Subject: 2015 SBF and Solvency 2 Readiness
Syndicate(s) Affected: Syndicate 218
ERS Syndicate Management has received feedback from the Capital and Planning Group (CPG) relating to Syndicate 218’s SBF 2015. The Managing Agent is awaiting formal feedback in writing and has asked for clarification on certain points relating to the feedback. CPG has supported the Managing Agent’s proposed written premium volumes for the 2015 underwriting year but has not yet been able to agree specific planned ultimate loss ratios (ULR) given the information provided to date. Lloyd’s has therefore requested further justification from ERS to ensure that the submitted ULRs are realistic, justifiable and achievable.
If a revised SBF reflects higher ULRs, then the plan will show a substantial reduction on forecast profitability for 2015, although at this stage the Managing Agent is unable to confirm the exact impact. It is possible that the revised plan will show an underwriting loss for the 2015 underwriting year.
Any deterioration in the plan will also have the effect of increasing the Syndicates Solvency Capital Requirement (SCR). In addition to the increase in SCR as a result of any deterioration in ULR, the CPG has indicated that it is considering applying a further discretionary load on the SCR of £10,000,000. The Standards Assurance Group (SAG) at Lloyd's also reconfirmed a RED rating on the readiness of the business to be fully compliant with Solvency 2 by the year end. A fuller understanding of this position will be sought in the coming week, prior to a final assessment by Lloyd's on the 21st October.
A revised SBF and SCR will be submitted once the outstanding questions relating to the feedback from CPG and SAG have been resolved with Lloyd’s.”
Date issued: 13th October 2014
Agency contact name: Peter Merrett Syndicate Compliance Officer
Agency contact no: + 44 (0)1277 206589
For auction office use only: D2014016
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