Alberta floods ‘most costly event’ for Lloyd’s market in 2013

Lloyd’s of London released Wednesday the financial results of the Lloyd’s market for calendar year 2013, reporting a combined ratio of 86.8% on gross written premiums of £26.489 billion, with the Alberta floods from June being the most costly event for the Lloyd’s market last year.

The annual report reflects the results of both the members underwriting through syndicates, and the Society of Lloyd’s. As of Dec. 31, the Lloyd’s market consisted of 91 active syndicates managed the 56 managing agents.

“Canada had a record year for catastrophes from flooding in Alberta and Toronto to a winter ice-storm,” Lloyd’s stated of its reinsurance results. “The net estimated claims of £120m from the Alberta flooding made it the most costly event to the Lloyd’s market in 2013.”

As of Tuesday the British Pound was trading at $1.84.

The flooding in southern Alberta last June was the costliest natural disaster in Canadian history when measured by insured losses of $1.7 billion.

Forty-three per cent of the Lloyd’s market business is from Canada and the United States. The total Lloyd’s market in Canada in 2012 was $1.7 billion, with 47% of direct premiums written in liability and another 34% in commercial property. Lloyd’s underwriters are represented in Canada by Toronto-based Lloyd’s Canada Inc.

For 2013, Lloyd’s reported an underwriting result in reinsurance of £1.321 billion on gross written premiums of £9.468 billion. In reinsurance, Lloyd’s reported a combined ratio of 80.5%, down from 91% in 2012.

“The year was remarkable for the absence of hurricanes crossing the US coastline, as well as for the relatively low level of major catastrophes resulting in annual global claims from natural catastrophes falling below their ten year average,” the corporation stated of the Lloyd’s market.

“Lloyd’s benefited from this lack of hurricane activity in the US, and the low severity of events elsewhere. The North American continent still contributed the majority of Lloyd’s natural peril losses in 2013 including floods in Canada (Alberta and Ontario), tornadoes in the Midwest and hurricanes Manuel and Ingrid in Mexico. Europe was the source of the next largest amount of catastrophe losses with floods in Central Europe and a major hailstorm in Southwest Germany producing significant catastrophe claims to property treaty portfolios.”

For all lines combined, the Lloyd’s market paid £13.153 billion in claims in 2013, down from £13.398 billion in 2012.

The underwriting result in property was £681 million on gross written premiums of £6.103 billion.

“All major property lines have benefited from the low incidence of catastrophe losses,” Lloyd’s stated. “There have been some headline risk losses to a computer plant in China, a mining landslide in US, and energy losses in both the US and Argentina, but none of these events in themselves or in aggregate have had any material effect on results or rating levels.”

In aviation, Lloyd’s had an accident-year combined ratio of 105.1%, up from 86.2% in 2012.

“While overall loss activity remained below long-term norms, the aviation and space markets were affected by two large losses,” Lloyd’s reported. “These included the Sea Launch Intelsat 27 launch failure in February and July’s Asiana Airlines Flight 214 crash landing at San Francisco International Airport which caused three fatalities and left many injured, some critically.”

In energy, Lloyd’s reported underwriting income of £201 million on gross written premiums of £1.668 billion. The combined ratio in energy was 83% in 2013, up from 76% in 2012.

In the United States and Canada, 34% of the Lloyd’s business is in property, 27% is in reinsurance, 20% is in casualty, 9% is in energy, 7% is in marine, 2% is in aviation and 1% is in motor.

Worldwide, the Lloyd’s market had an underwriting loss in motor of £87 million on gross written premiums of £1.184 billion, with a combined ratio of 108.6%.

“Lloyd’s motor market primarily covers UK private car and commercial/fleet business,” the corporation stated. “In response to the introduction of new legal reforms earlier in the year designed to cut claims costs, price reductions continued across most UK personal motor lines during 2013.

“The rating environment for commercial motor remained more stable although performance concerns remain in both areas. While claims inflation levels remain above long-term norms, there was some improvement in underlying trends including fraudulent claims activity.”