2009-05-20

By Editor, CIR

The US Lloyd's was able to boost its competitive position last year despite the faltering global economy, a new report concludes.

Lloyd's 2008 Results-Resilience in a Tough Market, issued by the London office of Guy Carpenter, suggests that the veteran insurance market benefited from its conservative investment allocation and effective risk management.

"The risk profile of the market's invested assets is relatively conservative, with strong cash balances and the high credit quality of fixed-income securities offsetting falls in value of many corporate bonds and equities," the report notes.

"Despite a marked increase in catastrophe activity and the broader turmoil engulfing capital markets, Lloyd's emerged from 2008 in an advantageous position, with strong financial-strength ratings and a proven ability to absorb the effects of a severe financial catastrophe," said Mike Van Slooten, senior vp at the group.

However, the report notes that underwriting results in all classes other than marine deteriorated in 2008. Property/casualty, energy and aviation would have reported technical losses without releases from prior-year reserves.

Lloyd's pre-tax profit for the year halved from GBP3.85 billion to GBP1.9 billion, reflecting heavier catastrophe losses, weaker investment returns and soft markets for many classes of business.

This was still the third best in the market's 300-plus-year history. The market's overall combined ratio for 2008 was 91.3%, against 84% in 2007. The figure was affected by higher levels of attritional and catastrophe claims, but partly offset partially by prior-year reserve releases and currency gains.

Home     More News