Lloyd's - Lloyd's reports interim results

Highlights

• Profit before tax of £1.32 billion (June 2008 £949 million)
• Combined ratio of 91.6% (June 2008 89%) continues to compare well with our peers who recorded an estimated average of 100% for US property & casualty insurers (June 2008 99%) (i); 94% for US reinsurers (June 2008 98%) (ii); 84% for Bermuda (June 2008 86%) (iii); and 99% for European insurers and reinsurers (June 2008 96%)
• Investment return £708 million (June 2008 £346 million)
• Central assets of £2.0 billion (June 2008 £1.9 billion)

Lloyd’s, the world’s leading specialist insurance market, today announced an interim profit before tax of £1.32 billion for the six month period ending 30 June 2009 (£949m, June 2008). The result reflects continuing underwriting discipline and a relatively low level of catastrophe claims.

A conservative investment mix has resulted in a positive return of £708 million during a period of continuing volatility in financial markets.

Lloyd’s Chairman, Lord Levene, said:

“The first six months result has been achieved in what remain challenging circumstances. The market is in solid financial shape and business volumes have increased as a result of brokers and policyholders seeking to use the security of the Lloyd’s platform.”

“External conditions, however, remain difficult with the US windstorm season and recessionary trends continuing to pose a threat to the insurance industry.”

Lloyd’s Chief Executive Richard Ward added:

”Lloyd’s prudent and conservative approach has ensured that our capital position and ratings remain strong. While we are well placed to take advantage of opportunities through the market’s wide product range and distribution channels, our focus must remain on underwriting profitability.”

Notes to editors

1. A copy of Lloyd’s Interim Report and presentation to analysts can be accessed at: www.lloyds.com/2009interims
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 - Insurance Information Institute (estimate - September 2009), (ii) US r/i) - Reinsurance Association of America (August 2009), (iii) Bermuda), Europe P&C & r/i industry, Company Returns / Lloyd's analysis (September 2009).
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 £2.0bn at June 2009 (£1.9bn June 2008)
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 2009 (£1 = US$1.65, £1 = €1.17)
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 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 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.