Lloyd’s posts profit for 2002

Bouncing back from successive years of loss, Lloyd’s of London insurance market posted an overall profit of 834 million pounds for 2002. As well, during the year, net resources of Lloyd’s Society and its members increased 85% over 2001, to 7.51 billion pounds from 4.05 billion pounds.
“It was the market’s resilience and disciplined approach, at a time when the industry as a whole has faced many difficulties, that generated 2002’s healthy result,” says Lloyd’s CEO Nick Prettejohn. “These figures compare very favorably when measured against the market’s peer group.”
He notes that Lloyd’s combined ratio for 2002 was 98.6%, compared with an average of 105.1% for European reinsurers, a projected 121.3% for U.S. reinsurers, and a projected 108.3% for U.S. insurers.
Lloyd’s central assets grew to 563 million pounds, a 55% increase over the 363 million pounds reported in 2001. The market is forecasting central assets will hit 800 million pounds by then end of this year.
At the same time, the market has commenced arbitration with the six insurers currently backing its “central fund” who are withholding payment on a portion of claims.
Lloyd’s also says it is well on its way to implementing the “franchise” system announced last year. Currently the new “franchise performance directorate” and Lloyd’s risk management team are working on a new business planning cycle and franchise guidelines. Lloyd’s is also working on eliminating tax disincentives for individual members (Names) who have been writing unlimited personal liability and are now expected to change to limited liability.
Looking ahead, Prettejohn says, “the state of the capital markets and the continuing actions by many insurers to increase their reserves for past underwriting means that the Lloyd’s market should enjoy positive trading conditions in the medium term. We are determined that the implementation of our new franchise arrangements will reinforce these external factors by raising underwriting standards and improving efficiency.”