Atrium Syndicate 609 updated forecasts and 2022 result*

Atrium Syndicate 609 updated forecasts and 2022 result*

Atrium has released updated 2021 and 2023 Year of Account forecasts for Syndicate 609 with a preliminary result for 2022*, as follows;

Regarding the 2021 year, the Syndicate comments:

"The syndicate has exposure to the fate of the western leased aircraft in Russia, which predominantly impacts the 2021 year of account. The situation remains complex and continues to develop with multiple ongoing litigation in a number of different jurisdictions. Key factors including underlying peril, date of loss, and whether any form of negotiated settlement is feasible, all result in considerably different ultimate outcomes to the syndicate.

In arriving at the reserving position for this loss, the financial implications of various scenarios have been modelled, taking account of the uncertainties listed above. In arriving at our reserving position, the likelihood of the scenarios occurring was established using expert judgement. A similar probabilistic approach was employed at 31 December 2023. However, for this update we have reduced and re-focused the number of scenarios under consideration, in line with our evolving knowledge and expectations of the situation.

The Directors, in conjunction with the relevant subject matter experts, continue to monitor the situation closely, taking legal advice and meeting with market participants on a regular basis to ensure that the most up to date information is reflected within the syndicate reserves.

The outcome of this reserving exercise is included within the +0.0% - +10.0% forecast.

Due to the nature of the circumstances mentioned above, the potential for variation to the booked reserves is considerably greater than the normal level of reserve sensitivity to downside risk and the actual outcome of the loss could be in a particularly wide range with greater than usual variability. As a result, the 2021 year of account will continue to remain open until the level of reserve sensitivity to downside risk normalises."

*Regarding the 2022 year, the Syndicate comments:

"The 2022 YOA is closing with a result of +18.7% of capacity. Please note that this is subject to audit sign off which will follow later this month in line with the Lloyd’s reporting timetable."

Regarding the 2023 year, the Syndicate comments:

"The current forecast range for the 2023 year of account takes account of the fact that it is unlikely that this year of account will benefit from the reinsurance to close of the 2021 year of account, including estimates of prior year development and investment return associated with the prior year reserves. The current forecast range does reflect the impact of the reinsurance to close of the 2022 year of account.

All forecasts are shown as a percentage return on allocated capacity after deduction of standard personal expenses, but before members’ agents’ fees. These forecasts are subject to the assumptions listed below and are subject to possible revision. We draw your attention, in particular, to assumptions 1 and 6 below."

The key assumptions upon which each syndicates’ open year forecasts are based are set out below:
1. Inherent volatility in claims development will not give rise to actual ultimate claims which are materially divergent from expectations. In particular there will be no significant
distortion in the incidence of major catastrophe or attritional losses or in the ability of the syndicates’ reinsurers to respond to potential reinsurance recoveries;

2. The development of open year premiums will be broadly consistent with historical development patterns;

3. There will be no material change in reserving methodology or accounting policies at the respective dates of closure of the open years;

4. Inflation, interest and exchange rates as at the respective dates of closure of the open years will not differ significantly from those taken into account in the forecasts;

5. There will be no material unbudgeted expenses; and

6. Investment returns will be materially in line with investment manager expectations.