Lloyd's insurance syndicates are raising new capital in expectation of improved trading conditions after sustaining big hurricane losses, a new analyst report reveals.
That assessment came in the latest "Lloyd's Update" published today by Benfield's Industry Analysis and Research team.
Benfield said that while Bermuda seems to be the preferred destination for new capital, the downtrend in capacity expected at Lloyd's prior to the hurricanes has now been reversed.
Prior to the hurricanes, the report said it was expected that capacity at Lloyd's would fall by 7 percent in 2006, but post-Katrina there has been a change and capacity is now estimated at ?14.7 billion ($25.9 billion, under current exchange rates)–about 7 percent ahead of 2005 levels.
Angie Coad of Benfield's Industry Analysis and Research team said a number of the syndicates "have revealed 2006 forecasts that are 20 percent in excess of original targets, and those entities raising money for new ventures in Bermuda have also increased their capacity in Lloyd's."
Ownership of managed capacity, Benfield said, varies from company to company, with Hiscox, BRIT and Amlin retaining a 100 percent interest while Omega Underwriting has an interest of less than 1 percent.
The report noted that some syndicates have declared they will be increasing ownership, citing Kiln expanding from 41 percent to 47 percent.
It said Beazley is growing from 70 percent to 78 percent and is proposing formation of a new syndicate.
Newcomer Advent is increasing participation in 2006 from 53 percent to 80 percent, the report said.
Discussing the result as of October, Benfield said Lloyd's continues to perform well against its peers, with only Bermuda displaying a better underwriting result. The report described Lloyd's combined ratio of 87.3 in October as "marginally worse than the previous year."
Benfield said, however, that catastrophe events have overtaken early results and Lloyd's has recently declared that "chances of the market making a profit in 2005 are now small."
A full copy of the report can be viewed online at www.benfieldgroup.com/research. Printed copies can be obtained by contacting IAR@benfieldgroup.com.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.