Lloyd’s announced an interim profit of 1.38 billion pounds Sterling ($2.47 billion) for the six month period ended June 30, 2005, a 21% increase compared to the same period in 2004.
The severe hurricane season will reportedly have a significant impact on the full year result. Despite that, and in the absence of any further major catastrophe or unforeseen events, the market is still expected to make a profit in 2005.
* Profit of 1.377 billion pounds ($2.465 billion), before tax, for the
first half of 2005 on a pro-forma basis (June 2004: 1.142 billion
* Combined Ratio of 87.3% (June 2004: 85.0%) compares favourably with an estimated average of 93.0% for US property and casualty insurers (i), 105.8% for US re-insurers (ii) and 92.9% for European insurers and re-insurers (iii)
* Reduction in gross written premium to 8.40 billion pounds ($15.04
billion) (June 2004: 9.84 billion pounds) reflects underwriting discipline, responding to an increasingly competitive rating environment in the first half of 2005
* Resources of the Society and Members up 4.9% to 11.98 billion pounds ($21.44 billion) on corresponding period in 2004 (June 2004: 11.42 billion pounds).
“These solid results reflect the market’s ability to respond effectively to more competitive conditions, with a clear focus on underwriting profit,” said Lloyd’s Chairman Lord Peter Levene. “Hurricanes Katrina and Rita were vivid illustrations of the increasing severity of natural catastrophes and the complex world of risk in which Lloyd’s underwriters operate with distinction. Our policyholders in the affected U.S. states can rest assured that Lloyd’s will once against meet all of its obligations, and play a full part in the recovery of that region.”
“The strong first half performance was driven by a combination of disciplined underwriting and a relatively benign claims environment,” added Lloyd’s Chief Executive Nick Prettejohn, “and put Lloyd’s on a strong footing, even as rates declined from their peak across many areas of business in the first six months.
“Hurricanes Katrina and Rita were a reminder that insurers’ full year results are influenced significantly by the extent of catastrophic loss, and most notably this year by the severity of the windstorm season. Katrina, in particular, will have a significant bearing on full year profits. With three months left of the year, the North American hurricane season not yet over and the full impact of Katrina and Rita not certain, it is not possible to draw any firm conclusions about the full year result. However, in the absence of any other major catastrophic loss or unforeseen event, the market is still expected to achieve a profit.
“The hurricanes are also likely to have the effect of stemming the softening of rates in a number of classes of business, and indeed in some rates are now increasing.
“Lloyd’s capital position is strong and stable. The solvency ratio has continued to improve, from 300% at the end of 2004, to 375% at the end of June.”
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