A number of Lloyd's of London syndicates were risking jeopardy by offering potentially 'unsustainable' terms of business, including writing 100% risks, the chairman of Chaucer Holdings has warned.
Martin Gilbert made the worrying claims in a statement trailing his company's interim results. These showed a pre-tax profit for the Lloyd's vehicle of £500,000 in the six months to June, compared to an interim £500,000 loss last year.
Commenting on the general outlook for Lloyd's in the coming year, he said there were signs of further improvement, following substantial rate increases, particularly in the motor market.
However he stressed some Lloyd's syndicates were failing to exercise caution in other markets where recovery was more fragile.
"We see other Lloyd's syndicates writing risks 100% and offering extended terms or multi-year deals. In our view this is unsustainable and will militate against those underwriters when the market turns."
In contrast, Gilbert pledged his firm would ensure its underwriting philosophy remained strict, so that it would be well placed when the upturn in the market came.
And he said it was precisely because Chaucer had been cautious in its approach to underwriting that it had been able declare an interim dividend of one pence per share, to be paid on October 21.
This reasoning had also informed Chaucer's determiniation to establish a fully-integrated Lloyd's vehicle. Gilbert's concern was endorsed by Chaucer finance director Ewen Gilmour.
He told Insurance Times a small number of syndicates had been putting themselves at risk by signing contracts for longer than the usual period of one year and thereby locking themselves into low rates in the non-motor market.
Gilmour said it was an habitual moan among Lloyd's members that it would be difficult for market rates to rise if some syndicates continue to do business at low rates. He too warned of the dangers of prolonged rate cutting: "Eventually it will all end in tears."