Lloyd’s Market shaken, not stirred by 2005 hurricanes

As a result of enhanced risk management and three consecutive years of significant profit, Lloyd’s was well positioned to absorb the substantial claims arising from a second year of unprecedented natural catastrophes in 2005, according to an overview of the Lloyd’s Market by Guy Carpenter & Company, Inc.
“Lloyd’s underlying performance continued to be strong in 2005, but net losses of 3.3 billion from Hurricanes Katrina, Rita and Wilma (KRW) pushed the market into a small overall loss of 103 million,” the report observes. “While the KRW claims have been substantial, every syndicate has been able to trade through these losses, and the impact on the Central Fund is expected to be negligible.”
The combined ratio of the Lloyd’s Market was 111.8% in 2005, including 28.1 points of KRW losses. Guy Carpenter notes this “compares favorably with U.S.- and Bermuda-based reinsurers.”
All non-catastrophe exposed lines remained profitable, Guy Carpenter notes.
In the wake of KRW, capital providers committed 1.2 billion of new money to the market, boosting Funds at Lloyd’s (FAL) by 6% percent to 10.2 billion and market capacity for 2006 by 8% to 14.8 billion, the report says.
“Lloyd’s continues to be a strong and stable reinsurance market for our clients, despite six of the ten largest insured losses in U.S. history occurring in the last two years,” according to Geoffrey Bromley, chairman of Guy Carpenter’s European and Asian Operations.