A paper, and an AI model for predicting Lloyd’s carriers’ performance, applied concepts inspired by sports analytics, with underwriting returns heavily influenced by cyclical swings.
Hampden Risk Partners (HRP) and Insurance Capital Markets Research (ICMR) have released a joint white paper introducing a new AI-powered method for predicting underwriting performance at Lloyd’s, with a focus on relative performance as a benchmark.
The paper, “Winning Portfolio Strategies: Using innovative AI models to predict relative performance”, applied concepts inspired by sports analytics to the Lloyd’s market, where underwriting returns are heavily influenced by cyclical swings.
By shifting emphasis from absolute to relative performance, the model aims to offer a clearer view of syndicate capability compared with peers, the authors said.
“This white paper explores how we assess and forecast performance within the Lloyd’s market,” said Markus Gesmann, co-founder of ICMR.
“The principle of predicting relative performance, which is so crucial for determining winners in sports, is directly applicable to the Lloyd’s market. ICMR has developed an innovative AI-powered model, inspired by these very techniques, to predict the relative loss ratio performance of Lloyd’s syndicates, utilising the peer performance data curated by ICMR. Our analysis provides objective, data-driven insights that not only enhance accuracy but also bring greater transparency to portfolio management.”
HRP, which specialises in allocating capacity to outperforming underwriting teams rather than employing in-house underwriters, said the findings backed its own capital deployment approach.
“Providing a sophisticated and predictive view of future performance enhances transparency and builds confidence with our investors,” said Chris Sharp, active underwriter at HRP.
“The analysis by ICMR directly supports our strategy by demonstrating that our approach is successfully targeting growth with quality counterparties, while simultaneously reducing volatility and improving potential reward. For Hampden Risk Partners, embracing the prediction of relative performance is not just an analytical exercise – it is a winning strategy.”
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