Carbon’s Card: 35% SIAB expense ratio a “challenge”

While significant strides have been made to encourage the reduction of soaring and unsustainable expense ratios at Lloyd’s for the market’s greater good, Stephen Card, CEO of Carbon Underwriting, admits that parts of this effort are a “challenge”.

Stephen Card – Carbon Underwriting

While Card did not disclose the expense ratios of Carbon Syndicate 4747, it has been well publicised that one of requirements of owning a syndicate in a box (SIAB) is that the initial target for the combined expense ratios (including brokerage and cost of operation), is 35 percent at a maximum.

“It’s an absolute challenge,” Card told The Insurer, “but it’s also one of the reasons why we adopted the business model we did and why we felt we could actually exist within the SIAB model.”

Formally launched on 1 July 2020 with a stamp capacity of £15mn ($19.5mn) for year one, Carbon Syndicate 4747 operates as an underwriting and data lead with a focus on coverholder partnerships in the property and casualty space.

The syndicate – which is led by Nicholas Tye as active underwriter – marked the first SIAB to be established to be in 2020 (during lockdown) and is one of four existing SIABs, a key initiative in the Future at Lloyd’s Blueprints.

Syndicate 4747 is supported by its proprietary technology platform ‘Graphene’, which presents underwriters and coverholders with a fast and efficient way of acquiring data which can support profitable underwriting decisions.

“We are fortunate because our costs are kept very low simply because, as a new business, we are completely digital,” said Card. “This has been a huge factor in our ability to maintain a good expense ratio.”

Speaking about the process of launching syndicate 4747, Card said it had been “incredibly interesting for someone who has worked in the market as long as I have”.

“For Lloyd’s to go with this initiative, as a sort of fast start, fast fail, bringing new syndicates into the market – a process that normally takes nine to 12 months, or even longer – was really interesting. I thought at the time, this is great news.”

As a class agnostic MGU with an aim of “driving transformation” in the international coverholder market, Carbon Underwriting’s syndicate proposition was deemed as a “prime candidate” for SIAB, according to Card.

“I think because our business model fitted the SIAB model and because we understood the market quite well, having all coming from a Lloyd’s background, this was something that worked to our advantage,” he said.

“I think if we’d been an MGA working either from overseas or with no real Lloyd’s operational experience, it would have been a much more daunting process. [Lloyd’s] was using acronyms which we understood because we use them ourselves every day, whereas I think people from overseas might be put off,” he added.

While commending the support Carbon received from Lloyd’s and it’s managing agency Asta, getting Syndicate 4747 established and launched during lockdown was not what Card and the team had planned, but in the spirit of digital transformation, perhaps it was apt.

Evolving into a full syndicate

When Syndicate 4747 started writing business on 1 July 2020 it had year-one stamp capacity of, which is estimated to rise to £62.5mn in year three.

“We started off this year with a £15mn GWP because we only started underwriting six months into the year, but we’ll be going to £45mn next year. It looks aggressive, but we’re not really going from £15mn, we’re really going from an annual of £30mn and I think we’re very comfortable with that,” said Card.

However, while completely supportive of the SIAB initiative, Card recognises its limitations and does not rule out the prospect of scaling up to become a full Lloyd’s syndicate.

“The SIAB model is a low-cost model and is more defined in terms of the class of business you write, and is not as broad-based as a full syndicate. So yes, it does have its limitations, but we embraced these when we started this journey.

“We do have an ambition at some point when it’s right for us to become a full syndicate because it will give us greater flexibility than SIAB does. But when will that be? I can’t predict at the moment.”


While Carbon Underwriting has not been directly impacted by losses relating to Covid-19, Card has felt the aftershocks in the industry, as it came under fire by policyholders, the regulators and the media for the way in which it reacted.

“One of the things that I feel slightly disappointed about, is very often as a market, we tend to be on the back foot and we’re not great at publicity at times. And for all the good things we do, all the claims, the billions of pounds of claims that are paid without any issue whatsoever, it’s always the ones that make the headlines where we’re caught on the back foot slightly.”

He added: “I think we could be more upfront with the good that we do in society as an industry because it would counter a lot of the criticism which has been levelled at the insurance market over Covid and the claims which have not been paid.”

Of course, like many others in the industry, the shift in market dynamics which has mostly been driven by Covid-19 has not gone unnoticed by Card and his team.

“It’s been an interesting period. Clearly it has exaggerated the upturn in the insurance cycle and we will see significant rate rises and changes in terms and conditions. And by that I don’t mean just pandemic exclusions, which are ubiquitous in every class these days, but in terms of looking harder at where people have pushed the limits of additional clauses, pushed deductibles down.”

He concluded: “So the whole aspect is being looked at; it’s not just price, but it’s all the T&Cs which go into making up an insurance policy. So yes, the agenda has been pushed harder because of Covid-19, but it is not just the pandemic which has done that. This has been coming for a long time.”