Moody's: Lloyd's Profitable For 2003
NU Online News Service, March 10, 2:00 p.m. EST?New York City-based Moody's Investors Service's forecasts indicate that the Lloyd's of London insurance market could produce around ?3 billion ($4.8 billion) of profit covering 2002 and 2003 years of account, following losses of around ?4.5 billion ($7.2 billion) for 2000 and 2001 combined.
Moody's said that although it is currently forecasting the 2000 and 2001 years of account will produce losses of around ?2.3 billion ($3.7 billion) and ?2.2 billion ($3.5 billion), respectively, it has increased its forecast profit for 2002 to around ?1.6 billion ($2.6 billion). Additionally, Moody's anticipates further profit potential for 2003 of around ?1.4 billion ($2.2 billion.), assuming a "normal" loss year.
Moody's called its outlook "prudent," acknowledging that there are still a number of outstanding claims to be settled from the World Trade Center attack of 9/11, which could impact earnings.
The rating agency said market conditions are expected to remain exceptionally strong for 2003, and, assuming a "normal" loss year, Moody's said it currently predicts a 10 percent return on capacity for the market.
For both 2002 and 2003, Moody's added that it expects a wide variance between the results of the best and worst performing syndicates.
"Lloyd's in the previous up-cycle showed its ability to rebound from a period of substantial losses, and history is likely to repeat itself," said Mark Hewlett, managing director of Moody's European Insurance Division, in a statement. "Most business lines underwritten at Lloyd's have seen a considerable improvement in pricing as well as terms and conditions, and a period of strong profitability is anticipated in the current upturn."
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