Up-for-sale Lloyd’s carrier Chaucer expects its casualty book to shrink over the next two years according to a business plan seen by re-Insurance.com.
In a pitch book for the business, Goldman Sachs - which has a sell mandate for Chaucer - said the (re)insurer expects its casualty premiums to have dwindled by almost 11 percent come 2020.
Meanwhile, Chaucer has forecast meaningful growth in all other classes.
Last year, the carrier wrote $259.9mn of casualty premiums and it is expecting that figure to climb to $269.5mn for 2018.
However, it has forecasted that premium volume will slide to $254.1mn the following year before dropping to $240.6mn in 2020.
“Most areas have seen continued softening of rates in recent years, which is why Chaucer has reduced premium volumes,” the pitch book said.
“Forecasts assume a continued c.10 percent reduction per annum across the portfolio until 2020, after which levels are flat.” By 2022, premiums were expected to have levelled out at $145mn.
Meanwhile, Chaucer has upped the portion of casualty premiums ceded to reinsurers. In 2016, 17.8 percent of premiums were passed on to reinsurers. That figure jumped to 21.4 percent last year and is expected to climb again this year to 27.2 percent.
Yesterday, re-Insurance.com revealed that Chaucer had dramatically hiked its reinsurance spend in the wake of last year’s devastating catastrophe losses.
However, Chaucer expects the casualty book to generate a loss-making combined ratio of 108 percent for 2018, a deterioration from the 104.9 percent combined it reported last year.
Chaucer forecasts that the combined ratio on its casualty book will hover at just over 107 percent until 2022.
The prospectus said the division includes several strong-performing lines, notably hospitals and general liability, although it noted that international professional indemnity and North American lines had underperformed.
“The overall premium reduction therefore masks further anticipated portfolio re-balancing, which is expected to improve the blended loss.”
It also said that Chaucer was starting to identify small niche opportunities that can be written more profitably outside of Lloyd’s and will be written into its new Dublin platform.
Across the rest of its book, Chaucer has forecast healthy growth, predicting overall premiums will climb to $1.64bn by 2022. Last year it wrote $1.22bn and it is expecting that to increase to $1.35bn for 2018.
The bulk of that growth is expected to come from its treaty, political risk and property books.
Treaty premiums are expected to climb by 36.9 percent - compared to 2017 levels - to $531.6mn. Its political risk book is forecast to swell to $286.9mn, a 74 percent increase on 2017.
Meanwhile property premiums are expected to double to $193.2mn.
The Hanover acquired Chaucer for £292mn in 2011 and put the business up for sale in March.