Time to take in a reef or two

2005 and 2017 felt like very similar years, right down to the three-letter abbreviations that defined them.

And for Lloyd's, HIM really is equal to KRW.

Lloyd's 2017 investor presentation has reindexed its ￡3.3bn ($4.7bn) 2005 cats to ￡4.6bn in today's money - broadly equivalent to the ￡4.5bn recorded from 2017's major losses.

To all intents and purposes the cat hit was equal. Does that mean everything else should be the same?

Let's travel back in time and have a little look.

In 2005, Lloyd's ￡3.3bn net cat hit from the KRW storms and other major losses came on net earned premium of ￡11.8bn. So that's a hefty 28 points.

Yet, it posted a 111.8 percent combined ratio, despite only 0.1 points of net reserve releases.

This time it took its ￡4.5bn major losses on net earned premium of ￡24.5bn. That's only approximately 18.5 points. Yet it posted a combined ratio of 114 percent, despite still benefiting from 2.9 points of net reserve releases.

In 2005 the expense ratio was 31 percent. The attritional loss ratio was 52.8 percent. All of the non-cat classes made a profit.

Twelve years later and they're all loss-making or at best marginal. Expenses are 39.5 points and the underlying loss ratio is a hefty 58.9 percent.

Clearly 2017 was a stormy sea and 2005 was as flat as a millpond in comparison.

The 2017 water is brackish and poisoned by toxic waste. The channels are strangled by weeds and the rampant algal blooms of expenses run wild.

Looking back through today's lens, 2005 looks like a sweet harbour teeming with fish of all shapes and sizes.

Yet, just as in nature, where specialised creatures seem to be able to survive whatever the extremes, some players are still prospering from the poisonous fare on offer.

The only trouble with the hardy specialists in nature is that they tend to be microscopic. The bacteria that thrive at extremes of temperature and pressure around volcanic vents on the ocean floor are not visible to the naked eye.

While the small fry may be nimble enough to adapt to extremes, larger beasts depend upon the overall heath and quality of the ocean ecosystem as a whole. Tiny bacteria may be okay but whales need clean seas.

See the Lloyd's giant Amlin, currently finding it hard to breathe.

Cleansing the oceans of plastic and toxins is a massive task that will take decades to see results.

The turning circle of a market such as Lloyd's is equally vast.

But in order to turn you have to start nudging the tiller concertedly, and in a consistent direction.

Performance director Jon Hancock has said that he doesn't see his job to be the chief underwriting officer of every syndicate. That is fair enough.

"If everyone takes the right action, then we can be a light-hand at the tiller," he said.

In maritime terms, Hancock may not be the captain of every ship, but he is the fleet commodore and sets the principle course for the group according to the state of wind and tide.

It's clear the fleet has been carrying too much sail as the wind has got up.

Experienced sailors know that too much sail set too tight causes the phenomenon of weather helm.

This acts like an invisible hand on the tiller pushing the boat into the wind and making the vessel difficult to manoeuvre. The only way to get rid of it is to take in a reef or two.

Any helmsman will tell you that once this is done the relief on the tiller is palpable and oddly enough, there is no appreciable loss of boat speed.

Time for the order to go out to trim the sails.