Following last week’s World Insurance Forum in Bermuda, Lloyd’s chairman Lord Peter Levene undertook to give his answers to some important questions in a Q&A format on the Lloyd’s Website (www.lloyd’s.com).
Levene said he didn’t see problems with Bermuda-based competition, as “Lloyd’s has a growing relationship with Bermuda; many Bermudian companies reinsure with Lloyd’s syndicates – and vice versa.” He added that “just as Bermudian companies have been investors in Lloyd’s for a decade, so some Lloyd’s vehicles are now investing in Bermuda too, setting up complementary platforms and diversifying their business where it fits with their business strategy. This is not surprising in an increasingly interdependent global marketplace and these businesses are certainly not leaving Lloyd’s – in fact they are increasing their Lloyd’s presence.”
Commenting on the impact of last year’s hurricanes (Lloyd’s took an estimated $5 billion hit), Levene stated: “Although we are not expecting to make a profit for 2005, Lloyd’s is in good shape, with strong ratings and no downgrades. Capacity has increased by 7 percent this year to take advantage of market conditions, but we expect the actual premium written to be adjusted as market conditions develop and as new risk modeling information is received.”
He also saw no significant problems in raising capital. “Since 2002, Lloyd’s capital has grown by approximately $4.5 billion (£2.5 billion), he noted, “and since Hurricane Katrina, over $2.1 billion of ‘new money’ has come into Lloyd’s to support underwriting in 2006. Lloyd’s capacity has increased for 2006 by 7 percent in absolute terms and by 15 percent compared to what we expected before the 2005 hurricanes, which is the right response to current market conditions. Amongst the businesses seeking to grow the most in 2006 are Liberty Mutual (+27 percent), AIG (+34 percent), QBE (+20 percent) and Munich Re (+37 percent).”
For the complete text of Lord Levene’s remarks go to the Lloyd’s Website noted above.
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