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Lloyd’s: An Overview of the Market

Lloyd’s: An Overview of the Market. Keith Stern: UK Regional Manager October 2014. Agenda History Market Structure Financial Strength Financial Results Global Reach Uk insurance market & Lloyd’s Accessing the market Coverholders Events questions. History. From Coffee House….

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Lloyd’s: An Overview of the Market

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  1. Lloyd’s: An Overview of the Market Keith Stern: UK Regional Manager October 2014

  2. Agenda • History • Market Structure • Financial Strength • Financial Results • Global Reach • Uk insurance market & Lloyd’s • Accessing the market • Coverholders • Events • questions

  3. History

  4. From Coffee House… First known reference to Edward Lloyd’s coffee house in Tower Street (London Gazette 18-21 February 1688)

  5. …To every type of Insurance 1906 1911 1877 1969

  6. PIPER ALPHA 1988 EXXON VALDEZ 1989 HURRICANES 1989 ASBESTOS 1980s- 1990s

  7. …and an appetite for unusual risks requiring innovative solutions

  8. The Lloyd’s market is known for its specialist expertise… 8 8

  9. Market Structure

  10. Lloyd’s Key Characteristics • Lloyd’s is a market,not a company • The Lloyd’s market insures complex and specialist risks and SME business • London based international business (UK is our second largest market = £3.5bn) • Regulatedby the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA) • Products are distributed via Lloyd’s brokers, coverholders and syndicate service companies.

  11. Lloyd’s market structure Corporation of Lloyd’s Management Coverholders 56Managing Agents 200Lloyd’s Brokers Service Companies Members Policyholders 91Syndicates • Direct • Corporate • Reinsurance • Individual Underwriting BUSINESS FLOW (£26,106m) CAPITAL PROVISION (£60,782m) www.lloyds.com/directories

  12. A DYNAMIC AND DIVERSE MARKETPLACE At December 31st 2013, the Lloyd’s marketplace was home to 56 “live” managing agents that manage 91 syndicates

  13. Financial Strength

  14. Lloyd’s Ratings INDEPENDENTLY ASSESSED In the eyes of leading ratings agencies,Lloyd’s is viewed as enjoying robust capital reserves: Standard and Poor’s: ‘A+’ (strong) Fitch Ratings: ‘AA-’ (verystrong) A.M.Best: ‘A’ (excellent) ` Lloyd’s Annual Report 2013

  15. OUR CHAIN OF SECURITY • LINK ONE:SYNDICATE ASSETS(£42,342m) • Before writing business, a syndicatemust put up funds to cover their own share of claims • These funds are the first port of callwhen paying policyholder claims Figures correct as at December 2013

  16. OUR CHAIN OF SECURITY • LINK TWO:MEMBERS’ FUNDS AT LLOYD’S(£15,242m) • Every member (corporate or individual) must provide sufficient capital to support their underwriting • These funds are held in trust for the benefit of policyholders and used only if the syndicate assets have been exhausted Figures correct as at December 2013

  17. OUR CHAIN OF SECURITY • LINK THREE:LLOYD’S CENTRAL FUND(£3,198m) • The Central Fund includes members’ annual contributions and funds issued by the Corporation of Lloyd’s • If a syndicate has failed to meet its liabilities and the two previous links proved insufficient, the Central Fund can provide a final reserve to cover those outstanding liabilities Figures correct as at December 2013

  18. Financial Results

  19. Strong U/W Results Source: Lloyd’s Annual Report 2013. All figures as at 31 December 2013

  20. 2013 major claims Significantly below long term average Source: Lloyd’s 2013 Annual Results (March 2014) Claims in foreign currency translated at the exchange rate prevailing at the date of loss

  21. Lloyd’s outperforms peers Combined ratio Source: Lloyd’s pro forma financial statements, Dec 2013 Peer group formed of 11 companies operating in the US, European and Bermudan markets

  22. Global Reach

  23. Central Asia & Asia Pacific12% Rest of the World4% Other Americas8% 2013 Lloyd’s Premiums by region Europe (including UK [18%])33% US (including Canada)43% 13% 2012 12% 2011 10% 2010 9 % 2009 US & Canada 41% 2012 44% 2011 43% 2010 45% 2009 Other Americas 8% 2012 8% 2011 7% 2010 6% 2009 Europe + UK 15% + 18% = 33% 2012 16% + 18% = 34% 2011 16% + 20% = 36% 2010 16% + 20% = 36% 2009 Sources: Lloyd’s Annual Reports (2008 – 2013): http://www.lloyds.com/Lloyds/Investor-Relations

  24. 1 4 4 1 3 1 4 1 3 1 1 1 2 2 3 3 1 1 2 2 Type Market Development Scope Territories China Local underwriting with co-located syndicates (or via a Lloyd’s regulated entity); Country Manager with Market Development Role 4 Japan Singapore Benelux, France, Germany, Ireland, Italy, Poland,Spain, Sweden, Switzerland Australia, Hong Kong (SAR) 3 Country Manager with Market Development Role Brazil South Africa, Cyprus, Greece, Israel, Malta, Legal Representative for regulatory requirements 2 New Zealand, India Austria, Denmark, Norway, Portugal, Lithuania Legal Representative for minimum regulatory requirements 1 Argentina, Belize, Chile Namibia, Zimbabwe, US Virgin Islands 2014 Lloyd’s Office Network Europe North America Europe www.lloyds.com/AMERICA 3 1 2 3 3 3 3 3 3 3 3 2 UK Canada, US Northeast, US Southeast, US Central & US West

  25. Uk insurance market & Lloyd’s

  26. Uk insurance market Chart: Insurance Market Leaders (2012) (based on ABI Statistics; UK domestic business only, excluding Lloyd’s; in billion GBP) 0.0 2.0 4.0 6.0 4.9 3.4 3.4 3.2 3.1 2.5 2.0 1.7 • Almost 75% of the market is dominated by these 11 players 1.7 1.7 1.4

  27. Lloyd’s UK Premium income Split % Direct: RI 59:41 51:49 55:45 55:45 54:46 53:47

  28. Swot analysis

  29. Accessing the market

  30. Access to Lloyd’s for EU BrokersThis roadmap is for local Brokers who are seeking access to the Lloyd’s Market for a local client Via Lloyd’s Broker Lloyd’s Managing Agent – direct or via a Lloyd’s Broker Via Local Service Company Via Eu Service Company (crossborder) Via Local Coverholder Local Broker / MGA with binding authority, Underwriting Agency Become a managing agent approved broker Become a non Lloyd’s Registered Broker - approval via individual Managing Agent registration process (direct contact) Become a Lloyd’s registered broker - approval via Lloyd’s Broker Approval Process Via Eu Coverholder (crossborder) local Broker / Agent with binding authority, Underwriting Agency Contact local Country Manager> www.lloyds.com/officesAccess Directory of Lloyd’s Registered Brokers www.lloyds.com/directories/brokers Contact local Country Manager> www.lloyds.com/officesAccess the Coverholder Directory> www.lloyds.com/directories/coverholders Contact local Country Manager> www.lloyds.com/offices Access information on becoming a Lloyd’s Registered Broker> www.lloyds.com/brokerregistration Contact local Country Manager> www.lloyds.com/offices Access information on Managing Agents – non Lloyd’s Brokers> www.lloyds.com/nonlloydsbrokers Contact local Country Manager> www.lloyds.com/officesAccess information for prospective Coverholders> www.lloyds.com/coverholders Contact local Country Manager> www.lloyds.com/officesAccess Service Company details in the Coverholder Directory> www.lloyds.com/directories/coverholders Contact local Country Manager>www.lloyds.com/officesAccess Service Company details in the Coverholder Directory> www.lloyds.com/directories/coverholders Contact local Country Manager> www.lloyds.com/offices Access the Coverholder Directory> www.lloyds.com/directories/coverholders Become a coverholder In countries with established licence – approval via Delegated Authority Approval Process (contact Managing Agent and Lloyd’s Broker) Lloyd’s Managing Agent – direct or via a Lloyd’s Broker Lloyd’s Managing Agent – via a Lloyd’s Broker or direct Lloyd’s Managing Agent Lloyd’s Managing Agent Lloyd’s Managing Agent Lloyd’s Managing Agent Lloyd’s Managing Agent Syndicate(s) Syndicate(s) Syndicate(s) Syndicate(s) Syndicate(s) Syndicate(s) Syndicate(s) Syndicate(s) How to access this channel Placement Risk Carrier

  31. coverholders

  32. Improvements to the coverholder model Prior to July 2010 • No applicant coverholder had been visited by a Lloyd’s representative • No Lloyd’s networking opportunities for coverholders • Restricted access to the Lloyd’s brand • Lack of best practice guidelines • UK Population: 700 coverholders Today • Visited all applicants (ex-City of London) since 2010 - 95% have been approved • Held coverholder conferences • A number of enhancements have already been made - faster turnaround times, branch approvals, broker sponsored approvals, and more informative welcome packs • Greater access to the brand, a coverholder toolkit and enhanced guidelines online. • Monitoring how we compare to the companies market (‘gap’ analysis) and enhancements to the rules on sub-delegation/internet trading • UK Population: 1600 coverholders (‘grand-fathered’ 600 restricted coverholders this year)

  33. Coverholders (& Service Companies): Regional Distribution www.lloyds.com/directories Number of Service CompaniesAugust 2014: Total 90 Number of CoverholdersAugust 2014: Total 1649 Source: Market Intelligence based on: Lloyd’s Delegated Authorities

  34. Events where can you meet lloyd’s underwriters & brokers?

  35. 2015 events schedule • Compass Broker Services (Whittlebury Hall) – 25th/26th February 2015 – 4 underwriters • BIBA (Manchester) – 13th/14th May – 10 underwriters • AIRMIC (Liverpool) – 15th/16th/17th June – 22 underwriters and brokers • Broker Expo West (Bristol) – 24th Sept 2015 – 4 underwriters • Lloyd’s Meet the Market (Birmingham) – October – 100 market practitioners • Broker Expo North (Coventry) – 12th November – 5 underwriters • BIBA Scotland – November – 4 underwriters • Contact me at keith.stern@lloyds.com

  36. Questions?

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