The following commentaries have been prepared based on information contained in the Managing Agents Report and Accounts as at 31 December 2009.

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Syndicate 53 successfully closed the 1998 and 1999 accounts at 31 December 2009.

The managing agent has reported an improvement to the overall loss position of both years of account during the previous 12 months of 4.8% and 4.9% for the 1998 and 1999 accounts respectively.  Names will be aware from our memorandum of 17 December 2009 of the managing agents intention to accept a quotation from Shelbourne Syndicate Services Limited to close the account at 31 December 2009.

The closure will result in a further cash call of 10.2% of capacity in respect of the 1998 account and a surplus of 4.1% for 1999.  Both of which will be due for settlement in June 2010.

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Syndicate 340 was unable to close the 2000 & 2001 years of account at 31 December 2009.

Syndicate 340 was a specialist aviation syndicate and the 2000 and 2001 years of account have material exposure to losses arising from the terrorist activities in the USA of 11 September 2001.  The scale and complexity of these losses have resulted in there being significant uncertainty as to their final outcome: the uncertainty relates to the extent of liability and the quantum of possible loss settlements.  

In the managing agents report as at 31 December 2009 they have advised that negotiations have started that could give rise to a potential deal.  In outline, all of the subrogating property insurers who had sued in New York together with most (but not all) of the insured property plaintiff's would accept a figure representing a percentage of the total remaining policy limits of the airlines and security companies.  All of the other aviation defendants would benefit from the release to be given by the settling plaintiffs.  Any deal along these lines would not end all current and potential litigation against the aviation defendants, but the airlines direct insurance characterised their approach as seeking "relative finality to the greatest extent possible".

In February 2010 a settlement was concluded formally with all but three of the property plaintiffs.  The liability insurers of the main aviation defendants have also agreed on how any future resolution of those three outstanding property claims will be allocated amongst them.

Under the terms of the settlement agreement the relevant defendants' liability insurers have to place the settlement funds into an escrow account and they are paid out to the settling plaintiffs in the event that the settlement is approved conclusively by the New York court.  Syndicate 340, as a reinsurer and a retrocessionaire, is paying its share of these funds.  In the meantime the Judge has ordered that details of the settlement including the amount paid on behalf of each defendant should remain confidential.

The managing agents report goes on to say the terms of the settlement as negotiated would remove many, but not all of the uncertainties which have led to the syndicate remaining open and lead to a material improvement in the eventual result of both open years.  However, the managing agent stresses that there are two extremely important points which cannot be over-emphasised.

1.  The settlement would not extinguish all outstanding liabilities but it would provide relative finality to a      greatest extent possible.

2.  It is not definitive until it is approved conclusively by the New York court.  This decision is awaited.

The settlement has the potential to allow both years to be closed as at 31 December 2010, but in the event that the settlement is not approved by the court the managing agent does not anticipate being in a position to close either year of account before 31 December 2012.

In light of the above we are more optimistic that the syndicate could be in a position to close at 31 December 2010.

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Syndicate 529 was unable to close the 1998 and 1999 years of account at 31 December 2009.

The managing agent reports that the 1998 account has achieved a marginal improvement of 1% on the loss position during the calendar year 2009.  In contrast the 1999 account has seen a further deterioration of 6.47%.  In the report and accounts of 31 December 2009 the managing agent has made particular reference to the syndicates exposure to construction defects in the United States which has showed adverse developments during the year with result they have had to revise their ultimate loss projections in this area which has resulted in their re-estimating the future liabilities.

On a more positive note the syndicate will seek quotations from the third party reinsurance to close market with a view to obtaining closure at 31 December 2010.

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Syndicate 957 was able to close the 1997, 1998 & 1999 years of account at 31 December 2009. 

Names will be aware from our memorandum of 20 November 2009 that the managing agent proposed to accept a quotation for closure from RITC Management Limited, Syndicate 5678.  The final result for each of the three years in run-off was an improvement on the loss position reported at 31 December 2008.  Each year of account had previously made cash calls in excess of the closing position and therefore the surplus will be due for release in June 2010.

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Syndicate 991 closed the 1998, 1999 & 2000 years of account at 31 December 2009. 

Names will be aware from our memorandum of 4 December 2009 that Capita Managing Agency Limited proposed to accept a quotation from Shelbourne Syndicate Services Limited, Syndicate 2008 which was approved by the board and the syndicates capital providers with effect that all run-off years of account closed at 31 December 2009.

The closing result is shown above together with the cash calls made to date which will result in a surplus being paid in respect of the 1998 account and calls made for both 1999 and 2000 years of account for settlement in June 2010.

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Syndicate 1007 was unable to close the 2002 year of account at 31 December 2009. 

The reasons for putting the year of account into run-off included uncertainty over the eventual outcome on casualty treaty business and in respect of certain high profile US issues involving investment banks.  Lesser uncertainties include US comprehensive, general liability business transacted in conjunction with US direct property business and a modest amount of reinsurance exhaustion which had the potential to become more pernicious under certain circumstances. 

In the calendar year 2009 some deterioration has been seen in respect of a few specific claims, outweighing other instances of favourable development.  The managing agent quotes in the latest report and accounts "that going forward the low level of US interest rates in particular holds out little prospect of a useful contribution from investment return over the next 12 months".  Under these circumstances, the managing agent has revised the forecast of the ultimate outcome to a loss of between 17.5% and 7.5% of stamp capacity.

In recent years the uncertainty surrounding some of the issues has diminished considerably, particularly in relation to casualty treaty business, following concerted action to deal with this issue, including some useful reinsurance commutations.  The uncertainty over US comprehensive general liability business has also diminished with the passage of time.  More recently, there has also been some useful progress in resolving some of the investment bank issues.

The managing agent will continue to investigate the possibility of attracting a third party reinsurer and it is hoped that the syndicate may be in a position to close at 31 December 2010.

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Syndicate 1101 closed the 1997, 1998 and 1999 years of account at 31 December 2009. 

Names will be aware from our memorandum of 20 November 2009 that the managing agent negotiated a reinsurance to close of all the run-off years of account with RITC Management Limited, Syndicate 5678.  As can be determined from the above result the refunds due on the 1997 and 1998 accounts and the call on the 1999 account will be due for settlement in June 2010.

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Syndicate 1171 has been unable to close the 1998 and 1999 years of account at 31 December 2009. 

Syndicate 1171 is a Life syndicate and can only be reinsured under Lloyd's current regulations into another Lloyd's Life syndicate as there are only three Life syndicates trading at Lloyd's the opportunities are very limited to complete a RITC.  It is unlikely that the syndicate will close at 31 December 2010.

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