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Lloyd's publishes Interim Management Statement Q3 2010

Highlights:


  • Excess of central assets over solvency shortfalls of £2,941m (30 June 2010: £2,886m)
  • During the period there have been no events that have resulted in any material changes to our expectations for the full year

The Society of Lloyd’s is today publishing its Interim Management Statement for the nine month period to 30 September 2010. 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 Lloyd’s Strategy 2010 – 2012 sets out the strategy to deliver Lloyd’s vision to be the market of choice for insurance and reinsurance buyers and sellers to access and trade specialist property and casualty risks. The main priorities are Performance Management; Solvency II, the Exchange, Claims Transformation and Access to business.

Financial Review

Excess of central assets over solvency shortfalls

Management’s estimate of the excess of central assets over solvency shortfalls has increased by £55m since 30 June 2010 to £2,941m, comprising:


30 Sept ‘1030 Jun ‘1031 Dec ‘09

£m£m£m
Society net assets1,3401,2911,126
Subordinated liabilities953941958
Central assets2,2932,2322,084
Callable layer692677683
Other solvency adjustments677344
Central assets for solvency purposes3,0522,9822,811
Solvency shortfalls(111)(96)(59)
Excess of central assets over solvency shortfalls2,9412,8862,752

The increase of £12m in subordinated liabilities since the interim report arises from an unrealised exchange loss on the translation of euro denominated debt.

Investments

Investment exposures of the Society arise principally within the Lloyd's Central Fund. Investments include more volatile assets, such as equities and hedge funds, but the majority of assets are invested in fixed interest securities of high credit quality.

The prospects for global economic growth have deteriorated during 2010, leading to significant declines in bond yields in some currencies, including sterling. Equity markets have been quite volatile but have generally seen modest gains overall after nine months of 2010. The Society's investments returned £128m in the period (30 June 2010: £47m) as falling yields generated capital gains on fixed interest investments. This development means that investment returns have continued to exceed expectations and the, ever lower, level of prevailing yields illustrates the subdued outlook for future returns.

Notes to Editors

  1. A copy of Lloyd’s 2009 Annual Report can be accessed at www.lloyds.com/about-lloyds/investor-relations/financial-performance/financial-results/archive
  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 £2,293m at 30 September 2010. 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 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 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 2010 (£1 = US$ 1.58, £1 = €1.15)

For further information, please contact:

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

Lloyd's is the world's leading specialist insurance market and occupies fourth place in terms of global reinsurance premium income, and is the second largest surplus lines insurer in the US. In 2010, 85 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

Contacts

Michelle Cunningham

Manager, Ratings & Investor Relations

+44 (0)20 7327 5434