THE Lloyd’s of London insurance market has revealed that record claims from disasters including the Chilean earthquake and US oil spill have halved its profits, and says it has seen no respite from a steady decline in prices.
Lloyd’s, which traces its origins back 322 years to a London coffee house where wealthy merchants insured ships, yesterday posted a pre-tax profit of £628 million (€ 734.3m) for the first half of 2010, down from £1.32 billion a year earlier.
Lloyd’s, a cluster of competing insurance syndicates which specialise in covering large-scale risks, said it had to absorb more claims in the first half than in any other six-month period. The market was also hit by a 15% drop in investment returns as it switched to safe low-yielding assets in the face of volatile financial markets. Property and casualty insurers worldwide have reported bumper claims in the first half of the year, with reinsurer Munich Re estimating total insured losses over the period at $70 billion, exceeding the total for all of 2009.
Insurers have had to pick up the bill for heavy storms in Europe and Australia as well as the Chilean earthquake and Gulf of Mexico oil spill, while some Lloyd’s insurers have been hit by a sharp rise in British motor insurance claims. The industry is also struggling with falling prices amid intense competition between insurers holding abundant supplies of capital after a low volume of claims in 2009.
Lloyd’s finance director Luke Savage said prices looked set to keep falling, and most of the syndicates operating in the market would probably respond by writing less business next year.
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