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Disasters hit Lloyd's profits
By Myles Neligan |
September 29, 2010, Wednesday
|
Print Edition
Print Edition
THE Lloyd's of London insurance market revealed that record claims from disasters including the Chilean earthquake and United States oil spill halved its profits, and said it saw no respite from a steady decline in prices.
Lloyd's, a cluster of competing insurance syndicates which began in a London coffeehouse in 1688 and specialize in covering large-scale risks, yesterday posted a pre-tax profit of 628 million pounds (US$996 million) for the first half of 2010, down from 1.32 billion pounds a year earlier. The company said it had to absorb more claims in the first half than in any other six-month period.
The market was also hit by a 15 percent drop in investment returns as it switched to safe low-yielding assets in the face of volatile financial markets.
Property and casualty insurers worldwide have reported bumper claims in the first half of the year, with reinsurer Munich Re estimating total insured losses over the period at US$70 billion, exceeding the total for all of 2009.
Insurers have had to pick up the bill for heavy storms in Europe and Australia as well as the Chilean earthquake and Gulf of Mexico oil spill, while some Lloyd's insurers have been hit by a sharp rise in UK motor insurance claims.
The industry is also struggling with falling prices amid intense competition between insurers holding abundant supplies of capital after a relatively low volume of claims in 2009.
Lloyd's finance director Luke Savage said prices looked set to keep falling, and most of the syndicates operating in the market would probably respond by writing less business next year.
"At the moment there is nothing that would lead us to believe that (prices) are going to improve generally. In an environment of slowly declining rates, people are going to be slowly reining in the amount of premium they write," he told Reuters.
Lloyd's, a cluster of competing insurance syndicates which began in a London coffeehouse in 1688 and specialize in covering large-scale risks, yesterday posted a pre-tax profit of 628 million pounds (US$996 million) for the first half of 2010, down from 1.32 billion pounds a year earlier. The company said it had to absorb more claims in the first half than in any other six-month period.
The market was also hit by a 15 percent drop in investment returns as it switched to safe low-yielding assets in the face of volatile financial markets.
Property and casualty insurers worldwide have reported bumper claims in the first half of the year, with reinsurer Munich Re estimating total insured losses over the period at US$70 billion, exceeding the total for all of 2009.
Insurers have had to pick up the bill for heavy storms in Europe and Australia as well as the Chilean earthquake and Gulf of Mexico oil spill, while some Lloyd's insurers have been hit by a sharp rise in UK motor insurance claims.
The industry is also struggling with falling prices amid intense competition between insurers holding abundant supplies of capital after a relatively low volume of claims in 2009.
Lloyd's finance director Luke Savage said prices looked set to keep falling, and most of the syndicates operating in the market would probably respond by writing less business next year.
"At the moment there is nothing that would lead us to believe that (prices) are going to improve generally. In an environment of slowly declining rates, people are going to be slowly reining in the amount of premium they write," he told Reuters.
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