On Apr. 24, UK Lloyds bulletin outlined business plan/capital approval.
UK Lloyds issued 2025 business plan and capital approval process and timeline.
Follows Lloyds May 2023 outlined 2024 business plan/capital approval, see #172939.
Capital and Planning
Sustainably profitable performance remains main priority; critical that syndicates evidence they have considered, factored in risks related to macro thematic challenges that have been highlighted in Market Messages, other communications over the year.
Continuing to build on the work and collaboration with the market in 2024.
Will again be defining areas of focus and levels of materiality for challenge early by setting clear direction during the Syndicate Business Discussions (SBDs).
UK Lloyds will also be maintaining consistency throughout the planning process.
Outperforming Syndicates
Recognized as Lloyd’s strongest performers, there is high confidence in outperforming syndicates to run sustainably profitable businesses well, and UK Lloyds is happy to see that they continue to proactively provide high quality supporting information.
Approach for outperforming syndicates will be to understand what they intend to do.
To check all material strategic/thematic issues resolved, evidenced through SBD engagement, trust them to have planned well; this will manifest in de-minimis review in Sept-Nov planning period, supplemented with a more continuous approach to oversight, performance management per principles-based oversight (PBO) model.
In 2025, outperforming syndicates will be offered chance to have earlier SBD meeting where discussion will be less agenda led; for syndicates not outperforming, Lloyds' principles-based approach means it will focus review on area(s) driving the overall categorization rating and the potential impact of such on underwriting and capital.
Good Syndicates
Good syndicates’ plans will focus on material issues as part of a portfolio based approach, supplemented with more continuous approach to oversight and performance management in line with PBO model; syndicates will have to give Lloyds confidence in their key material assumptions, including all loss ratios; the move from good to outperforming for underwriting must include evidence of meeting plans in the future.
Moderate Syndicates
Moderate syndicates’ plans will be reviewed in detail; onus is on syndicates to give Lloyds confidence in their loss picks and assumptions above the Lloyd’s benchmarks.
Underperforming and Unacceptable Syndicates
Underperforming syndicates will already have had their board level discussions.
These Underperforming syndicates must operate strictly within pre-agreed remediation plans; where a syndicate is classed as unacceptable, Lloyd’s will engage separately.
Syndicate Business Discussions
Most SBDs will commence in late Jun. 2024; every managing agent will meet with Lloyd’s representatives, led by Lloyd’s Account Managers, attended by syndicate performance managers, relevant technical teams; discussions will generally be performance focused, cover syndicates’ intentions and ambitions for 2025 year of account (YOA), including where appropriate, syndicate class of business data.
Data Requirements
All syndicates are required to complete and submit a whole account high-level SBD KPI template for 2025 plans; details of requirements are set out in the bulletin.
Class KPIs will be requested from some syndicates, determined by oversight category.
The class KPIs required will be anticipated 2025 GWP, GULR, NCR for each syndicate class of business listed, and details of new classes syndicates may seek to write.
Lloyds is no longer collecting decile information from syndicates, so no requirement for syndicates to submit their decile class information within the SBD KPI template.
SBD KPI template for 2025 plans will be issued on May 23, 2024 via SecureShare.
The deadline for it to be returned is Jun. 7, 2024.
Capital Fast Track
Fast Track Process for capital will continue for the 2025 YOA Lloyd’s Capital Return (LCR) submissions; level of review of LCRs carried out by Market Reserving and Capital (MRC) team will continue to be risk-based; review level will be linked to the following:
Syndicate's capital principle rating; amount of change submitted as part of the capital submission; amount of movement in key Solvency Capital Requirement (SCR)-to-exposure metrics; materiality of syndicate re ultimate solvency capital requirement.
All syndicates, regardless of Fast Track status, will still be considered for capital appropriateness based on their catastrophe risk appetite and model completeness.
Further detail on Capital Fast Track process for 2025 YOA submissions due Jul. 2024.
Capital Review Timetable for Aligned Syndicates
Lloyds considering giving aligned syndicates option of longer capital approval window.
All syndicates would still be required to submit SBF and LCR per published timetable.
But for eligible aligned syndicates, a file and use type approach might be possible during Sep./Oct. CPG period; usual Lloyd’s review would then take place later.
Early View of Capital
LLoyds plans to facilitate early indication of member ECA for members, where needed.
Syndicates will have option to submit an early view of SBF, LCR, LCM returns in July.
Lloyd’s will update and release the member modeller at the end of July once these submissions have been received to provide the corresponding member capital.
Noted this will be an indicative view only, returns will not go through usual review.
Early submissions will focus on a reduced subset of the full returns; full submissions will still be required in line with main CPG timeline, as usual; further communication, guidance on what is required for early view will follow within the 2025 SCR guidance.
Business Plan and Capital Submission Deadlines
Phased approach to business plans, capital submissions is being streamlined for 2025 YOA capital and planning (CPG) process; syndicates split into 3 phases per capital requirements: 1 non-aligned; ii aligned with letters of credit; iii aligned without LOC.
May 16: market messages will outline focus areas for 2025 business and capital plans.
W/c May 20: pre-planning letter issued including confirmation of syndicate phasing group, oversight category and strategic business discussion approach.
May 23: high level KPI template for 2025 YOA plans issued.
Jun. 7: deadline to return high level KPI template and any other data requirements.
From mid-Jun. to end Jul.: SBDs to take place and feedback letters sent (as relevant).
Jul. 5-22: 2025 YOA SBF, LCR submission window to support early view of capital.
Jul.: all 2025 SBF, LCR and catastrophe guidance published.
