Why Lloyd’s?
Lasting the tests of time
Adrian Humphreys
COUNTRY MANAGER
May 2011
 > www.lloyds.com/MARKETPRESENTATIONS
Content
Lloyd’s Platform
1
Lloyd’s key strengths
2
Lloyd’s Australia
3
2010 Catastrophes
4
Conclusions
5
© Lloyd’s
1
Lloyd’s platform
LLOYD’S UNIQUE
ENVIRONMENT
3
> Brief history
> Key players
© Lloyd’s
1
LLOYD’S Business > History
From Coffee House……to Lloyd’s Members
1689

Ships and goods insured by wealthy individuals
acting on a personal basis.

Lloyd’s Coffee House; first recorded February
1689.
1800 – 1850s

Development of syndicates
Present Day

iPhone
Historical Context
1712 First steam engine
1750s Beginning of the Industrial Revolution
1805 Battle of Trafalgar
© Lloyd’s invented
1876 Telephone
2
Lloyd’s business > Subscription market
“to be the platform of choice for insurance and reinsurance buyers and sellers to access
and trade specialist property and casualty risks”.
© Lloyd’s
© Lloyd’s
© Lloyd’s
Lloyd’s market structure
Corporation of Lloyd’s
Management
Coverholders
Policyholders
178
Lloyd’s
Brokers
 Direct
54
Managing
Agents
82
Syndicates
Service
Companies*
 Reinsurance
BUSINESS FLOW
Members
 Corporate
Members
Agents
 Individual
Underwriting
CAPITAL PROVISION
SEE: www.lloyds.com/directories
Source: Lloyd’s as at 31/12/10 * some risks are placed directly with managing agent-owned service companies
© Lloyd’s
2
key strengths
LLOYD’S
PLATFORM
9
Security
Brand
Expertise & Flexibility
Licences
© Lloyd’s
2
Lloyd’s strengths > 4 key strengths
“to be the platform of choice for insurance and reinsurance buyers and sellers to access
and trade specialist property and casualty risks”.
• Lloyd’s platform key strengths:
• Security and rating
• Brand and reputation
• Expertise and flexibility
• Licence network
© Lloyd’s
Lloyd’s > business Results
“Solid results in challenging circumstances”
£m
2009
2010
Gross written premiums
21,973
22,592
Combined ratio
86.1%
93.3%
Investment return
1,769
1,258
Profit before tax
3,868
2,195
23.9%
12.1%
Return on capital (pre-tax)
© Lloyd’s
Lloyd’s > chain of security
“Insurance is a promise to pay”, understanding the security behind your policies is vital
when securing your clients future
© Lloyd’s
…and our performance compares well against
our peers
COMBINED RATIO
%
120
101
100 102
100
99
94
93
95
91
86
84
80
60
Lloyd's
US P/C Industry (i)
2006
US Reinsurers (ii)
2007
2008
2009
European
(Re)Insurers (iii)
Bermudian
(Re)Insurers (iii)
2010
Sources i) Insurance Information Institute (estimate-2010), ii) Reinsurance Association of America,
iii) Company data (8 European companies: 17 Bermudian companies)
© Lloyd’s
2
Lloyd’s strengths > Ratings
Lloyd’s strengthened position is recognised by the rating agencies
S&P rating actions since January 2002 - Lloyd’s IFS rating has been upgraded to A+, despite
downgrades in the wider market
Upgraded
Unchanged
Downgraded
Negative outlook
Sources: Source: AM Best, Fitch and S&P, 2009
© Lloyd’s
2
Lloyd’s strengths > Brand
“I applaud Lloyd’s, which tops the [insurance] category and also secures its highest position in the survey
ever. Whilst being highly rated in this survey is pleasant news for the respective brand owners it is also
an indicator of their business’s ability to grow through a brand that stakeholders, trust, want and believe
in.”
Stephen Cheliotis, Chairman of the expert council & CEO, The Centre for Brand Analysis:
© Lloyd’s
2
Lloyd’s strenghts > Flexibility
Flexibility, Underwriting Freedom and Extra Capacity were given as the 3 biggest advantages of being a
coverholder for Lloyd’s
© Lloyd’s
Source: Lloyd’s US MGA Survey
Lloyd’s Australia Ltd
INSURANCE
ENVIRONMENT
17
3
> Lloyd’s Office
> Networking
> Regulation & Compliance
© Lloyd’s
4
LLOYD’S in Australia> Timeline
Australia is Lloyd’s 4th largest market…
Growth has been steady over the past 10 years
April - Lloyd’s
Australia opened as
permanent office &
Steve Boucher
appointed full-time
Lloyd’s General
Representative for
Australia
New legislation
formally authorises
Lloyd’s to
underwrite
Insurance
Business in
Australia
1973
1980
Lloyd’s Legal
Representative
appointed:
“1980 Ian
Hutchinson,
appointed Lloyd’s
General
Representative in
Australia
1989
1999
December - Keith
Stern appointed
Lloyd’s Country
Manager for
Australia
May
2010
New Lloyd’s
Australia Manager
“Adrian Humphreys
joins Lloyd’s
Australia as the
Country Manager
© Lloyd’s
1
Market Overview >Market Players
High concentration amongst few players - top 5 account for approx. 87% of total Australian Premiums
Lloyd’s is currently ranked as 5th in terms of GWP.
19
© Lloyd’s
Lloyd’s >Agency distribution overview
LLOYD’S COVERHOLDERS
1
2007 – 2010 Total GSP for Agencies (USD)
700
Important source of income
614
600
500
2
Accessing smaller business lines
and facilities
378
400
424
404
300
200
3
Strategic importance of this
channel
100
0
2007
SOURCE: Lloyd’s Strategy 2010 -2012, www.lloyds.com/strategy
!
2010
2006 – 2010 Total # of individual Agencies
2006
2007
2008
2009
2010
Aviation
0
0
0
0
1
Casualty
108
98
134
202
206
Energy
6
4
4
4
2
Marine
31
24
29
41
28
Motor
7
9
8
13
13
PA & Health
19
23
29
40
36
Property
118
120
129
132
136
289
278
333
432
422
SOURCE: Lloyd’s, Delegated Authority, (2011)
2009
SOURCE: Market Intelligence based on Gross Signed premiums; Xchanging (2010)
2006 – 2010 Number of Binder by Class
Grand Total
2008
100
75
62
64
2006
2007
71
79
78
2009
2010
50
25
0
2008
SOURCE: Lloyd’s, Delegated Authority, (2011)
Lloyd’s data is based on Xchanging “REG 258”, (2010); unaudited figures based on country of origin and processing by calendar year; please refer to Appendix for detailed summary ©
of Lloyd’s
Lloyd’sData Limitations.
2
Lloyd’s > Lloyd’s Australian Agencies
Lloyd’s agencies and service companies you may recognise…..
AFA
Affinity Risk Partners Brokers
AIS Insurance Brokers
Altiora Insurance Solutions
Aon Risk Services
Arch Underwriting at Lloyd’s
Asia Mideast Insurance & Reins.
ASR Underwriting Agencies
ATC Insurance Solutions
Aurora Underwriting Agency
Ausnet Underwriting Agency
Austagencies
Austbrokers RWA
Austbrokers Sydney
Australian Income Protection
Australian Reinsurance U/w Svs
Australis Group Underwriting
Austruck Insurance
Axis Underwriting Services
Beazley Underwriting
Bizcover
Brit Insurance
Brooklyn Underwriting
Brooks Inglis Insurance Brokers
Catlin
CBD Underwriting
Celestial Underwriting Agency
Cerberos Brokers
Cerberus Special Risks
CKA Risk Solutions
Columbus Direct Travel Ins.
Coverforce Underwriting
Dolphin Insurance
Dual
East West Insurance Brokers
Elkington Bishop Molineaux
Epsilon Insurance Broking
Services
Fenton Green & Co
Film Insurance Underwriting
Agencies
Fitton Insurance Brokers
Freeman McMurrick
General Security Insurance
Brokers
Gow-Gates Insurance Brokers
Guardian Underwriting Services
High Street Underwriting Agency
Hiscock Insurance Brokers
Horsell International
H W Wood
IBL
Indemnity Corporation
Insurance Advisernet
Insure That
International Underwriting Svs
Jardine Lloyd Thompson
JMD Ross Insurance Brokers
JUA Underwriting Agency
Lawsons Underwriting Australasia
Logan Livestock Insurance Agency
London Underwriting
Macquarie Underwriting
Magic Millions Insurance Brokers
Mansions of Australia
Manufactured Homes Ins Agency
Marsh
Midas Insurance Brokers
Millennium Underwriting Agencies
Miller & Associates Ins Broking
Miramar Underwriting Agency
Mobius Underwriting
National Underwriting Agencies
Nautilus Marine Insurance Agency
Newline Insurance
Newmarket Insurance Brokers
Nova Underwriting
Online Insurance Brokers
Parmia
PI Direct Insurance Brokers
Professional Risk U/w
QBE Placement Solutions
Resource Underwriting Pacific
Richard Oliver
Risk Insure
Southern Cross Underwriting
Transcorp Underwriting
Tasman Underwriting
Sterling Insurance
Savannah Insurance Agency
SLE Worldwide
Sportscover
SRS Underwriting Agency
Starr Underwriting
Trafalgar Risk Management
Trident Insurance Group
Trinity Pacific U/w Agencies
Willis
Winsure Insurance Group
Market Intelligence based on: Lloyd’s 2007 - 2010 Statistics in Gross Signed Premiums
© Lloyd’s
2
Lloyd’s > Agencies by geography
http://www.lloyds.com/Lloyds/Offices/Australasia/Australia/Lloyds-in-Australia
2010 Queensland
Casualty
Energy
MAT
Motor
PA & Health
Property
6
0
1
3
3
5
18
Grand Total
2010 Western Australia
Casualty
Energy
MAT
Motor
PA & Health
Property
3
0
0
1
0
2
Grand Total
6
2010 NSW
Casualty
Energy
MAT
Motor
PA & Health
Property
33
0
4
3
10
21
71
Grand Total
2010 South Australia
Casualty
Energy
MAT
Motor
PA & Health
Property
Grand Total
1
0
0
0
0
2
3
2010 Victoria
Casualty
Energy
MAT
Motor
PA & Health
Property
Grand Total
Market Intelligence based on: Lloyd’s 2007 - 2010 Statistics in Gross Signed Premiums
© Lloyd’s
10
0
1
0
5
10
26
5
Lloyd’s Australia >Purpose
Promote and protect the Lloyd’s brand in Australia and facilitate the development of new relationships.
Gateway to Australian market with broad expertise available to assist in business development activities.
AUSTRALIA TEAM
OFFICE FACILITIES
General Representative: Adrian Humphreys
Compliance Manager:
Tracey Bryan
Office Manager:
Martina Lee
RELATIONSHIP FACILITATOR
> Meet and engage with managing agent representatives,
underwriters and brokers in London;
> Assistance with local market intelligence;
> Networking events/promotional &
sponsorship activities;
> Facilitate introductions for new business;
> Point of contact and primary Lloyd’s market resource.
BRAND PROMOTION & PROTECTION
> Promote the profile of the Lloyd’s brand;
> Ensure general interests of Lloyd’s are served;
Legislative and regulatory compliance with the law.
23
View from Lloyd’s Australia Office window – Feb 2011
 Meeting Room available
 Teleconferencing system
SEE ALSO: www.lloyds.com/AUSTRALIA
www.lloyds.com/MARKETINTELLIGENCE
© Lloyd’s
ACCESSING LLOYD’S > 2011 Lloyd’s Priorities
The 2011 Priorities of Lloyd’s have been identified as follows:
• Performance management - A resolute focus on underwriting discipline and
risk management
• Solvency II - Implementing Solvency II at Lloyd’s in a way that protects, and
where possible, enhances Lloyd’s capital structure and efficiency
• The Exchange - Increasing adoption and use of The Exchange
• Claims Transformation - Driving a transformation in the way the Lloyd’s
market handles claims to enhance the experience of the customer
• Access to business - Improving access to business through streamlining
Underwriting Agency management strengthening broker relationships and gaining
new trading rights
© Lloyd’s
Source: Market Review Report,
22nd
June 2010, Lloyd’s Analysis Team
4
catastrophes
INSURANCE
ENVIRONMENT
25
> Context
> Distribution Overview
> Establishment Offices
© Lloyd’s
3
Catastrophes >Protocols
Lloyd’s and the ICA have established protocols for the catastrophes which have occurred in the last year.
LLOYD’S
INFORMATION ON LLOYD’S.COM
• Lloyd’s Cat Response Panel
• Lloyd’s Australia set up freephone number
and dedicated email
2010 Annus Horribilis
•Project Horizon, Perth Windstorm, Melbourne
Hailstorm, Chile
•Recent Australian cats, $92m incurred claims
DEDICATED HELPLINE
Current total net estimates are:
•US$ 650m - Australia flooding
•US$ 1.95bn - Japan earthquake and tsunami
•US$ 1.2bn - New Zealand earthquake
UNQIUE EMAIL CONTACT
INFORMATION FOR ALL
A PRIORITY FOR LLOYD’S
© Lloyd’s
Conclusions
27
5
© Lloyd’s
© Lloyd’s
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© Lloyd’s