- Strong underwriting profit, despite significant US hurricane claims
- Good combined ratio versus international peer group
- Continuing focus on underwriting performance
- Further strengthening of the Lloyd's balance sheet
Lloyd's, the world's leading specialist insurance market, today announced an annually accounted profit of £1,357 million in 2004. This was achieved despite net claims of £1.2 billion from the US hurricanes, in the worst-ever year for industry losses from natural catastrophes.
Highlights:
- profit of £1,357 million, before tax, for 2004 on a pro-forma annually accounted basis (2003: £1,892 million);
- combined ratio of 96.9% (2003: 90.7%) compares favourably with an estimated average of 98.7% for US property and casualty insurers (i), 106.1% for US re-insurers (ii) and 98.2% for European insurers and re-insurers (iii);
- resources of the Society and Members up 20% to £12,169 million (2003: £10,145 million); and
- 52% increase in central assets to £1,184 million, following successful £500 million subordinated debt issue.
Chairman of Lloyd's, Lord Levene, said:
"These results, achieved despite significant losses from natural catastrophes, are testimony to the continually improving quality and strength of the Lloyd's market. A few years ago, such a performance would have been unthinkable.
"Lloyd's is rightly proud of the important part it plays in insuring some of the world's toughest risks. The critical nature of this role was yet again underlined in 2004 with the catalogue of natural disasters across the globe."
Lloyd's Chief Executive, Nick Prettejohn, said:
"Lloyd's performance compared well with our global competitors. However, we must remain vigilant if we are to continue to deliver a strong underwriting performance. Market conditions remain profitable but increasingly competitive in a number of lines.
"There will be no let up in our determination to improve the efficiency of doing business at Lloyd's and in our focus on the quality of that business rather than volume."
Notes to Editors
1. A full breakdown of Lloyd's results can be viewed at http://www.lloyds.com/2004results
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 ratio figures - (i) Insurance Information Institute (estimate - January 2005), (ii) Reinsurance Association of America (March 2005), (iii) Company Returns / Lloyd's analysis (March 2005).
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 £1,184m at December 2004.
5. Lloyd's also announced today its latest results and projections on the statutory three year accounting basis.
The result at December 2004 for the 2002 account and for prior years of account is a profit of £1,193m as below:
|
£m |
| 2002 pure year |
1,738 |
| 2001 & prior years reinsured into the 2002 account at 1 January 2004 |
(245) |
| 2002 year of account overall |
1,493 |
| 2001 & prior run-off years of account result in 2004 |
(300) |
| Total for the 2002 account and prior run-off years of account |
1,193 |
The latest projection, at 24 months, for the 2003 year of account is a profit of £2,069m.
The first projection, at 12 months, for the 2004 year of account is a profit of £1,074m.
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, 2004. 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 anticipate.
- 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.
- 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.
Foreign exchange rates may materially fluctuate from the rates prevailing at 31 December, 2004 (£1 = US$1.92, £1 = Euro1.41)
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Lloyd's is the world's leading specialist insurance market with a capacity to accept insurance premiums of more than £13.7 billion in 2005. It occupies sixth place in terms of global reinsurance premium income, and is the second largest surplus lines insurer in the US. In 2005, 62 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.
