Lloyd's - Lloyd's reports interim results (Euro)

• Profit before tax of £1.8 billion (€2.7bn)
• Combined ratio continues to outperform major international peer groups
• Investments returned over £800 million (€1.2bn)
• Lloyd's financial strength ratings upgraded to A+
• Central assets further strengthened through the issue in June of £500m (€745m) tier 1 subordinated debt to over £2 billion (€3bn)
• Equitas - Berkshire Hathaway reinsurance transaction – phase 1 completed.

Lloyd’s, the world’s leading specialist insurance market, today announced an interim profit before tax of £1.8 billion (€2.7bn) for the six month period ending 30 June 2007. This result was driven by the favourable rating environment in 2006, together with the release of prior claims reserves. This was balanced by the weaker, but still profitable, underwriting conditions experienced in the first half of the year.

Highlights

• Profit of £1,807 million (€2,692m) (first half ending 30 June 2006: £1,351 million);
• Combined ratio of 82.9% (first half ending 30 June 2006: 86.0%), compared with an estimated average of 93% for US property & casualty insurers (i); 90% for US reinsurers (ii); 86% for Bermuda (iii); and 97% for European insurers and reinsurers;  and
• Increased central assets to £2,165 million (€3,226m) (31 December 2006: £1,454 million).
  
  

 Lloyd’s Chairman Lord Levene said:

“The market has recorded an excellent set of results. Today’s numbers are further proof of the progress that has been made by the market in recent years. Lloyd’s continues to outperform its major international peer groups and is in robust shape to meet the challenges ahead.”

Lloyd’s Chief Executive Richard Ward added:

“These profits reflect the recent favourable rating environment and a relatively low level of catastrophe claims. We are now seeing a downward pressure on rates and a softening of conditions across all classes. This reinforces the continued need to focus on underwriting for profit.”

Notes to editors

1. A copy of Lloyd’s Interim Report and presentation to analysts can be accessed at: www.lloyds.com/2007interims
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. A ratio of over 100% is a loss; less than 100% is a profit.
3. Sources of combined ratios figures for international peer groups (i) US P&C industry 93% - Insurance Information Institute (estimate - September 2007), (ii) US r/i industry 90% - Reinsurance Association of America (August 2007), (iii) Bermuda 86.4%, Europe P&C & r/I industry 97.3% - Company Returns / Lloyd's analysis (September 2007).
4. 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, amounted to £2,165m ($4,352m) at June 2007.
5. Balance due to/from Members and Funds at Lloyd’s represent the aggregate of each member’s resources. These resources operate on a several basis and are only available to meet each member’s share of claims. Central Assets are available at Council’s discretion to meet the liabilities of any member on a mutual basis.
6. Foreign exchange rates may materially fluctuate from the rates prevailing at 30 June 2007, (£1 = US$2.01, £1 = € 1.49)
7. This press release includes forward-looking statements. These statements are based on currently available information and consistent accounting policies as applied at 30 June 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 on 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; and

- 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.