Lloyd’s of London reported its interim (6 months to June 30) results today, which could best be described as mixed. Although Lloyd’s posted an overall pretax profit of £628 million [$922 million], this was less than half the amount, £1.322 billion [$2.1 billion] it reported for the same period in 2009.
Other highlights included the following: — Combined ratio of 98.7 percent (June 2009 91.6 percent), which, Lloyd’s noted, “continues to represent a solid performance compared to our peers.”
— Investment return of £597 million [$943 million] (June 2009 £708 million [$1.12 billion])
— Central assets of £2.232 billion [$3.525 billion] (June 2009 £2.008 billion [$3.171 billion]).
Lloyd’s bulletin characterized the results as reflecting “a period of significant claims and extremely challenging investment conditions.” It also noted that the investment result was produced by a “conservative investment mix …during a period of continuing volatility in financial markets, and central assets are at a record high.”
Even though profits were down for the period, mainly due to increased claims, Lloyd’s overall operations were not greatly affected. The syndicates gross premiums written, less discontinued operations, totaled £13.49 billion [$21.3 billion], a slight increase compared to the 2009 6 month total. Earned premiums, net of reinsurance, were about the same at £8.285 billion [$13.08 billion]. The decrease in profits is apparent, however, at the syndicate level, where the “result per syndicate returns” fell to £497 million [$785 million] from £1.137 billion [$1.796 billion] for the first 6 months of 2009.
Lloyd’s Chairman, Lord Levene, explained: “The first six months of 2010 were the costliest on record since we began interim reporting, testing not only Lloyd’s but insurers around the globe. While events such as the Chilean earthquake and the Deepwater Horizon loss have proved challenging, paying these claims and supporting our policy holders is what we are here to do.
“It is a true indication of the strength of the Lloyd’s market that despite challenging investment conditions, softening rates and exceptional catastrophic events, we have returned a first half profit of £628 million.”
Chief Executive, Richard Ward, added: “The first half of 2010 demonstrates that we are well placed to deal with challenging market conditions. Our resolute focus on underwriting discipline, close attention to our customers’ needs and a prudent approach to investment stands us in good stead for the second half of the year.”
In the full report Ward explained: “All specialist insurers have been affected by the rise in the number of catastrophes in the first half of this year and we must accept that it is part of the normal insurance cycle that some years will attract more claims than others.
“Our purpose, after all, is to support businesses when disaster strikes, and to enable them to rebuild. And, as usual, our interim report comes with the caveat that, historically, the last six months of the year attract a greater number of catastrophe losses. Indeed, forecasters predict that 2010 will experience a more active than average hurricane season. However, our focus on underwriting discipline and a prudent approach to investment means we remain a stable and secure insurer to individuals and businesses.”
Source: Lloyd’s of London
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