New IUA research underlines international nature of business models
The overall intellectual and economic premium total for the London company market in 2013 was £24.276bn, a new report by the International Underwriting Association has revealed.
The figure is up by 0.2% on the 2012 amount of £24.225bn reported by the association last year in its annual London Company Market Statistics Report. Growth is largely being driven by a rise in income that is identified as written by companies in other locations around the world but subject to a level of oversight by London operations. Such business accounted for £6.831bn of premium in 2013, a rise of more than 10% on the total reported 12 months ago (£6.232bn).
“It is no longer appropriate to use only premium physically written in the square mile as a measure of the size of the London Market, ” commented Dave Matcham, chief executive of the IUA. “Local offices increasingly have the skills to underwrite more business locally and are able to access mobile capital.
“Yet the development of international underwriting hubs has not been an independent or spontaneous process. It has, in fact, been driven by the establishment of satellite offices of global operations with substantial London presences that often maintain significant management responsibility of hub operations.”
Gross premium written in London totalled £17.445bn in 2013, while the restated figure for 2012 was 17.712bn, indicating a decline in income of 1.5% over the year. A challenging business environment is thought to have put pressure on some premium rates and the market has also suffered from a deteriorating exchange rate. In addition, some organisations may have written more premium through their Lloyd’s platform if they do not have the same licence structure available on their company side and perhaps used to write such business as reinsurance.
Combining the overall company market figure of £24.276bn with the £26.106bn gross written premium reported by Lloyd’s of London for 2013 gives a total income for the London Market of £50.382bn.
London company market business continues to be dominated by direct and facultative placements (81.2%) compared to treaty business (18.8%). Direct premium accounts for two thirds of the combined direct and facultative total.
Property is the most significant class of business, making up just under one quarter of total income. Liability and marine are also important lines of business, the IUA’s report shows.
The UK and Ireland remains the most important source of income for business written in London, accounting for 54% of such premium in 2013. However, for business written in other locations but overseen by London operations, Europe is the biggest regional contributor supplying 42% of this business, followed by Asia on 14%.
“Nearly £3bn of premium income in 2013 was written in European offices outside the UK and Ireland, but managed by London company market operations, ” stated Mr Matcham. “This figure illustrates the vital economic importance of the trading rights afforded by the EU’s financial services passport to IUA member companies.”
About the IUA
The International Underwriting Association of London (IUA) represents international and wholesale insurance and reinsurance companies operating in or through London. It exists to promote and enhance the business environment for its members.
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