A collaboration between Aon’s UK Capital Advisory team and the Lloyd’s Market Association (LMA), the report, How CFOs Connect Capital and Business Strategy, provides an analysis of the results of an online questionnaire completed by CFOs at 28 Lloyd’s managing agents, representing 75 percent of the market’s capacity for 2021.
The report reveals that for most survey respondents, capital availability was not a constraint for growth, a trend highlighted in the underutilisation of Tier 2 Funds at Lloyd’s. Respondents generally agreed that capital optimisation was critical in developing a dynamic and proactive approach to capital management.
Further findings include:
• Eighty-seven percent of survey respondents wanted to increase their stamp capacity at Lloyd’s.
• Intragroup reinsurance was managing agents’ primary capital optimisation technique, utilised by 78 percent of participants.
• A third of survey respondents intended to implement legacy solutions in the near future.
• Forty percent of respondents managed the volatility of underwriting returns by explicitly looking at a variety of return periods.
Eric Paire, Head of Aon’s UK Capital Advisory team, said: “Following a couple of difficult underwriting years, the start of the COVID-19 pandemic and the tightening of rules on the use of Tier 2 capital, it appeared timely to look at how syndicates’ approach to capital management has evolved. In this regard, our report offers insight into the key considerations of Lloyd’s CFOs, and highlights their evolving role, which includes setting strategy, facilitating growth, managing risk and optimising capital.”
Paul Davenport, Finance and Risk Director at the LMA, said: “This report aims to provide LMA members with a comprehensive overview of how capital and business strategy are connected within the Lloyd’s market. We would like to warmly thank all those CFOs who took the time to answer our questions and comment on their capital strategy.”
To read the full report, please click here
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