Press Release

LL11/08 29/04/2008

Lloyd's announces interim management statement Q1 2008


The Society of Lloyd’s is today publishing its Interim Management Statement, as required by the EU’s Transparency Directive. It covers the three month period to 31 March 2008 and describes the Society’s unaudited consolidated financial position, but does not include results of the Lloyd’s Market.

The results of the Lloyd’s Market which include the aggregate results reported separately by all Lloyd’s syndicates, for the six months to 30 June 2008, will be published in September 2008.

Financial summary

  • Central assets increased by £13m to £1,964m (31 December 2007: £1,951m)
  • Excess of central assets over solvency shortfalls increased by £13m to £2,302m (31 December 2007 £2,289m)
  • Financial performance is in line with expectations.

Financial Update

  • During the period 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
  • The excess of central assets over solvency shortfalls increased by £13m to £2,302m, comprising:

31 Mar ‘08

31 Dec ‘07

£m

£m

Society net assets

934

939

Subordinated liabilities

1,030

1,012

Central assets

1,964

1,951

Callable layer

478

478

Other solvency adjustments

28

28

Central assets for solvency purposes

2,470

2,457

Solvency shortfalls

(168)

(168)

Excess of central assets over solvency shortfalls

2,302

2,289


The increase of £18m in subordinated liabilities arises from an unrealised exchange loss on the conversion of euro denominated debt.

Investments

The first quarter of 2008 has seen continuing volatility in financial markets, driven by uncertainty over the developing sub-prime mortgage crisis and its impact on global economic activity. Equity markets fell significantly in the period and many corporate debt securities also declined in value as investors’ aversion to credit risk continued to grow, particularly with respect to those financial issuers most vulnerable to sub-prime losses. The general level of bond yields continued to fall, in expectation of further action by central banks to ease monetary policy and despite persistent inflationary pressures. Consequently, bond investments of high credit quality produced positive returns in this period.

Investment exposures of the Society are diversified across a variety of asset classes. However, bond investments of high credit quality predominate. As a result, losses on equity investments have been exceeded by gains arising from bond exposures and the Society's investment assets have generated positive investment returns overall in the first quarter.

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.

Brazil

On 17 April Lloyd’s announced that it has received approval from the Superintendence of Private Insurance (SUSEP) to become the first admitted reinsurer in Brazil.

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 £1,964m at 31 March 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 31 March 2008 (£1 = US$ 1.99, £1 = €1.25)

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 sixth 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.

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


Lloyd's is the world's leading specialist insurance market. Lloyd's underwriting capacity at 1 January 2008 is £15.95 billion which will be underwritten through 75 syndicates (including SPS and RITC syndicates), managed by 46 managing agents and supported by 176 brokers. It is the world's third largest non-life reinsurer, and is the second largest surplus lines insurer in the US.

Lloyd's is regulated by the Financial Service Authority.