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AON BENFIELD

2010 Capacity and Lloyd’s Strategy 2010-2012

While Lloyd’s no longer publishes capacity figures, market estimates have suggested that opening capacity for 2010 was 30% higher than in 20091 . The increase was largely due to syndicates allowing for foreign exchange movements, as new capacity from 2010 start-ups was minimal in comparison to previous years. A key element of Lloyd’s recently announced Strategic Review was the desire to improve access to the Lloyd’s market.

Marlborough

Commenced 1/1/2010

Argenta

Commenced 1/1/2010

Beaufort

Commenced 1/1/2010

Beazley

Special Purpose Syndicate (SPS)

Jubilee

Merged with s.5820

HCC

Merged with s.4141

Spectrum

In run-off

Syndicate New Entrants and Departures

As detailed in Appendix 2, four new syndicates were formed for 1 January 2010, all by existing Lloyd’s players. This was much fewer than the 12 new syndicates formed during 2009 to take advantage of the more attractive rate environment in some of Lloyd’s key markets and diversification benefits of the Lloyd’s franchise. As shown in Chart 1 capacity for the four new syndicates was GBP165mn, more than offsetting the GBP70mn of capacity lost as syndicate 2112 was placed into run-off. The departing syndicates, 1231 and 4040 have merged into syndicates 5820 and 4141 respectively.

Chart 1 – Syndicate New Entrants and Exits 2009/2010

1969

1110

2318

6107

1231

4040

2112

  • -

    80

  • -

    40

0 Capacity GBPmn

2009 Departures New Entrants

40

80

Source: Lloyd’s, Moody’s, Company data, Aon Benfield Research

Lloyd’s Strategic Review 2010-2012

On February 8, 2010, Lloyd’s announced the completion of its 2010-2012 Strategic Review. Stated aims were to maintain and develop the attractiveness of the Lloyd’s brand, and to focus on underwriting discipline and risk management. In addition, the Corporation’s priorities for 2010 were preparations for Solvency II, increased use of The Exchange, claims transformation and improving access to business through streamlining coverholder management.

Richard Ward, Lloyd’s Chief Executive Officer, placed particular emphasis on reiterating the strength of Lloyd’s as a broker market and on the need for Lloyd’s “to take a more outward view”2. Lloyd’s hopes that this greater external focus will enable it to achieve its stated aim to be the market of choice for specialist casualty and property risks while strengthening the position of London as a financial services centre.

1 2

Company Information, Moody’s, Aon Benfield Research Chief Executive Officer’s Introduction, Lloyd’s Strategy 2010-2012

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