According to an article on the Lloyd’s web site (www.lloyds.com), leading figures in the Lloyd’s market have welcomed the record results for 2007 and acknowledge the strength of the market to face the softening cycle (See IJ web site – http://www.insurancejournal.com/news/international/2008/04/03/88802.htm).
Ewen Gilmour, Chief Executive of Chaucer Holdings, commented: “Clearly, the excellent results speak for themselves. What is particularly gratifying is the way that Lloyd’s combined ratio has been consistently better than that of rival markets. Given our efficient capital ratios, this translates into an even better return on equity.”
His views were echoed by Dermot O’Donohoe, Chief Executive of XL London Market and a member of the Council of Lloyd’s, who indicated that the “record 2007 results clearly demonstrate that Lloyd’s is still a successful global marketplace for complex and specialized insurance cover. As a global insurance group we are proud to be part of this achievement through our Lloyd’s Syndicate 1209.”
He also pointed out that, although “the industry as a whole benefited from fewer catastrophe claims,” in 2007, “the continuing market softening will be a challenge across the industry and will require further efforts in underwriting discipline and operational efficiency by all involved.”
David Ross of Arthur J Gallagher UK Ltd added: “A fine set of results – but I would counsel caution, as I see rates continuing to soften for at least 24 months. It’s encouraging that Lloyd’s underwriters appear to be holding a prudent line and pledging to write less business this year, but equally I’m distressed by some catastrophe pricing in the US – where we’re witnessing limits being doubled at half of last year’s quoted premium.”
Andrew Hubbard, Head of Insurance and Pensions Fund practice at accountancy firm Mazars, said the results showed a number of strengths within the Lloyd’s market and its syndicates. He described the results as an “excellent outcome for a year in which rates have softened and reflects the fact that it was a low catastrophe year.”
Hubbard noted the increase in investment returns and the level of back year releases, adding there were already signs in the tail end of 2007 that rates were starting to fall. “A 29 percent return on capital is clearly an excellent result and has helped to achieve an average 19 percent return over the last 5 years. This is itself is an excellent return, especially when it is considered that the average is adversely affected by a negative return of 0.9 percent in 2005 (a catastrophe year).”