Structured credit and political risk insurance capacity grows, says Gallagher

Capacity for structured credit and political risk insurance (SCPR) in the Lloyd’s and London market has increased in 2022, according to Gallagher Specialty’s report on the market.

Total capacity for political risks was $3,428m as of January 2022 ($3,309m 2021), and for trade risks political it was $3,315m ($3,269m 2021). For trade risks commercial it was $2,585m ($2,532m 2021), and for non-trade risks it was $2,001m ($1,864m 2021).

Total market capacity

	Political risks	Trade risks political	Trade risks commercial	Non-trade
Lloyd’s	$1,638m	$1,568m	$1,124m	$1,021m
Company	$2,625m	$2,552m	$2,161m	$1,566m
Total January 2022	$3,428m	$3,315m	$2,585m	$2,001m
Total July 2021	$3,405m	$3,283m	$2,472m	$1,906m

The market capacity data was compiled by Gallagher from information provided by each insurer, correct as of January 2022. It noted that where an insurer has a Lloyd’s and company market platform, their data is not double-counted in the calculation of total capacity

The biggest players at Lloyd’s for political risks (more than $100m capacity) are: AXA XL syndicate 2003, Chubb syndicate 248813, Canopius CPR syndicate 4444, and Liberty syndicate 44721. The biggest capacity providers at Lloyd’s for credit risks (more than $100m capacity) are: AXA XL syndicate 2003, Canopius CPR syndicate 4444, Liberty syndicate 44721, Markel International syndicate 3000, and QBE syndicate 1886.

For the company market, the biggest players for political risks (more than $100m capacity) are: AIG, AXA XL, Chubb, Euler Hermes, Everest Insurance, Fidelis, Lancashire, Liberty Mutual Insurance Europe and The Hartford. The biggest London market capacity providers for credit risks (more than $100m capacity) are: AIG, Atradius, AXA XL, Euler Hermes, Fidelis, Liberty Mutual Insurance Europe, Markel, QBE and Swiss Re.

According to Gallagher: “2022 will continue to provide for uncertainty despite the global appeal of a return to normality. Whilst the world begins to reopen, there are numerous other macroeconomic and sociopolitical factors that investors must evaluate and effectively mitigate in order to protect their interests. Despite this increased risk environment, the SCPR market has continued to demonstrate its robustness by supporting both existing and new clients throughout 2021. The release of new initiatives from our insurers only validates the dynamic nature of the market as it continues to remain relevant moving into the digital era.”

The report also examines the current state of political risk and includes the following observations:

• In APAC, the problems in Myanmar caused some concerns and led to an increase in its risk rating
• In Europe and CIS, Turkmenistan saw increased confidence with the long-anticipated succession from the current president to his son expected to take place in the coming months
• LatAm and Caribbean risk ratings all generally headed in the right direction with economic growth expected across the region and growth acceleration
• In MENA, Lebanon caused some concerns and an increase in its risk rating, including inflation and a planned rescue package not yet being agreed
• In sub-Saharan Africa, Ethiopia saw the highest increase in risk rating due to the unstable ceasefire between the government and the Tigray People’s Liberation Front.