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Moody’s upgrades Lloyd’s forecasts

Ratings agency Moody's has released its latest forecasts for Lloyd's, indicating that the market could record profits of around £6bn for the 2002 to 2004 years of account, with cumulative returns on capacity equalling profits recorded by Lloyd's between 1993 to 1995.

In a statement released on 11 March, 2004, Moody's said it had increased its forecast profits for the 2002 and 2003 years of account to 15 percent of capacity for both years, reflecting the relative absence of major loss activity, and exceptional underwriting conditions for those years. This despite the deterioration in the US dollar exchange rate, which was offset by the improving development of the underlying incurred statistics for these years.

Conditions for 2004 remain in line with those experienced in 1994/1995, and assuming a “normal” loss year, Moody’s is predicting a 12 percent return on capacity.

For 2002 to 2004 results on a cumulative basis are expected to come in at around 42 percent of capacity.

Mark Hewlett, managing director of Moody's European Insurance Division, commented: "These are exceptional forecasts for the 2002 to 2004 years of account, demonstrating the enduring power of the Lloyd's franchise and the earnings that can be achieved by syndicates underwriting at Lloyd's at this stage of the cycle, and underline the financial strength offered by some of the syndicates currently trading in the market."

Moody’s Lloyd’s forecasts 2004

2002: + £2.0bn (+ 15 percent)

2003: + £2.2bn (+ 15 percent)

2004: + £1.8bn (+12 percent)

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