Lloyd's rides hurricane losses and Central Fund settlement
World's oldest insurance market Lloyd's announced annual profits for 2004 of £1.36bn, 28 percent down on the £1.89bn it booked in 2003.
But in the light of net claims of £1.2bn from the devastating US hurricanes that hit the Caribbean and Florida last autumn, Lloyd's chairman Lord Levene was upbeat about the year's performance.
"These results, achieved despite significant losses from natural catastrophes, are testimony to the continually improving quality and strength of the Lloyd's market. A few years ago, such a performance would have been unthinkable," he commented.
Lloyd's achieved a combined ratio of 96.9 percent for 2004, a deterioration on the 90.7 percent recorded in 2003 but, says the Society, a favourable result against its peers, with an estimated average of 98.7 percent for US property casualty insurers, 106.1 percent for US reinsurers, and 98.2 percent for European (re)insurers.
According to Lloyd's, resources of the Society and its members - the Names and corporate members - were up 20 percent from £10.15bn to £12.17bn.
Central assets were up 52 percent to £1.18bn, following November's successful £500mn subordinated debt issue, and including the impact of the Central Fund arbitration settlement.
The £152mn settlement, announced on 14 March, resulted in a £324mn hit on pre-tax profits for 2004. The impact on the Central Fund itself was £226mn, after tax.
Lloyd's chief executive Nick Prettejohn said: "Lloyd's performance compared well with our global competitors. However, we must remain vigilant if we are to continue to deliver a strong underwriting performance. Market conditions remain profitable but increasingly competitive in a number of lines.
"There will be no let up in our determination to improve the efficiency of doing business at Lloyd's and in our focus on the quality of that business rather than volume."
Lloyd's also announced its latest results and projections on the three-year accounting basis, revealing a profit for the 2002 year of account, including prior-year run-off, of £1.19bn.
The Society projects a £2.07bn profit for 2003, and a £1.07bn profit for 2004.
The next issue of The Insurance Insider will provide further analysis of Lloyd's full annual report and accounts, which are due to be published in early May.