The following commentaries have been prepared based on information contained in the Managing Agents Report and Accounts as at 31 December 2008 and where appropriate interim reports received during the course of 2008.

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Syndicate 2 closed the 2001 and 2002 years of account at 31 December 2008.

Names will be aware that the managing agent had left the 2001 and 2002 years of account open due to the material uncertainties surrounding the aviation liabilities for the World Trade Center (WTC), namely the number of events that the WTC loss comprises for aviation liabilities is not yet determined and the extent to which property losses can be subrogated against aviation policies is  unknown.  However, uncertainty surrounding the balance of the syndicates non-WTC reserves is reduced.

Advent Underwriting Limited was of the opinion that Names best interests would be served if the syndicate could effect a RITC at no additional cost to Names.  Consequently a RITC was agreed with Advent Capital Holdings plc, the managing agents parent company at no risk premium based on the reserves held at 31 December 2008.

In respect of the 2001 year of account, the balance of the outstanding loss, 19.25% and the remaining surplus of the 2002 year of account, 12.20% will be due for settlement June 2009.

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Syndicate 53 was unable to close the 1998 and 1999 accounts at 31 December 2008. 

The managing agent has reported further deteriorations of 53.5% and 2.5% of capacity for the 1998 and 1999 years of account respectively.

The deterioration in respect of the 1998 year is particularly severe.  During 2008 the syndicate has resolved two major disputes.  Firstly, in the dispute with Hanover, which was held in the UK Commercial Court, the syndicate expected to win this case, however the Court found in favour of Hanover.  The syndicate has also agreed commutations on certain other major contracts which were in dispute.  Secondly, the resolution of the Trust Mark and Legion arbitrations exacerbated the poor result.

In addition the 1998 year of account also suffered further losses on the Personal Accident account.  The syndicate has written a number of personal accident contracts in each of the 1998 and 1999 years of account where the final outcome remains uncertain.  However, the managing agent comments that, following the resolution of the major disputes the potential volatility in the final outcome has been reduced. 

The 1999 year of account has seen a small deterioration on the Aviation account and appears to be settling within its loss projections.

In view of the significant deterioration in the 1998 year of account and the major claims since the previous cash call a further cash call of 45% of capacity will be made for settlement June 2009. 

The Managing Agent is still unable to give a realistic date for closure.

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Syndicate 138 closed the 2000 and 2001 underwriting accounts as at 31 December 2008.

Names will be aware from our Memorandum of 18 December 2008 of the managing agents intention to secure an economic reinsurance to close at 31 December 2008.  This was achieved by an acceptance of a quotation by the Meacock Syndicate 727 which will result in the release of a surplus of 4.13% and 16.35% in respect of the 2000 and 2001 year of account respectively to Names June 2009.

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Syndicate 340 was unable to close the 2000 and 2001 years of account at 31 December 2008. 

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.   This situation has remained unchanged during the course of 2008.

In aviation terms, the events of 11 September 2001 resulted in the loss of four airliners, two at the World Trade Center, (WTC) one at the Pentagon, and one at Shanksville, Nr, Pittsburgh, Pennsylvania with significant loss of life/bodily injuries and ground damage.  All but a very small minority of third party personal claims have now been settled and further mediation efforts in relation to the remaining personal injury wrongful death claims are on-going.  However, there continues to be little realistic prospect that the WTC related third party property damage/business interruption liability claims against the aviation defendants will be settled in advance of a major trial.  These losses are expected to exhaust relevant policy limits if it is determined by the Courts that the aviation defendants are liable.  It is currently expected that the trial of those claims will commence sometime during the second half of 2010 following on from the protracted discovery process.  It is for this reason that the managing agent has extended the realistic date for closure to 31 December 2012. 

The current mid-point forecast result to the ultimate before members agents fees is a loss of 69.6% and 16.1% for the 2000 and 2001 years of account respectively.

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Syndicate 529 was unable to close the 1998 and 1999 years of account at 31 December 2008.

The managing agent reports that the 1998 account has deteriorated by 6.6% during the calendar year 2008 which was attributable to a small deterioration in the underwriting account of 2.8% and a loss on exchange reflecting the movement between the US dollar and the pound during the year of 3.8%

In contrast the 1999 year of account has seen an improvement of 7.4% of capacity.  The managing agent reports that the 1999 account had a similar small deterioration in the underwriting account of 3.19% but a profit on exchange of in excess of 10% has produced the overall surplus position during 2008. 

It was anticipated that both years of account would close at 31 December 2008 but regrettably quotations in respect of a potential RITC did not fall within the range that was acceptable for the managing agent.  It is the intention to continue with the RITC process during the course of 2009 when it is hoped both years of account will be reinsured at 31 December 2009.

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Syndicate 566 closed the 2000 account at 31 December 2008. 

The 2000 year of account was left open due to the material uncertainties surrounding the aviation World Trade Center (WTC) losses of 11 September 2001.  While uncertainties continue to remain, particularly with regards the potential for subrogation by property insurers against aviation insurers there have been sufficient positive developments in 2008 for the managing agent to warrant a review of the reinsurance to close options.  These options concluded with the acceptance of a proposal by QBE’s wholly aligned Syndicate 2999 which will result in a release of 5.4% of capacity in June 2009. 

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Syndicate 957 was unable to close the 1997, 1998 & 1999 years of account at 31 December 2008. 

Syndicate 957 wrote mainly accident and health and aviation business both on a direct and excess of loss business.  The account also includes medical expenses and a small amount of satellite business.  It wrote through consortia common open market slips, binders and reinsurance. 

The managing agent reports that all run-off years of account have seen an improvement on the results reported at 31 December 2007 mainly due to exchange rate differences.  However, all three years saw an improvement in investment income and reductions in bad debt and claims handling provisions.  This was particularly relevant to the 1997 account which has reduced its full cost loss by over 12 percentage points. 

Regrettably the managing agent has not commented on a likely date for closure but it is hoped they will be in a position to seek a reinsurance to close at 31 December 2009.

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Syndicate 991 was unable to close the 1998, 1999 & 2000 years of account at 31 December 2008. 

The managing agent reports a deterioration in the underwriting result, for 1998 account, mainly due to the general liability and motor accounts and this was partly off-set by calendar year investment income and favourable rates of exchange differences which reversed the deficit position to the slight surplus reflected in the above declared result.  The 1999 year of account saw very little movement in the underwriting result and the small surplus achieved was generated by calendar year investment income and a reduction in the bad debt provision.  The 2000 year of account deteriorated by 2.24% which was only partially off-set by calendar investment income and favourable rate of exchange differences.  The deterioration was experienced on the long tail account particularly the general liability and motor accounts.

The managing agent is seeking to close all three years of account at the same time.  Names will be aware from previous Newsletters that the 1998 year of account remains open in spite of efforts to achieve closure, pending the outcome of a dispute with the liquidator of one of the syndicates reinsurers.  This dispute is still subject to legal proceedings in Australia and until now, the board has considered that it has not been possible to close any of the three open years until its resolution.  We understand that CSML will seek quotations to effect a RITC during 2009 when it is hopeful that an acceptable quotation will be obtained to close all three years whether the dispute concerning the 1998 account is settled or not.

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Syndicate 1007 was unable to close the 2002 year of account at 31 December 2008. 

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.  Collectively these factors produce material uncertainty and hence the inability to close the syndicate at 36 months.

Since then the uncertainty surrounding some of these issues has diminished considerably.  This has included a reduction in uncertainty surrounding casualty treaty business following a concerted action to deal with this issue, including some useful reinsurance commutations.

Although the syndicate has made progress on certain issues there is still major concern over the outcomes in prospect in respect of high profile US issues regarding investment banks.  During the calendar year 2008 deterioration has occurred which has resulted in the declared result being increased to a loss of 10.3% the deterioration outweighed other instances of favourable development.

The managing agent has not commented on the likely date of closure.

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Syndicate 1047 closed the 2000, 2001 and 2002 years of account at 31 December 2008.   

Argenta Syndicate Management Limited successfully closed the above run-off years of account and their resultant surpluses will be due for settlement in June 2009.

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Syndicate 1101 was unable to close the 1997, 1998 and 1999 years of account at 31 December 2008. 

The 1997 year of account has seen an improvement during the calendar year 2008 which primarily stems from the reduction in the estimated ultimate claims in the Professional Indemnity account and an increase in the investment income.  These improvements were partially off-set by a small deterioration on the Syndicates Accident and Health account and an increase in the claims handling provision. 

Both the 1998 and 1999 years of account deteriorated during 2008 the deterioration stems from an increase in the estimated ultimate claims on the Accident and Health account, largely from adverse development on four reinsurances of US companies.  The 1999 account also saw an increase in the syndicates reinsurance of bad debt and claims handling provisions.

As can be seen from the above the uncertainty on the Accident and Health account affects all three open years, in addition the continuing volatility on the Professional Indemnity account is on the 1999 year.  These two key elements are affecting the managing agents ability to obtain an economic RITC quotation.

The managing agent has not given any indication when the syndicate is likely to close, although it is hoped closure could be achieved at 31 December 2009.

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Syndicate 1121 closed the 1998 and 1999 accounts at 31 December 2008.  

Names will be aware from our Memorandum of 22 December 2008 that the managing agent was proposing to accept a quotation by the Shelbourne Syndicate to close both years of account at 31 December 2008.  The RITC was successfully concluded and the balance of the loss outstanding will be called for settlement in June 2009.

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Syndicate 1171 has been unable to close 1998 account at 31 December 2008. 

The managing agent has reported that the 1998 account achieved a surplus of approximately 1.2% during the calendar year 2008 increasing the overall surplus to 2.8%.

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.

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Syndicate 1173 closed the 1999, 2000, 2001 and 2002 years of account at 31 December 2008. 

Names will be aware from our Memorandum of 9 December 2008 advising that the managing agent intended to close the above run-off years of account as at 31 December 2008.  The managing agent has confirmed that the above run-off years of account was successfully reinsured with RITC Syndicate Management Limited.  The surpluses in respect of the 2000 and 2001 years and the small deficit in respect of the 2002 year of account will be due for settlement June 2009.

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Syndicate 1204 closed the 1997, 1998 and 1999 years of account at 31 December 2008.

Names will be aware from our Memorandum of 6 January 2009 of the managing agents intention to secure an economic reinsurance to close at 31 December 2008.  This has been achieved by an acceptance of a quotation by Centrewrite Limited, which will result in the surpluses for the 1997 and 1998 account and the small deficit in respect of the 1999 account being settled in June 2009.