Chief exec warns of rating pressure
Lloyd’s has announced an interim profit before tax of £1.8bn for the six-month period ending 30 June 2007. This compares to a half-year profit for 2006 of £1.35bn.
This result was driven by the favourable rating environment in 2006 together with the release of prior claims reserves. It was balanced by the weaker, but still profitable, underwriting conditions experienced in the first half of the year.
Despite the favourable results Lloyd’s chief executive Richard Ward warned of challenges ahead. “These profits reflect the recent favourable rating environment and a relatively low level of catastrophe claims,” he said. “We are now seeing a downward pressure on rates and a softening of conditions across all classes. This reinforces the continued need to focus on underwriting for profit.”
The half year combined ratio was 82.9% (compared to 86% for 1H 2006). This compares with an estimated average of 93% for US property & casualty insurers; 90% for US reinsurers; 86% for Bermuda; and 97% for European insurers and reinsurers.
Central assets in the first half increased to £2,165m compared to £1.454m at 31 December 2006.
Lloyd’s chairman Lord Levene said: “The market has recorded an excellent set of results. Today’s numbers are further proof of the progress that has been made by the market in recent years. Lloyd’s continues to outperform its major international peer groups and is in robust shape to meet the challenges ahead.”
