THE LLOYD’S of London insurance market swung to a profit last year as the number of natural disasters fell worldwide.
Lloyd’s of London yesterday posted a £2.77bn profit for 2012, in spite of £10bn in claims including £1.4bn in the wake of Superstorm Sandy, making the storm that battered North America one of the costliest disasters in Lloyd’s history.
The gain compares to a £516m loss in the previous year, which was the second-worst performance in the market’s 325-year history.
“That’s a good performance showing disciplined underwriting, but in the business that we’re in, it will go up and down,” chairman John Nelson told City A.M. “Last year, in 2011, we had that coincidence of catastrophes in Australia, New Zealand, Thailand, Japan and North America. This year has been more normal – there’s been a normal pattern of catastrophes.”
The firm, which oversees the face-to-face underwriting market in which almost 100 syndicates cover risk, saw gross written premium income hit a record £25.5bn in the year. This increase included favourable currency movements as well as an average three per cent rise in rates.
Lloyd’s paid out 91.1 per cent of its premiums in claims, an improvement on its 106.8 per cent combined ratio in the previous year.
Calmer global markets meant the group’s investment return rose to £1.3bn for the year, and its central fund, which is used to pay claims that cannot be met by Lloyd’s members, grew four per cent to £2.5bn.
Nelson said the firm was making progress on its goal to become an insurance hub for new markets.