Lloyd's now expects 2025 GWP will be closer to 60 billion pounds

By Scott Vincent

May 15 - (The Insurer) - Risk-adjusted rates have fallen by 3.3% across the Lloyd's market at a whole account level during the first quarter, the Corporation's chief underwriting officer Rachel Turk said in today's market message, with full-year GWP now likely to be closer to 60 billion pounds than the original plan of 65.5 billion pounds.

She described current market conditions as fragile with little consistency among managing agents' views of rating and adequacy in individual classes.

"Syndicates are experiencing different conditions depending on their market position, appetite or portfolio construction, but talks of rates being down 10 to 15% across the board are apocryphal," she said. "We remain at a critical juncture where discipline, portfolio optimization and a healthy dose of realism are of paramount importance."

"We are not risk off but are instead risk aware," she said.

For large catastrophe losses, Turk said there are pockets of the market where there is room to increase the sophistication of the way these are managed and modelled.

"If you rely too long on an unvalidated model for pricing and reinsurance decisions, this is entirely inadequate and increases the risk of writing outside of your cat appetite," she said.

Turk said underperforming syndicates should expect to be shrinking or otherwise demonstrate significant replanning as the rate environment moderates.

She said delegated business remains under "lazer focus" at Lloyd's, given that increased delegation can risk overcapacity and place downward pressure on rates.

"Already some are feeling the impact of our oversight in this area with extra underwriting performance oversight of some material MGAs," she said.

"If coverholders are not managed well, restrictions will be imposed on the ability to delegate authority."

Turk also said syndicates must have capabilities in place to underwrite large multi-class facilities if Lloyd's is to allow them to be underwritten, both by leaders and followers. "We will not allow large multiclass facilities to drag down the market in the same way that poor management of MGAs did in the past," she said.