September 19th, 2012

Lloyd’s: 2012 Capacity and Future Trends

Posted at 1:00 AM ET

Matthew Day, Senior Vice President
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Lloyd’s capacity is an estimated GBP24.0 billion at the start of 2012, showing continued growth. Lloyd’s capacity grew from GBP15.7 billion to GBP23.3 billion between 2007 and 2011, an increase of 48 percent. GWP in that time increased 43 percent to GBP23.5 billion.

 

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Between 2009 and 2010, capacity jumped by 35 percent year-on-year. However, there was only an increase of 1 percent year-on-year in 2011, as fears of recession in the United Kingdom and Europe created a risk averse attitude towards investments and limited the availability of capital.

The global insurance industry has increased its Lloyd’s presence by over GBP2 billion between 2009 and 2011. Bermudian insurers have almost tripled their capacity to GBP2.2 billion in the last five years, but recent growth has been flat. Although individual members’ capacity has increased broadly in line with overall capacity growth, there has been a significant shift away from unlimited liability to limited liability members.

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Despite reduced earnings across the insurance industry in 2011 and continued economic and regulatory uncertainty, Lloyd’s capacity increased by approximately 6 percent in 2012. However, the fears caused by economic uncertainty, as well as the pressures of demonstrating Solvency II readiness, may limit growth of new start-up syndicates.

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