Lloyd's of London reports jump in profits

A low level of catastrophe claims helped the Lloyd’s of London insurance market announce a sharp improvement in profitability today.

The market, which is home to 66 insurance syndicates, said profits rose to £1.81bn (€2.58bn) in the six months to June 30, up from £1.35bn (€1.93bn) last year.

The figures also benefited from a favourable environment for premiums in 2006, following hurricanes in previous years, but Lloyd’s said it was now seeing downward pressure on rates and a softening of conditions across all classes.

Chief executive Richard Ward said: “These profits reflect the recent favourable rating environment and a relatively low level of catastrophe claims.”

Reflecting the market’s focus on underwriting for profit rather than market share, Lloyd’s said its combined ratio – the industry measure of profitability - came in at 82.9%.

With a figure below 100% representing a profit, this compared favourably with 86% last year and an estimated average of 93% for US property and casualty insurers and 97% for European insurers and re-insurers.

Among recent changes to modernise the market, Lloyd’s has introduced a new franchise structure and phased out the number of Names who backed the market with an unlimited liability.

Lloyd’s is not an insurance company but a society of members, both corporate and individual, who underwrite in syndicates on whose behalf professional underwriters accept risk. Supporting capital is provided by investment institutions, specialist investors, international insurance companies and individuals.

Lloyd’s chairman Lord Levene said: “The market has recorded an excellent set of results. Today’s numbers are further proof of the progress that has been made by the market in recent years.

“Lloyd’s continues to outperform its major international peer groups and is in robust shape to meet the challenges ahead.”