Lloyd's more than doubled its profits, reduced central charges, and improved its combined ratio during 2004, said the Guy Carpenter Lloyd's Market in 2004 report.
Highlights of the report included:
· Lloyd's profits more than doubled to a record £1.9bn for 2003, after prior year reserve strengthening of £545m. Gross and net written premium reached record highs of £16.4bn and £12.3bn, respectively.
· The combined ratio improved to 90.7% in 2003, up from 98.6% in 2002.
· Net resources stood at £10.1bn at the end of 2003, a 150% increase since the end of 2001.
· Central charges have been reduced from 3.25% of capacity in 2003 to 1.75% in 2004. The 2% premium levy, which was imposed on all members in the wake of the US terrorist attacks, ceased at the end of 2003, having achieved its objective of increasing central assets.
· The Central Fund expanded by 49% during 2003, reaching £711m at the year-end.
The report said significant efforts were being made to reform the market's business processes, with the introduction of LMP slips, new underwriting guidelines, and guidelines to promote efficient run-off management.
It also noted the progress of the franchise board in implementing measures to prevent underperformance at syndicate level.
Guy Carpenter & Company president of non-American operations Geoffrey Bromley said the results demonstrated Lloyd's ability to operate successfully in a hard market.
“Looking ahead, general underwriting conditions remain good, which bodes well for 2004. Against this backdrop, Lloyd's financial strength ratings continue to exhibit considerable stability, relative to the wider industry,” he said.
But Bromley there was the need for Lloyd's management to resist complacency as the market faced continuing challenges.
He warned that the trend for a low level of natural catastrophe losses could not continue indefinitely.
This, combined with the expectation that Lloyd's will report a cumulative deficit of almost £1.5bn over the period 1993 to 2003, on the traditional three-year accounting basis, would provide the franchise board with its first real test as market conditions begin to weaken.
The Guy Carpenter & Company Lloyd's Market in 2004 report is available from the Guy Carpenter website.
www.guycarp.com/portal/extranet/pdf/LloydsMarket2004.pdf?vid=1
