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Lloyd’s Overview
August 2014
© Lloyd’s
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Agenda
• History
• Market Structure
• Distribution &
The London Market
• Financial Strength
• Financial Results
• Global Reach
• Vision 2025
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Lloyd’s Key Characteristics
► Lloyd’s is a market, not a company
► We have a long history of risk taking, dating back to 1688
► The Lloyd’s market insures complex and specialist risks
► London based international business
► Lloyd’s appetite for risk is tempered by 325 years of
experience and a Performance Management Directorate that
mandates responsible risk taking
► Regulated by the Prudential Regulatory Authority (PRA) and
the Financial Conduct Authority (FCA)
► Products are distributed through brokers and coverholders
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History
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From Coffee House…
First known reference
to Edward Lloyd’s coffee
house in Tower Street
(London Gazette 18-21 February 1688)
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…To every type of Insurance
1877
1906
1911
1969
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PIPER ALPHA
1988
EXXON VALDEZ
1989
HURRICANES
1989
ASBESTOS
1980s- 1990s
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…and an appetite for unusual risks requiring innovative solutions
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The Lloyd’s market is known for its specialist expertise…
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Market Structure
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How the Market Works
Corporation of Lloyd’s
The policyholder
The brokers
Managing
agents
Members
The coverholders
Syndicates
SEE: www.lloyds.com/directories
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A DYNAMIC AND DIVERSE MARKETPLACE
At December 31st 2013, the Lloyd’s marketplace was home to 56 “live” managing
agents that manage 91 syndicates
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Syndication of Risk
Lloyd’s Policy
Syndicate
Syndicate
Policyholder
Broker
Syndicate
Syndicate
Mutualised
Security
Fitch Ratings
AA- (very strong)
Standard & Poor’s
A+ (strong)
Syndicate
A.M. Best
A (excellent)
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Distribution & The
London Market
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A wide variety of insurers are within a stone’s
throw of the Lloyd’s building
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… as are many of the world’s leading brokers
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Financial Strength
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Lloyd’s Ratings
INDEPENDENTLY
ASSESSED
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In the eyes of leading ratings agencies,go here
Lloyd’s is viewed as enjoying robust
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capital reserves:
Standard and Poor’s: ‘A+’ (strong)
Fitch Ratings: ‘AA-’ (very strong)
A.M. Best: ‘A’ (excellent)
`
Lloyd’s Annual Report 2013
© Lloyd’s 2012
OUR CHAIN OF SECURITY
• LINK ONE:
SYNDICATE ASSETS
(US$70,287m)
• Before writing business, a syndicate
must put up funds to cover their own share
of claims
• These funds are the first port of call
when paying policyholder claims
Figures correct as at December 2013
OUR CHAIN OF SECURITY
• LINK TWO:
MEMBERS’ FUNDS AT LLOYD’S
(US$25,301m)
• 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
OUR CHAIN OF SECURITY
• LINK THREE:
LLOYD’S CENTRAL FUND
(US$5,309m)
• The Central Fund includes members’
annual contributions and funds issued by
the Corporation of Lloyd’s
• If a syndicate has failed to meet its liabilities
and the two previous links proved
insufficient, the Central Fund can provide a
final reserve to cover those outstanding
liabilities
Figures correct as at December 2013
Financial Results
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Strong U/W Results
US$ m
Gross written
premiums
Combined ratio
Investment return
Result before tax
Return on capital
2009
2010
2011
2012
2013
35,376
35,469
36,389
40,545
$43,698
£21,973
£22,592
£23,477
£25,000
£26,106
86.1%
93.3%
106.8%
91.1%
86.8%
2,848
1,975
1,528
2,084
$1,406
£1,769
£1,258
£955
£1,311
£839
6,227
3,446
(800)
4,517
$5,734
£3,868
£2,195
(£516)
£2,771
£3,205
23.9
12.1
(2.8)
14.8
16.2
(pre-tax) %
Source: Lloyd’s Annual Report 2013. All figures as at 31 December 2013
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2013 major claims Significantly below long term average
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Source: Lloyd’s 2013 Annual Results (March 2014)
Claims in foreign currency translated at the exchange rate prevailing at the date of loss
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Global Reach
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2013 Lloyd’s Premiums by region
Europe
(including UK)
33%
US (including Canada)
13% 2012
43%
Central Asia
& Asia Pacific
12%
41% 2012
44% 2011
43% 2010
45% 2009
Other
Americas
8%
4%
Other Americas
8% 2012
8% 2011
7% 2010
6% 2009
10% 2010
9 % 2009
Rest of
the World
US & Canada
12% 2011
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
© Lloyd’s
2014 Lloyd’s Office Network
Europe
North America
Europe
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3
2
3
1
4
www.lloyds.com/AMERICA
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3
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3
1
3
3
3
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1
1
3
3
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Type
Market Development Scope
2
Territories
Local underwriting with co-located syndicates
(or via a Lloyd’s regulated entity);
Country Manager with Market Development Role
China
Japan
Singapore
3
Country Manager with Market Development Role
Benelux, France, Germany, Ireland, Italy, Poland, Spain, Sweden, Switzerland
UK
Australia, Hong Kong (SAR)
Brazil
Canada, US Northeast, US Southeast, US Central & US West
South Africa,
2
Legal Representative for regulatory requirements
Cyprus, Greece, Israel, Malta,
1
Legal Representative for
minimum regulatory requirements
4
2
New Zealand, India
Austria, Denmark, Norway, Portugal, Lithuania
Argentina, Belize, Chile
Namibia, Zimbabwe, US Virgin Islands
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Vision 2025
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21st century
2012: Prime Minister David Cameron, Lloyd’s Chairman John Nelson and
Lloyd’s CEO Richard Ward launch Vision 2025, a strategy to ensure Lloyd’s
becomes the major global hub for specialist insurance and reinsurance
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© Lloyd’s 2012
2025 Lloyd’s Vision
► Growing our premium income from established
markets in line with their economic growth with greater
growth in new markets.
► A more diversified capital base, with a greater
contribution from high growth economies.
► A truly internationalized underwriting community.
► A broker market, utilizing brokers’ international
networks.
► Powerful oversees hubs in certain major oversees
markets.
© Lloyd’s 2012
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The world’s leading specialist insurance market
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Disclaimer
This presentation has been produced by Lloyd's for general information purposes only. While care has been taken in gathering
the data and preparing the presentation, Lloyd's does not make any representations or warranties as to its accuracy or
completeness and expressly excludes to the maximum extent permitted by law all those that might otherwise be implied.
Lloyd's accepts no responsibility or liability for any loss or damage of any nature occasioned to any person as a result of acting
or refraining from acting as a result of, or in reliance on, any statement, fact, figure or expression of opinion or belief contained
in this presentation. This presentation does not constitute advice of any kind.
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