NU Online News Service, March 28, 11:01 a.m. EDT
Lloyd’s says record catastrophe losses led to a loss of more than $800 million for 2011 as the specialty-insurance market experienced the largest catastrophe-claims year in its history.
In a statement today, London-based Lloyd’s says it incurred total net claims of $20.6 billion last year, including $7.4 billion in catastrophe claims. Lloyd’s calls this the “largest catastrophe-claims year on record for the 324-year-old insurance market.”
Lloyd’s notes that the year includes flooding in Australia in January, the second earthquake in New Zealand in February, the Japanese earthquake and tsunami in March and flooding in Thailand over the summer.
To put its losses in context, Lloyd’s referred to a report from Aon Benfield that estimates catastrophe losses for the insurance industry in 2011 amounted to $107 billion (see here).
“Make no mistake, 2011 was a difficult year for the insurance industry,” says Lloyd’s Chief Executive Richard Ward in a statement. “Given the scale of the claims, a loss is unsurprising but it reflects what we’re here to do—help communities and businesses rebuild after a disaster.
“It is also reassuring that, despite this loss, our financial strength has been maintained,” he continues. “It’s testament to Lloyd’s robust oversight and professionalism in the market today.”
He adds that it was disappointing that with the “exceptional level of catastrophes” insurance “rates have not responded more positively.” He calls on the industry to show more discipline on the issue of pricing.
“The Lloyd’s market has emerged from its largest catastrophe year ever in a strong position,” says John Nelson, chairman. “Our strong capital position is unchanged and we were able to make a profit in the second half of the year despite the floods in Thailand and continuing low investment returns.”
He says 2012 will remain a challenge in the face of tough economic headwinds and repeated Ward’s call for pricing discipline.
Lloyd’s reports loss before tax of £516 million ($820 million at the current exchange rate) compared to profit of £2.2 billion ($3.5 billion) for 2010.
The combined ratio deteriorated 13.5 points to 106.8, which Lloyd’s says is in line with other estimates.
The syndicate reports a prior year reserve surplus of £1.17 billion ($1.8 billion) compared to £1.02 billion ($1.6 billion) in 2010.