Lloyd’s outperforms international peer group; Market conditions set to remain favourable in the medium term; Modernisation of market set to improve profit sustainability
2 April 2003 – The Lloyd’s of London insurance market today reported its financial results for 2002.
- Profit of £834 million on a pro forma annually accounted basis
- Initial projection of profit of £1,484 million on a three-year accounted basis for the 2002 underwriting year
- The result is in line with expectations and marks a strong return to profitability for the market.
Lloyd’s Chief Executive Nick Prettejohn said: “These results demonstrate a very strong performance. It was the market’s resilience and disciplined approach, at a time when the industry as a whole has faced many difficulties, that generated 2002’s healthy result.
“These figures compare very favourably when measured against the market’s peer group. Lloyd’s combined ratio for 2002 was 98.6%. This compares with an average of 105.1%i for European reinsurers, 121.3%ii for US reinsurers and 108.3%iii for US property and casualty insurers.”
During 2002, the net resources of the Society and its members increased by 85% to £7,509 million (from £4,052 million in 2001).
Lloyd’s central assets increased by 55% to £563 million (from £363 million in 2001). Based on current expectations, the central assets are forecast to grow to approximately £800 million by the end of 2003.
Lloyd’s advised that it has commenced arbitration proceedings with the group of insurers involved in its Central Fund insurance policy in order to secure payment in full under the terms of the policy. The six insurers on the policy are currently withholding payment of a proportion of the claims. Lloyd’s is confident of success in the arbitration proceedings. Irrespective of the outcome, there will be continued growth in Lloyd’s central assets when measured against the year-end 2001 position. Commenting on the prospects for the market in the immediate future, Mr Prettejohn said: “The state of the capital markets and the continuing actions by many insurers to increase their reserves for past underwriting means that the Lloyd’s market should enjoy positive trading conditions in the medium term.
“We are determined that the implementation of our new Franchise arrangements will reinforce these external factors by raising underwriting standards and improving efficiency. These should enable Lloyd’s to sustain today’s positive performance into the future.”
Lloyd’s is the world’s leading insurance market with a capacity to accept insurance premiums of up to £14.4 billion. It is the world’s second largest commercial insurer and third largest reinsurer. In 2003, 71 syndicates are underwriting insurance at Lloyd’s, covering all classes of business from more than 120 countries worldwide. Approximately five per cent of world reinsurance is placed at Lloyd’s which also accounts for half of the London market’s international insurance premiums. Lloyd’s is regulated by the Financial Services Authority. More at www.lloyds.com