Canopius chief blasts rate cuts

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Lloyd's insurer posts £43m profit for 2010

Michael Watson, chief executive of Lloyd's insurer Canopius, has hit out at falling insurance and reinsurance rates against a background of heavy catastrophe losses.

"2010 is considered to be one of the six most costly years for insured catastrophe losses since 1980, yet the reaction of the (re)insurance markets has been to continue reducing prices. This is folly!" Watson said in a statement accompanying Canopius's 2010 results.

Canopius made a profit of £43m for the year, down 14% on the £50m it made last year. The combined ratio increased to 92% from 88%.

The company attributed the profit decline and combined ratio increase to the level of catastrophe and large losses during 2010. These losses added 11 points to Canopius's combined ratio.

Despite the fall in profit, net tangible assets increased to £303m in 2010 from £262m in 2009.

“This is an excellent result for Canopius, producing profits for shareholders of £43m after tax, despite a substantial increase in catastrophe and large losses during 2010," Watson said. He added that the treaty reinsurance division in particular had had a good year, posting a loss ratio of 47% compared with 2009's 45%. "This is testimony to our disciplined underwriting and reflects the diversification of our portfolio."

Canopius 2010 highlights in £m (compared with 2009)