The faction leader is off map (authority level?) until turn 10 plus distance from capital both could trigger it. Still surprising, given the loyalty level.
Edit - just checked: while the effect is loyalty 5 there is no level 5 for the LoyaltyStarter trait, only 1. Change the value to 1 and try again.
Code:
character Gellir Hvass, named character, age 26, x 60, y 145
traits GoodRiskyAttacker 1 , GoodCommander 1 , BattleDread 2 , StrategyDread 2, LoyaltyStarter 5, ManagementStarter 1
;---------------------------
Trait LoyaltyStarter
Characters family
Hidden
Level Loyalty_Starting_Value
Description Loyalty_Starting_Value_desc
EffectsDescription Loyalty_Starting_Value_effects_desc
Threshold 1
Effect Loyalty 5