News Analysis - Why aren't more tempted to follow Kiln's lead?

(From Reinsurance)

As observers and analysts of the (re)insurance market, we often complained in the past that we didn't usually get much insight into the strategic thinking of the market's main players. Nowhere was this more true than in the Lloyd's market of old.

Back in the days when Lloyd's was 100% backed by private equity, information was sealed tightly within the hallowed inner sanctum of those in the know or with an absolute need to know. Such an opaque and misty past only serves to make the transformation that has taken place within the marketplace over the last decade seem all the more refreshing.

The advent of the Lloyd's Franchise Performance Directorate, and its oversight and approval of syndicate business plans plus the discipline and scrutiny brought to bear by corporate capital and share listings on the London Stock Exchange, have combined to bring about a culture of openness that is hard to match elsewhere. The major syndicates are now actively engaging with analysts and the public at large, explaining the reasoning behind their strategic decisions.

In July of this year, RJ Kiln, the Lloyd's managing agency that is wholly owned by Kiln plc, said it wanted to increase its overall capacity by 25% on 2006, bringing the figure to over GBP1bn ($1.83bn) for 2007. In its initial business plan for 2007, the company said it intended to more than double the capacity of its catastrophe Syndicate 557 and up capacity on syndicate 510 by 17.6%

At the time, Kiln's director of underwriting, Robert Chase, said: "We are seeing strong rating conditions and increased discipline in the market, and the planned pre-emptions on our syndicate capacities reflect our sense that, on the assumption that 2007 will be a year of moderate catastrophe activity, it will offer excellent underwriting opportunities."

That week I wrote "To parody Kiln's remarks, the global market has talked itself into the assumption that 2006 and every other year in the near future will be a year of APPALLING catastrophe activity. Well, someone begs to differ." (By the way, to receive our free weekly email, simply register on www.reinsurancemagazine.com.)