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MARINE | STATE OF THE MARKET
Syndicate closures and capacity withdrawals have reshaped marine insurance. Adrian Ladbury reports
Marine market sails into unchartered waters as insurers rethink appetite Marine insurance markets have sailed through choppy waters during the past 18 months and look set for continued uncertainty during 2020 as insurers look to improve the profitability of their portfolios. Capacity reductions, which effectively began with the Lloyd’s 2019 business planning process, have spread beyond London with ramifications for underwriters, brokers and buyers across international marine markets. Exits from the class have seen underwriters facing job losses and a reduction in capacity available to brokers. This, in turn, has driven up the cost of cover for buyers. The current predicament was born out of a need to improve pricing following several years in which marine classes had struggled to achieve profitability. Recognising the need for action, Lloyd’s senior management, led by franchise performance director Jon Hancock, reshaped the business planning process ahead of the 2019 underwriting year. Syndicates were required to review the worst performing 10% of their portfolios with poorly performing syndicates facing even more stringent requirements to have their business plans passed. For many syndicates these poorly performing classes included marine lines, and this triggered the widespread withdrawal from the class which has reshaped marine insurance markets. The Marine Insurer | March 2020
Withdrawals have included the demise of certain marinefocused syndicates. The Standard Club’s Syndicate 1884, Skuld Syndicate 1897 and Advent’s Syndicate 780 are among those to have entered run-off. Marine hull exits for the 2019 underwriting year included Aspen’s Syndicate 4711, Channel Syndicate 2015, CNA Hardy Syndicate 382, Liberty Syndicate 4472 and Navigators Syndicate 1221. Barbican, which has since been acquired by Arch Capital, exited marine hull and cargo but did increase capacity for marine reinsurance.
RIPPLE EFFECT Outside Lloyd’s, Swiss Re Corporate Solutions announced that it would be closing its London marine hull operation and instead writing the business from its office in Genoa. Events in London had a ripple effect to other international hubs which have also seen marine capacity reductions, notably in Asia. Singapore has lost several hull carriers, among them ArgoGlobal Syndicate 1200 which exited Lloyd’s Asia and most of its hull underwriting business after warning that the business was not sustainable. Allianz Global Corporate & Specialty (AGCS) revealed it was exiting marine hull and liability markets in Asia and North
