Lloyd's profits slump on disasters

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Insurance market Lloyd's of London saw profits almost halve last year after a string of natural disasters sent claims soaring.

Devastating earthquakes in Chile and New Zealand, as well as floods in Australia led to "significant" claims in 2010 and sent profits plunging 43% to £2.2 billion.

The specialist insurance market, which is made up of 85 underwriting syndicates, said it was still too early to give an estimate on the bill from the Japanese quake and tsunami.

It hopes to provide an estimate in May, but said it believed total claims would fall within its realistic disaster scenario - which looks at a 64 billion US dollar (£39 billion) earthquake centred on Tokyo.

Lloyd's members, who insure insurers, suffered hefty share falls on the London market earlier this month after an estimate suggested the claims bill could reach as high as £22 billion for the Japanese crisis, excluding the tsunami damage.

Catastrophe risk expert AIR Worldwide said the insured loss could climb to between 14.6 billion dollars (£9 billion) and 34.6 billion (£21.5 billion) for the earthquake damage alone.

But one insurance expert warned that with the tsunami bill added in, the cost to the global insurance industry could rise above 60 billion dollars (337 billion).

Richard Ward, chief executive of Lloyd's, said 2010 had seen a higher than average number of natural catastrophes and added 2011 had already been an "extraordinary year of tragic natural disasters".

Lloyd's insurers were also knocked last year by 386 million US dollars (£240 million) in net claims for the loss of BP's Deepwater Horizon oil rig in the Gulf of Mexico, which exploded last April and caused America's biggest ever oil spill.

But revenue from premiums was still higher than claims paid out by Lloyd's insurers in 2010, giving it a combined ratio - which is a key insurance industry measure - of 93%.