Lloyd's reports interim results for 2012
Lloyd's, the world's specialist insurance market, today announced a profit of £1.53bn for the six-month period ending 30 June 2012.
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 £4,584m, a fall of nearly a third on those the market experienced in the first half of 2011. And, despite record low interest rates, Lloyd's investment return rose 13% to £619m.
Lloyd's CEO Richard Ward said: "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 favourable 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."
Chairman of Lloyd's John Nelson said: "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.
"Looking forward, 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."
· A profit of £1.53bn (up from a loss of £697m at half year 2011).
· Net incurred claims of £4,584m (down 32% from £6,697m at half year 2011).
· A combined ratio of 88.7% (down from 113.3% at half year 2011).
· Investment return of £619m/1.2% (up from £548m/1.1% at half year 2011).
· Central assets at £2,459m (2011: £2,472m million).
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Notes to Editors
1. A copy of Lloyd's 2012 Interim Report can be accessed at www.lloyds.com/2012interims
2. A combined ratio is a measure of an insurer's underwriting profitability based on the ratio of net incurred claims plus net operating expenses to net earned premiums. A combined ratio of 100% is break even (before taking into account investment returns). A ratio less than 100% is an underwriting profit.
3. Central assets include the assets of the Central Fund and the other assets of the Corporation. In aggregate, the value of Lloyd's central assets, excluding the callable layer and the liability in respect of the subordinated debt and securities, amounted to £2,459million (US$3,861million) at June 2012. The Society financial statements are drawn up under IFRS.
4. Members' resources operate on a several basis and are only available to meet each member's share of claims. Central assets are available at the Council's discretion to meet the liabilities of any member on a mutual basis.
5. This press release includes forward-looking statements. These statements are based on currently available information and consistent accounting policies as applied at 31 December 2011. They reflect Lloyd's current expectations, projections and forecasts about future events and financial performance. All forward-looking statements address matters that involve risks, uncertainties and assumptions. Based on a number of factors, actual results could vary materially from those anticipated by the forward-looking statements. These factors include, but are not limited to, the following:
- Rates and terms and conditions of policies may vary from those anticipated.
- Actual claims paid and the timing of such payments may vary from estimated claims and estimated timings of payments, taking into account the preliminary nature of such estimates.
- Claims and loss activity may be greater or more severe than anticipated, including as a result of natural or man-made catastrophic events.
- Competition affecting the basis of pricing, capacity, coverage terms or other factors may be greater than anticipated.
- Reinsurance placed with third parties may not be fully recoverable, or may not be paid on a timely basis, or such reinsurance from creditworthy reinsurers may not be available or may not be available on commercially attractive terms.
- Developments in the financial and capital markets may adversely affect investments of capital and premiums, or the availability of equity capital or debt.
- Changes in legal, regulatory, tax or accounting environments in relevant countries may adversely affect (i) Lloyd's ability to offer its products or attract capital, (ii) claims experience, (iii) financial return, or (iv) competitiveness.
- Economic contraction or other changes in general economic conditions could adversely affect (i) the market for insurance generally or for certain products offered by Lloyd's, or (ii) other factors relevant to Lloyd's performance.
- The foregoing list of factors is not comprehensive, and should be read in conjunction with other cautionary statements that are included herein or elsewhere. Lloyd's undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
6. Foreign exchange rates may materially fluctuate from the rates prevailing at 30 June 2012 (£1 = US$ 1.57, £1 = €1.24). Premiums, claims and investment income are translated at the average exchange rate for the six months to 30 June 2012 (£1 = US$1.58, £1 = €1.22).