Lloyd's - Society of Lloyd's Interim Management Statement Q3 2008

• Excess of central assets over solvency shortfalls increased by £8m to £2,334m (30 June 2008: £2,326m).
• Financial performance in the quarter in line with expectations.

The Society of Lloyd’s is today publishing its Interim Management Statement for the nine month period to 30 September 2008. This statement describes the unaudited consolidated financial position of the Society itself, its subsidiaries and the Central Fund and does not include results of the syndicates operating in the Lloyd’s Market.

Operating Review

Strategy
The Three-Year Plan 2008 – 2010 sets out the strategy to deliver Lloyd’s vision to be the platform of choice for insurance and reinsurance buyers and sellers to access and trade specialist property and casualty risks. The main priorities continue to be to work with managing agents to help manage the cycle; improve market access; and create an efficient, cost effective operating environment.

Legislative Reform Order
Following its consultation process, the Government is proposing that all of the proposals in the LRO should be made. Details of the specific reforms are contained in the Explanatory Document of July 2008, which can be accessed on the HM Treasury website. The LRO is now being considered by Parliament in accordance with the procedures provided for in the Legislative & Regulatory Reform Act 2006.

Financial Review

During the quarter there have been no events that have resulted in any material changes to our expectations for the full year.

Excess of central assets over solvency shortfalls
Management’s estimate of the excess of central assets over solvency shortfalls has increased by £8m since 30 June 2008 to £2,334m, comprising:

The increase of £16m in subordinated liabilities since the year end arises from an unrealised exchange loss on the conversion of euro denominated debt.

Investments
The global credit crunch has continued to affect financial markets and has led to unprecedented volatility. The absence of lending, even to major financial institutions, has dramatically increased the risk premia associated with many corporate credit exposures. Frozen credit markets also have significant implications for global economic growth and equity markets have responded by falling dramatically. Most recently, increasingly co-ordinated global government intervention appears to be restoring some confidence in the financial system. Lloyd's activities include relationships with bank counterparties globally and recent actions to stabilise the banking sector have been welcome.
However, current uncertainties seem likely to generate significant volatility in financial markets for some time. Recent financial shocks also make a global economic recession much more likely.

Investment exposures of the Society are diversified across a variety of asset classes and have not been immune from recent adverse market developments. However, overall investment dispositions are prudent, including significant exposure to Government debt securities, and limited equity holdings. As a result, the Society's investment assets have generated a positive investment return overall, both in the third quarter and over the nine months’ period.

For further information, please contact
Louise Shield
Tel: +44 (0)20 7327 5793 Fax: +44 (0)20 7327 5229 Email: louise.shield@lloyds.com

Bart Nash
Tel: +44 (0)20 7327 6272 Fax: +44 (0)20 7327 5229 Email: bart.nash@lloyds.com

For urgent out of hours media calls Tel: +44 (0)7659 597 825 

Notes to Editors:

1. A copy of Lloyd’s 2007 Annual Report can be accessed at www.lloyds.com/2007results
2. 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 £1,955m at 30 September 2008. The Society financial statements are prepared in accordance with IFRS.
3. Callable layer: Central Fund assets may be supplemented by a ‘callable layer’ of up to 3% of members ‘ overall premium limits in any one calendar year. These funds would be drawn from premium trust funds.
4. This press release includes forward-looking statements. These statements are based on currently
available information and consistent accounting policies as applied at 31 December 2007. 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.

5. Foreign exchange rates may materially fluctuate from the rates prevailing at 30 September 2008 (£1 = US$ 1.78, £1 = €1.27)

Lloyd's is the world's leading specialist insurance market and expects to have the capacity to write approximately £15.95bn of business in 2008. It occupies fifth place in terms of global reinsurance premium income, and is the second largest surplus lines insurer in the US. In 2008, 75 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.