Lloyd's of London rebounds with pounds 1bn profit

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The Independent Online

Financial Editor

Lloyd's of London is estimated to have made profits of over pounds 1bn in 1994, continuing the battered insurance market's rebound from a long run of ruinous losses, according to Chatset.

The analyst's 1994 forecast, coupled with an updated pounds 970m profit estimate for 1993, the first year of return to profits, marks the long-awaited turnaround in the society's fortunes.

In previous years, Lloyd's had amassed losses of over pounds 8bn, ruining large numbers of private investors and bringing the insurance market to the brink of collapse.

Lloyd's management are frantically putting the finishing touches to a pounds 6bn rescue and restructuring programme.

This will seek to draw a line under the loss-making years by placing all pre-1993 policies into a specially-formed reinsurance company, allowing a "new Lloyd's" to trade profitably into the future.

To reach this point, however, thousands of private investors, who have pledged their entire capital to Lloyd's, must agree to pay a last contribution to the reinsurance company, Equitas, to be able to buy themselves out of Lloyd's.

The society is already counting on drawing from the profits of 1993, 1994 and 1995 to finance part of this programme.

Traditionally, Lloyd's reports its results three years in arrears. Chatset described 1993 and 1994 as "exceptionally good years". Barring huge natural catastrophies, 1995 should produce "another reasonable profit".