During a year of lower insurance rates and increased claims due to natural disasters, Lloyd’s of London has reported a pre tax profit of £1.89 billion. Commenting on the profits, Lloyd’s CEO Richard Ward, said that “Given the financial crisis that has unravelled over the last year and the scale of catastrophes, our results represent a solid performance and better than we might perhaps have expected in such a turbulent year.”
The £1.89 billion profit made during 2008, is down £1.947 billion on the £3.846 billion profit made during 2007. 2008 was a bad year for the insurance industry, with natural catastrophes resulting in an approximated £193 billion worth of claims. £1.8 billion of those claims were handled by Lloyd’s, but Lloyd’s still managed to have its third most profitable year. Lloyd’s profits were boosted by the weakening of sterling against the dollar. Almost 60% of Lloyd’s premiums are written in US dollars, which has helped Lloyd’s make a £853 million profit in currency movements during 2008.
The Chairman of Lloyd’s, Lord Levene, commented that “Amidst the unprecedented slump in the world economy, Lloyd’s remains in good shape. The market has inevitably been impacted by significant claims from natural catastrophes, lower insurance rates and a reduction in investment income but this has been partially offset by currency movements and prior year surpluses”.
Lloyd’s sensible approach to investment, has resulted in a 2.5% return. Although a reduction from the 5.6% return from investment made during 2007, in the current economic climate, an investment return of £957 million is good solid performance. Lloyd’s have also increased their central assets to £2,072 million and have a surplus on prior years’ reserves of £1,265 million.
You can view Lloyd’s annual report here: http://www.lloyds.com/2008annualreport