Guy Carpenter & Company Ltd., Marsh & McLennan’s global risk and reinsurance specialist, announced that it has released its annual, comprehensive review of the Lloyd’s Market – The Lloyd’s Market in 2004.
The report was prepared by a team led by Vice President Mike Van Slooten, and notes the continued strengthening of Lloyd’s results since the U.S. terrorist attacks in September 2001.
Highlights include the following:
— On a pro forma annually accounted basis, Lloyd’s profits more than doubled to a record £ 1.9 billion [$3.5 billion] for 2003, after prior year reserve strengthening of £ 545 million [$1billion]. Gross and net written premium reached record highs of £16.4 billion [$30 billion] and £12.3 billion [$22.6 billion], respectively. — The combined ratio improved to 90.7 percent in 2003 from 98.6 percent in 2002.
— Net resources – total assets less policyholder and other liabilities – stood at £10.1 billion [18.58 billion] at the end of 2003, a 150 percent increase since the end of 2001.
— Lloyd’s financial strength ratings, as measured by Standard & Poor’s and A.M. Best, continue to demonstrate great stability relative to the wider market, having been lowered by only one notch since their introduction in 1997.
Geoff Bromley, Chairman of Guy Carpenter’s European and Asia Pacific Operations, commented: “The turnaround in Lloyd’s financial performance since 2001 is impressive and, absent any unforeseen circumstances, we would expect 2004 to be another healthy year. While the difficult market of the past few years has certainly contributed to the improvement, there is little doubt that the franchise reforms implemented have also played a role.”
The report also provides an overview of the activities undertaken by the Franchise Performance Directorate and Lloyd’s efforts in business process reform. In its first full year of operation, the Franchise Performance Directorate appears to have made good progress toward its goal of improving Lloyd’s operating performance across the business cycle. Among its key accomplishments in 2003 were new underwriting guidelines, more rigorous business planning and monitoring processes and guidelines to promote efficient run-off management. In addition, significant efforts are being made to improve the market’s business processes including policy production and premium and claims payment.
“Longer-term, Lloyd’s success will depend on its continued ability to instill management discipline and sustain meaningful process improvements, especially if faced with changing market conditions or a series of abnormally high catastrophe losses. All in all, however, we are pleased with the progress to date and applaud the vision and commitment of the Lloyd’s management team,” Bromley concluded.
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