Lloyd's Chief Executive Richard Ward has confirmed that Lloyd's is well positioned to handle the difficulties facing the insurance industry in what is likely to be the second most expensive year ever for insurers.
His statement follows today's announcement that Lloyd's made an interim loss before tax of £697m (over $1 billion) for the six-month period ending 30 June 2011.
The figure reflects an unprecedented level of natural catastrophes in recent months including devastating floods in New Zealand and Australia, the earthquake in Japan and tornadoes in the US.
Announcing the results, Dr Ward said: "Despite incurring £6.7bn in claims from the costliest first half year on record, Lloyd’s entered the second half of the year with £57bn in net assets to support our business and pay claims." He added that with volatile equity markets and low interest rates, Lloyd's "cannot rely on investment income to subsidise our underwriting" and "must decline under-priced risks".
Lloyd’s Chairman Lord Levene, highlighting some of the major catastrophes that have already occurred in 2011, added: "Lloyd’s ability to pay billions in claims to help these communities rebuild is unquestioned and the fact that we have managed to do so without any call on our central capital reserves is testament to the market’s exposure management.”
Lloyd’s conservative investment mix has resulted in a positive return of £548 million, despite the continuing volatility in financial markets. Central assets are at a record high, leaving the market well capitalised despite the high level of claims, and confident of its ability to trade forward – whatever the rest of 2011 brings.