Lloyds Expects Record Capacity For 03
International Editor
London
Lloyds capacity for 2003 is estimated to be a record 14.25 billion ($22.5 billion at current exchange rates), compared to the 12.3 billion ($19.4 billion) of capacity available to the market for 2002, Lloyds of London Chief Executive Officer Nick Prettejohn announced.
The new capacity record is "a demonstration of powerful commercial and financial strength, in defiance of the predictions of a number of pessimistic observers," said Mr. Prettejohn, speaking at a conference in New York sponsored by Standard & Poors and the Black Diamond Group.
"It is a new record which clearly demonstrates that Lloyds businesses have been successful in attracting new capital," he said. "Indeed, nearly $9 billion of capital has been injected into the Lloyds market over the last two years."
The smooth handling of Sept. 11, 2001 U.S. terrorism losses demonstrated Lloyds commitment to paying claims, he said.
"Over the last 12 months, Lloyds underwriters have placed $5 billion in our U.S. Trust Funds and have paid out $2.5 billion of claims in relation to Sept. 11 alone, and our loss estimates have stabilized," he said.
In other Lloyds news, the Association of Lloyds Members estimated that individual Lloyds Names, who participate at Lloyds on both a limited and an unlimited liability basis, increased their capacity levels to 3.0 billion ($4.7 billion) for 2003, up from 2.8 billion ($4.4 billion) for 2002.
"It is good news that many Names have been able to finance their recent losses and increase their underwriting," said Michael Deeny, chairman of the Association of Lloyds Members in London, in an ALM statement.
"This shows the resilience of private capital, which continues to be a key supporter of many of the best syndicates at Lloyds," he added.
The ALM said the average losses of Lloyds Names have been less than that of the corporate members of Lloyds, "particularly those financed by international insurance companies from the U.S.A. and Bermuda."
The average increase for individual Names, both limited and unlimited, will be from 763,000 ($1.2 million) in 2002 to 924,000 ($1.5 million) in 2003, the ALM said.
In addition, Lloyds has appointed Rolf Tolle as its first franchise performance director, a move marking the next major step in reforms designed to improve financial performance.
Mr. Tolle is currently chief underwriting officer and a board member of Faraday Group, the London-based insurance operation owned by General Re Corp. Mr. Tolle will assume the position in the spring of 2003, a Lloyds representative said.
The franchise performance director and his team will be responsible for working with individual Lloyds businesses–the franchisees–to improve the commercial performance of the market, Lloyds said in a statement.
The duties of the franchise performance team will include monitoring each franchisees performance against its business plan, ensuring that the new underwriting and service guidelines for franchisees are followed, Lloyds added.
"Lloyds has begun a program of reform that will ensure it remains a world leader in the insurance industry," Mr. Tolle said. "This should ensure Lloyds is better prepared for any future downturn in the insurance cycle."
Prior to his current position with Faraday, Mr. Tolle spent 10 years as chief executive officer of Europa Re, based in Cologne, Germany.
"The role of performance director will be pivotal to the future profitability and, thus, viability of the Lloyds market," said Milan Vukelic, chief executive officer of Faraday Group, in a statement issued by Gen Re in Stamford, Conn.
"Consequently, Faraday has a significant vested and ongoing interest in ensuring that the position is filled by an experienced, knowledgeable and respected underwriter," he added. "Rolf meets all these criteria."
In other news related to Lloyds, claims paid by Equitas for the six-month period ended Sept. 30, 2002, came to 451 million ($708.1 million), compared with 798 million ($1.3 billion) during the same period last year.
Equitas was created in 1996 to separate the Lloyds of London market from its prior-year liabilities.
Despite the reduction in overall claims paid, Equitas reports that U.S. asbestos claims filings and average claims settlements have continued to rise, while new companies are being targeted by asbestos claimants. As a result, Equitas said it may be necessary to increase asbestos reserves at the end of the financial year following an actuarial review.
"A large number of new asbestos claims have been filed by persons who have not been impaired by exposure to asbestos," Equitas Chairman Hugh Stevenson said in a statement.
"We remain firmly committed to ensuring that, except in special circumstances, Equitas reimburses only valid claims in which asbestos-related injuries can be documented," he added.
Equitas said it is encouraged by the impact of documentation requirements and other asbestos claims initiatives that were implemented in June 2001 for direct claims and in November 2001 for reinsurance claims. An Equitas representative said he didnt have statistics on how these requirements may have reduced claims figures.
Equitas also announced that Michael Crall, who has been chief executive officer of Equitas since its inception in 1996, will retire in November 2003. He will remain on the board of directors as a non-executive director.
Mr. Crall will be succeeded by Scott Moser, who has been Equitas claims director since April 1997.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, December 30, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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