Natural disasters push Lloyd's of London to £516m loss
Wednesday 28 March 2012
Earthquakes, tsunamis and floods pushed Lloyd's of London to a £516 million loss in 2011 as catastrophe claims hit a record high for the 324-year-old insurance market.
Lloyds, which is made up of 87 underwriting syndicates, saw £12.9 billion of claims last year, including £4.6 billion related to natural disasters, such as floods in Australia and Thailand, an earthquake in New Zealand and the tsunami in Japan.
The market, which posted a £2.2 billion profit in 2010, said total claims from natural catastrophes for the whole insurance industry in 2011 were 107 billion US dollars (£67 billion) - the second costliest year on record for disasters.
Lloyd's chief executive Richard Ward said: "Make no mistake, 2011 was a difficult year for the insurance industry."
Lloyd's said it was able to make a profit in the second half of the year, despite the flooding in Thailand, but a £697 million loss in the first half tipped it into the red.
As well as the high number of disasters, Lloyd's has had to cope with challenging investment conditions, resulting in a return of £955 million, compared with £1.3 billion a year earlier.
Mr Ward continued: "Given the scale of the claims, a loss is unsurprising but it reflects what we're here to do - help communities and businesses rebuild after disaster."
The Lloyd's market has shown in recent years that it is more than able to cope with major catastrophes, including US hurricanes.
Among changes to modernise the market, Lloyd's introduced a new franchise structure and phased out the number of Names who backed the market with an unlimited liability.
The specialist market said its central assets stood at £2.4 billion in 2011, broadly flat on the year before, while its reserve surpluses stood at £12 billion.
Chairman of Lloyd's John Nelson said: "The Lloyd's market has emerged from its largest catastrophe year ever in a strong position. Our strong capital position is unchanged and we were able to make a profit in the second half of the year despite the floods in Thailand and continuing low investment returns.
"2012 remains challenging for insurers with tough economic conditions globally. It is vital that the market continues to take a disciplined approach to underwriting."
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