Lloyd’s profits halve to £1.9bn

The Lloyd's of London insurance market has announced its profits halved in 2008 to £1.9bn.

It described the results as a “solid performance in challenging economic conditions”. Lloyd’s insisted it was still in a strong capital position and was continuing focus on underwriting discipline. IT also claimed its combined ratio of 91.3%, up from 84%, was better than anywhere else in the world.

Highlights (2007 in brackets):

• profit before tax of £1,899m (£3,846m);
• combined ratio of 91.3% (84.0%)
• central assets increased to £2,072m (£1,951m);
• investment return of £957m (£2,007m);
• profit before tax excluding currency movements on non-monetary items of £1,529m (£3,846m);
• surplus on prior years' reserves of £1,265m (£856m).

Lloyd’s said its combined ratio of 91.3% (84.0%) beat the estimated average of 101% for US property and casualty insurers,102% for US reinsurers, 97% for European insurers and reinsurers and, 92% for Bermudian insurers and reinsurers

Lord Levene, chairman of Lloyd's said: “Amidst the unprecedented slump in the world economy, Lloyd's remains in good shape. The market has inevitably been impacted by significant claims from natural catastrophes, lower insurance rates and a reduction in investment income but this has been partially offset by currency movements and prior year surpluses.

“Our focus on risk management and underwriting discipline has been fundamental to the market's resilience and it will stand us in good stead as we look to the opportunities and the challenges that the future brings.”

Lloyd's chief executive, Richard Ward, said: “In these testing times, it will be those businesses with clarity of vision and purpose that will stand the best chance of success. From a solid base, Lloyd's is seeking to further improve its competitive position and develop a truly modern and sustainable marketplace.

“As we move into 2009, it is more important than ever that we continue to improve our service to our customers, enhance our partnership with the market and continue to monitor the shifting global landscape so we are prepared to create and take advantage of opportunities as they arise.”