Lloyd’s Slumps To First Loss In Six Years
Lloyd’s of London today [Mar. 28] posted its first pretax loss in six years after being hit by lower investment returns and major catastrophes, in what industry experts call the second-costliest year on record in terms of insured disaster claims.
Lloyd’s isn’t publicly traded, though some of its members are listed companies, such as Bermuda-based Hiscox Ltd., Catlin Group Ltd. and Hardy Underwriting.
Its earnings are a collection of all members’ results and it doesn’t provide net profit figures.
The “Wall Street Journal” reports that executives at the 324-year-old London insurance and reinsurance market said 2012 remains challenging for insurers with tough economic conditions globally.
And despite the losses, insurance rates may rise only slowly because insurers have bulked up on capital, especially during years with smaller catastrophe claims.
For 2011, the Lloyd’s market had a pretax loss of £516 million, compared with a pretax profit of £2.2 billion a year earlier, consisting of the sum result of its members and itself as the managing corporation.
The loss comes as industry estimates show that total claims from natural catastrophes last year were between $100 billion and $116 billion, the second-highest on record after 2005, when strong hurricanes in the US pushed the figure to $120 billion.
“Make no mistake, 2011 was a difficult year for the insurance industry,” Lloyd’s Chief Executive Richard Ward told the “Wall Street Journal”.
Mr Ward added: “Given the scale of the claims, a loss is unsurprising, but it reflects what we’re here to do—help communities and businesses rebuild after disaster.”
“However, I am disappointed that, given the exceptional level of catastrophes in 2011, insurance rates have not responded more positively. These events demonstrate the need for the industry to show discipline in terms of pricing.”
