The damage caused by Superstorm Sandy wasn’t enough to derail the return to profit at specialist insurance market Lloyd’s of London as it bounced back from losses caused by Japan’s devastating tsunami.
The surplus of £2.8 billion is in sharp contrast to a year ago, when Lloyd’s recorded a loss of £516 million in what turned out to be the second most-expensive year on record for the insurance industry.
The market, which is made up of 89 underwriting syndicates, incurred net claims of £10.1bn in 2012, including $2.2bn (£1.4bn) after Sandy struck the Caribbean and North America in October.
But the total claims figure was still better than the £12.9bn in 2011 following floods in Australia and Thailand and the tsunami in Japan.
Today’s profit result was the strongest since 2009 and came after Lloyd’s generated record premium income of £25.5bn last year, partly as a result of average rate rises of 3 per cent. Its return on investment was up to £1.3bn from £995m a year earlier.
The Lloyd’s market has shown in recent years that it is more than able to cope with major catastrophes and met its claims in 2012 without any reduction in its central assets figure, which stood at a record £2.5bn.
The most-expensive event to rock the insurer was Hurricane Katrina in 2005, which caused claims worth $4.3bn (£2.8bn).
Lloyd’s recently unveiled Vision 2025, which sets out plans to grow the business in faster growing markets and to make London the “global hub” for specialist insurance and reinsurance by 2025.
Among previous changes to modernise the market, Lloyd’s has introduced a new franchise structure and phased out the number of “Names” who backed the market with an unlimited liability.