Brit Global Specialty, Lloyd’s syndicate 2987, has begun a major shake-up of its marine division by ending its yacht insurance business lines, TradeWinds understands.

The syndicate has been involved in yacht insurance for more than 50 years and it is a key sector of its diverse marine insurance portfolio also covering hull and machinery, cargo, marine war and builders risk, and third-party liability cover.

In common with other Lloyd’s syndicates, Brit’s yacht division, headed by John Higham, was hard hit by losses linked to hurricanes Harvey, Maria and Irma.

Figures from the Lloyd’s market put yacht losses at £350m ($460m) in 2017 and the loss ratio at 168%.

Marine accounts for less than 10% of Brit's total insurance business at Lloyd's.

Anthony Forsyth, head of Brit's marine division, declined to comment when approached by TradeWinds.

Looming deadline

The decision to quit comes as the syndicates respond to pressure from the Lloyd’s management to improve profitability or risk being thrown out. The syndicates have to present business plans by the end of this week on how they intend to get back in the black over the coming year.

Yachts are regarded as being the largest loss-makers in the Lloyd’s marine insurance sector and are struggling to get out of the red. Brokers say their figures show yachts still lost more than the beleaguered hull-and-machinery and cargo sectors even after the 2017 storm figures are stripped out.

Attention will now turn to whether Brit and other syndicates will scale down further in ma

rine. TradeWinds earlier reported how Lloyd’s syndicates AmTrust, Acappella, Advent, Barbican and MS Amlin had scaled down their marine insurance lines.

'Ready to reject plans'

One broker suggested Lloyd’s is ready to reject some of the business plans and force those syndicates to ditch loss-making business such as marine.

“Lloyd's approval for syndicate business plans will become clear over the next couple of weeks and we think there are several syndicates that will have their plans rejected.

"Lloyd's is likely to force those syndicates to withdraw from loss-making sectors like hull and cargo,” said one broker.

“The marine market at Lloyd’s could change very dramatically in a short space of time.”

Another said that he is concerned that Lloyd’s could go too far. “It could end up being a case of contagion,” he said. “You start by trying to cut marine capacity at Lloyd’s by 10% and end up losing 30%.”