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Lloyd’s of London Recent History Until Now A Few Thoughts and Observations. June 2,3 Presentation by Mike Falcone . Agenda. Who am I? Lloyds 101 Comments on the Lloyds “Culture” Drivers for Change Movement to Corporate Capital Recent Trading Activity The Way Forward. Who am I?.

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lloyd s of london recent history until now a few thoughts and observations

Lloyd’s of LondonRecent History Until NowA Few Thoughts and Observations

June 2,3

Presentation by Mike Falcone

agenda
Agenda
  • Who am I?
  • Lloyds 101
  • Comments on the Lloyds “Culture”
  • Drivers for Change
    • Movement to Corporate Capital
    • Recent Trading Activity
  • The Way Forward
who am i
Who am I?
  • Travelers Insurance Company (1991 - 1996
    • Standard US Actuarial Training Programme
  • Tillinghast London Office (1996 - 1999)
    • Actuarial Consultant hired in London to work on the Lloyds Recapitalization and Reconstruction (Equitas)
  • Crowe Syndicate Management at Lloyds of London (1999 - 2002)
    • Now Spectrum Run Off Services
    • A significant Lloyds / London market mess purchased by a Bermudian Reinsurer
lloyds 101
Lloyds 101
  • What is Lloyds
    • Not an Insurance Company
      • Small Business Association
    • Lloyds has historically been very flexible.
    • Underwriting focused
    • Historically Lloyds has not been very disciplined or quantitative
      • Until recently - a PC actuarial profession did not exist
      • In some measure “created” by Equitas
lloyds 1015
Lloyds 101

Managing Agents

RISK

CAPITAL

Synd. 123

Individual

Member

Insured /

Reinsured

Lloyd’s

Broker

Members’ Agent /

Lloyd’s Advisor

Synd. 456

Synd. 789

Corporate

Member

Retail /

Wholesale

Brokers

lloyds 101 chain of security 2002
Lloyds 101Chain of security 2002

Premiums

Trust Funds

Capital

held at

Lloyds

Members’

other

declared

assets

Lloyd’s

Central

Fund

£10,635m

£7,324m

£212m

£323m*

*supported by five year insurance programme

(limit of £350m any one year)

Plus £300m callable from PTFs

Figures @ 31st December 2000

lloyds london market culture
Lloyds / London Market Culture
  • Lloyds
    • Underwriting Focused
    • Very close to the market
    • More Reinsurance (many arbitrage strategies)
    • Small Flexible entities
    • Historically very little quantitative support
some recent drivers of change
Some recent Drivers of Change

Post Equitas

  • Move to Corporate Capital
    • Lumpier, more sophisticated Capital
  • Recent Trading Activity has been poor
    • Forecasting has been poor
  • Questions about Lloyds Security
    • Rating
    • Availability of Central Fund Reinsurance
  • Cash Flow Problems
    • Trust Funds, etc.
  • Difficulty in Rating new Capital
    • capacity grew in 2002
move to corporate capital
Move to Corporate Capital

Capacity

Year of Account

recent trading results
Recent Trading Results

Profit/Loss (£m)

Year of Account (2000+ Cal Yr)

the way forward
The Way Forward
  • Chairman’s Strategy Group
  • Bain Report
  • Elimination of Unlimited Liability Names
  • Movement toward Annual Accounting (2005)
  • Franchiser and Franchisee Relationship
  • Move away from the annual venture