Aon Benfield Publishes Report on Lloyd’s

June 1, 2011

Aon Benfield’s Analytics’ Market Analysis team has launched its latest Lloyd’s Update report, covering the market’s financial performance in 2010 and business position in 2011.

Key findings contained in the report were summarized as follows:
• Lloyd’s reported a 43 percent reduction in pre-tax profit to £2.2 billion [$3.607 billion] for 2010, a return on capital of 12.1 percent.
• Despite £2.2 billion of major loss claims, the market was able to deliver a profitable accident year combined ratio of 99.2 percent.
• Prior year reserve releases increased by 9 percent to £1.0 billion [$1.64 billion], while the investment return fell by 29 percent to £1.3 billion [$2.131 billion]
• Capital and reserves were unchanged at a peak level of £18.2 billion [$2.985 billion] at the end of 2010, leaving the market well-positioned to cope with the consequences of the natural catastrophes that occurred in the first quarter of 2011.
• Losses from these events are currently estimated at £2.4 billion [$3.936 billion]; split £1.22 billion [$2 billion] to the Japanese earthquake and tsunami, £750 million [1.23 billion] to the New Zealand earthquake and £406 million [$665.86 million] to the Australian floods.

The report also pointed out that Lloyd’s market capacity has increased to £23.2 billion [$38.05 billion] for 2011. Aon also noted that “in a challenging operating environment, underwriting discipline and risk management remain the top priorities. Major loss claims arising from events in the first quarter exceed those reported for all of 2010.

“There are now 54 managing agents overseeing active business at Lloyd’s. The number of active syndicates has increased to 87, although 6 of these provide internal quota share reinsurance only and are not available to write open market business. Average syndicate capacity now stands at £267 million [$438 million].”

Source: Aon Benfield

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