Record hurricane-related claims force Lloyd's of London to report a loss

Record hurricane-related claims force Lloyd's of London to report a loss

	Published : Thu, 06 Apr 2006 17:05 By : David Simms Print this Story

LONDON - The Lloyd's of London insurance market announced a loss for the year 2005 as it was hit by a deluge of hurricane claims. However, the company said it was back on track and expected 2006 to be a good year.

The world's largest insurance market reported a loss of £103 million before tax for the year 2005 as a record £3.3 billion of hurricane-related insurance claims were placed before it. However, Lloyd’s stressed that it was no small victory to have limited the damage to report a small loss. Hurricanes Katrina and Rita have hit insurance companies hard and have cost them at least £50 billion. "2005 was the worst year on record for natural disasters, costing the insurance industry far more that the impact of the 9/11 attacks on New York.

For Lloyd's to emerge from such a year with just a small loss represents an excellent performance by the market," observed Lord Levene, the chairman of the insurance market. He added that limiting the loss to just £103 million underlined the fact that Lloyd’s had better risk-management practices in place. "That outcome would have been unthinkable just a few years ago, which is the true measure of the progress Lloyd's has made," he said. The market had already warned last year that it was unlikely to make any profits for the full year. Lloyd's did make £11.8 billion on premiums of policies in the year, but this achievement paled in front of claims of more than £9.5 billion.

These resulted in the market underwriting a loss of nearly £1.4 billion. Lloyd's said that its solvency ratio had jumped to 379 percent this year as compared to 300 percent last year. The insolvency ratio is an important measure of the insurer's financial strength. The market said that it expected to write £14.8 billion of business this year.