SVB Syndicates has announced updated quarterly forecasts for its managed syndicates for the 2003 and 2004 years of account alongside its 2002 run-off accounts.
SVB estimated that it had £8 million for provision for discontinued units during Q2 (Q1: £5 million). As a result, some £54 million of the provision established as at 1st July 2004 remains unutilised and available to carry forward.
SVB said that the forecast loss for Syndicate 1241, 2002 Year of Account (in run off) saw an increase of five points, reflecting the experience in discontinued units so far in 2005.
In the 2004 year of account, SVB forecast that syndicate 1007 would generate between 7.5 and 12.5% of the £215.6m capacity. Syndicate 2147 forecast between 7.5 and 12.5% of its £286.4m capacity.
SVB said that syndicate 2147, since absorbing the windstorm activity in the second half of last year, has seen favourable claims experience in the first half of 2005. The net incurred loss ratio remained unchanged over the period at 34% (2003 15% at this stage, 2002 24% at this stage).
In the 2003 year of account, SVB forecast that syndicate 1007 would generate between 16 and 21% of the £151m capacity. Syndicate 2147 forecast between 14 and 19% of its £286.4m capacity.
Syndicate 1007 continued to enjoy favourable claims experience. The net incurred loss ratio was 12% (2002 23% at this stage, itself the best performance since 1993).
Syndicate 2147, was also said to continue to show encouraging development, with a net incurred loss ratio of 32% (2002 44% at the same stage). SVB said a small positive revision to the forecast is warranted.
In the 2002 Run-off years, the forecast for the Syndicate 1007 remained unchanged. SVB said that the experience from discontinued business resulted in utilisation of the provision in the first half of around £13m. The impact falls more heavily on Syndicate 1241.
SVB said that overall it saw a 4% rate reduction on business written in the first six months of the year. Provided claims experience is consistent with business plan assumptions, this suggests another profitable year for both syndicates, it added.
SVB said it planned to reduce the capacity of Syndicate 1007 for 2006 to £120m. For Syndicate 2147 it stated that it currently planned to maintain capacity at £286m. On this basis overall managed capacity for 2006 is £406m (2005: £437m), although plans for both syndicates remain subject to ongoing review.
