ANV Syndicates Limited

Managing Agent Name:   ANV Syndicates Limited

Subject: Disclosures Auction Season 2017

Syndicate Affected: s.5820

This statement has been prepared by ANV Syndicates Limited (ASL) for the purpose of disclosing to existing and prospective underwriting members of Syndicate 5820 (the Syndicate) information which may be of relevance to such members in considering their participation for the 2017 year of account (YOA).

Members are also referred to the Business Plan Narrative for the 2017 YOA, other SBF documents, and the Syndicate’s latest financial statements and quarterly returns, all of which have either been provided or are available to members (or their representatives as appropriate), and which include information on various changes affecting ASL and/or the Syndicate which have taken place since the end of 2015.

Managing Agency Ownership

As part of the ANV acquisition of the Jubilee Managing Agency Limited (‘Jubilee’) from Ryan Specialty Group, LLC (‘RSG’) in December 2013, RSG acquired a 19.99% ownership of ANV Syndicate Management Limited (‘ASML’). On 15 July 2016, ANV re-acquired RSG’s interest in ASML, increasing its holding in the ANV Managing Agencies to 100%.

On 19 April, AmTrust Financial Services entered into an agreement to acquire ANV Holdings B.V. and its affiliates from Ontario Teachers’ Pension Plan Board. The transaction is currently pending regulatory approval and will proceed to close once this has been received.

Syndicate Capital Requirements

For the 2017 YOA, the Syndicate is not subject to any capital loadings, including in respect of Solvency II and Conduct Risk compliance.

Management Changes

On 23 February 2016, Sheldon Lacy joined ASL as the Chief Risk Officer, bringing extensive experience to the role having previously served as Risk Director at Validus and Head of Group Financial Risk at RSA.

Underwriter Changes

In September 2016, Bruce Whitmee replaced Sanjay Vara as the Head of Consumer Products. Bruce will continue to hold this position alongside his role as Active Underwriter, reporting to the Chief Executive Officer, Janet Helson.

Variation to Managing Agent’s Agreement

Under the Managing Agent’s Agreement (General) and the Deed of Variation thereto, all new members who participate on the Syndicate in a “freehold capacity” with effect from 2013 YOA onward (and any new members acquiring capacity in the auctions or otherwise) are subject to specific terms in respect of:

• the conduct of ASL and its Related Persons as defined (specifically: allowing Related Persons of ASL, or another syndicate managed by ASL, to accept underwriting business from the same source, and of the same classes of business, as are underwritten by the Syndicate);
• the existence of differences in commercial terms between members (including fees); and
• the opportunity to participate in future special purpose syndicates (including provisions which mean that a member’s allocation of capacity for a succeeding YOA may be all or in part determined by the capacity taken up by the member on the special purpose syndicate which may in the future be set up to reinsure the syndicate).

The set fees and the relevant expenses policies under the Managing Agent’s Agreement (General) and the Deed of Variation are as follows:

• annual fees (0.75% of the member’s capacity for each YOA);
• profit commissions (17.5% of the member’s profit for each YOA);
• capacity fees (1% of the member’s capacity for each YOA up to and including the 2017 YOA; this is in addition to the syndicate’s annual fee and profit commission and is subject to a limit where the syndicate allocated capacity exceeds £250m);
• syndicate expenses (provision for charging the Syndicate for costs incurred in the acquisition of new business for the Syndicate, including through the acquisition of shares or assets).

Commercial terms differ between members participating on a limited tenancy basis and other members of the Syndicate. Members’ agents are familiar with these terms in full, and a summary version of them is available to all current and prospective members.

Consortia Participations

The Syndicate continues to be offered the opportunity to participate in consortia arrangements with ANV Syndicate 1861 on Accident & Health, Cyber, Non-Marine Liability and Property business for the 2017 YOA.

The 1861-led Accident & Health, Cyber and Non-Marine Liability consortia were first put in place for the 2015 YOA to provide short-term support during the period of transition for the Consumer Team and the Syndicate. For the 2016 YOA, the Syndicate’s participation on the Accident & Health and Cyber consortia were temporarily increased, as described within the SBF narrative.

For the 2017 YOA, as the Consumer Products team is expected to continue making good progress in executing this strategy, the consortium participations on Accident & Health and Cyber have been reduced back to 2015 levels as part of the expected evolution of the arrangements. The expectation for the 2018 YOA is that the Syndicate’s participation on the Accident & Health, Cyber and Non-Marine Liability consortia will be fully unwound.

Following the expected completion of the purchase of ANV by AmTrust, the final consortia shares on Property and Accident & Health may be subject to variation in the event consortia or similar arrangements are put in place for these classes of business as they are also underwritten within AmTrust. In the event of any such change, to ensure equity with Syndicate 1861, the following principles will be applied for the 2017 YOA:

• Property: Syndicate 1861 and Syndicate 5820 will write the same amount of premium, in keeping with the current 50:50 arrangements, and 
• Accident & Health: Syndicate 1861 and Syndicate 5820 will write the same ratio of premium, in line with the 2017 SBF stated participations.

Strategic Review

ANV recognises the advantages of aligning the underwriting operations of its non-life syndicates, and has an ambition to structure the syndicate operations accordingly to realise these benefits in the future. Any changes to the structure of Syndicate 5820’s operations will not be effected until the 2018 YOA, at the earliest.

Date issued: 28 October 2016

Contact Information

Agency contact name: Graham Luckett

Agency contact no: + 44 (0) 207 280 6218

For auction office use only: D2016006

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