Transcript Market Presentation: Germany

Market Presentation:
AUSTRALIA
Adrian Humphreys
COUNTRY MANAGER
August 2010
 > www.lloyds.com/MARKETPRESENTATIONS
Content
What is Lloyd's?
1
ACCESSING LLOYD’S
2
FOCUS ON DISTRIBUTION
3
LLOYD’S AUSTRALIA
4
Conclusions
5
© Lloyd’s
What is LLOYD’S?
LLOYD’S
ENVIRONMENT
3
1
> History
> Strong Results
> Good Performance
> Strength and Stability
> Lloyd’s Overview
© Lloyd’s
1
LLOYD’S Business > History
From Coffee House……to Lloyd’s Members
1689

Ships and goods insured by wealthy individuals
acting on a personal basis.

Lloyd’s Coffee House; first recorded February
1689.
1800 – 1850s

Development of syndicates
Present Day

iPhone
Historical Context
1712 First steam engine
1750s Beginning of the Industrial Revolution
1805 Battle of Trafalgar
© Lloyd’s invented
1876 Telephone
1
Core strength > Strong Result
2009 annual results of a profit before tax of AUD7,736
2005
Gross written premiums
AUD 29,964m
2006
2007
2009
2008
AUD 32,828m AUD 32,732m AUD 35,970m AUD 43,946m
111.8%
83.1%
84.0%
Investment return
AUD 2,872m
AUD 3,322m
AUD 4,014m
AUD 1,914m AUD 3,538m
Profit before tax
(AUD 206m)
AUD 7,324m
AUD 7,692m
AUD 3,778m
AUD7,736m
(0.9%)
31.4%
29.3%
13.7%
23.9%
Combined ratio
Return on capital (pre-tax)
86.1%
91.3%
© Lloyd’s
Source: Lloyd’s pro forma financial statements, 2009 Interim Results: Rate of Exchange used : 1 GBP = 2 AUD
1
Core strength > Good Performance
Lloyd’s continues to do well against its PEERS.
COMBINED RATIO
130
110
101
102
100
94
91
90
99
97
92
86
84
70
50
Lloyd's
US P/C Industry (i)
2005
US Reinsurers (ii)
2006
2007
2008
European
(Re)Insurers (iii)
Bermudian
(Re)Insurers (iii)
2009
© Lloyd’s
Sources: Sources i) Insurance Information Institute (estimate-2009), ii) Reinsurance Association of America, iii) Company data (8 European companies:
17 Bermudian companies)
1
Core strength > Good Performance
Lloyd’s strengthened position is recognised by the rating agencies
S&P rating actions since January 2002 - Lloyd’s IFS rating has been upgraded to A+, despite
downgrades in the wider market
Upgraded
Unchanged
Downgraded
Negative outlook
Sources: Source: AM Best, Fitch and S&P, 2009
© Lloyd’s
1
Core strength > Good Performance
Lloyd’s strengthened position is recognised by the rating agencies
Lloyd’s insurer financial strength (“IFS”) is interactively assessed by three leading insurance
rating agencies:
A (Excellent). Stable
Outlook.
A+ (Strong). Stable
Outlook.
A+ (Strong). Stable
Outlook.
Affirmed July 2009
Affirmed 4 August 2009
Affirmed 30 July 2009
Sources: Source: AM Best, Fitch and S&P, 2009
© Lloyd’s
1
Core strength > Strength and Stability
Chain of Security provides excellent security and Capital Efficiency
1 st
Syndicate Level Assets
Link
Several
Assets
2 nd
’ Funds at Lloyd
’s
Link
AUD 26,318m
Link
Central Fund
AUD 1,996m
Corporation Assets
AUD 286m
Subordinated Debt / Securities
AUD 1916m
© Lloyd’s
Source: Society of Lloyd’s financial statements, Annual Report, (March 2010) - Rate of Exchange used : 1 GBP = 2 AUD
Callable Layer
Assets
3 rd
Members
AUD 1,366m
Mutual
AUD
1.1bn
AUD 74,800m
1
ACCESSING LLOYD’S > 2010 Lloyd’s Overview
The impact of Large losses, economic downturn and the rating environment poses various challenges
and a robust cycle management is necessary
•
Costliest 1st quarter on record : Lloyd’s continues to be impacted by frequency of large
losses this year
•
CERTAIN CLASSES IMPACTED BY LARGE RISK LOSSES: Energy Market again in “Deepwater”
and Aviation is facing another difficult year
•
ECONOMIC
…
•
Rating environment : continues to be softer than plans anticipated
•
Cycle management: Robust cycle management is needed as the soft market deepens
DOWNTURN : still poses significant threat as further claims deterioration
is expected in the medium term
© Lloyd’s
Source: Market Review Report,
22nd
June 2010, Lloyd’s Analysis Team
ACCESSING LLOYD’S?
LLOYD’S
ENVIRONMENT
11
2
> Priorities
> Coverholders
> Initiatives
> Brokers
> Claims
© Lloyd’s
2
ACCESSING LLOYD’S > 2010 Lloyd’s Priorities
The 2010 Priorities of Lloyd’s have been identified as follows:
• Performance management - A resolute focus on underwriting discipline and
risk management
• Solvency II - Implementing Solvency II at Lloyd’s in a way that protects, and
where possible, enhances Lloyd’s capital structure and efficiency
• The Exchange - Increasing adoption and use of The Exchange
• Claims Transformation - Driving a transformation in the way the Lloyd’s
market handles claims to enhance the experience of the customer
• Access to business - Improving access to business through streamlining
coverholder management strengthening broker relationships and gaining new
trading rights
© Lloyd’s
Source: Market Review Report,
22nd
June 2010, Lloyd’s Analysis Team
2
ACCESSING LLOYD’S > Lloyd’s and Coverholders
Lloyd’s holds the coverholder market as an important segment of the overall business
• Strategically important distribution channel providing Lloyd’s with local
expertise, access to local markets without costly operations
• Sources of product innovation and intelligence
• Allows Lloyd’s to access smaller and medium sized risks across different
classes and territories
© Lloyd’s
Source: Market Review Report,
22nd
June 2010, Lloyd’s Analysis Team
2
ACCESSING LLOYD’S > Lloyd’s and Coverholders
Flexibility, Underwriting Freedom and Extra Capacity were given as the 3 biggest advantages of being a
coverholder for Lloyd’s
© Lloyd’s
Source: Lloyd’s US MGA Survey
2
ACCESSING LLOYD’S > Lloyd’s and Coverholders
The principal factors that would make MGAs choose an insurer other than Lloyd’s are admitted status,
coverage, claims payment and ease of doing business
© Lloyd’s
Source: Lloyd’s US MGA Survey
2
ACCESSING LLOYD’S > Coverholder Initiative
“..The development of the coverholder channel, subject to proper and appropriate controls, will be a
particular area of focus, with the objective of improving both awareness and the efficiency of this
distribution channel” (Lloyd’s Strategy 2010 – 2012)
• Technology & Standards: We want to improve operational
efficiency of the coverholder distribution model
through information standards and taking advantage
of e-trading opportunities.
• Routes to market: We want to make the route to market for
new coverholder business as simple and transparent
as possible.
• Coverholder experience: We want to make life easier for a
coverholder to do business with Lloyd’s.
© Lloyd’s
Source: Lloyd’s US MGA Survey
2
ACCESSING LLOYD’S > Coverholder Initiative
Distribution findings – Lloyd’s will remain a broker market
• The Corporation is clear that Lloyd’s is and will
remain a broker market
• Brokers are changing – they are increasingly
placing in most ‘efficient’ markets and have greater
reach internationally
• Winners will have scale or a strong niche
position; Others will be challenged in the near
term by the rate of change in Lloyd’s and wider
environments
• The Corporation’s focus is on reducing the
cost of access to the Lloyd’s market
• Existing Lloyd’s brokers are playing a significant
role in managing the change successfully
Source: xx
© Lloyd’s
2
ACCESSING LLOYD’S > Brokers
The corporation has specific actions for the 2010 to maintain and develop market attractiveness
• Support but not cross into the work of the Brokers and Managing Agents
• Make placing businesses into the Lloyd’s Market more efficient
• Support Small Brokers to Develop and Grow
• Undertake Promotional and Educational Activities aimed at existing and
potential brokers and coverholders
• Provide more detailed market insight for Managing Agents and Brokers
© Lloyd’s
Source: Lloyd’s Strategy 2010-2012
2
australia > Claims services vs Competitors
The claims services in Lloyd's compared to our peers is very good
Source ‘The Claims Landscape Claims Monitor 2009’, December 2009, Gracechurch Consulting
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© Lloyd’s
Lloyd’s Australia Ltd
Lloyd’s Australia
20
3
> Global Context
> Profile
> Purpose
© Lloyd’s
3
LLOYD’S Business >Global Context
Australia is Lloyd’s 4th largest market…
Growth has been steady over the past 10 years
Lloyd’s Top 7 territories
Lloyd ’s premiums
(AUD)
US
56%
44%
14.3bn
UK
56%
44%
5.61bn
87%
Canada
76%
Australia
Bermuda
13%
13%
24%
87%
1.76bn
1.21bn
0.99bn
France
53%
47%
0.77bn
Germany
53%
47%
0.55bn
2009 Direct
2009 Reinsurance
Source: Market Intelligence calculation based on Xchanging figures. Rates of exchange calculated using 2009 average – Rate of Exchange
used : 1 USD = 1.1 AUD
© Lloyd’s
3
LLOYD’S Business >Distribution Overview
Lloyd’s premiums continue to grow in Australia, dominated by Binding Authorities and Direct lines.
Reinsurance experienced the strongest year-on-year growth of 33% (AUD 74.8m) whilst Binding Authority
business increased by 5% (AUD 21.89m)
2007 – 2009 LLOYD’S PREMIUMS: BY DISTRIBUTION
TOTAL
AUD 1,023m
+9.5%
AUD 1,120m
+9.1% AUD 1,221.8m
2009 LLOYD’S PREMIUM GROWTH: BY DISTRIBUTION
AUD m
80
74.8
1,200
60
1,000
466
444
800
416
40
600
464
400
22.0
459
428
20
200
179
216
2007
2008
5.5
290
-
-
Binding Authorities
2009
Direct
Reinsurance
Gross Signed Premiums in: million AUD
Source: Market intelligence based on Xchanging; Country Manager soft intelligence, (March 2010): Rate of Exchange used : 1 USD = 1.1 AUD
!
Lloyd’s data is based on Xchanging “REG 258”, (2010); unaudited figures based on country of origin and processing by calendar year; please refer to Appendix for detailed summary ©
of Lloyd’s
Lloyd’sData Limitations.
3
LLOYD’S Business >Business Profile
Lloyd’s premiums are dominated by Property and Liability classes.
Liability experienced the most significant growth during 2009 at 12.9% (AUD 66m).
2007 – 2009 LLOYD’S PREMIUMS: BY CLASS
TOTAL
AUD1,023m
+9.5% AUD 1,119.8m
+9.1% AUD 1,222.1m
2009 LLOYD’S PREMIUM GROWTH: BY CLASS
AUD m
75
1,200
65
1,000
56
55
81
67
57
78
45
35
800
579
600
508
66.0
55
513
28.6
25
11.0
15
11.0
2.2
5
400
4.4
4.4
(5)
200
343
386
415
(15)
(25)
(24.2)
2007
2008
2009
Miscellaneous
Motor
PA & Health
Property
Marine
Aviation
Transit
Liability
Gross Signed Premiums in: million AUD
Source: Market intelligence based on Xchanging; Country Manager soft intelligence, (March 2010): Rate of Exchange used : 1 USD = 1.1 AUD
!
Lloyd’s data is based on Xchanging “REG 258”, (2010); unaudited figures based on country of origin and processing by calendar year; please refer to Appendix for detailed summary ©
of Lloyd’s
Lloyd’sData Limitations.
3
LLOYD’S AUSTRALIA >Purpose
Promote and protect the Lloyd’s brand in Australia and facilitate the development of new relationships.
Gateway to Australian market with broad expertise available to assist in business development activities.
OFFICE FACILITIES
Australian Team:
General Rep:
Compliance
Manager:
General Office:
Adrian Humphreys
Peter Fryer
Martina Lee
RELATIONSHIP FACILITATOR
>Work with local market and provide input into
coverholder and broker initiatives
> Assistance with local market intelligence;
> Networking events/promotional &
sponsorship activities;
> Facilitate introductions for new business;
> Point of contact and primary Lloyd’s market resource.
BRAND PROMOTION & PROTECTION
> Promote the profile of the Lloyd’s brand;
> Ensure general interests of Lloyd’s are served;
Legislative and regulatory compliance with the law.
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View from Lloyd’s Australia Office window – May 2010
 Meeting Room available
 Teleconferencing system
SEE ALSO: www.lloyds.com/AUSTRALIA
www.lloyds.com/MARKETINTELLIGENCE
© Lloyd’s
Conclusions
25
4
© Lloyd’s
4
Conclusion > Relationships
Maintaining relationships through delivery
© Lloyd’s
Source: Lloyd’s Strategy 2010-2012
27
© Lloyd’s