Lloyd s Update - Aon Benfieldthoughtleadership.aonbenfield.com/Documents/201407_l… · · 2017-09-17New Entrants 5 Mergers ... SPS providing whole account quota share support to

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Lloyd´s Update July 2014

Contents

Executive Summary 3

2014 Market Capacity 4

Top 10 Syndicates 4

New Entrants 5

Mergers & Acquisitions 5

Lloyd’s Strategy 6

Management Changes 6

Regulatory Background 6

Vision 2025 6

Strategic Plan 2014-16 7

2013 Results 9

Premium Income 9

Underwriting Performance 12

Investment Return 14

Pre-Tax Results 15

Balance Sheet 16

Investments 16

Technical Reserves 17

Capital 17

Ratings 19

Lloyd’s Market Ratings 19

Standalone Syndicate Ratings/Rankings 19

Appendix 1 – Top 40 Reinsurers at Lloyd’s 21

Appendix 2 – Active Syndicate Listing 24

Appendix 3 – Lloyd’s Ten Year Segmental Results 26

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3

Executive Summary

The Lloyd’s market began 2014 with 93 active syndicates (including six new entrants) and record underwriting capacity of GBP26.4 billion, up 6% on the prior year.

One mid-year syndicate launch and three M&A transactions completed so far in 2014, demonstrate the continued attractiveness of the Lloyd’s platform.

New leadership has brought a fresh approach to the delivery of the Vision 2025 agenda, which aims to increase Lloyd’s premium income in high-growth economies.

A three year strategic plan released in April 2014 placed increased emphasis on growing insurance business, through the establishment of a local presence where required.

Lloyd’s has acknowledged the impact ‘alternative’ capital is having on the reinsurance market and is looking at how best to access it in support of indemnity-based products.

Operating performance remains strong: pre-tax profit rose by 16% to GBP3.2 billion in 2013, representing a return on capital employed of 16.2%.

The combined ratio improved by 4.3 percentage points to 86.8%, driven by reduced major losses and more favourable development of prior year reserves.

Lloyd’s balance sheet is strong: overall investment allocation remains relatively conservative, capital resources are at an all-time high and legacy issues appear contained.

Fitch upgraded its rating of Lloyd’s by one notch to ‘AA-’ in June 2014 and A.M. Best and Standard & Poor’s both maintain positive outlooks on their ratings of the market.

Lloyd’s Update – July 2014

4

2014 Market Capacity Lloyd’s began 2014 with 93 active syndicates and record underwriting capacity of

GBP26.4 billion, up 6% on the prior year. This included GBP608 million of ‘sidecar’

quota share capacity supplied by 13 special purpose syndicates (SPSs).

Exhibit 1: Lloyd’s Underwriting Capacity

Source: Company reports, Lloyd’s, Aon Benfield Market Analysis

Top 10 Syndicates The capacity of the ten largest syndicates aggregates to GBP10.8 billion in 2014 (41% of the market). Excluding life syndicates and SPSs, average syndicate capacity now stands at GBP339 million. A full active syndicate list can be found in Appendix 2.

Exhibit 2: Top 10 Syndicates by 2014 Capacity

Source: Company reports, Lloyd’s, Aon Benfield Market Analysis

Lloyd’s expects the number of large managing agents to increase over time, but aims to maintain the conditions that will allow smaller operations to flourish. There will be no minimum size threshold for managing agents, but the maximum size will remain at 15% of premium. New entrants (particularly overseas trade capital providers with a franchise) will be encouraged. Any broker-owned managing agents will be subject to the existing 20% related party business restriction.

12.214.4 15.0

13.7 14.816.1 16.0

17.4

22.8 23.2 24.2 25.026.4

0

5

10

15

20

25

30

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

GBP

(b

illio

ns)

1,400 1,391

1,1751,107 1,064 1,060

1,000 1,000

860

700

0

500

1,000

1,500

2001(Amlin)

2003(Catlin)

4472(Liberty)

2623(Beazley)

0510(R J Kiln)

2999(QBE)

0033(Hiscox)

2987(Brit)

1084(Chaucer)

4444(Canopius)

GBP

(m

illio

ns)

2013 2014

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5

New Entrants Former SPS Acappella 6110 (managed by Pembroke) re-launched as standalone Syndicate 2014 effective January 1, 2014, alongside five other newly-authorized syndicates. Combined underwriting capacity of these new entrants totaled GBP366 million. Vibe Syndicate 5678 was authorized as a mid-year start-up, effective July 1, 2014, having previously operated exclusively in the run-off sector.

Exhibit 3: New Entrants in 2014

Syndicate

Number

Managing

Agent

Active

Underwriter Comments

1686 Asta Alistair Robson Backed 100% by Axis Capital. Commenced underwriting on January 1, 2014 with capacity of GBP119 million. Business consists of full or partial transfer of selected classes of business from

Axis company platforms in London, Bermuda and Dublin.

1729 Asta Duncan Dale Backed 51% by ProAssurance Corporation and 49% by third parties, including private Names.

Commenced underwriting on January 1, 2014 with capacity of GBP75 million.

2014 Pembroke David Bruce Formerly SPS 6110 supporting Pembroke Syndicate 4000, Acappella launched as a standalone syndicate on January 1, 2014. Capacity stands at GBP75 million, provided by private Names.

6117 Asta Darren Lednor SPS providing whole account quota share support to Ariel Syndicate 1910 from January 1, 2014.

Capacity stands at GBP58 million, provided by private Names.

6118 Barbican David Booth SPS providing whole account quota share support to Barbican Syndicate 1955 from January 1,

2014. Capacity stands at GBP25 million, provided 50:50 by ARIG and Labuan Re.

6119 Catlin Nicolas

Burkinshaw SPS providing whole account quota share support to Catlin Syndicate 2003 from January 1,

2014. Capacity stands at GBP14 million, provided by GIC Re, India.

5678 Vibe Bradley Knight Former RITC Syndicate 5678. Commenced underwriting on July 1, 2014 with capacity of GBP6

million, provided by Soros and Pine Brook.

Source: Company announcements, Lloyd’s, Aon Benfield Market Analysis

Three new managing agents have been established so far in 2014. ‘Turnkey’ managing agent Capita relinquished control of Allied World Syndicate 2232 to Allied World Managing Agency Ltd, effective April 1, 2014. Similarly, Asta relinquished control of SCOR Syndicate 2015 to The Channel Managing Agency Ltd and Sirius Syndicate 1945 to Sirius International Managing Agency Ltd, effective April 1 and July 1, respectively. Asta’s turnkey portfolio was partially replenished when it took over management of Skuld Syndicate 1897 from R&Q from April 3, 2014. In addition, RITC Syndicate Management Ltd was relaunched as Vibe Syndicate Management Ltd. At July 1, 2014, there were 94 active syndicates, overseen by 56 managing agents.

Mergers & Acquisitions Lloyd’s businesses continue to be attractive acquisition targets and a popular route for gaining a presence in the market, although the number of ‘available’ businesses is now limited. Three transactions have completed so far in 2014 and one recently announced deal is pending regulatory approval.

Exhibit 4: Corporate Activity in 2013/2014

Date Acquirer Target Comments

Apr 2013 Aquiline Equity Manager of Motor Syndicate 0218

May 2013 Markel Alterra Alterra Syndicate 1400 merged into Markel Syndicate 3000 effective January 1, 2014

Nov 2013 Enstar/Stone Point Atrium Manager of Syndicate 0609 Nov 2013 Lancashire Cathedral Manager of Syndicates 2010 and 3010

Dec 2013 AmTrust Sagicor Europe Manager of Syndicates 0044 and 1206

Dec 2013 ANV Jubilee Group Manager of Syndicates 0779 and 5820 Apr 2014 Enstar/Stone Point Torus Manager of Syndicate 1301

May 2014 NKSJ Canopius Manager of Syndicates 0260, 0958 and 4444

Jun 2014 QIC Antares Manager of Syndicate 1274

2H 2014* BTG Pactual Ariel Capital provider to Syndicate 1910

Source: Company announcements, Lloyd’s, Aon Benfield Market Analysis *Subject to Lloyd’s/regulatory approval (estimated completion date)


6

Lloyd’s Strategy New leadership has brought a fresh approach to the delivery of the Vision 2025

agenda, which focuses, among other things, on driving growth in developing

markets. A three year strategic plan released in April 2014 placed increased emphasis

on growing insurance business, through the establishment of a local presence where

required.

Management Changes Inga Beale, previously Chief Executive Officer of Canopius, replaced Richard Ward as Chief Executive Officer of Lloyd’s effective January 1, 2014. Long-standing Finance Director Luke Savage resigned in May 2014. His role has been split in two, with Shirine Khoury-Haq joining from Catlin as Director of Operations and John Parry stepping up as Acting Director of Finance.

Regulatory Background In the United Kingdom (UK), the precise impact of the new regime introduced in April 2013 continues to evolve. In response to increased scrutiny of the insurance industry’s behaviour by the Financial Conduct Authority (FCA), Lloyd’s has opened consultation on proposed minimum conduct standards for managing agents and published a new code of practice covering delegated underwriting. The latter area is of particular concern, given that the cover-holder model is an efficient way for the London market to access international business and generated 28% of total premium income in 2013.

Lloyd’s is on track to meet the revised Solvency II implementation date of January 1, 2016 and capital-setting is already in-line with the requirements of the new regime. However, the prospect of a referendum on the UK’s membership of the European Union (EU) by the end of 2017 has created new uncertainty. Lloyd’s has warned that withdrawal would be damaging, for the following reasons:

Lloyd’s might lose the ‘passporting’ rights that allow it to sell insurance and reinsurance business cross-border into other EU countries (and open offices there) without having to comply with additional local prudential regulations. Excluding the UK, Lloyd’s generates 11% of its premium income from the EU.

Lloyd’s might lose the ability to influence the regulations to which it will be subject. Over the years and as a result of intensive lobbying, EU rules have taken legislative account of Lloyd’s unique legal and economic structure and business model, to the market’s clear benefit.

Lloyd’s would no longer be able to shape trade liberalization and insurance regulatory discussions conducted by the European Commission with non-EU countries on behalf of all Member States.

At the global level, the International Association of Insurance Supervisors (IAIS) will shortly be publishing a list of systemically important reinsurers. Work is continuing on the development of a Common Framework (ComFrame) for regulating internationally active insurance groups and the IAIS is also engaged in developing global capital standards. Lloyd’s is monitoring these developments closely.

Vision 2025 In May 2012, Lloyd’s published ‘Vision 2025’, a long-term strategic plan aimed at ensuring that the market grows beyond the English-speaking world to become the true global hub for specialist insurance and reinsurance business. Inga Beale has reiterated that Lloyd’s intends to expand in underinsured, high-growth economies, with the aim of increasing premium income in the largest ten high-growth economies at a rate of which tracks or exceeds non-life premium growth.

Progress has already been made. The Lloyd’s Asia platform in Singapore now has 17 participating syndicates, 250 staff and revenues of USD600 million. Lloyd’s Chinese premiums grew by over 20% to USD370 million in 2013. The number of participating syndicates in Shanghai has increased to 10 and Lloyd’s has now applied to open a branch in Beijing. In Brazil, Lloyd’s is the second largest foreign player in the reinsurance market.

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7

Strategic Plan 2014-16 In April 2014, Lloyd’s published its strategic plan for the next three years, which seeks to promote a mindset based around more actively seeking business. As far as the developing markets are concerned, the main changes of emphasis relate to increasing the focus on insurance (in addition to reinsurance), establishing a local presence where this is a commercial or regulatory requirement for business access and ensuring that brokers and cover-holders find it as easy to access Lloyd’s as they would local market carriers. The main priorities are laid out below.

Market Oversight With no end in sight to the low interest rate environment, an emphasis on underwriting discipline continues to be Lloyd’s top priority. At the same time, the market oversight regime is required to operate in such a way that it supports Lloyd’s reputation for innovation and increases the market’s geographic footprint.

During 2014, the Corporation of Lloyd’s will:

Develop a framework that provides transparency around Lloyd’s supervisory approach and priorities to regulators and managing agents.

Implement a plan to comply with the Solvency II regime that will enable Lloyd’s to obtain approval of its Internal Model in 2015.

Complete a review and publish a suite of minimum standards for managing agents.

Diversity of Capital The Lloyd’s model was built around the management of third party capital and this remains a core competency of the market. The capital base already encompasses private, trade and institutional investment and this diversity is viewed as a strength. However, the increasing portability of capital and the growing relevance of capital markets and hedge funds in providing reinsurance solutions present competitive challenges.

Management’s main goals are to maintain Lloyd’s attractiveness to a range of capital providers, while increasing the weighting towards developing markets. During 2013, Lloyd’s facilitated members’ agents’ efforts to increase the supply of private ‘Names’ capital into the market through the authorisation of Syndicates 1729 and 2014 and Special Purpose Syndicate 6117. Investment from trade investors in developing markets was increased through the authorisation of Special Purpose Syndicates 6118 and 6119 (backed respectively by ARIG/Labuan Re and GIC Re). Finally, new relationships with institutional investors have been established through the authorisation of Syndicates 2357 (backed by Nephila) and the development of Syndicate5678 (backed Soros/Pine Brook).

Lloyd’s has acknowledged the impact ‘alternative’ capital is having on the reinsurance market and is looking at how best to access it in support of the underwriting of indemnity-based products. The aim is to be a ‘risk selector’, rather than a capital provider to a commoditised market. The use of parametric products as a means to access some of the under-insured high growth markets Lloyd’s is targeting as part of Vision 2025 has not been ruled out in the longer term.

International Growth Lloyd’s now believes that accessing cross-border reinsurance from London will not be sufficient to meet the aims of Vision 2025 and that increasing the market’s share of insurance business in developing markets is also required. In some cases, this will necessitate a shift away from Lloyd’s historic preferred models. Trading rights must be obtained and consideration of offices, local establishment and other access options in selected territories will be required. Business development activity will focus on forecast insurance market development and managing agent appetite.


Work with the Turkish Government to secure necessary legislative changes to enable a trading licence to be granted.

Conduct a feasibility study for insurance licence opportunities in Brazil. Conduct feasibility studies for a Lloyd’s presence in Indonesia, Malaysia and South Korea. Open a reinsurance-focused branch office in Beijing.


8

Investigate options for a regional reinsurance office in Latin America. Subject to regulatory position, investigate options in Colombia and Mexico. Work towards establishing a representative office in Dubai. Continue the pursuit of an onshore reinsurance presence in India.

Given current market conditions, short-term growth opportunities are said to lie in more traditional markets like North America, France and Germany, where premium rates have been more stable.

Distribution Lloyd’s is looking for growth in all existing distribution channels (brokers, cover-holders, service companies and local underwriting offices) in order to maximize the market’s access to business. Lloyd’s has also indicated that managing agents should consider new options, such as joint ventures with local (re)insurers.

Lloyd’s recognizes the key role that London and international brokers must play in accessing new business in developing markets. It is also acknowledged that larger brokers are making significant investments in their own networks and reviewing their business models.

Lloyd’s views recently introduced broker facilities as both an opportunity and a threat, but it is accepted that they can add value where there are appropriate checks and balances on any delegation of underwriting and claims authority. Many of the initiatives being pursued reflect a desire to increase efficiency and deal with a smaller number of carriers. Lloyd’s is responding by encouraging the use of consortia underwriting, which enables leading Lloyd’s specialists to offer significantly enlarged capacity by accepting risk on behalf of other syndicates. This is particularly relevant in the case of challenging risks such as cyber, where a coordinated approach is needed to muster the capacity necessary to compete with global peers.


Develop and execute mutually agreed action plans with at least ten of Lloyd’s largest producing brokers to drive market development activity.

Work with interested managing agents to develop consortia arrangements, where market and client demand exists.

Launch Lloyd’s Global Development Centre offering coordinated promotion of Lloyd’s to international brokers and clients.

Market Operations

The advantages of the subscription market will be negated if the complexity and additional cost of the associated processes cannot be addressed. The first components of the Central Services Refresh Programme will be delivered in 2014. The Exchange will be further embedded as the way of moving ACORD standard data messages and documents across the market, resulting in increased use of structured data by brokers and managing agents. Work is also underway on Project Genesis, which aims to develop a shared service which will take placement information and turn it into rich structured ACORD standard data and make this data available to the back office systems of all subscribing insurers. Finally the Claims Transformation Programme continues to strengthen the market’s claims-handling capabilities.

In 2013, Lloyd’s launched a new central processing facility for service companies operating on its Singapore platform called Insurance Services for Lloyd’s Asia. This will provide a single point of contact for back-office functions, easier payment processing and cost reductions.

Aon Benfield

9

2013 Results Lloyd’s reported a 16% increase in pre-tax profit to GBP3.2 billion for 2013.

Premium growth, lower major losses and higher prior year reserve releases were

partly offset by a weaker investment result. The return on capital employed stood at

16.2%, taking the five year average to 12.8%.

Exhibit 5: Lloyd’s Results

Income Statement

GBP (millions)

Full Year

2009

Full Year

2010

Full Year

2011

Full Year

2012

Full Year

2013

Year-on-Year

Change

Gross premiums written 21,973 22,592 23,477 25,500 26,106 2%

Net premiums written 17,218 17,656 18,472 19,435 20,231 4%

Net premiums earned 16,725 17,111 18,100 18,685 19,725 6%

Underwriting result 2,320 1,143 -1,237 1,661 2,605 57%

Investment result 1,769 1,258 955 1,311 839 -36%

Pre-tax result 3,868 2,195 -516 2,771 3,205 16%

Key Ratios

Full Year

2009

Full Year

2010

Full Year

2011

Full Year

2012

Full Year

2013

Year-on-Year

Change

Combined ratio 86.1% 93.3% 106.8% 91.1% 86.8% -4.3pp

Investment yield 3.9% 2.6% 1.9% 2.6% 1.6% -1.0pp

Return on capital* 23.9% 12.1% -2.8% 14.8% 16.2% 1.4pp

*Capital, reserves, subordinated loan notes and securities

Source: Lloyd’s, Aon Benfield Market Analysis

Premium Income Gross premiums written totaled GBP26.1 billion in 2013, up 2.4% on a reported basis and 1.5% at constant exchange rates. In the aggregate, risk-adjusted rates fell by 0.3%. Outwards reinsurance premiums fell by 3.1% to GBP5.9 billion, representing a cession rate of 22.5% (2012: 23.8%). Net premiums written rose by 4.1% to GBP20.2 billion, while net premiums earned rose by 5.6% to GBP19.7 billion.

Exhibit 6: Gross Premiums Written


In the Reinsurance segment, gross premiums written fell by 3.0% to GBP9.5 billion in 2013, representing 37% of the total portfolio (2012: 38%). The 5% reduction in property treaty volumes exceeded the internally monitored rate change, indicating that some business was actively declined due to unsatisfactory terms.

12.616.1 16.2 16.4

14.6 15.016.4 16.4

18.0

22.0 22.6 23.5 25.5 26.1

0

10

20

30

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GBP

(b

illio

ns)

Gross Premiums Written

Net Premiums Written


10

Direct classes generated gross premiums written of GBP16.6 billion in 2013, up 5.7% on the prior year. Growth in Property (+11.4%, driven by the US market), Casualty (+6.8%, partly due to increased demand for cyber liability cover), Marine (+5.0%) and Motor (+2.5%) was partially offset by reductions in Energy (-3.4%) and Aviation (-16.0%).

Exhibit 7: Gross Premiums Written by Segment


The geographic spread of the portfolio was North America 43% (2012: 41%), United Kingdom 18% (18%), Europe 15% (15%), Asia Pacific 12% (13%), Other Americas 8% (8%) and Rest of the World 4% (5%).

Exhibit 8: Gross Premiums Written by Region

*prior to 2007 Canada was included in Other Americas


14.6 15.016.4 16.4

18.0

22.0 22.6 23.525.5 26.1

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GBP

(b

illio

ns)

Life & adj

Aviation

Motor

Energy

Marine

Casualty

Property

Reinsurance

14.6 15.016.4 16.4

18.0

22.0 22.6 23.525.5 26.1

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GBP

(bi

llion

s)

Rest of World

Other Americas

Asia Pacific

Europe

UK

US & Canada*

Aon Benfield

11

Exhibit 9 shows the distribution of 2013 gross premiums written by region across the seven high-level business segments used by Lloyd’s for reporting purposes.

Exhibit 9: Lloyd’s Segment Breakdown by Region

2013

US &

Canada

Other

Americas UK Europe Asia Pacific

Rest of

World Total

Reinsurance 27% 75% 29% 37% 46% 61% 37%

Property 34% 7% 21% 15% 16% 8% 23%

Casualty 20% 7% 19% 18% 25% 10% 19%

Marine 7% 5% 6% 18% 7% 9% 8%

Energy 9% 4% 3% 7% 3% 5% 6%

Motor 1% 1% 20% 1% 1% 2% 5%

Aviation 2% 1% 2% 4% 2% 5% 2%

Total (GBP millions) 11,226 2,088 4,699 3,916 3,133 1,044 26,106

Source: Lloyd’s

Growth in net premium earned by segment in 2014 was as follows: Reinsurance +0.7%, Property +14.8%, Casualty +10.3%, Marine +5.7%, Energy +3.0%, Motor -4.5%, Aviation -7.8% and Life +5.8%.

Exhibit 10: Net Premiums Earned by Segment


11.812.7 13.1 13.8

16.7 17.118.1 18.7

19.7

0

5

10

15

20

25

2005 2006 2007 2008 2009 2010 2011 2012 2013

GBP

(bi

llion

s)

Life & adj

Aviation

Motor

Energy

Marine

Casualty

Property

Reinsurance


12

Underwriting Performance Lloyd’s combined ratio improved by 4.3 percentage points to 86.8% in 2013, driven by reduced major losses and more favourable development of prior year reserves. The five-year average stands at 92.8%.

Exhibit 11: Lloyd’s Combined Ratio History


Underwriting profit stood at GBP2.6 billion (2012: GBP1.7 billion), the accident year contributing GBP1.0 billion (GBP0.3 billion) and prior year reserve releases GBP1.6 billion (GBP1.4 billion). Excluding major claims, the accident year combined ratio rose by 1.8 percentage points to 90.4%, the weakest result since 2002. This was attributed to increasingly competitive market conditions, combined with foreign exchange losses.

Exhibit 12: Composition of Lloyd’s Combined Ratio


*Excluding major losses

Lloyd’s reported reserve releases for the ninth successive year, supported by underlying claims experience being more favourable than expected across most classes and years of account. The development of business written in the soft market conditions of 1997-2001 continues to be within expectations and initial claims estimates for the major catastrophe events of 2011 have in aggregate proved to be adequate. Limited deterioration has been seen on financial institutions and general liability business written in more recent years and on the Costa Concordia and Deepwater Horizon events. Only in the Motor segment was overall reserve strengthening required, with Lloyd’s warning that any possible alteration to the discount rate used to determine large awards in bodily injury claims, in addition to high claims inflation levels, could affect current claims reserves in the future.

Major losses halved to GBP873 million in 2013, split GBP531 million to natural catastrophes (the largest being the Alberta floods at GBP120 million) and GBP342 million to man-made losses. These added 4.4 percentage points to the combined ratio, well below the five and ten year averages of 10.9% and 11.3%, respectively.

96.6%

111.8%

83.1% 84.0%91.3% 86.1%

93.3%106.8%

91.1% 86.8%

-10%

10%

30%

50%

70%

90%

110%

130%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Attritional Loss Ratio Expense Ratio Major Losses Prior Year Reserve Development

AttritionalLossRatio

52.2%

90.4% 86.8%

Expense Ratio

38.2%

4.4% -8.0%

Accidentyear*

Majorlosses

Reservereleases

Calendaryear

2013AttritionalLossRatio

51.5%

88.6% 91.1%

Expense Ratio

37.1%

9.7% -7.2%

0%

20%

40%

60%

80%

100%

Accidentyear*

Majorlosses

Reservereleases

Calendaryear

2012

Aon Benfield

13

Exhibit 13: Lloyd’s Major Loss History

*Indexed to 2013


Segmental Results Underwriting profits were reported in all segments except Motor in 2013. The largest contribution came from Reinsurance at GBP1.3 billion, representing 51% of the total for the market as a whole.

Exhibit 14: Combined Ratios by Segment


Stripping out prior year reserve adjustments, four of the segments reported underwriting losses in 2013. The accident year combined ratios were: Aviation 105.1%, Motor 104.4%, Marine 102.8%, Casualty 101.2%, Energy 94.3%, Property 93.4% and Reinsurance 91.7%.

Exhibit 15: Segmental Reserve Releases as a % of Net Premium Earned


A ten year summary of Lloyd’s results by segment is included in Appendix 3.

3.5

0.30.2

1.6

4.3

0.1 0.6

1.9

0.4

2.3

4.8

1.8

0.9

0%

10%

20%

30%

40%

50%

60%

0

1

2

3

4

5

6

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GBP

(b

illio

ns)

Lloyd'sMajorClaims*

MajorClaims as %of NPE

MajorClaims as %of Capital

108.6% 98.8% 95.4%85.0% 83.0% 81.4% 80.5%

0%

20%

40%

60%

80%

100%

120%

Motor Casualty Marine Property Energy Aviation Reinsurance

2012 2013

23.7%

11.3% 11.2%8.4% 7.4%

2.4%

-4.2%-5%

0%

5%

10%

15%

20%

25%

Aviation Energy Reinsurance Property Marine Casualty Motor

2012 2013


14

Investment Return Lloyd’s investments produced a total return of just GBP839 million or 1.6% in 2013, down from GBP1.3 billion or 2.6% in 2012, driven by the low interest rate environment and mark-to-market losses on bonds caused by rising yields in May and June. The three components of the result are shown in Exhibit 16.

Exhibit 16: Investment Return


The syndicate investment return fell by 62% to GBP379 million in 2013, a yield of just 1.1% (2012: 3.0%). This included GBP255 million of realized and unrealized investment losses (versus gains of GBP310 million in 2012). Only a third of the 72 non-life syndicates achieved a total yield of more than 1.0%. Very liquid and short-duration asset classes continue to dominate portfolios, although investment risk has increased in some cases. The average duration of syndicate fixed income securities was 2.3 years (2012: 2.4 years), compared with an average duration for claims provisions of approximately 3 years.

Members’ capital is generally held centrally at Lloyd’s, but a proportion is maintained in investment assets and managed at members’ discretion. A notional return on Funds at Lloyd’s (FAL) is included in the financial statements, based on the investment disposition of the relevant assets and market index returns. This doubled to GBP400 million in 2013, equating to a yield of 2.5% (2012: 1.3%), driven by a 14% allocation to equities.

The return generated by mutually-held central assets almost halved to GBP60 million in 2013, a yield of 2.3% (2012: 4.5%). Most of these investments are held within the Central Fund, the majority being fixed interest securities of high credit quality. Developed market equities achieved strong returns, driving the overall positive result. However emerging market equities, high yield bonds and commodities performed poorly.

3.6%

4.3%4.7%

5.6%

2.5%

3.9%

2.6%

1.9%

2.6%

1.6%

0%

1%

2%

3%

4%

5%

6%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GBP

(bi

llion

s)

Investment returnon Society assets(GBP)

Notional returnon Funds atLloyd's (GBP)

Syndicateinvestment return(GBP)

Investment return(%)

Aon Benfield

15

Pre-Tax Results Lloyd’s reported a 16% increase in pre-tax profit to GBP3.2 billion in 2013. Prior year reserve releases have contributed strongly to overall results in the past several years, as can clearly be seen in Exhibit 17. In 2013, these represented 49% of Lloyd’s total pre-tax profit.

Exhibit 17: Pre-Tax Result Composition


The pre-tax return on net resources (capital, reserves, subordinated loan notes and securities) was 16.2% in 2013, taking the five year average to 12.8%.

Exhibit 18: Pre-Tax Return on Average Net Resources


1.4

-0.1

3.7 3.8

1.9

3.9

2.2

-0.5

2.83.2

-3

-2

-1

0

1

2

3

4

5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GBP

(bi

llion

s)

Accident yearunderwriting result

Prior year reservereleases

Investment result

Other

Pre-tax result

12.3%

-0.9%

31.4% 29.3%

13.7%

23.9%

12.1%

-2.8%

14.8% 16.2%

-10%

0%

10%

20%

30%

40%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


16

Balance Sheet Lloyd’s balance sheet strength has been recognized by the leading rating agencies.

Overall investment allocation remains relatively conservative, capital resources are at

an all-time high and legacy issues appear contained.

Exhibit 19: Year-End Balance Sheet Summary

Balance Sheet

GBP (millions)

Dec

2009

Dec

2010

Dec

2011

Dec

2012

Dec

2013

Year-on-Year

Change

Cash and investments 46,254 48,483 51,415 51,767 51,494 -1%

Gross technical provisions 43,544 46,428 51,918 51,517 49,821 -3%

Reinsurers’ share 9,931 10,237 12,153 12,439 11,466 -8%

Net technical provisions 33,613 36,191 39,765 39,078 38,355 -2%

Net resources* 19,121 19,121 19,114 20,193 21,107 5%

*Capital, reserves, subordinated loan notes and securities


Investments Cash and investments totaled GBP51.5 billion at December 31, 2013, a reduction of 0.5% from the end of 2012. Allocations to corporate bonds and equities were increased at the expense of government bonds.

Exhibit 20: Investment Allocation at December 31, 2013

*Includes supra nationals and government agencies


Increased risk appetite was evident within the Central Fund, which accounts for 5% of Lloyd’s total cash and investments. The allocation to government bonds fell from 42% to 26%, with part of the portfolio liquidated to fund a GBP180 million subordinated debt repurchase in May 2013. The allocation to global equities was increased from 5% to 13%.

40%

27%

26%

6%1%

Total Invested Assets: GBP51.5 billion

Corporate bonds

Government bonds*

Cash and LOCs

Equities

Alternative investments

41%

26%

13%

5%

5%4%

<2%>

Central Assets: GBP2.4 billion

Fixed income - corporateFixed income - government*Global equityEmerging markets & high yield bondsHedge fundsEmerging equityProperty equityCashCommodities

Aon Benfield

17

Technical Reserves Gross provisions for outstanding claims fell by 6% to GBP38.0 billion at the end of 2013, while reinsurers’ share declined by 11% to GBP9.6 billion. The ratio of claims reserves to overall net resources stood at 180% on a gross basis and 135% net of reinsurance. The number of ‘orphan’ years of account in run-off reduced from 8 to 6 over the course of the year.

Exhibit 21: Claims Reserve Leverage


Capital Lloyd’s is a partially mutualized market and does not hold conventional equity. The components of the capital base are shown in Exhibit 22. Both Funds at Lloyd’s (FAL) and members’ balances operate on a several liability basis. Overall net resources rose by 5% to a record level of GBP21.1 billion at December 31, 2013. Solvency deficits fell to GBP34 million at the end of 2013, from GBP94 million at the end of 2012, with no new exposures to the Central Fund. Assets admissible for solvency purposes stood at almost GBP3.2 billion.

Exhibit 22: Lloyd’s Capital Base


FAL represents capital lodged and held in trust to support members’ underwriting commitments. The total fell by 4% to GBP15.1 billion at December 31, 2013, of which 49% was held in the form of letters of credit (LOCs) and bank guarantees. Many members seek to match their capital disposition by currency against their peak exposures. At the end of 2013, approximately half of all capital deployed at Lloyd’s was provided in US dollars.

Amounts reported under members’ balances almost doubled to GBP3.6 billion, including GBP2.5 billion of underwriting capital (members that participate on only one syndicate have the option of holding supporting capital in their syndicate’s premium trust funds, potentially enhancing investment returns). The remainder represented the net profit/(loss) to be distributed/(collected) by syndicates to/(from) capital providers.

Central assets fell by 4% to GBP2.4 billion, including GBP0.7 billion of subordinated loan notes and perpetual capital securities. Mutual assets stood at GBP1.7 billion, including the Central Fund at just over GBP1.5 billion.

237%

343%

228%

200%

252%

178%

190%

216%

199%

180%

12 1113 14 15

19 19 19 20 21

29

38

30 29

3834

36

41 4038

0

10

20

30

40

50

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GBP

(b

illio

ns)

Reinsurers'share of claimsprovision

Net claimsprovision

Net resources

12.2 11.013.3

14.5 15.3

19.1 19.1 19.120.2 21.1

0

5

10

15

20

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GBP

(bi

llion

s)

Subordinatedliabilities

Central assets

Members' balances

Funds at Lloyd's

Solvency surplus


18

The Chain of Security The resources available to pay claims at Lloyd’s are linked together in a ‘Chain of Security’ as follows:

1. Syndicate assets: Premium Trust Funds (PTFs) of GBP42.0 billion. All premiums received by syndicates are held in trust as the first resource for paying policyholders’ claims. Until all liabilities have been provided for, no profits can be released. Every year, each syndicate’s reserves for future liabilities are independently audited and receive an actuarial review.

2. Members’ assets: FAL of GBP15.1 billion. Each member, whether corporate or individual, must provide sufficient capital to support their underwriting at Lloyd’s. The capital is held in trust for the benefit of policyholders, but is not available to support the liabilities of other members. Assets supporting FAL requirements must be liquid but may include LOCs and bank guarantees.

3. Central resources: Society of Lloyd’s net assets of GBP1.7 billion, plus subordinated debt of GBP0.7 billion.

Should the first link need additional funds, the second link ensures members have resources available. In the rare event that these two links are insufficient, central resources can be made available at the discretion of the Council of Lloyd’s to ensure valid claims are paid.

Exhibit 23: Lloyd’s Chain of Security at December 31, 2013


Capital Setting at Lloyd’s From January 2013, managing agents are required to use Solvency II internal models to determine each syndicate’s Individual Capital Assessment (ICA). This is the level of capital required to cover underlying business risks at a 99.5% confidence level. Lloyd’s reviews all ICAs to assess the adequacy of the proposed capital level. When agreed, each ICA is then ‘uplifted’ by 35% to ensure there is sufficient capital to support the market’s ratings and financial strength. This uplifted ICA is known as the syndicate’s Economic Capital Assessment (ECA) and drives members’ capital levels.

Central assets are currently managed to a minimum of 250% of the ICA prepared centrally for the market as a whole. The Corporation regularly runs detailed analyses aiming to balance the need for financial security with the need for cost-effective mutuality of capital. Members’ contributions to the Central Fund remain at 0.5% of gross premiums written for 2014.

Funds at Lloyd's (underlying capital set by Lloyd's)GBP15,088 million

Premium Trust FundsGBP41,990 million

Subordinated Debt GBP721 million

Central Fund GBP1,513 millionCorporation Assets GBP150 million

Callable Layer (=3%)GBP788 million

Central Assets

Members'Assets

Several assets Mutual assets Contingent

Syndicate Assets

Aon Benfield

19

Ratings After a long period of rating stability, Lloyd’s looks likely to be rewarded for its

improved operating performance and strengthened balance sheet.

Exhibit 24: Lloyd’s Market Ratings

Rating Outlook Action

A.M. Best A+ (Excellent) Positive Positive outlook assigned July 19, 2013

Fitch AA- (Very Strong) Stable Upgraded June 10, 2014

Standard & Poor's A+ (Strong) Positive Positive outlook assigned August 28, 2012

Source: Rating agencies

Lloyd’s Market Ratings On June 10, 2014, Fitch upgraded their financial strength rating by one notch to ‘AA-’ (Very Strong), reflecting expectations of improved cross-cycle underwriting performance, a level of risk-adjusted capitalization that is in line with the new rating level, low financial leverage and Lloyd’s significant market position in both insurance and reinsurance classes. A.M. Best and Standard & Poor’s (S&P) ratings of the Lloyd’s market were affirmed with positive outlooks on July 24, 2014 and November 27, 2013 respectively.

Standalone Syndicate Ratings/Rankings Three of the leading rating agencies assign ratings or rankings to individual syndicates, all of which are captured in Exhibit 25. The methodologies differ widely and none of them is endorsed by Lloyd’s.

A.M. Best Syndicate financial strength ratings are assigned through the application of A.M. Best’s interactive rating process. They are a complementary analytical service to A.M. Best’s rating on the overall Lloyd’s market and should be considered only in this context. Syndicate ratings include the modifier ‘s’, and the rating scale follows that used in the company market.

Moody’s Syndicate Continuity Opinions are based on an assessment of both quantitative and qualitative information and indicate the rating agency’s view of a syndicate’s relative long-run potential future performance and continuity characteristics based on currently known factors. Some are based solely on public information. The rating scale ranges from Excellent (‘A+’) to Below Average (anything below ‘B’).

Standard & Poor's Lloyd’s Syndicate Assessments (LSAs) rely on both qualitative and quantitative analysis to evaluate the relative dependence of a syndicate on Lloyd's infrastructure and the Central Fund. The assessment reflects the syndicate's ability to offer business continuity to policyholders, ranked on a scale of ‘1’ to ‘5’ (where ‘5’ denotes the highest levels of continuity). LSAs carry a ‘pi’ subscript where they are based solely on public information.


20

Exhibit 25: Lloyd’s Syndicate Ratings/Rankings

Syndicate

Number Managing Agent

A.M. Best

Financial Strength

Rating

Moody’s

Continuity

Opinion

S&P Lloyd’s

Syndicate

Assessment 0033 Hiscox Syndicates Ltd A s A -

0218 Equity Syndicate Management Ltd - B -

0260 Canopius Managing Agents Ltd - B- -

0308 R J Kiln and Co Ltd - B 2pi

0318 Beaufort Underwriting Agency Ltd - B+ 3pi

0382 Hardy (Underwriting Agencies) Ltd - B* 3pi

0386 QBE Underwriting Ltd - A 5/Stable

0435 Faraday Underwriting Ltd - A-* 4pi

0457 Munich Re Underwriting Ltd - B+ 3pi

0510 R J Kiln and Co Ltd A s A- 4pi

0557 R J Kiln and Co Ltd - B+ 2pi

0609 Atrium Underwriters Ltd - A- -

0623 Beazley Furlonge Ltd A s A- -

0727 S A Meacock & Co Ltd - B 2pi

0779 ANV Syndicates Ltd - B 2pi

0780 Advent Underwriting Ltd - B- -

0958 Canopius Managing Agents Ltd - B+ -

1084 Chaucer Syndicates Ltd - B+ 3pi

1176 Chaucer Syndicates Ltd - B+ 3pi

1183 Talbot Underwriting Ltd A s B+ -

1200 Argo Managing Agency - - -

1206 AmTrust at Lloyd's Ltd - C+* 1pi

1209 XL London Market Ltd - B+* -

1218 Newline Underwriting Management Ltd - B* 2pi

1221 Navigators Underwriting Agency Ltd - B+ -

1225 AEGIS Managing Agency Ltd A s - 3pi

1301 Torus Underwriting Management Ltd - - 2pi

1414 Ascot Underwriting Ltd - - 3pi

1919 Starr Managing Agents Ltd - - 2pi

2001 Amlin Underwriting Ltd A+ s A 4+/Stable

2003 Catlin Underwriting Agencies Ltd A s A-* 4+/Stable

2007 Novae Syndicates Ltd - B+ 3-/Stable

2010 Cathedral Underwriting Agencies Ltd A s - 4pi

2121 Argenta Syndicate Management Ltd - - 2pi

2468 Marketform Managing Agency Ltd - - 1pi

2488 ACE Underwriting Agencies Ltd - A- -

2623 Beazley Furlonge Ltd A s A- -

2791 Managing Agency Partners Ltd - A- 3pi

2987 Brit Syndicates Ltd - B+ 3pi

2999 QBE Underwriting Ltd - A- 5/Stable

3000 Markel Syndicate Management Ltd A s A- 3pi

3210 Mitsui Sumitomo Insurance Underwriting at Lloyd's Ltd - B+ -

3334 Sportscover Underwriting Ltd - - 1pi

3622 Beazley Furlonge Ltd A s - -

3623 Beazley Furlonge Ltd A s - -

4020 Ark Syndicate Management Ltd - - 3pi

4242 Asta Managing Agency Ltd - - 2pi

4444 Canopius Managing Agents Ltd - B+ 3+/Stable

4472 Liberty Syndicate Management Ltd - B+* -

Source: Rating Agencies *Continuity Opinion based solely on public information or limited non-public information

Ratings/rankings as at July 22, 2014

Aon Benfield

21

Appendix 1 – Top 40 Reinsurers at Lloyd’s The Reinsurance segment represented 37% of gross premiums written at Lloyd’s in 2013. This

section focuses on the performance of the 40 syndicates with the largest inwards reinsurance

books, based on disclosure in the 2013 syndicate accounts.

Exhibit 26: 2013 Gross Premiums Written

Source: Syndicate annual reports, Aon Benfield Market Analysis

Exhibit 27: 2013 Reinsurance Gross Premiums Written, % Change


0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

GBP

(m

illio

ns)

Insurance (Direct)

Reinsurance (Facultative and Treaty)

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%


22

Exhibit 28: 2013 Combined Ratios


Exhibit 29: Five Year Average Combined Ratios (2009–2013)

*Four year average


0%

20%

40%

60%

80%

100%

120%Loss Ratio

Expense Ratio

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

Aon Benfield

23

Exhibit 30: 2013 Pre-Tax Results as % of Net Premiums Earned


Exhibit 31: Five Year Average Pre-Tax Results as % of Net Premiums Earned (2009–2013)

*Four year average


-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%


24

Appendix 2 – Active Syndicate Listing

Syn.

No.

Managing

Agent Agency Owner*

Largest Capital

Provider in 2014*

2013 Gross

Premiums Written

GBP million

2013

Combined

Ratio

2013 Pre-

Tax Result

as % of NPE

2014

Capacity

GBP million** 0033 Hiscox Hiscox Hiscox (72.5%) 823 75.2% 26.6% 1,000

0044 AmTrust AmTrust AmTrust 9 90.4% -3.6% 10

0218 ERS Aquiline Aquiline (66.7%) 406 107.7% -5.0% 438

0260 Canopius NKSJ NKSJ (92.8%) 67 105.9% -3.5% 70

0308 Kiln Tokio Marine Tokio Marine (50.4%) 31 94.0% 6.6% 32

0318 Beaufort Munich Re Munich Re (91.2%) 149 78.9% 22.1% 235

0382 Hardy CNA CNA 291 91.0% 9.8% 330

0386 QBE QBE QBE (69.6%) 449 94.4% 10.3% 413

0435 Faraday Berkshire Berkshire 234 43.6% 59.3% 325

0457 Munich Re Munich Re Munich Re 511 88.2% 12.4% 425

0510 Kiln Tokio Marine Tokio Marine (55.2%) 1,169 87.5% 13.3% 1,064

0557 Kiln Tokio Marine Hampden (52.6%) 30 57.0% 44.1% 39

0566 QBE Operates as a trading division of Syndicate 2999

0609 Atrium Enstar/Stone Point Hampden (36.5%) 380 82.1% 17.9% 420

0623 Beazley Beazley Hampden (53.6%) 240 78.3% 20.4% 243

0626 Hiscox Operates as a trading division of Syndicate 0033

0727 Meacock Family-owned Hampden (43.2%) 70 87.0% 16.7% 81

0779 ANV ANV Hampden (40.0%) 26 87.8% 12.9% 22

0780 Advent Fairfax Fairfax 135 103.2% 2.6% 200

0887 Amlin Operates as a trading division of Syndicate 2001

0958 Canopius NKSJ NKSJ (69.0%) 172 98.2% 4.0% 175


1084 Chaucer Hanover Ins Hanover Ins 888 88.7% 11.9% 860

1110 Argenta Argenta ProSight Specialty 103 117.3% -16.7% 150

1176 Chaucer Hanover Ins Hanover Ins (57.0%) 27 45.1% 56.4% 32

1183 Talbot Validus Validus 698 80.6% 19.8% 625

1200 Argo Argo Argo (68.9%) 425 93.0% 7.7% 350

1206 AmTrust AmTrust AmTrust 183 115.1% -13.8% 200

1209 XL XL XL 307 93.5% 6.2% 300

1218 Newline Fairfax Fairfax 106 97.4% 20.2% 105

1221 Navigators Navigators Navigators 235 87.8% 11.9% 215

1225 AEGIS AEGIS AEGIS (93.0%) 367 87.1% 15.8% 330

1274 Antares Qatar Ins Qatar Ins (75.6%) 246 88.3% 12.7% 242

1301 Torus Enstar/Stone Point Torus (64.0%) 148 104.0% -3.8% 180

1414 Ascot AIG (20%) AIG (97.8%) 625 80.2% 20.5% 650

1458 RenRe RenRe RenRe 141 95.8% 4.3% 169

1686 Asta Tawa/Paraline/Skuld Axis Commenced trading January 1, 2014 119

1729 Asta Tawa/Paraline/Skuld ProAssurance (57.6%) Commenced trading January 1, 2014 75

1861 ANV ANV ANV 155 105.3% -4.8% 175

1880 Kiln Tokio Marine Tokio Marine 237 48.9% 52.6% 360

1882 Chubb Chubb Chubb 81 120.5% -19.7% 85


1897 Asta Tawa/Paraline/Skuld Skuld (66.7%) 75 110.6% -10.6% 85

1910 Asta Tawa/Paraline/Skuld BTG Pactual† 204 57.9% 43.3% 174

1919 Starr Starr International Starr International 289 85.6% 15.5% 245

1945 Sirius White Mountains White Mountains 59 107.6% -7.4% 99

1955 Barbican Barbican Barbican 279 95.2% 5.2% 192

1967 W.R. Berkley W.R. Berkley W.R. Berkley 136 94.0% 6.2% 185

1969 ANV ANV Argenta (79.8%) 121 97.2% 3.2% 140

1980 Liberty Operates as a trading division of Syndicate 4472

*100% unless otherwise stated **Unofficial and subject to change †Subject to Lloyd’s/regulatory approval 1/2

Aon Benfield

25

Syn.

No.

Managing

Agent Agency Owner*

Largest Capital Provider

in 2014*

2013 Gross

Premiums Written

GBPmn

2013

Combined

Ratio

2013 Pre-

Tax Result

as % of NPE

2014

Capacity

GBPmn** 1991 R&Q R&Q Argenta (21.2%) 5 n.m. n.m. 150

2001 Amlin Amlin Amlin 1,472 92.1% 12.8% 1,400

2003 Catlin Catlin Catlin 1,922 93.0% 9.9% 1,391

2007 Novae Novae Novae (90.0%) 608 93.4% 8.2% 575

2010 Cathedral Lancashire Lancashire (57.8%) 273 66.9% 34.0% 350

2012 Arch Arch Arch 158 99.0% -5.0% 200

2014 Pembroke Ironshore Hampden (81.5%) Formerly SPS 6110, re-launched from January 1, 2014 75

2015 Channel SCOR SCOR 124 112.2% -12.0% 155

2088 Catlin Catlin China Re 49 102.0% -0.2% 50

2121 Argenta Argenta Argenta (86.9%) 239 87.4% 13.6% 240

2232 Allied World Allied World Allied World 96 116.6% -15.5% 121

2357 Asta Tawa/Paraline/Skuld Nephila 9 33.6% 66.5% 73

2468 Marketform American Financial American Financial (70.0%) 186 99.1% 5.7% 175

2488 ACE ACE ACE 371 81.2% 19.7% 350

2525 Asta Tawa/Paraline/Skuld Hampden (45.3%) 39 67.6% 34.2% 42

2526 Asta Tawa/Paraline/Skuld AmTrust (60.8%) 53 125.1% -23.3% 64

2623 Beazley Beazley Beazley 1,093 78.0% 24.9% 1,107

2791 MAP MAP (90.0%) Hampden (38.1%) 261 69.6% 35.3% 453

2987 Brit Brit Brit 1,183 93.6% 9.4% 1,000

2999 QBE QBE QBE 1,118 80.7% 21.0% 1,060

3000 Markel Markel Markel 369 88.8% 16.9% 500

3002 Catlin Catlin Catlin 10 88.7% 11.3% 14

3010 Cathedral Lancashire Lancashire 27 108.8% -8.6% 30

3210 Mitsui MS&AD MS&AD 343 90.3% 12.3% 340

3334 Sportscover Sportscover Wild Goose 88 108.9% -8.3% 46

3622 Beazley Beazley Beazley 13 115.0% -15.3% 16

3623 Beazley Beazley Beazley 134 105.2% -5.3% 140

3624 Hiscox Hiscox Hiscox 306 100.8% -0.4% 300

3902 Ark Operates as a trading division of Syndicate 4020

4000 Pembroke Ironshore Ironshore 273 89.9% 11.0% 252

4020 Ark Ark Ark 359 86.0% 18.1% 340

4141 HCC HCC HCC 87 85.1% 16.2% 120

4242 Asta Tawa/Paraline/Skuld Paraline (15.7%) 76 89.2% 10.9% 80

4444 Canopius NKSJ NKSJ (74.0%) 704 89.8% 12.5% 700

4472 Liberty Liberty Liberty 1,268 94.7% 6.5% 1,175

4711 Aspen Aspen Aspen 279 97.4% 3.0% 365

5000 Travelers Travelers Travelers 331 79.9% 21.0% 300

5151 Montpelier Montpelier Montpelier 150 90.0% 13.0% 180

5678 Vibe Soros/Pine Brook Soros/Pine Brook Commenced trading July 1, 2014 6

5820 ANV ANV ANV (51.1%) 130 83.5% 16.8% 131

6103 MAP MAP (90.0%) Hampden (55.1%) 21 18.6% 80.3% 30

6104 Hiscox Hiscox Hampden (45.9%) 43 43.0% 58.6% 72

6105 Ark Ark Argenta (43.3%) 13 87.4% 15.2% 60

6107 Beazley Beazley Hampden (49.9%) 29 61.0% 35.8% 19

6111 Catlin Catlin Hampden (58.0%) 108 96.0% 5.2% 106

6112 Catlin Catlin Everest Re 38 96.0% 5.4% 31

6113 Barbican Barbican Hampden (35.8%) 23 60.6% 40.1% 34

6115 Canopius NKSJ NKSJ (50.0%) 71 108.7% -8.5% 70

6117 Asta Tawa/Paraline/Skuld Hampden Commenced trading January 1, 2014 58

6118 Barbican Barbican ARIG/Labuan Re Commenced trading January 1, 2014 25

6119 Catlin Catlin GIC Commenced trading January 1, 2014 14

*100% unless otherwise stated **Unofficial and subject to change †Subject to Lloyd’s/regulatory approval

Hampden and Argenta are Lloyd's members' agents acting mainly on behalf of third party capital providers

Source: Lloyd's, Aon Benfield Market Analysis


26

Appendix 3 – Lloyd’s Ten Year Segmental Results Reinsurance Segment 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gross Premiums Written (GBP million) 4,353 5,261 5,557 5,453 6,298 7,989 8,388 8,813 9,763 9,468

Underwriting Result (GBP million) 177 -1,307 802 790 734 1,245 590 -1,945 605 1,321

Combined Ratio 95% 135% 81% 82% 84% 78% 90% 131% 91% 81%

Prior Year Reserve Release -5% -1% -4% 5% 12% 6% 10% 8% 7% 11%

Accident Year Combined Ratio 89% 134% 77% 86% 96% 84% 100% 138% 98% 92%

Property Segment 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


Underwriting Result (GBP million) 113 -457 495 408 103 292 283 -10 221 681

Combined Ratio 96% 119% 82% 86% 97% 92% 92% 100% 94% 85%

Prior Year Reserve Release 1% 1% 4% 6% 7% 3% 7% 6% 8% 8%


Casualty Segment 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


Underwriting Result (GBP million) -278 179 327 205 148 316 113 117 152 47

Combined Ratio 109% 94% 89% 93% 95% 91% 97% 97% 96% 99%

Prior Year Reserve Release -11% -4% 7% 9% 9% 8% 5% 2% 5% 2%


Marine Segment 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gross Premiums Written (GBP million) 977 1,017 1,153 1,226 1,334 1,606 1,671 1,968 2,090 2,195

Underwriting Result (GBP million) 101 73 105 127 160 147 128 89 2 84

Combined Ratio 87% 91% 89% 87% 85% 89% 91% 95% 100% 95%



Energy Segment 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gross Premiums Written (GBP million) 739 804 1,125 1,019 1,150 1,371 1,419 1,523 1,727 1,668

Underwriting Result (GBP million) 96 -238 9 206 -194 157 164 130 275 201

Combined Ratio 83% 147% 99% 73% 124% 84% 83% 88% 76% 83%

Prior Year Reserve Release 8% 2% -15% 4% 8% 6% 18% 10% 19% 11%


Motor Segment 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gross Premiums Written (GBP million) 1,016 895 923 983 939 1,118 1,103 1,187 1,155 1,184

Underwriting Result (GBP million) 61 82 30 14 3 -83 -520 -82 -42 -87

Combined Ratio 93% 91% 96% 98% 100% 108% 152% 107% 104% 109%

Prior Year Reserve Release % 9% 6% 5% 6% 1% -4% -37% 2% 1% -4%


Aviation Segment 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gross Premiums Written (GBP million) 510 375 393 464 481 551 642 708 669 562

Underwriting Result (GBP million) 102 96 97 50 48 10 115 196 170 90

Combined Ratio 73% 71% 65% 85% 87% 97% 75% 65% 68% 81%



Source: Lloyd’s

27

Contact Information Should you have any questions about this report, please contact [email protected], or a member of Aon Benfield Analytics, including:

Mike Van Slooten [email protected]

Eleanore Obst [email protected]

Mike McClane [email protected]

Aon Benfield 55 Bishopsgate London EC2N 3BD t +44 (0)20 7088 0044 f +44 (0)20 7575 7001 aonbenfield.com

Aon UK Limited trading as Aon Benfield (for itself and on behalf of each subsidiary company of Aon Plc) (“Aon Benfield”) reserves all rights to the content of this report. This document is intended as a courtesy to the recipient for general information and marketing purposes only and should not be construed as giving advice or opinions of any kind (including but not limited to insurance, tax, regulatory or legal advice). The contents of this document are based on publicly available information and/or third party sources in respect of which Aon Benfield has no control and which have not necessarily been verified. The content of this document is made available without warranty of any kind and without any other assurance whatsoever as to its completeness or accuracy. Aon Benfield disclaims any legal or other liability to any person or organization or any other recipient of this document (together a "Recipient") for loss or damage caused by or resulting from any reliance placed on this document or its contents by such Recipient.