Lloyd’s Pleased with Firms 2005 Results Despite Hurricanes

March 29, 2006

Ewan Gilmour, Chief Executive of the U.K.’s Chaucer insurance group and Lloyd’s Deputy Chairman, issued a statement praising the market’s underwriters for delivering a series of good results, following the recent publication of most companies 2005 preliminary earnings figures.

He noted that the market had achieved the results despite the worst US hurricane season on record and the biggest loss in insurance history from Hurricane Katrina. “I am very pleased to see several of the Lloyd’s underwriters delivering reasonably good results in the face of the claims of last year,” Gilmour stated on the Lloyd’s Website (www.lloyds.com).

“I think it speaks volumes for the way in which the Lloyd’s companies and the market’s management have approached the underwriting of all risks, both in terms of discipline, the limits on exposure to any particular line and their reserving strategies. It once again proves that Lloyd’s is a strong entity and is able to take losses of this magnitude,” he added.

While that is certainly true, neither Gilmour nor any of the reporting companies, highlighted the fact that the profits were for the most part achieved through reserve releases and investments. Except for Amlin, operating profits were down significantly and most of the companies combined ratios exceeded 100 percent.

Lloyd’s bulletin singled out reports from the following companies:
— Chaucer was just one of a number of syndicates to announce results in the past week. The company recorded a pre-tax profit of £11.9 million [$20.67 million] for 2005, despite hurricane losses of £68.5 million [$119 million].
— Kiln reported an £8.5 million [$14.77 million] pre-tax profit compared to the £37.9 million [$65.85 million] figure for 2004. However its hurricane exposure was £77 million [$133.8 million], twice the level of claims it paid following the terrorist attacks on 9/11.
— Brit Insurance Holdings delivered a pre-tax profit of £62.4 million [$108.43 million] after catastrophe claims of £244 million [$424 million] for the year.
— Amlin, Lloyd’s biggest underwriter reported a record pre-tax profit of £182.7 million [$317.5 million] despite an exposure to the hurricanes of £130.1 million [$226 million].
— Hiscox weathered £165 million [$286.7 million] of storm losses to report a pre-tax profit of £70 million [$121.6 million],
— Beazley delivered a £16 million [$27.8 million] pre tax profit off the back of £130 million [$225.9 million] of hurricane claims.
— Wellington insurance group saw a 2004 pre-tax profit of £77.2 million [$134 million] turned into a 2005 pre-tax loss on the back of £140 million [$243.3 million] of hurricane exposures. But the group has increased its underwriting capacity for 2006 to £800 million [$1.39 billion] as it seeks to take advantage of strong rating conditions.

Lloyd’s also noted that many of the businesses said they were expecting rates in some areas to continue to climb, and that in some reinsurance sectors there would be price increases as the year progressed and the lack of capacity pushed up premiums for the capacity which remained on offer.

However the bulletin concluded that Lloyd’s “chances of it making a profit overall this year are small following the 2005 record hurricane season, which cost the market almost £3 billion [$5.213 billion].”

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