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Lloyd’s ready to take advantage of cat risk opportunity: Tiernan

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The Lloyd’s insurance and reinsurance marketplace is ready to support its participants response to the opportunity presented by rising rates in property and catastrophe business and the market may support updated business plans that seek to capitalise on this, Chief of Markets Patrick Tiernan suggested today.

lloyds-london-reinsurance-ilsSpeaking during the Q4 message to the market this morning, Tiernan said that Lloyd’s is confident that any downside threats to the market can be managed and so it can move into 2023 with a appetite for growth in the improving rate environment.

However, he noted that plans can change and those syndicates that have submitted plans for 2023 already may be looking to adjust them, something Lloyd’s own risk appetite can support, within reason.

“Recent weeks have demonstrated a level of dislocation in the property and specialty insurance and reinsurance markets that is beyond what would have been reasonable for you to forecast when you submitted your plans to us in September,” Tiernan explained.

Adding that, “If, as we expect, there are opportunities to take advantage of risk-adjusted rate increases above the planning assumptions, we expect you to want to make significant strategic changes to the makeup of the property plans you’ve submitted.

“And we will continue to support those who have the capacity, capability and expertise to lean into that opportunity.”

Property premiums make up around one-third of Lloyd’s planned book for 2023, Tiernan said.

But, with the market having moved and rate changes now being above many assumptions, Lloyd’s has the ability to grow in catastrophe risks, Tiernan explained.

“We have headroom in our cat appetite to grow the book sensibly and we stand ready to respond at speed to well considered submissions,” he told the assembled market participants this morning.

It will be interesting to see whether any syndicates at Lloyd’s look to take advantage of investor appetite for catastrophe risks to support their growth, with the London Bridge ILS structure at Lloyd’s perhaps a route through which additional capital to fund growth in 2023 could be channelled.

Overall, Lloyd’s is targeting £56 billion of GWP for 2023, Tiernan said, which would be a record for the market.

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