The number of syndicates operating in Lloyd's will fall from 86 to 50 in the next year, a leading analyst has predicted.
Moody's Investors Service managing director of European Insurance, Mark Hewl ...
The number of syndicates operating in Lloyd's will fall from 86 to 50 in the next year, a leading analyst has predicted.
Moody's Investors Service managing director of European Insurance, Mark Hewlett, said the drop in the number of syndicates would result from mergers, acquisitions and market withdrawals. Last year there were 108 syndicates in Lloyd's.
He predicted many would be forced to leave as they had underestimated their exposures for 11 September.
"This year is going to be a real wakening year," he said. "We have been expecting a lot more doubts on developments at the World Trade Centre.
"The marketplace itself was talking about a loss of $40bn (£28bn)."
He said that the figure was getting
bigger as people were becoming aware of bigger problems that had not been taken account of, such as business interruption.
" If that trend continues, that loss has to come out somewhere."
Hewlett said syndicates would also be under pressure from cash calls. The request for money from investors is needed to comply with US trust fund requirements.
Insurers must deposit 100% of their gross liabilities by the end of next month.
Hewlett added Syndicate Quarterly Returns, where insurers estimate financial results at the end of March, would add further strain.
"We are going to see people struggle," he said.
"Things are hotting up. There will inevitably be casualties. The market will continue to consolidate and will rapidly move to 50 syndicates next year."
Lloyd's spokesman Adrian Beeby said: "The number of syndicates has been going down for about a decade.
"However, based on the current trend we expect it to be in the high seventies and not as low as 50."
