Guy Carpenter & Company Inc., a global risk and reinsurance specialist and part of the Marsh & McLennan Companies, has published its fourth annual report on the Lloyd’s Market, a comprehensive review of Lloyd’s financial and operational performance in 2006.
The report found that as a result of enhanced risk management and three consecutive years of significant profit, Lloyd’s was well positioned to absorb the substantial claims arising from a second year of unprecedented natural catastrophes in 2005:
* Lloyd’s underlying performance continued to be strong in 2005, but net losses of GBP3.3 billion from Hurricanes Katrina, Rita and Wilma (KRW) pushed the market into a small overall loss of GBP103 million.
* While the KRW claims have been substantial, every syndicate has been able to trade through these losses, and the impact on the Central Fund is expected to be negligible.
* The combined ratio was 111.8 percent in 2005, including 28.1 points of KRW losses, which compares favorably with U.S.- and Bermuda-based reinsurers. All non-catastrophe exposed lines remained profitable.
* Mutually held central assets increased by 5.9 percent to GBP1.27 billion, under International Financial Reporting Standards.
* In the wake of KRW, capital providers committed GBP1.2 billion of new money to the market, boosting Funds at Lloyd’s (FAL) by 6 percent to GBP10.2 billion and market capacity for 2006 by 8 percent to GBP14.8 billion.
“Lloyd’s continues to be a strong and stable reinsurance market for our clients, despite six of the ten largest insured losses in U.S. history occurring in the last two years,” said Geoffrey Bromley, chairman of Guy Carpenter’s European and Asian Operations.
In addition to providing in-depth analysis of Lloyd’s 2005 results, recent trends in capacity, the market’s capital structure and the current ratings in effect, the report examines the role of the Franchise Board and Lloyd’s competitive position. Other highlights include an overview of all active syndicates, plus a ranking of the top 20 syndicates, capital providers and managing agents operating in the market in 2006.
“Change is becoming a mantra at Lloyd’s,” Bromley added. “With another active hurricane season predicted for 2006, we believe that Lloyd’s recent record and proven ability to adapt to new circumstances bode well for current and potential policyholders alike.”
The full report, The Lloyd’s Market in 2006, is available for download at www.guycarp.com. For printed copies, please contact Guy Carpenter at firstname.lastname@example.org.
Source: Guy Carpenter & Company
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