Tokio Marine Kiln Syndicates 510 and 557: 2019 and 2020 Year of Account Forecasts

Tokio Marine Kiln has released an updated forecast for the 2019 and 2020 years of account for its syndicates 510 and 557.

Syndicate 510
The 2019 forecast loss has improved to between -12.3% and -2.3% of capacity (midpoint -7.3% loss). The previous forecast range was between -14.7% and -4.7% (midpoint -9.7%) of capacity.
The 2020 forecast has improved to between -2.5% and +2.5% of capacity (midpoint breakeven). The previous forecast range was between -2.8% and 2.2% (midpoint -0.3%) of capacity.

Syndicate 557
The 2019 forecast has improved to between -3.5% and +1.5% of capacity (midpoint -1.0% loss). The previous forecast range was between -5.2% and -0.2% (midpoint -2.7%) of capacity.
The 2020 forecast has improved to between -15.2% and -10.2% of capacity (midpoint -12.7% loss). The previous forecast range was between -17.7% and -12.7% (midpoint -15.2%) of capacity.

Alpha comment

It is encouraging to see all forecasts improve whilst substantial COVID-19 reserves continue to be held. The improvements for the 2019 year are due to favourable movements on the closed 2018 & prior years which, for syndicate 510, have historically contributed an average of 3.7 percentage points to the bottom line on closure. The forecasts also include a more modest investment return than has been enjoyed in previous years. For the 2020 year of account, the forecast for syndicate 510 has moved from a small loss to a breakeven position and Brad Irick, CEO of TMK, advised that they expect to see the 2020 year closing in profit despite the impact of COVID-19 and the high frequency of catastrophe losses in 2020. For syndicate 557, which writes a quota share of the reinsurance book, an overall loss for the 2020 year of account is unavoidable but the forecast has improved slightly this quarter.