So far, the results season has proved as predictable as the hurricane season is not. Burgeoning profits and ridiculously low combined ratios have become almost a given, leaving chief executives with the enviable task of whether to increase dividends, retain capital, boost reserves or even buy back shares.
As one senior broker said of insurance company chief executives last week: "They all have a healthy glow about them at the moment."
But, while catastrophe-exposed business has, to a large degree, led to the 100% plus increases in profit before tax, the same cannot be said for UK business.
A familiar trend emerging behind the headline figures of a number of Lloyd's insurers is the continuing contraction of UK commercial portfolios as competition heightens in fleet motor, professional indemnity and property packaged business.
Last year, those who wrote UK business admitted they were taking their eye off the market in order to focus on more profitable areas of insurance offshore.
With commercial motor and UK liability business remaining under pressure, similar statements of intent have been made again this year, leading to the question of whether certain quarters of the market have lost their appetite for that type of risk.
Amlin and Brit have already stated that they will not write UK commercial business that is inadequately priced. Amlin even admits to losing business in 2006 and is struggling to find opportunities to write profitable new accounts as a result of that competition.
It seems to makes sense for insurers to step away and wait for the market to turn – the latest prediction being early 2008. After all, the reason super-sized insurers continue to churn out year-on-year profits is not all about whether the wind blows but also intuitive underwriting.
One commercial UK broker is keen to point out, however, that the appetite of Lloyd's insurers has not waned, but that they are simply not prepared to go to the lengths of composite insurers in following the market down.
He says: "The likes of AXA and Norwich Union want more and more commercial business and do that by taking it away from Lloyd's. The more profitable Lloyd's syndicates on the other hand take a more long term view to it all."
The fact that Lloyd's is saying 'no' to the UK commercial broker is not necessarily a bad thing for provincial commercial brokers either. Placing risks at Lloyd's means feeding a percentage of their commission to Lloyd's brokers. Take Lloyd's out of the equation and provincial brokers potentially earn more.
For the time being, at least, Lloyd's insurers are choosing to grow their international and US accounts at the expense of a position in the UK commercial rankings.
But, as with everything in the insurance industry, things go round in cycles and brokers are expecting the specialist, niche players back in time for a hardening market. IT
