Lloyd's of London on high as disasters low

Published on Thursday 24 September 2009 21:14

A LACK of global disasters has boosted profits at insurance syndicate Lloyd's of London.

Pre-tax profits at the group, the world's largest insurance market, rose 39 per cent to 1.32 billion after it benefited from a relatively low level of catastrophe claims.

The result, for the six months to 30 June, came as brokers and policyholders also sought the security of the Lloyd's platform, the group said. It warned that external conditions remained difficult and said it was "mindful" of the US windstorm season and the threat to the industry posed by the global recession.

In recent years significant claims from natural catastrophes such as North Atlantic hurricanes Gustav and Ike have impacted on profits.

Lloyd's said that its conservative approach had ensured its capital position and ratings remained strong but it was wary that recent relatively good conditions could turn sour.

Finance director Luke Savage said: "Things could run out of steam because the investment climate is still tough.

"Even if the equity market rally continues, we expect to see a sideways drift in underwriting unless there is a major event such as a wind storm or man-made catastrophe."

The group said its solvency position has improved on a year ago, with central assets standing at 2bn. Lloyd's, made up of 74 syndicates, has shown in recent years that it is more than able to cope with major catastrophes.

The group is not an insurance company but a society of members – corporate and individual – who underwrite in syndicates on whose behalf professional underwriters accept risk.

It has stuck to traditional reinsurance and insurance products rather than diversified into complex financial instruments at the centre of the market turmoil.

Lloyd's chairman Lord Levene said: "The first six months result has been achieved in what remain challenging circumstances.