October 2, 2002 by Canadian Underwriter
Moody’s Investors Service expects that Lloyd’s of London will return to profitability for the 2002 financial year. However, Lloyd’s will likely show higher than expected losses for the market’s still to be reported 2001 and 2000 financial years, the agency says in a recently released report.
Moody’s predicts that Lloyd’s will report a US$4 billion loss for 2001, with 2000’s financial return being in the red for about US$3.75 billion. These loss expectations far exceed the negative financial forecasts made by Lloyd’s. Between 70%-80% of Lloyd’s syndicates engaged in underwriting during the 2001 and 2000 financial years will likely be loss-making, Moody’s says.
The investment rating agency believes that Lloyd’s will achieve a profit of around US$1.5 billion for the 2002 financial year, largely on the back of improved rates and better policy terms on covers issued post-September 11. Moody’s cautions that its profit forecast for 2002 depends on the fact that the market will only incur "normal losses".