Moody's Forecasts Higher Profit At Lloyd's

Moody's Forecasts Higher Profit At Lloyd's

NU Online News Service, March 12, 10:40 a.m. EST?Lloyd's of London won't release its year-end earnings report until next month, but one ratings agency is predicting the insurer could post profits totaling ?6 billion, or around $10.8 billion, for the 2002-to-2004 years of account.[@@]

In the forecast released yesterday, Moody's Investors Service said it is predicting profit for 2002 to be around ?2 billion ($3.6 billion) and profit potential for 2003 of around ?2.2 billion ($4.0 billion), as well as ?1.8 billion ($3.2 billion) profit for 2004.

Moody's stated also that it had raised its projected profits for the 2002 and 2003 years of account to 15 percent of capacity for both years. For 2004, Moody's said it is predicting a 12 percent return on capacity for the 2004 account, assuming a "normal" loss year.

The ratings firm said the adjustment reflects "the relative absence of major loss activity" as well as "exceptional underwriting conditions" for those years.

Mark Hewlett, managing director of Moody's European Insurance Division, commented that these are "exceptional forecasts" for the 2002-to-2004 years of account.

Mr. Hewlett added that the forecast demonstrates "the enduring power of the Lloyd's franchise and the earnings that can be achieved by syndicates underwriting at Lloyd's at this stage of the cycle, and underlines the financial strength offered by some of the syndicates currently trading in the market."

The New York-based Moody's said it adjusted its profit forecast upward despite the deteriorating U.S. dollar exchange rate because this adverse impact was offset by improving development of the underlying incurred statistics for these years.