By Adam Jones
Lloyd?s of London posted a pre-tax loss of ?697m for the first half of 2011 after the specialist insurance market shouldered heavy losses from cata-strophes in Japan, Australia and New Zealand.
?The toll of natural disasters means that 2011 has already been one of the most challenging years on record,? said Lord Levene, Lloyd?s chairman.
However, he praised the market?s ?calm, collected? response to the earthquake and tsunami in Japan in March; the earthquake near Christchurch, New Zealand, in February; and January?s floods in Australia.
These three events are predicted to generate claims of $3.8bn for Lloyd?s members. ?Our ability to pay these claims is unquestioned,? Lord Levene declared.
Richard Ward, Lloyd?s chief executive, said the succession of natural disasters highlighted the need for Lloyd?s members to be disciplined in their underwriting.
?While interest rates are low and equity markets are volatile, we can?t rely on investment income to subsi-dise our underwriting. The Lloyd?s market must decline under-priced risks,? he said.
Lloyd?s is a society of members who underwrite insurance on their own account through syndicates. Its results are a pro forma guide to the aggregate performance of members.
The ?697m loss for the first six months of the year compared with a ?628m pre-tax profit reported for the first half of 2010. Gross written premiums were ?13.5bn, up 0.3 per cent.
Money invested by Lloyd?s members generated a ?548m return, down from ?597m. The combined ratio – a measure of underwriting profitability – deteriorated from 98.7 per cent to 113.3 per cent after a prior year reserve release.
? The Financial Times Limited 2011