Lloyd’s 1st Half Profits at $2.4 Billion; CEO Cites ‘Disciplined Underwriting’

Lloyd’s of London’s first six months of 2012 financial figures couldn’t evince a greater difference from those posted in the first half of 2011. It posted profits of £1.53 billion ($2.47 billion).

Lloyd’s said “the result follows a benign first half of 2012 for natural catastrophes for the insurance industry, one which saw no major claims, and which marks a return to profit after the second most expensive year on record for the insurance industry in 2011.”

Lloyd’s incurred total net claims of £4.584 billion ($7.243 billion), a fall of nearly a third on those the market experienced in the first half of 2011. In addition Lloyd’s reported that despite record low interest rates, its “investment return rose 13 percent to £619 million ($978 million).”

CEO Richard Ward  commented: “This is a welcome return to profit for the market, after a six month period that could not be in greater contrast to the first half of 2011.

“The result has certainly been helped by the favorable claims climate. But it is testament to the market’s disciplined underwriting that, in the face of continuing low premium rates, coupled with low interest rates and the most challenging economic climate for a generation, it is able to return the strongest half year result in five years.”

Lloyd’s Chairman John Nelson added: “These results cap off a strong six-month period for Lloyd’s. We have seen the launch of our longer term strategy, Vision 2025, strong progress towards being ready for Solvency II, and our credit rating outlook upgraded from stable to positive by Standard & Poor’s.”

He also indicated confidence in the future, indicating that the “Lloyd‘s market – with its record capital levels,’ A’ and ‘A+’ credit ratings and strong reputation – is well-positioned to take advantage of opportunities that arise both home and abroad.”

Lloyd’s bulletin summarized the financial highlights as follows:
• A profit of £1.53 billion [$2.47 billion], compared to a loss of £697 million [$1.129 billion] for the first half of 2011.
• Net incurred claims of £4.584 billion [$7.243 billion (down 32 percent from £6.697 billion [$10.85 billion] for the first half of 2011.)
• A combined ratio of 88.7 percent (down from 113.3 percent at half year 2011).
• Investment return of £619 million [$978 million], 1.2 percent (up from £548 million [$883 million], 1.1 percent, at half year 2011).
• Central assets at £2.459 billion [$3.861 billion] (2011: £2.472 billion [$3.98 billion).

Source: Lloyd’s of London