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OPERATING AND FINANCIAL REVIEW / BUSINESS CONTEXT / AMLIN & LLOYDS
Currently, all of Amlin’s insurance business is
underwritten through its wholly owned Lloyd’s
operation, Syndicate 2001, which is the largest
independent business in the Lloyd’s market.
Amlin’s share of the Lloyd’s market was 7% in
2004, as measured by underwriting capacity.
In the specialist sector of the insurance market
occupied by Lloyd’s businesses, often dealing
with complex commercial risks for large
international corporations or the reinsurance of
volatile exposures, the financial security of an
insurer is a major influencing factor in the
selection of carriers by brokers and clients.
Lloyd’s position in the global insurance market
has been particularly vibrant and successful of
late, providing an excellent environment for
Amlin. Its operating performance has been
strong and its relative Insurance Financial
Strength Rating, as assessed by Standard &
Poor’s, has strengthened when compared with
its major international competitors. A M Best,
another rating agency that is widely used by
brokers and clients in the United States,
upgraded Lloyd’s from ‘A-’ to ‘A’, citing “Lloyd’s
improving prospective capitalisation, strong
operating performance, its global reach and
improvements in risk management”.
Much of the business written is in the
“subscription” market, where individual
insurers underwrite a proportion of the policy
rather than the entire risk. Substantial available
market capacity allows brokers to efficiently
place this type of insurance in the London
market. In 2004 Lloyd’s total underwriting
capacity grew to a record £15 billion, up 4%
from 2003 and 49% since 2000.
As can be seen below, partly as a result of a
successful capacity offer made in 2002, Amlin
has grown its capacity more than the market
over this period, by 222%.
Both Lloyd’s and Amlin source close to 70%
of their business from North America and the
United Kingdom. Lloyd’s is the second largest
surplus lines insurer in the United States after
AIG and in the UK has an approximate 10%
share of the domestic market.
Globally, Lloyd’s is particularly strong in the
marine and aviation markets with shares of
approximately 13% and 21% respectively, and
in the area of underwriting large commercial
risk, its global market share is estimated at
approximately 5%.
In each of its chosen fields of expertise,
Amlin enjoys a leading market position as
shown in the following table:
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AMLIN'S MARKET SHARE OF LLOYDS (2003)
Source: Moody's
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CLASS |
MARKET
SHARE |
MARKET
RANKING
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Reinsurance |
11.0% |
1st |
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Motor |
12.2% |
3rd |
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Aviation |
8.5% |
4th |
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Marine |
4.7% |
6th |
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Property |
4.7% |
8th |
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Liability |
4.1% |
11th |
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