In the News
Lloyd’s Exits Three US Admitted Markets
The move is intended to focus the company on nonadmitted, E&S lines.
- David Pilla
- August 2020
In an effort to strengthen its focus on the U.S. reinsurance and excess and surplus insurance markets, Lloyd's said it will give up its admitted licenses in the U.S. Virgin Islands, Kentucky and Illinois.
The move is part of a strategy to focus on its core markets as Lloyd's is the market leader in U.S. reinsurance and E&S, Lloyd's said in a market bulletin.
The licenses to be relinquished collectively represent $215 million, or 1% of its annual U.S. premium income, Lloyd's said.
“Those are the only territories that Lloyd's currently writes admitted business,” Lloyd's said in an email. “Lloyd's is strengthening its focus on the U.S. E&S and reinsurance markets, which remains our biggest market in the world.”
This decision was not related to the local markets or the business we write under the licenses, rather it was a recognition that E&S business is a better fit for our underwriters given the market’s innovative nature and expertise in emerging risks.
“This decision was not related to the local markets or the business we write under the licenses, rather it was a recognition that E&S business is a better fit for our underwriters given the market's innovative nature and expertise in emerging risks,” Lloyd's said in the market bulletin. “Lloyd's believes that the product flexibility of the E&S space is key to realizing Lloyd's strategic vision.”
Lloyd's said the market and its key stakeholders “will need time to make changes to their commercial plans. We are therefore providing a window of 12 months during which new business will continue to be allowed.”
After July 1, 2021, no new business or programs will be accepted on the U.S. licensed platforms, Lloyd's said.
“Regarding existing and renewal business, Lloyd's will be working with the regulators in the licensed territories to develop plans to nonrenew this business with as little disruption to the local markets and policyholders as possible,” Lloyd's said. “We will issue further and more detailed guidance in due course once arrangements with the regulators have been agreed.”
Driven by E&S lines, North America has replaced the United Kingdom and Ireland as the top source of income for the London Market, according to a recent report from the London Market Group and McKinsey.
Market business in the region grew 6% from 2010 to 2018, outpacing the rest of the world. Thirty-six percent of the market's $110 billion of gross written premium originated in the U.S. in 2018, helped by a strong economy and gains in the tech sector and weather-related catastrophe, the report said.