Canadian Underwriter

Moody’s forecasts $14.4 billion profit for Lloyd’s

March 16, 2004   by Canadian Underwriter

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Rating agency Moody’s Investors Service is predicting the 2002 to 2004 years of account for Lloyd’s of London will produce a profit of GBP6 billion (Cdn$14.4 billion), or 42% of capacity on a cumulative basis.
In the absence of major losses in 2002 and 2003, plus stronger underwriting, profits for these two years are each expected to equal 15% of capacity. This equals profit of GPB2 billion (Cdn$4.8 billion) and GBP2.2 billion (Cdn$5.3 billion) respectively.
“Although market conditions have reduced for 2004, overall conditions remain in line with those experienced in 1994-1995,” the rater notes. Moody’s expects profits to equal 12% of capacity for 2004, or GPB1.8 billion (Cdn$4.3 billion), given a normal loss year.
This is a sharp turnaround from the loss of 18.7% of capacity expected to be reported for the 2001 year of account.
“These are exceptional forecasts for the 2002 to 2004 years of account, demonstrating the enduring power of the Lloyd’s franchise and the earnings that can be achieved by syndicates underwriting at Lloyd’s at this stage of the cycle, and underline the financial strength offered by some of the syndicates currently trading in the market,” says Mark Hewlett, managing director of Moody’s European insurance division.

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