Lloyd’s capacity to drop 9% in 2005

Lloyd’s of London says its capacity should be GBP 13.7 billion (Cdn$33 billion) in 2005, a 9% drop over the nearly GBP 15 billion pounds (Cdn$36 billion) of capacity this year.
Lloyd’s chairman Lord Peter Levene says the drop in capacity is actually a positive sign indicating the resolve of the market to maintain underwriting discipline. “Under the new franchise arrangements, businesses at Lloyd’s have to take a hard look at how much business they plan to write in the coming year. Given current market conditions and the focus on delivering underwriting profit, it is a positive sign that there has been a decrease, not an increase in capacity at this point in the insurance cycle,” he says.
He adds that capacity figures represent a “plan” for the year ahead, and that Lloyd’s will be monitoring the actual underwriting activities of its franchisees as the year progresses. Lloyd’s is keen to maintain the underwriting discipline it reports this year, which resulted in at least one rating agency upgrading the market’s financial strength rating earlier this year.
“The fundamental financial strength and attractiveness of this market have both been underlined this year. Striking examples of this were the market’s ability to ride the worst US hurricane season for a century, and the success of our recent debt issue,” Levene notes.