Lloyd’s turned in a strong first half, booking a pretax profit of £1.807 billion ($3.65 billion), compared to £1.351 billion ($2.732 billion) for the first six months of 2006. Despite the subprime lending crisis, Lloyd’s said its investments “returned over £800 million [$1.617 billion].” Lloyd’s also noted that as a result of the recent financial strength its ratings have been “upgraded to A+.”
Lloyd’s said the results were “driven by the favorable rating environment in 2006, together with the release of prior claims reserves. This was balanced by the weaker, but still profitable, underwriting conditions experienced in the first half of the year.”
The completion of phase I of its deal with Berkshire Hathaway’s National Indemnity to take over its Equitas liabilities (See IJ web site March 28) also eliminated an ongoing potential liability, which Lloyd’s has carried since 1996.
Lloyd’s posted a combined ratio of 82.9 percent for the period, compared to 86 percent for the first six month of 2006. The bulletin noted that this compares “with an estimated average of 93 percent for US property & casualty insurers; 90 percent for US reinsurers; 86 percent for Bermuda; and 97 percent for European insurers and reinsurers.”
The profits have increased the assets of Lloyd’s Central Fund to £2.165 million ($4.38 billion) from £1.454 billion ($2.942 billion) as of December 31, 2006.
Lloyd’s Chairman Lord Levene commented: “The market has recorded an excellent set of results. Today’s numbers are further proof of the progress that has been made by the market in recent years. Lloyd’s continues to outperform its major international peer groups and is in robust shape to meet the challenges ahead.”
CEO Richard Ward added: “These profits reflect the recent favorable rating environment and a relatively low level of catastrophe claims. We are now seeing a downward pressure on rates and a softening of conditions across all classes. This reinforces the continued need to focus on underwriting for profit.”
Source: Lloyd’s – www.lloyds.com
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