TMK and CNA Hardy pull capacity from Ethos binder

CNA Hardy and Tokio Marine Kiln have pulled capacity from Ascot managing general underwriter Ethos Specialty’s property binder book, The Insurance Insider understands.

According to market sources, Melville, New York-based Ethos is looking to replace the withdrawn capacity with domestic excess and surplus lines paper from parent Ascot.

There are different reasons as to why CNA Hardy and Tokio Marine Kiln have decided to cut their support for Ethos’ property binder.

This publication understands that CNA Hardy is currently re-underwriting its direct and facultative (D&F) book and pulling back on binder business, hence the decision to withdraw the capacity from Ethos.

Sources said Tokio Marine Kiln was pulling back on its support to Ethos due to hitting property aggregation limits.

The decisions from CNA Hardy and Tokio Marine Kiln come amid ongoing pressure from Lloyd’s performance management directorate to improve market performance, with the Corporation taking a close look at managing general agent, MGU and binding authority agreements.

The Lloyd’s property market made a loss of £700mn ($918.8mn) in 2018, with a combined ratio of 110.4 percent. That was an improvement on the significantly catastrophe-impacted prior year when Lloyd’s property book suffered a loss of £1.76bn and was left with a combined ratio of 127.6 percent.

Even without the natural catastrophe activity, Lloyd’s property business had been suffering. In 2016, the property book reported a full year combined ratio of 103.4 percent.

The bid to improve Lloyd’s performance and its drive to push through greater profitability are causing D&F business to be re-rated after years of soft market conditions and intense competition took their toll.

Outside Lloyd’s, major D&F players such as FM Global and AIG’s Lexington have scaled back.

Ethos, Tokio Marine Kiln and CNA Hardy all declined to comment.

Ascot set up Ethos after being bought by the Canada Pension Plan Investment Board for $1.1bn at the end of 2016.