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Transcript of © Lloyd’s 1 © Lloyd’s 1 Lloyd’s Overview August 2014.
© Lloyd’s 1
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© Lloyd’s 1
Lloyd’s Overview
August 2014
© Lloyd’s2
Agenda
• History
• Market Structure
• Distribution & The London Market
• Financial Strength
• Financial Results
• Global Reach
• Vision 2025
© Lloyd’s 2012
► 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
Lloyd’s Key Characteristics
© Lloyd’s 2012
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History
© Lloyd’s 2012
From Coffee House…
First known reference to Edward Lloyd’s coffee house in Tower Street(London Gazette 18-21 February 1688)
© Lloyd’s 2012
…To every type of Insurance
1877 1911 19691906
© Lloyd’s
PIPER ALPHA1988
EXXON VALDEZ
1989
HURRICANES1989
ASBESTOS1980s- 1990s
© Lloyd’s 2012
…and an appetite for unusual risks requiring innovative solutions
© Lloyd’s 20129 9
The Lloyd’s market is known for its specialist expertise…
© Lloyd’s 2012
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Market Structure
© Lloyd’s11
SEE: www.lloyds.com/directories
The policyholder
The brokers
The coverholders
MembersManagingagents
Syndicates
Corporation of Lloyd’s
How the Market Works
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A DYNAMIC AND DIVERSE MARKETPLACEAt December 31st 2013, the Lloyd’s marketplace was home to 56 “live” managing
agents that manage 91 syndicates
© Lloyd’s 2012
Syndication of Risk
Syndicate
Syndicate
Syndicate
Syndicate
Syndicate
Broker
Lloyd’s Policy
Mutualised Security
Fitch RatingsAA- (very strong)
Standard & Poor’sA+ (strong)
A.M. BestA (excellent)
Policyholder
© Lloyd’s 2012
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Distribution & The London Market
© Lloyd’s 2012
A wide variety of insurers are within a stone’s throw of the Lloyd’s building
© Lloyd’s 2012
… as are many of the world’s leading brokers
© Lloyd’s 2012
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Financial Strength
© Lloyd’s 2012
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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-’ (very strong)
A.M. Best: ‘A’ (excellent)
` Lloyd’s Annual Report 2013
Lloyd’s Ratings
Figures correct as at December 2013
OUR CHAIN OF SECURITY
• LINK ONE:SYNDICATE ASSETS(US$70,287m)
• 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
• 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$5,309m)
• The Central Fund includes members’ annual contributions and funds issued by the Corporation of Lloyd’s
• If a syndicate has failed to meet its liabilities and the two previous links proved insufficient, the Central Fund can provide a final reserve to cover those outstanding liabilities
Figures correct as at December 2013
OUR CHAIN OF SECURITY
© Lloyd’s 2012
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Financial Results
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Strong U/W Results
US$ m 2009 2010 2011 2012 2013
Gross written
premiums
35,376
£21,973
35,469
£22,592
36,389
£23,477
40,545
£25,000
$43,698
£26,106
Combined ratio
86.1%
93.3% 106.8% 91.1% 86.8%
Investment return 2,848
£1,769
1,975
£1,258
1,528
£955
2,084
£1,311
$1,406
£839
Result before tax 6,227
£3,868
3,446
£2,195
(800)
(£516)
4,517
£2,771
$5,734
£3,205
Return on capital
(pre-tax) %
23.9 12.1 (2.8) 14.8 16.2
Source: Lloyd’s Annual Report 2013. All figures as at 31 December 2013
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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
2013 major claims Significantly below long term average
© Lloyd’s 2012
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Global Reach
© Lloyd’s
Europe (including UK)
33%
Other Americas
8%
Central Asia & Asia Pacific
12%Rest of
the World
4%
US (including Canada)
43%
US & Canada
41% 2012
44% 2011
43% 2010
45% 2009
13% 2012
12% 2011
10% 2010
9 % 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
2013 Lloyd’s Premiums by region
© Lloyd’s
1
1
1
1
2
22
2
33
3 3
3
3
33
1 1
1
11
4
4
4
3
3
3
3
2
4Local underwriting with co-located syndicates(or via a Lloyd’s regulated entity); Country Manager with Market Development Role
Europe
3 Country Manager with Market Development Role
2 Legal Representative for regulatory requirements
1 Legal Representative for minimum regulatory requirements
Type Market Development Scope Territories
Europe
Austria, Denmark, Norway, Portugal, LithuaniaArgentina, Belize, Chile
Namibia, Zimbabwe, US Virgin Islands
Cyprus, Greece, Israel, Malta,
New Zealand, India
South Africa,
Australia, Hong Kong (SAR)Benelux, France, Germany, Ireland, Italy, Poland, Spain, Sweden, Switzerland
Brazil
ChinaJapanSingapore
North America
www.lloyds.com/AMERICA 3
UK
Canada, US Northeast, US Southeast, US Central & US West
2
2014 Lloyd’s Office Network
1
© Lloyd’s 2012
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Vision 2025
© Lloyd’s 2012
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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
21st century
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► 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.
2025 Lloyd’s Vision
© Lloyd’s
The world’s leading specialist insurance market
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.
© Lloyd’s 2014 All rights reserved
© Lloyd’s