Canada Chronicle: CEO's message
Welcome to the summer edition of Lloyd’s Canada Chronicles. In this edition you’ll hear from the Canadian team about the exciting line up of Lloyd’s 2021 events, clarification around the use of the LMA Cyber wordings for the auto class of business, updates on ASPS enhancements and the latest news on Lineage, Delegated Contract and Oversight Manager (DCOM) and Delegated Data Manager (DDM). Finally, Hank Watkins, President of the Americas Region for Lloyd’s shares an update on Futureset, Lloyd’s global platform to create and share risk insight, expertise, and solutions to help customers bravely face tomorrow’s challenges, today.
At the time of writing this update Canada finds itself still griped by the third wave of COVID-19 infections. While much of the recent news has been concerning, it is encouraging that as of May 19, over 19.3 million does of vaccines have been administered with 17.9 million individuals having received at least one dose (47% of the population) and 1.5 million Canadians having been fully vaccinated against COVID-19.
From an economic perspective, prior to COVID-19 and the global pandemic, Canada had been enjoying stable (although hardly remarkable) annual GDP growth around 2% per annum. While the pandemic has been extremely damaging to Canada’s economy (not unlike any other country), the IMF has upgraded Canada’s growth prospects in 2021 to 5.2%, the largest upgrade for any developed market, due to the country’s vaccine roll-out and prospects for economic recovery. The Province of Ontario, which is the home to much of Canada’s manufacturing sector, is targeted to lead much of the post pandemic growth, boosted by additional investments in the automotive sector.
In the face of unprecedented public health and economic challenges, Lloyd’s and the entire Canadian insurance industry has responded strongly to the challenges that we have encountered. While Lloyd’s global results were inevitably impacted by the COVID-19 pandemic, Lloyd’s is proud of the market's overall response and the critical financial support that has been provided to our customers.
Excluding COVID-19 claims, our 2020 global results demonstrate solid underlying progress with an underlying combined of 97.0% in 2020 (excluding COVID-19). Furthermore, we have achieved a profit of £0.8bn in 2020 (excluding COVID-19). Including the impact of COVID-19, Lloyd’s is reporting a pre-tax loss of £0.9bn, driven by £3.4bn net incurred COVID-19 losses adding 13.3% to the market’s combined ratio of 110.3%.
In Canada, thanks to long standing and strong trading relationships, in 2020 Lloyd’s transacted CAD$4.4 billion gross written premium (GWP) and enjoyed 11% year over year growth compared to 2019. Growth was fuelled by gains in both the open market channel and delegated authority business. I’m pleased to say that the market was able to achieve growth in Canada while at the same time delivering a 94% combined operating ratio (on a statutory reporting basis), including COVID-19 losses.
Lloyd’s maintained its position as the top commercial insurer and continues to hold its position as the largest direct writer of commercial risks in Canada with approx. 12% of the overall market (excluding personal lines). In terms of reinsurance, Lloyd’s ranks third overall with approx. 13% of the Canadian market.
The principle classes of business within Lloyd’s Canadian portfolio remain: Casualty at 29%; Property at 27%; Financial Lines at approximately 15% and thereafter a number of lines including Energy and various specialty lines.
Lloyd’s balance sheet remains exceptionally well capitalized post COVID-19, with strong financial strength ratings including A+ (Strong) stable outlook with Standard & Poor’s, A (Excellent) stable outlook with A.M. Best, AA- (Very Strong) with Fitch Ratings. On April 22, 2021, Lloyd’s appointed a new credit rating agency and received from Kroll Bond Rating Agency an AA- (stable) financial strength rating.
To find out more about Lloyd’s 2020 global results, please click here: Annual Results 2020
I am also excited to confirm that Patrick Tiernan has taken up his role as Chief of Markets, effective May 5, 2021. In this role Patrick will oversee Lloyd’s market performance, oversight and development, including responsibility for distribution and the global network. Patrick will become a member of Lloyd’s Council and will also sit on Lloyd’s ESG Advisory Group.
As a highly regarded industry executive with leadership experience across business and financial management, Patrick joins Lloyd’s at an exciting time. Our overarching priorities of performance, strategy, culture, together with a new ‘purpose’ pillar, remain paramount and drive everything we do in the Corporation and across the market.
I hope you enjoy the information contained in this edition of the Lloyd’s Canada Chronicle and please – as always – get in touch using the details below to share your feedback.
Stay safe and we look forward to connecting during the second half of the year.
Attorney in Fact in Canada for Lloyd’s Underwriters -President, Lloyd's Canada