Country Profile USA www.lloyds.com/USAMI
April 2014 chris.brown@lloyds.com
KEY FACTS FULL NAME / CAPITAL CITY: United States of America / Washington, D.C
GDP (PPP):
US$ 16,198bn (Global Rank #1)
LANGUAGE:
POPULATION:
US$ 16,198bn (Global Rank #1)
IMF CATEGORISATION:
“Developed”
English (82%), Spanish (11%), Other (7%)
MAIN EXPORT PARTNERS:
Canada 19%, Mexico 13%, China 7% (2011)
MAIN IMPORT PARTNERS:
China 18%, Canada 14%, Mexico 12% (2011)
MAIN EXPORTS:
Capital goods, industrial supplies, consumer goods
MAIN IMPORTS:
Industrial supplies, capital goods, consumer goods
2012 Rank
2013 Rank
Change in Rank
EASE OF DOING BUSINESS:
4
4
0
COMPETITIVENESS:
5
7
-2
FREEDOM FROM CORRUPTION:
22
24
-2
DISASTER
YEAR
ECONOMIC COST (US$ x 1000)
Storm
2005
125,000,000
Storm
2008
30,000,000
Earthquake
1994
30,000,000
Storm
1992
26,500,000
Storm
2004
18,000,000
Source: Disaster Statistics based on: Prevention Web (2013); Export Statistics based on CIA World Factbook; Doing Business Indicators based on World Bank & World Economic Forum © Lloyd’s
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KEY STATISTICS SIZE OF ECONOMY
WEALTH PER CAPITA
Purchasing Power Parity (PPP) basis in International $ bn
Purchasing Power Parity (PPP) basis in International $
94
95
20,000
90
25,000
Political Stability and Absence of Violence/Terrorism
68
81
88
15,000
Control of Corruption
89
96
95
10,000
Regulatory Quality
88
97
96
5,000
Rule of Law
91
95
95
0
75,000
50,000
25,000
0
2006
Voice and Accountability
100,000
86
96
65,126
Canada
51,704
Australia
46,358
Government Effectiveness
CA
16,245
2012
AU
13,858
US United States of America
21,556
GOVERNANCE INDICATORS Percentile Rank (1-100) 2012
2012
2006
2018f
94 US
AU
US
CA
2012 AU
2018f CA
PA & Health
19,447
14,000
12,000
116,500
400,000 Property
300,000 Liability
200,000
USA 2012 US$ 493bn
196,177
13,688
493,143
500,000
16,000 Motor
12,326
Gross Signed Premiums in US$ m; by country of origin
600,000
11,971
LLOYD’S GROSS SIGNED PREMIUMS
Premiums in US$ m; by OECD Class
511,722
NON-LIFE DIRECT INSURANCE MARKET
472,498
TOTAL NON-LIFE DIRECT INSURANCE MARKET* Premiums in US$ m
10,000 8,000 6,000
4,000 MAT
100,000
5,635
2,000
155,384
Miscellaneous
0 2011
US
2012
AU
2013
CA
0 2011
US
2012
AU
2013
CA
All data, sources & data limitations are available for download at www.lloyds.com/comparecountries; * 2013 total non-life based on CAGR projection
LLOYD’S TRADING POSITION USA www.lloyds.com/crystal
Admitted: No (except Illinois, Kentucky, and the USVI) Surplus Lines: Yes (except Kentucky) Reinsurance: Lloyd’s underwriters are approved reinsurers for non-life business in all states © Lloyd’s
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BUSINESS ENVIRONMENT Inventory accumulation flattered 2H US growth; 2014 started slower but should exceed 2013 overall. Real GDP grew 3.2% in the fourth quarter of 2013 with consumption and exports more than offsetting a drop in government spending. Growth is now firming in 2014 propelled in part by a strong housing recovery and less fiscal drag. Recent turmoil in emerging markets, while detrimental to financial market risk-taking, should not impair the US economic outlook during 2014. Relief from sequester secured in January 2014 with passage of an omnibus spending bill to prevent repeat of October 2013 government shutdown. The bill funds the government at USD1.1 trillion for the rest of fiscal year 2014 (through September). The funding level provides some relief from the sequester, avoids further cuts to defence spending, and restores some funding for certain non-defence discretionary programmes. The bill will allow the government to spend another US$ 25.8bn, or US$ 71m more per day, than last year, excluding overseas contingency operations and disaster relief. The deal suggested some waning in the hyper-partisanship that has impeded legislative progress in Congress. President Barack Obama's foreign policy has been dragged back to the Middle East, faces acute dilemma over Syria strategy. After attempts to "reset" US relations with Russia and an initiative to pivot the US military's strategic posture towards Asia, Obama's second-term foreign policy has by force of circumstance come to focus on the Middle East. A new, more conciliatory government in Iran, which the US suspects of nuclear weapon development, has given Obama's preferred tactic of multilateral talks a potential opening. Congressional mid-term elections in November 2014 will dominate political agenda, with both sides blaming each other for legislative impasse and hyper-partisanship. With approval ratings for congress at low levels, following four years of partisan brinkmanship, both parties must tread a careful line in the prelude to the 2014 mid-terms. Congress has already made painful progress towards cutting the US fiscal deficit and agreeing government funding, which should ensure that the issues are less explosive than was the case particularly after the Republicans won control of the House in 2010 under the "Tea Party" small government banner.
GROSS DOMESTIC PRODUCT (GDP)
TOP-10 SECTORS (BY VALUE ADDED)
BUSINESS ENVIRONMENT INFORMATION
(nominal GDP levels in billion US$; Real GDP change)
(value added in billion US$ & 2014 Change in real %)
(provided by IHS Global Insight, April 2014)
25,000
5%
20,000
4%
TOP SECTORS
3.3% 15,000
3.3%
3.1%
2.8%
2.5% 10,000
3%
2.7%
2.5%
2%
1.9%
1.8%
5,000
1%
0
0% 2010
2011
2012
2013
2014
2015
2016
2017
2018
2013 Value Added
2014 Percentage Change
1. Real estate 2. Business services 3. Health and social services 4. Public Admin. & Defence 5. Retail trade - total 6. Wholesale trade 7. Education 8. Banking & related financial 9. Construction 10. Hotels & restaurants
1847.4
1.8
1573.6
3.1
Top-10 Total
10552.5
1265.5
2.3
1253.2
-1.4
1058.7
2.4
927.0
3.3
891.7
1.4
651.5
2.6
593.9
8.7
490.0
2.5
For daily updates visit: > www.ihsglobalinsight.com Š Lloyd’s
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INSURANCE ENVIRONMENT 2012 MAJOR E&S INSURERS
2012 DIRECT PREMIUMS
(Gross Written Premiums in E&S market in million US$)
(Gross Written Premiums for Admitted Market in million US$)
Lloyd's
6,269
AIG
5,041
Scottsdale
Motor PA & Health
1,253
QUICK LINKS / USEFUL SOURCES 19,447
Insurance Market Profiles > www.iii.org/international/profiles SNL > www.snl.com
116,500 196,177
Steadfast
1,024
Columbia Ironshore
777
487
AXIS Surplus
475
Homeland
Liability
USA 2012 US$ 493bn
Insurance Information Institute > www.iii.org
665
Nautilus
Illinois Union
Property
MAT 5,635 155,384
Miscellaneous
437
National association of Insurance Commissioners > www.naic.org Lloyd’s Agency Network > www.lloyds.com/agency
194
BUSINESS CULTURE GUIDE > http://www.kwintessential.co.uk
Source: Market Intelligence based on > www.snl.com
Source: Market Intelligence based on > www.snl.com
(View Resources > Culture Guide)
The size of the Excess & Surplus Lines Market in 2011 was US$ 28.8bn: Breaking a two-decade run of fairly consistent gains, the surplus lines industry’s DWP declined for a fourth consecutive year. A major source of pricing pressure and profit margin compression still are the standard market carriers that compete on risks traditionally insured in the surplus lines market. The federal government’s involvement is limited to the National Flood Insurance Program, certain parts of the crop insurance market and the very high level protection afforded by TRIA, the Terrorism Risk Insurance Act. The US market is probably the most highly regulated insurance environment in the world. The burden of compliance is exacerbated by the fact that insurance is regulated by the individual states and the stringency of requirements and their enforcement varies widely. Deregulation has been concentrated on commercial lines. Market players: In 2011, the top 5 players in the E&S market were Lloyd’s, Lexington, Scottsdale, Steadfast, and Chartis. The top 5 reinsurers in the US in 2011 were National Indemnity, Lloyd’s, Swiss Re, QBE, and Munich Re. AIG has rebranded its P&C insurance business units both in the US and abroad under the name Chartis. Broker market: The US retail market is dominated by publicly traded brokers Aon, Marsh, Willis, AJ Gallagher, Wells Fargo, Brown & Brown, BB&T and privately-held Lockton, Alliant & USI . Outlook: If the improvement in the financial markets can be sustained and rates continue to moderate or only decline slightly, surplus lines insurers that remain focused on bottom-line profits, and not on top-line growth, should experience solid results in the future. A.M. Best believes that the opportunity to generate profit still exists for surplus lines insurers, despite market conditions that remain competitive. With the continuing volatility in the equity and credit markets, underwriting profitability must become a more significant contributor to companies’ operating profits. © Lloyd’s
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LLOYD’S BUSINESS 2009-2013 LLOYD’S TOTAL PREMIUMS
2013 LLOYD’S HIGH LEVEL CLASSES
Gross Signed Premiums; Direct versus Reinsurance; in million US$
Gross Signed Premiums; high level classes; in million US$
2013 GROSS SIGNED PREMIUMS* UK Motor
16,000 14,000 12,000 5,393
10,000
5,559
5,091
4,920
5,110
8,000 6,000 4,000
7,171
6,859
7,406
6,861
Total
US$ 13,688m
Reinsurance Direct
US$ 5,393m US$ 8,295m
2,000
2009
2010
2011
Direct
2012
2013
Reinsurance
2,798.3
Property (D&F)
*COUNTRY OF ORIGIN PREMIUMS
Policyholders are based or headquartered in this territory;
Energy
Premiums may be written outside this territory;
X X
Not necessarily where risks are located May differ to what is reported to local regulator (dependent on local requirements).
0
211.8
Property Treaty
Marine
8,295
0.0
Overseas Motor
4,526.7
1,453.4 1,012.4
Casualty
2,565.8
Casualty Treaty
211.5
Aviation
225.5
Accident & Health
682.5
0
1,000
2,000
3,000
4,000
5,000
SOURCE: Market Intelligence based on *Gross Signed premiums; Xchanging (2014); unaudited figures based on country of origin and processing by calendar year; see Appendix for details
Hank Watkins , President, North America
NEW YORK:
E: hank.watkins@lloyds.com
T: +1 212 382 4090
Joseph Gunset, General Counsel
NEW YORK:
E: joseph.gunset@lloyds.com
T: +1 212 382 4090
Kiran Bhovan, North American Market Development Manager
LONDON:
E: kiran.bhovan@lloyds.com
T: 0207 327 5671
Glenn Dorr, Northeast Regional Director
BOSTON:
E: glenn.dorr@lloyds.com
T: +1 781 968 5422
Rodney Smith, Southeast Regional Director
ATLANTA:
E: rodney.smith@lloyds.com
T: +1 678 775 6701
Pat Talley, Central Regional Director
ILLINOIS/ FRANKFORT, KY:
E: pat.talley@lloyds.com
T: +1 502 875 5940
Anthony Joseph, Western Regional Director
LOS ANGELES:
E: anthony.joseph@lloyds.com T: + 1 310 706
4100Hank Feuerzeig, Attorney in Fact
US Virgin Islands:
E: hank.feuerzeig@lloyds.com T: +1 340 715 4443
www.lloyds.com/america © Lloyd’s
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LLOYD’S OBJECTIVES Promote and protect Lloyd’s profile as the leading E&S insurer and a leading reinsurer by facilitating access to and understanding of Lloyd’s by our distribution partners (brokers & coverholders), cedants, capital providers, media, the general business community and academic institutions
LLOYD’S KEY INITIATIVES 2014 •
Focus educational and networking efforts on key distribution partners
•
Continue providing information to managing agents and London brokers on the admitted, surplus lines and reinsurance markets in the key Lloyd’s states while facilitating the development of new relationships in these segments
•
Maintain the market’s ability to access business by making required regulatory filings and maintaining effective and productive regulatory relationships
•
Monitor and provide updates on state and federal regulatory changes and undertake lobbying to protect the market’s interests when necessary
EVENTS & MARKET INTELLIGENCE 2014 INDUSTRY EVENTS – Click here for full list of events
2014 LLOYD’S EVENTS
Risk and Insurance Management Society (RIMS) Annual
RIMS Annual Conference, 27 – 30 April
Conference, 27 – 30 April
Lloyd's US Meet the Market, 1 May
American Association of Managing General Agents (AAMGA)
Andrew Beazley Broker Academy at Lloyd’s,
Annual Meeting, 18 – 21 May
National Association of Professional Surplus Lines Offices
Available Market Intelligence products for this territory include:
Country Profile
8-12 September
Council of Insurance Agents & Brokers
(NAPSLO) Annual Convention, 15 – 18 September
(CIAB) Insurance Leadership Forum, 11 –
Council of Insurance Agents & Brokers (CIAB) Insurance
15 October
Leadership Forum, 11 – 15 October
MARKET INTELLIGENCE
Market Presentation Class Review
www.lloyds.com/USAMI
Professional Liability Underwriting Society (PLUS) Annual Conference, 5- 7 November © Lloyd’s
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APPENDIX MACRO-ECONOMIC & BUSINESS ENVIRONMENT DATA Source: IMF (www.imf.org/external/data.htm), World Bank (http://data.worldbank.org/), IHS Global Insight. Notes: GDP data on size and wealth of the economy is reported in Purchasing Power Parity (PPP) terms; this is the most accurate indicator of the true standard of living in each country and therefore potential demand. To calculate this, GDP is converted from local currency to an international $ currency using PPP exchange rates rather than the market exchange rate. The PPP local currency-to-international $ exchange rates are determined such that a standard basket of goods has the same price in international $ terms in each country. This adjusts for the differing costs of goods across countries, when converted at market exchange rates. INSURANCE MARKET DATA Source: Reported data derived by Lloyd’s Market Intelligence team; original source is regulatory bodies, associations, third party information providers. Notes: Data is reported in US$. For more information, see www.lloyds.com/comparecountries. Exchange Rates Note: Where required, data has been converted to US$ using annual average exchange rates as per www.oanda.com. LLOYD’S PREMIUM DATA Source: Reported data derived by Lloyd’s; original source is Xchanging (data therefore contains only premiums processed by Xchanging). Notes: Data is reported is US$, on a calendar year basis and is signed gross premiums. This differs from the data published in the Lloyd’s Annual Report, which is also on a calendar year basis, but is written gross premiums and sourced directly from Syndicates. Differences are therefore (1) timing inconsistencies between signed and written gross premiums; (2) inconsistent use of exchange rates by Syndicates and Xchanging; & (3) incompleteness of Xchanging data set for certain classes of business (a substantial amount of premium is not processed by Xchanging and missing from the REG 258 data set; this comprises, for example, UK Motor). Exchange Rates Note: Data has been converted to US$ using monthly exchange rates provided by Xchanging. Definitions: Gross Signed Premiums: Original and additional inward premiums, plus any amount in respect of administration fees or policy expenses remitted with a premium but before the deduction of outward reinsurance premiums. Calendar Year: Relates to the calendar year in which the premium, additional or return, is processed by Xchanging. This is irrespective of the actual underwriting year of account, which is determined by the inception date of each risk. Country of Origin: Denotes the domicile of the insured party (i.e. the coverholder or policyholder). This is the country from which demand for the insurance / reinsurance emanates, & is irrespective of the country to which the risk is classified for regulatory reporting purposes. Example: A policy holder in the UK insuring a holiday home in France would be classified as a UK risk by “Country Of Origin”, but “French” for regulatory reporting purposes. Similarly a risk incepting on 1st December 2007 would be classified at 2007 “Underwriting Year of Account” but may not be processed by Xchanging until 2008 and so be allocated to the 2008 “processing year”. ACCESSING THE DATA: to access the raw data in this document, and equivalent data for other countries, see www.lloyds.com/comparecountries.
DISCLAIMER: This document is intended for general information purposes only. Whilst all care has been taken to ensure the accuracy of the information, Lloyd's does not accept any responsibility for any errors or omissions. Lloyd's does not accept any responsibility or liability for any loss to any person acting or refraining from action as a result of, but not limited to, any statement, fact, figure, expression of opinion or belief contained in this document. © Lloyd’s
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