ILS backed Arcus Syndicate 1856 falls to loss, but underwriting expands

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Arcus Syndicate 1856 at Lloyd’s of London, which is backed by funds under the management of the Credit Suisse insurance and reinsurance linked investment strategies team, fell to a loss for 2017 but the syndicates underwriting activities continued to expand during the year.

The Arcus Syndicate 1856 underwrote £91.4 million of gross premiums during the year, up from £84.6 in the prior year and premiums earned increased significantly, with net premiums earned coming out at £72.2 million for 2017, up from £35 million for 2016.

The syndicate underwrites risk on behalf of a range of corporate members established by the Credit Suisse ILS team, enabling the ILS asset management team to source risk via the Lloyd’s of London reinsurance market for its fund investors.

Claims rose significantly as well though, with total net claims reported as £56.6 million, compared to just £21.3 million in 2016.

The major hurricanes were the largest contributor to losses for the Arcus Syndicate in 2017, with Harvey, Irma and Maria all serving to impact profits by £4.6 million.

Reinsurance underwriting business drove the bulk of the losses, while direct business only accounted for a smaller portion of the impacts felt in 2017.

The overall impact was a loss of £7.7 million and a combined ratio of 111.7% for 2017, compared to a loss of £1.5 million and a combined ratio of 104.8% in 2016.

The Arcus Syndicate book continues to steadily expand, with premiums written rising each year and more classes of business being added.

In 2017 the syndicate underwrote £48.5 million of property reinsurance, which includes treaty reinsurance and excess of loss, but also expanded into space risks, writing two quota shares and cyber risks, writing one quota share during the year.

Arcus also underwrites a large whole account quota share with Barbican’s syndicate 1955, which generated gross premiums of £34.1 million during the year.

In 2017 the Arcus Syndicate team added a new class of business, property insurance, writing one binder during the year, as it looked to expand into an area allowing capacity to be more directly applied to likely catastrophe exposed property risks.

In 2018 the syndicate expects to continue writing its reinsurance classes of business and also more of the direct binder property insurance, which could be a growth area for the team.

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