Skip to main content

Lloyd's publishes Interim Management Statement Q3 2011

3 November 2011

Highlights

  • Excess of central assets over solvency shortfalls of £3,024m.
  • 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 2011. 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

The Lloyd’s Strategy 2011 – 2013 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 Market Oversight; 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 during the nine month period to £3,024m, comprising:

  30 Sep 201131 Dec 2010 
  £m£m 
 Society net assets1,509 1,447
 Subordinated liabilities 922 930
 Central assets 2,431 2,377
 Callable layer 679 703
Other solvency adjustments(16)(32)
Central assets for solvency purposes3,0943,046
Solvency shortfalls(70)(123)
Excess of central assets over solvency shortfalls3,0242,925


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 third quarter of 2011 has seen significant volatility in financial markets, driven by growing fears of default by some European sovereigns and the, potentially severe, consequences for the banking industry, as well as slowing economic growth and the spectre of renewed global recession. Equity markets have fallen significantly and credit spreads on corporate bonds have widened, while yields on sovereign debt of the highest credit quality have fallen to unprecedented levels, generating capital gains on such securities. The diversified disposition of the Society's investments has protected it from the worst effects of the recent volatility as losses experienced on equity holdings and some corporate credit exposures have been largely offset by gains in the value of sovereign bond holdings. After nine months of 2011 the Society's investment assets have produced a return of £57m.

 

Notes to Editors

  1. Lloyd’s 2010 Annual Report and 2011 Interim Report can be accessed at http://www.lloyds.com/Lloyds/Investor-Relations/Financial-performance/Annual-Reports
  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 £2,431m at 30 September 2011. 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 release includes forward-looking statements. These statements are based on currently available information and consistent accounting policies as applied at 31 December 2010. 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 2011 (£1 = US$ 1.56, £1 = €1.16)

For further information, please contact:

Jessica Stalley

Investor Relations

+44 (0)20 7327 5148

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

Lloyd's is the world's leading specialist insurance market with 88 syndicates underwriting insurance, covering all classes of business from more than 200 countries and territories worldwide. In 2010, Lloyd’s was ranked fifth in terms of global reinsurance premium income and, as the largest insurer of surplus lines in the US. Lloyd's is regulated by the Financial Services Authority.

Contacts

Michelle Cunningham

Manager, Ratings & Investor Relations

+44 (0)20 7327 5434