Lloyd's Loses ?3.11 Billion In 2001

By Lisa S. Howard, London Editor

NU Online News Service, April 10, 4:01 p.m. EST,London?Lloyd's of London today broke its tradition ofreporting results three years in arrears and released annuallyaccounted figures disclosing a ?3.11 billion loss for the 2001account year.

The amount equals $4.5 billion, at current exchange rates. Forcomparison purposes, the 2000 loss was calculated at ?1.2 billion($1.7 billion at current exchange rates) on an annually accountedbasis.

Of the ?3.11 billion loss figure, ?1.98 billion ($2.8 billion)relates to Sept. 11 losses, said Andrew Moss, director of financefor Lloyd's, during a press conference here today to release theresults.

"It goes without saying that 2001 was an exceptional year by anymeasure," said Nick Prettejohn, Lloyd's chief executive. "Sept. 11was the industry's largest insured loss, and Sept. 11 was Lloyd'ssingle largest insured loss as well."

Despite the loss in 2001, Lloyd's has demonstrated "greatresilience," he said. "We have our largest ever capacity going into2002 of ?12.2 billion [$17.1 billion] versus just over ?11 billion[$15.4 billion] for 2001," he said.

Since September, Lloyd's has transferred $5 billion of fundsinto its U.S. trust fund to meet regulatory requirements, and $900million in claims relating to Sept. 11 have been paid, he said.

Mr. Prettejohn admitted that the market's loss record since itsreconstruction and renewal program was completed in 1996 is notacceptable. That's why fundamental changes in the market are beinginitiated, he noted. (See "Lloyd's Proposes Radical Modernization"in NU, Jan. 21, page 9, with followup coverage on Jan. 28and Feb. 11, both on page 23.)

The move to annual accounting is part of that initiative, soLloyd's can easily be compared with its competitors, he said.

Lloyd's loss was large in absolute terms, he said in astatement, but he added that with a combined ratio of 140, themarket had a comparable performance to other majorproperty-casualty insurers on a global basis.

Lloyd's said that in the final quarter of 2001 and the firstquarter of 2002, it is projected that premium income will increaseby 62 percent compared with a year earlier, he said.

Rates are projected to rise by 60-to-90 percent in the aviationsector; 35-to-60 percent in the property reinsurance area;25-to-250 percent in the marine area, 10-to-15 percent in motorcoverage; 25-to-35 percent in personal accident, 10--to-50 percentin property insurance, and 20-to-50 percent in general liability,Lloyd's said.

During the press conference, Mr. Moss said that the increase inpremium income suggests that 2002 will be a profitable year,"absent another very large and very extraordinary loss?"