Paladin exits waste following 'unsustainable rates'

Paladin Underwriting Agency will not renew its current waste and recycling risks account for 2011, and has taken the decision to exit the sector as rates fall to levels which are considered unsustainable.

Managing director Bill Adamson said: “Going into this renewal season I was confident of renewing our portfolio of Waste & Recycling risks into 2011. However, most recently, market rates have been softening again by typically 20%-30%.  

"Taken together with the latest analysis with our insurers, Montpelier Syndicate 5151, and partnering reinsurers, this has led us all to the unavoidable conclusion that, regrettably, we must withdraw from this class of underwriting, until further notice  -  until prices improve to a level that is technically sufficient.”

Paladin is an off-shoot of Montpelier Re launched earlier this year.

The company said the withdrawal of several insurers from this class during 2009 led to rate increases of typically 100%+ in 2010, supporting profitable underwriting.  

However, a number of large insurers have since entered the class in the latter part of this year and some appear to be pricing these risks as standard manufacturing plants, an approach which is not borne out by historic claims experience.

Adamson added: “We will continue however to monitor and retain our knowledge base; and will consider re-entering this class should market conditions improve. In the meantime, we are concentrating on our other existing lines of business and upon the acquisition of new teams through 2011.

“This position appears symptomatic of current market conditions generally. Reinsurers are seeing from their cedants that rates across very many classes are currently too thin. As a result the Lloyd’s market is also strategically reducing its overall capacity by 14% for 2010 .

“We have thanked all our clients and brokers who have supported us with their Recycling business; and look forward to the continued business, with all our supporting brokers, in our other classes of insurance through 2011.”