw (No. 8 of 2005), are being provided for informational purposes only. The syndicate reports and accounts have not been prepared by Lloyd’s, and Lloyd’s has no responsibility for their accuracy or content. Access to the syndicate reports and accounts is not being provided for the purposes of soliciting membership in Lloyd’s or membership on any syndicate of Lloyd’s, and no offer to join Lloyd’s or any syndicate is being made hereby. Members of Lloyd’s are reminded that past performance of a syndicate in any syndicate year is not predictive of the related syndicate’s performance in any subsequent syndicate year. You acknowledge and agree to the foregoing as a condition of your accessing the syndicate reports and accounts. You also agree that you will not provide any person with a copy of any syndicate report and accounts without also providing them with a copy of this acknowledgement and agreement, by which they will also be bound. Job No: 44192 Proof Event: 1 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA Customer: Meacock Project Title: Disclaimer T: 0207 055 6500 F: 020 7055 6600 44192 U Syndicate 727 R&A 2020 Cover Spread WITH PMS.qxp_44192 Syndicate 727 R&A Cover 2020 08/03/2021 17:21 Page 1 SA MEACOCK .......... ❖ .......... SYNDICATE 727 REPORT AND ACCOUNTS 2020 Printed by Park Communications, London 44192 Job No : 41956 Proof Event: 1 Park Communications Ltd Alpine Way London E6 6LA Job No : 41956 Proof Event: 1 Park Communications Ltd Alpine Way London E6 6LA 44192 U Syndicate 727 R&A 2020 P1-30.qxp_44192 U Syndicate 727 R&A P1-30 11/03/2021 08:01 Page 1 SA MEACOCK ..........❖ .......... SYNDICATE 727 KEY INFORMATION ..........❖ .......... RESULTS – 2018 ACCOUNT Profit 5.1% After standard personal expenses FORECAST – 2019 ACCOUNT Loss Profit 9% to 11% After standard personal expenses CAPACITY Total 2021 account £84.8million DIRECT CORPORATES 18% WORKING NAMES 8% MAPA 6% EXTERNAL NAMES INCLUDING NAMECOS, LLPS & SLPS 68% SYNDICATE FUNDS – Syndicate’s position as at 31 December 2020 CASH, INVESTMENTS, OVERSEAS DEPOSITS AND OTHER ASSETS AT 31 DECEMBER 2020 Sterling £2.2 million US dollars US$ 334.4 million Canadian dollars CAN$25.0 million Total translated into Sterling £260.6 million ......... 1 ......... Job No : 44192 Proof Event: 3 Park Communications Ltd Alpine Way London E6 6LA 44192 U Syndicate 727 R&A 2020 P1-30.qxp_44192 U Syndicate 727 R&A P1-30 11/03/2021 08:01 Page 2 SA MEACOCK ..........❖ .......... SYNDICATE 727 ACTIVE UNDERWRITER’S REPORT ..........❖ .......... REVIEW OF YEAR OF ACCOUNT RESULTS AND PROSPECTS The Closed 2018 Account 2018 has closed with a profit of 5.09%, after standard personal expenses. The main contribution to the result comes from a strong investment return of £8.8m and a release from prior year reserves, reflecting a relatively benign 12 months of development within the ‘old years’. The 2018 pure year ultimate loss ratio forecast itself is not dissimilar to that of 2017 after 36 months. The year of account was impacted by losses from Hurricane Florence and Michael in the US, along with the wildfires on the west coast. A small part of our pandemic loss will also attach to the year. During 2018, however, we did begin to move out from the low point of the market cycle, and in doing so managed to increase our premium income modestly to £53.2m (31.12.20 exchange rates). Overall, we are pleased to report a small profit, and a slight improvement on the 2017 distribution. The Open 2019 Account During 2019 market conditions continued to improve, and it is pleasing to report that our loss ratios are tracking slightly better than 2018 at the same stage. However, if we add in the extent to which we think our pandemic losses effecting this year will develop, that gap will narrow. It is also important to mention the extent to which our recently closed years have benefited from the strong investment returns achieved on our funds. That benefit does now of course fade, with interest rates very much down to nothing and with no sign of moving for some time, we cannot look for any assistance here. Our results now are very much dependent upon our underwriting and our ability to achieve healthy loss ratios. Thankfully though market discipline was beginning to return and we saw the much needed movement in rates (and terms and conditions) continue through the year. As you would expect, our premium income was starting to grow a little more as the underwriting scene improved, particularly within the direct E&S account in North America, and we currently estimate writing £56.2m for the year. If the old years continue their satisfactory historical development, we are hopeful that we can produce a modest profit for the year. 2020 Year of Account In our business we do of course start every year with no idea of what will be thrown our way during the course of the next 12 months. But the pandemic and subsequent ‘lockdowns’ really has been something else. To operate without our market place physically functioning has been a tough challenge, but we have always prided ourselves on being lean and flexible, and the team adapted quickly to the remote way of working. I am pleased with the quality of the business that continued to be shown to us through the year, helped considerably by our historical broker relationships, and a healthy renewal book. New business gathered momentum too in a market that was not only disrupted as a result of the uncertainty surrounding COVID 19 claims but also disrupted from its usual way of conducting the business. You will recall our original business plan had some premium growth built in, but as the year progressed we asked Lloyd’s for further headroom in order to make the most of the tightening market. The outcome being that we will write our income, up to the limit of our revised plan. We will of course take some pain from the pandemic and at this stage it looks likely to produce claims not dissimilar to the expensive hurricanes of 2017 (which you will recall cost the Syndicate nearly US$14m or just over £10m at today’s rates). Like the storms of that year, our loss will be spread over three years of account, but with a great degree of uncertainty still surrounding the pandemic a large part of this £10m estimate is IBNR. The majority of these claims emanate from our Accident and Health/Payment Protection business, an area we can only afford to pursue if we are allowed to move rates quickly. ......... 2 ......... Job No : 44192 Proof Event: 3 Park Communications Ltd Alpine Way London E6 6LA 44192 U Syndicate 727 R&A 2020 P1-30.qxp_44192 U Syndicate 727 R&A P1-30 11/03/2021 08:01 Page 3 SA MEACOCK ..........❖ .......... SYNDICATE 727 ACTIVE UNDERWRITER’S REPORT ..........❖ .......... REVIEW OF YEAR OF ACCOUNT Whilst the claims focus for the year has been very much on COVID 19, natural catastrophe activity did not abate. A record number of Atlantic hurricanes kept us on our toes, but we were at least spared a major storm making landfall in a densely populated area, and Hurricanes Sally and Laura will not give us too much to be concerned about. All in all though, we are just pleased to see the back of 2020. Prospects for the 2021 Account We go into the year with some optimism, with rates having moved again at year end, we are now seeing the impact of compounding rate increases. It is of course much needed, our premium income fell back as low as £48m in 2017 – at the bottom of the soft market. We have steadily grown each year from there and we plan to achieve something nearer £75m in premium income for 2021. If this momentum continues, it is our hope that we will be asking you for a pre-emption in order to increase our stamp capacity for 2022. This growth is needed for two reasons. Firstly, our expenses are at an all time high, despite our own internal efforts to stay lean, the cost of being associated with Lloyd’s is growing unnecessarily. Expenses must be controlled, otherwise the Lloyd’s market, our market, that for years has offered us capital providers a competitive platform from which to take risk, will ultimately be uncompetitive in the worldwide market. The Corporation’s zealous but largely unproductive heavy hand is endangering the continuing successful returns of the business, and we will not be able to maintain our relevance if this burden is not addressed. Secondly, a huge benefit of recent years has been the strong investment returns achieved on our Syndicate funds - we are in a very different world now. As a result the loss ratios become all that more important, so the growth has to be achieved with high standards in mind - risk selection more crucial than ever. It is just pleasing that there is more opportunity now on the underwriting side than there has been for some while.
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