Lloyd’s turns £2.2bn 2010 profit despite catastrophes

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£1bn of reserves released, surpassing 2009’s £934m

Lloyd’s has made a pre-tax profit of £2.2bn for 2010, down 43% on the £3.9bn it made in 2009.

Following a heavy year of natural catastrophes, the market’s combined ratio increased to a still-profitable 93.3% in 2010 from 86.1% in 2009.

While investment returns fell 29% to £1.3bn (2009: £1.8bn), the result was bolstered by £1bn of reserve releases (2009: 934m)

Lloyd’s also reported a record level of central assets at £2.4bn in 2010, up 14% on 2009’s £2.1bn.

“This is a solid result in a year with a slightly higher than average number of natural catastrophes,” said Lloyd’s chief executive Richard Ward in a statement. “And 2011 has already been an extraordinary year of tragic natural disasters. We extend our deepest sympathies to those affected and we are working hard to make sure claims are dealt with swiftly so communities in Japan, New Zealand and Australia can rebuild and recover.”

Ward said the industry faced challenging times amid softening rates, excess capital and depressed investment returns. “In 2011, we must help the market steer through the cycle, ensuring they underwrite for profit and not growth,” he said. “At the same time we are positioning the market to take advantage of future opportunities by expanding in new economies and making it even easier to do business with Lloyd’s.”

Lloyd’s 2010 highlights in £m (compared with 2009)