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Record results during challenging economic conditions
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Balance sheet remains strong
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Continued focus on underwriting discipline in 2010
Lloyd’s, the world’s leading specialist insurance market, today announced a profit of £3,868 million for 2009.
Financial highlights:
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profit before tax of £3,868m (2008: £1,899m);
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combined ratio of 86.1% (2008: 91.3%) compares favourably with an estimated average of 100% for US property and casualty insurers (i) 94% for US reinsurers (ii) 99% for European insurers and reinsurers and, 84% for Bermudian insurers and reinsurers (iii);
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central assets increased to £2,084 million (2008: £2,072m);
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investment return of £1,769m (2008: £957m);
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profit before tax excluding currency movements on non-monetary items of £4,247m (2008: £1,529m); and
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surplus on prior years’ reserves of £934m (2008: £1,265m).
Commenting on the results, Chairman of Lloyd's, Lord Levene, said:
“The hard work and very careful attention to risk in the Lloyd’s market have resulted in a pre-tax profit of £3.9bn, the highest that we have ever recorded. The result has been achieved despite the economic turbulence that characterised most of 2009, although we were certainly helped by a low level of catastrophe related losses – helped by a benign Atlantic hurricane season. The market can be proud of what it has achieved in 2009.
“These results show that not all parts of the financial services sector are the same and, at Lloyd’s, our strength and resilience means that we can face the future with confidence.”
Lloyd's Chief Executive, Richard Ward, said:
“Our 2009 results are built on a resolute focus on underwriting discipline coupled with a strong balance sheet and a conservative investment strategy. This has meant that, during testing times for the financial services industry, we continued to be a stable partner for businesses seeking to manage their risks.
“While the results are a testament to our strength, we cannot afford to be complacent and in 2010 we must work to continue to develop the attractiveness of the market, whilst focusing on profitable underwriting and sound risk management.”
Footnotes
Source: Lloyd's Pro forma Financial Statements. Sources i) Insurance Information Institute estimate, ii) Reinsurance Association of America, iii) Company data (8 European companies; 17 Bermudian companies)
Notes to Editors
1. A copy of Lloyd’s 2009 Annual Report can be accessed at www.lloyds.com/2009annualreport
2. 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 (before taking into account investment returns). A ratio less than 100% is an underwriting profit.
3. 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 and securities, amounted to £2,084m at December 2009. The Society financial statements are drawn up under IFRS.
4. Members’ resources operate on a several basis and are only available to meet each member’s share of claims. Central assets are available at the Council’s discretion to meet the liabilities of any member on a mutual basis.
5. The results ultimately attributable and distributable to members are determined in proportion to their share in each syndicate for each underwriting year of account. In accordance with this, the 2007 year of account has closed at 36 months with a net profit of £2,773m at 31 December 2009 rates of exchange. This comprises a surplus on 2006 and prior years reinsured into 2007 of £964m and a pure year profit of £1,809m. Years of account in run-off during 2009 reported a profit of £117m.
6. This press release includes forward-looking statements. These statements are based on currently available information and consistent accounting policies as applied at 31 December 2009. They reflect Lloyd’s current expectations, projections and forecasts about future events and financial performance. All forward-looking statements address matters that involve risks, uncertainties and assumptions. Based on a number of factors, actual results could vary materially from those anticipated by the forward-looking statements. These factors include, but are not limited to, the following:
- Rates and terms and conditions of policies may vary from those anticipated.
- Actual claims paid and the timing of such payments may vary from estimated claims and estimated timings of payments, taking into account the preliminary nature of such estimates.
- Claims and loss activity may be greater or more severe than anticipated, including as a result of natural or man-made catastrophic events.
- Competition affecting the basis of pricing, capacity, coverage terms or other factors may be greater than anticipated.
- Reinsurance placed with third parties may not be fully recoverable, or may not be paid on a timely basis, or such reinsurance from creditworthy reinsurers may not be available or may not be available on commercially attractive terms.
- Developments in the financial and capital markets may adversely affect investments of capital and premiums, or the availability of equity capital or debt.
- Changes in legal, regulatory, tax or accounting environments in relevant countries may adversely affect (i) Lloyd’s ability to offer its products or attract capital, (ii) claims experience, (iii) financial return, or (iv) competitiveness.
- Economic contraction or other changes in general economic conditions could adversely affect (i) the market for insurance generally or for certain products offered by Lloyd’s, or (ii) other factors relevant to Lloyd’s performance.
- The foregoing list of factors is not comprehensive, and should be read in conjunction with other cautionary statements that are included herein or elsewhere. Lloyd’s undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
7. Foreign exchange rates may materially fluctuate from the rates prevailing at 31 December 2009 (£1 = US$ 1.61, £1 = €1.13)
For further information, please contact:
Bart Nash (Media)
Tel: +44 (0)20 7327 6272 Fax: +44 (0)20 7327 5229 Email:
bart.nash@lloyds.com
Sarah Robson (Media)
Tel: +44 (0)20 7327 6125 Fax: +44 (0)20 7327 5229 Email:
sarah.robson@lloyds.com
For urgent out of hours media calls Tel: +44 (0)7659 597 825
Christina Nallaiah (Investor Relations)
Tel: +44 (0)20 7327 6456 Email:
christina.nallaiah@lloyds.com
Vinay Mistry (Investor Relations)
Tel: +44 (0)20 7327 5935 Email:
vinay.mistry@lloyds.com
Find out more about Lloyd's
Lloyd's is the world's leading specialist insurance market and occupies fifth place in terms of global reinsurance premium income, and is the second largest surplus lines insurer in the US. In 2010, 78 syndicates are underwriting insurance at Lloyd's, covering all classes of business from more than 200 countries and territories worldwide. Lloyd's is regulated by the Financial Services Authority.
