Reaction to the £1.9bn pre-tax profits announced by Lloyd's today has been generally positive within the insurance industry.
Commenting on the losses inflicted on Lloyd's following the 11 September attacks, Mazars partners Ian Sparshott and Andrew Goldsworthy said the market had more than recovered the amount paid out in 2001 through the pre-tax profits recorded during 2002 and 2003.
Sparshott said the results were not totally unexpected considering the current rating environment, but that £1.9bn of pre-tax profit was a good result for the market.
Goldsworthy also pointed out that the market was taking out a low level of reinsurance following two low catastrophe years. He pointed to a trend of consolidation within the market, increasing the number of organisations that could totally or partially reinsure themselves.
Sparshott and Goldsworthy also drew attention to the £545m of additional reserving during the 2003 year of account. “Lloyd's reserved a further £545m during the year, another quarter on top of the pre-tax profits announced,” said Sparshott.
Goldsworthy commented: “In a less profitable year that number would have been more prominent in the results.”
They described the performance of the market as “substantially better than those of its peers”, but said it was difficult to compare markets directly due to different accounting practices.
Talbot Underwriting chief executive and former Limit managing director Michael Carpenter said: “We are delighted to see these excellent results, which reflect the resilience of the Lloyd's market following the major loss resulting from the World Trade Center catastrophe.
“These results reflect hard market conditions and Lloyd's high reputation in world markets. As we move into a softer market, the franchise board at Lloyd's will play a vital role in protecting the reputation of Lloyd's, and preventing it from being tarnished by irresponsible underwriting.”
John Francis, director of Lloyd's capital provider Hampden Agencies, said: “These results show that Lloyd's is in better shape than it has been for more than 20 years.
“Investment in a Lloyd's syndicate is a compelling investment in a year of low investment returns.”
Association of Lloyd's Members chairman Michael Deeny said he thought the 2003 results were excellent.
“They demonstrate that Lloyd's is now leading the world, both in terms of profitability and the way they do business.
“Out of the seven categories covered in Lloyd's results presentation, in four the rates are higher than in 2002, which was a very profitable year. This suggests that, subject to a normal catastrophe experience, 2004 looks like being a very profitable year.”
