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Update on Underwriting US risks

Update on Underwriting US risks. Tom Bolt - Director, Performance Management 25 th September 2014. Agenda. Market results North America business Delegated Authority strategy Key issues for the market. Results at a glance. Source: Lloyd’s pro forma financial statements, Jun 2014

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Update on Underwriting US risks

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  1. Update on Underwriting US risks Tom Bolt- Director, Performance Management 25th September 2014

  2. Agenda • Market results • North America business • Delegated Authority strategy • Key issues for the market

  3. Results at a glance Source: Lloyd’s pro forma financial statements, Jun 2014 1 Profit before tax 2 Actual in first six months. FY 2013: 1.6% 3RoC calculated on an annualised basis

  4. LLOYD’S - 2013 Global premium Central Asia & Asia Pacific12% Rest of the World4% Other Americas8% UK + Europe 15% + 18% = 33%2012 16% + 18% = 34%2011 16% + 20% = 36%2010 16% + 20% = 36%2009 US & Canada 41%2012 44%2011 43%2010 45% 2009 Europe (including UK)33% US (including Canada)43% Other Americas 8% 2012 8% 2011 7% 2010 6% 2009 Central Asia & Asia Pacific 13%2012 12% 2011 10%2010 9 % 2009 Source: Market Intelligence based on Lloyd’s Annual Reports: http://www.lloyds.com/Lloyds/Investor-Relations)

  5. North America figures in 2013 • Lloyd’s total Gross net premium (GNP): £20.22Bn ($33.76Bn) • Lloyd’s total US GNP: £8.14Bn ($13.6Bn) • Lloyd’s total MGA GNP: £6.22Bn ($10.4Bn) • Total Lloyd’s US MGA GNP: £2.12Bn ($3.54bn) • Total number of Lloyd’s Coverholders: 3,912 • Lloyd’s US Coverholders: 1,025 • Total numbers of Lloyd’s binders: 8,127 • Lloyd’s US binders: 2,853 (35% )

  6. THE MARKET – 2013 E&S Top 10 Premiums in US$ m and apply to Lloyd’s and domestic US companies only % change from 2012 2013 Loss Ratio 49% 13% 7,099 62% -4% 4,832 55% 15% 1,440 84% 5% 1,072 64% 4% 805 25% -24% 777 52% 10% 732 71% 36% 617 37% -3% 572 39% 15% 547 • Berkshire Hathaway continue to expand their presence in the E&S market, which they entered in May 2013 Please Note: Loss ratios are on a calendar year basis for 2013 Source: Market Intelligence based on: SNL Financials, (June 2014) and U.S Reporting System (June 2014)

  7. LLOYD’S - Top 10 E&S states 2013 Lloyd’s Market Share of E&S Premium by State 17% 39% 23% 28% 21% 32% 25% 29% 46% 29% Property Energy Liability Prop + Liab Please Note: These figures do not include Reinsurance premiums Gross Signed Premiums as registered by the US reporting system in 2013 Source: Market Intelligence based on SNL financial and Lloyd’s US reporting system (May 2014)

  8. THE MARKET - 2013 US LLOYD’S 2012 vs 2013+5% US$ 212m 2012 vs 2013+5% US$ 499bn 2012 vs 2013+13% US$ 7.1bn 2012 vs 2013+8% US$ 34.3bn 2012 vs 2013+6% US$ 5.2bn 2012 vs 2013-2% US$ 47.3bn Licenced Excess & Surplus lines (E&S) Reinsurance Not shown: $1.1 billion Exempt business (interstate railroads, marine builder’s risk, vessels, etc.) Note – 1) The figures above for the market include only US based entities plus Lloyd’s figures 2) The above analysis does not include exempt business Source: Market Intelligence based on: Lloyd’s US reporting system, RAA Reinsurance Underwriting report, SNL Financial, (June 2014)

  9. LLOYD’S - 2013 US profile Total US$ 13.6bn Source: Market Intelligence based on Lloyd’s US reporting system (May 2014)

  10. LLOYD’S – US premium distribution Source: Market Intelligence based on Lloyd’s US reporting system (May 2014)

  11. LLOYD’S - Premium trends by segment

  12. LLOYD’S – Coverholders in the US 18 5 1 1 5 - 1 11 4 4 14 13 4 5 2 6 1 63 23 5 39 1 3 1 9 - 14 4 29 2 3 116 28 4 11 58 2 12 11 3 11 14 1 64 15 10 8 15 8 26 (MA) 1 8 11 (RI) 15 11 25 (CT) 9 15 20 6 64 (NJ) 18 4 (DC) 11 10 9 20 (MD) 3 23 2 (DE) 15 22 11 8 46 20 16 3 8 39 116 6 113 34 96 Total Coverholders = 1025 (May 2014) 4 5 • Total premium written by Lloyd’s coverholders (MGA’s) in 2013 was US$ 2.9bn • Joint outreach to this critical distribution force by London and Lloyd‘s America remains a priority in 2014. Activities include participation in AAMGA and NAPSLO conferences and support of their member education efforts (AAMGA University, NAPLSO E&S School) Source: Market Intelligence based on Lloyd’s Delegated Authority Team and country manager (May 2014)

  13. Class of business % of MGA premium

  14. LLOYD’S – All lines premium trends By class of business (Licenced, E&S, Exempt and Reinsurance) Gross Signed Premiums in US$ m Property Treaty Property (D&F) Overseas Motor Marine Energy Casualty Treaty Casualty Aviation Accident & Health • Total Written Premium grew by 11% (US$ 1.4bn) in 2013 Source: Market Intelligence based on Lloyd’s US reporting system (May 2014)

  15. Planned acquisition cost remained reasonably constant by method of placement…. Source: SBFs 164 2008 – 2014 approved plans

  16. …..however change in business profile causes overall planned acquisition cost to increase Source: SBFs 164 2008 – 2014 approved plans

  17. Delegated Underwriting strategy highlights • Audit coordination • Compliance coordination   • Straight through processing

  18. Key issues for the market • Capital • Investment Income • Underlying Economy • Broker concentration • Benign Nat Cat • Frequency and severity • Casualty • Portfolio versus Subscription approach • Regulatory pressure • Localisation • Solvency II • Conduct Standards

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