October, 2006 – For the first time in three years, workforce-improvement issues did not top list
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Strong profit before tax of £1.35bn ($2.50bn) in first half
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Improved combined ratio outperformed major international peer groups
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Increased underwriting profitability
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Growth in central assets and a further increase in solvency ratio
Lloyd’s, the world’s leading specialist insurance market, today announced an interim profit before tax of £1.35 billion ($2.50bn) for the six month period ending 30 June 2006. This result is broadly similar to that of last year, underpinning the market’s consistency with a 20% improvement in underwriting profit offset by a smaller contribution from investment income compared with the same period last year.
Highlights
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Profit of £1.35 billion ($2.50bn) (first half ending 30 June 2005: £1.38 billion);
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Combined ratio of 86.0% (first half ending 30 June 2005: 87.3%), compared with an estimated average of 93% for US property & casualty insurers (i); 97% for US reinsurers (ii); 89% for Bermuda(iii); and 93% for European insurers and reinsurers;
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Increased central assets to £1,401 million ($2.592bn) (31 Dec 2005: £1,265 million); and
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Solvency ratio increased to 529% (31 Dec 2005: 384%)
Lloyd’s Chairman Lord Levene said:
“These are an excellent set of results. Today’s numbers clearly show the underlying strength of the market. Lloyd’s, in the first half of 2006, outperformed its major international peer groups due to a combination of good market conditions and the strong underwriting discipline within the market.”
Lloyd’s Chief Executive Richard Ward added:
“Five new syndicates have joined the market in the last year, which together with the £2bn ($4bn) of fresh capital during the same period demonstrates once again Lloyd’s continuing appeal as a place to do business.”
About Lloyd’s
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A copy of Lloyd’s Interim Report and presentation to analysts can be accessed at: www.lloyds.com/2006interims
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A combined ratio is a measure of an insurer’s underwriting profitability based on the ratio of net incurred claims plus net operating expenses to net earned premiums. A combined ratio of 100% is break even. A ratio of over 100% is a loss; less than 100% is a profit.
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Sources of combined ratios figures for international peer groups (i) US P&C industry 93% – Insurance Information Institute (estimate – September 2006), (ii) US r/i industry 96.5% – Reinsurance Association of America (August 2006), (iii) Bermuda 88.5%, Europe P&C & r/I industry 93.2% – Company Returns / Lloyd’s analysis (September 2006).
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Central assets include the assets of the Central Fund and the other assets of the Corporation. In aggregate, the value of Lloyd’s central assets, excluding the callable layer and the liability in respect of the subordinated debt, amounted to £1,401m ($2.592bn) at June 2006.
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Balance due to/from Members and Funds at Lloyd’s represent the aggregate of each member’s resources. These resources operate on a several basis and are only available to meet each member’s share of claims. Central Assets are available at Council’s discretion to meet the liabilities of any member on a mutual basis.
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Foreign exchange rates may materially fluctuate from the rates prevailing at 30 June 2006, (£1 = US$1.85, £1 = € 1.45)
