BackLloyd’s of London sinks to $1 bn loss
Lloyd’s of London sinks to $1 bn loss
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London: The Lloyd’s of London insurance market crashed to a first-half loss of £697 million ($1 billion), hit by an unprecedented string of natural disasters led by the Japanese earthquake and tsunami.
The loss compares with a profit of £628 million a year earlier and reflects a total of £6.7 billion in claims absorbed during the first half, making it the costliest six-month period in Lloyd’s 323-year history.
That included £2.7 billion in catastrophe-related claims, more than 10 times Lloyd’s average disaster loss for the first half of the year.
Lloyd’s said it remained financially strong enough to cope with a potential further spate of big claims, with capital reserves of £2.47 billion at the end of June, up 10% from a year earlier.
“We go forwards into the second half of the year as strong as we’ve ever been," Lloyd’s finance director Luke Savage told Reuters.
The outcome for 2011 as a whole will depend on whether the June to November US hurricane season inflicts further losses on the industry and on how Lloyd’s investment portfolio performs as the euro zone sovereign debt crisis continues to unsettle financial markets, Savage said.
This year’s hurricane season has been the most active on record, but with the exception of Hurricane Irene, no major windstorm has hit the US mainland.
Many European and US insurers have reported steep losses because of a run of natural disasters between January and May, which also included an earthquake in New Zealand, heavy flooding in Australia, and tornadoes in the United States.
This year already ranks as the second most destructive on record for catastrophe losses after 2005, with the insurance industry absorbing $70 billion in claims in the first six months alone, according to Swiss Re, the world’s No. 2 reinsurer.
The industry had hoped that the catastrophe hit would force some players to retrench, easing competitive pressure and reversing a four-year decline in prices.
However, insurers now expect prices to be broadly flat, barring an increase of up to 15% for catastrophe-related business, when customers renew their polices in January.
Lloyd’s, which traces its origins back to a 17th century London coffee house where merchants met to insure ships, had investment income of £548 million in the first half, down for £597 million a year earlier.
Last month, Catlin, operator of the biggest Lloyd’s syndicate, reported a first-half loss of $201 million, while rivals Amlin and Hiscox unveiled deficits of £192.3 million and £85.6 million, respectively.
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