Neon in Run Off After Parent Pulls Plug

Lloyd’s managing agent Neon has been placed into run off after the decision of its US parent to walk away from the Lloyd’s market.

American Financial Group, (AFG) has announced that it plans to exit and as such will put its Lloyd’s subsidiaries including its Lloyd’s Managing Agency, Neon Underwriting Ltd., into run-off.

The group said the decision had been made due to what it saw as an inability to deliver the necessary return from their Lloyd’s operations.

“The exit from this business will allow AFG to reallocate capital to its other insurance businesses and opportunities that have the potential to earn targeted returns on investment,” it added. “Neon and its predecessor, Marketform, have failed to achieve AFG’s profitability objectives since AFG’s purchase of Marketform in 2008.

“After review of Neon’s anticipated results for 2019 and its 2020 prospects, AFG has determined that Neon will not meet AFG’s return expectations. Neon produced approximately 7% of AFG’s property and casualty net written premiums in 2019.”

However, it will come at a cost said the insurer. AFG estimates that it will incur a non-core after-tax charge of between $50 million and $60 million in the fourth quarter of 2019 for Neon reserve strengthening and expenses related to exit costs associated with the run-off of this business.

In a message to policyholders AFG said it will work with Neon and UK regulators to ensure that Neon continues to meet its obligations to policyholders and achieves an orderly run-off of operations.

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