Credit Suisse ILS backed Arcus Syndicate 1856 targets 2020 expansion

Arcus Syndicate 1856 at Lloyd’s, which is backed by third-party funds under the management of the Credit Suisse Insurance Linked Strategies team, is targeting an expansion of business across most of the underwriting classes it operates in for 2020.

In reporting its 2019 results, the Arcus 1856 team revealed that a hit from typhoons Faxai and Hagibis dented its profits by around £7 million, driving it to a £1.844 million loss for the underwriting year.

That was considerably better than the almost £6.6 million loss the Arcus 1856 syndicate suffered in 2018.

Were it not for the typhoons the syndicate would have reported a profit for the year, as its other lines of business

In 2019, gross premiums underwritten by the Arcus 1856 team reached just over £106.5 million.

This was a drop from the almost £144 million written in 2018, but that underwriting year featured a whole-account quota share reinsurance agreement with Barbican’s syndicate 1955 which was not written for the 2019 underwriting year and accounts for the decline.

The Arcus 1856 team intend to grow across most classes of business for 2020 though, as they target expansion across reinsurance as well as certain primary and specialty market lines.

In property reinsurance, which the Arcus 1856 team underwrite on a catastrophe excess of loss and risk excess basis, the syndicate wrote some £55.2 million of premium in 2019, up on 2018’s £47.3 million.

Looking to 2020, the syndicate said it aims to modestly grow this property reinsurance business, in line with rate increases seen and some new business opportunities encountered.

The syndicate also expects to write a little more property proportional reinsurance as well, with one or two new contracts to be added to that segment of its book.

Arcus 1856 also underwrites primary property insurance, through binder relationships, which it again expects to grow in terms of income in 2020.

While increasing property insurance income for the syndicate, the team at Arcus 1856 also intend to write fewer contracts, but larger, in 2020, to make this segment of the portfolio more manageable going forwards.

In energy risks Arcus 1856 intends to shift to a strategy that will see it writing more business through binders and on a reinsurance basis, so income here may decline somewhat in the year ahead but perhaps be primed for growth in future.

The specialty line business of space risks is an area where Arcus 1856 sees a chance for growth and higher returns, as significant rate increases have been seen.

Cyber risk underwriting is also seen as a growth prospect for the syndicate, with a few new portfolios expected to be supported in 2020.

So overall the prospects are for further growth as the Arcus 1856 syndicate continues to transition to one that is wholly independent in terms of its risk sourcing and underwriting, since the whole-account quota share was cancelled.

The Arcus 1856 syndicate at Lloyd’s continues to source its capital from insurance-linked securities (ILS) funds and structures managed by the Credit Suisse Insurance Linked Strategies team.

In particular its funding comes from the Credit Suisse Iris Low Volatility Plus, Iris Balanced and Humboldt Re funds and reinsurance entity.

The shrinking of premiums written in 2019 had been wholly expected, given the quota share from Barbican’s syndicate was ending. Now the Arcus 1856 team stand well-positioned to grow their book in 2020, taking advantage of better rates and market conditions as they go.