Lloyd’s of London has posted losses of £697m as the industry counted the cost of a series of major natural disasters.
Lloyd’s, which consists of 88 underwriting syndicates, received £6.7bn in claims during the costliest half year ever recorded for catastrophes.
It said its own claims were being met without dipping into its central fund, which would be considered as a fund of last resort, despite 2011 being on course to be the second most expensive year on record for insurers.
“These are tough times for the insurance industry, but we are well positioned to handle them,” said chief executive Richard Ward.
“Despite incurring £6.7bn in claims from the costliest first half year on record, Lloyd’s entered the second half of the year with £57bn in net assets to support our business and pay claims.”
The earthquake and tsunami in Japan is the fourth biggest event to hit the London-based market, with a projected figure of £1.2bn in claims. In 2005, Hurricane Katrina caused claims of $4.3bn (£2.4bn), making it the costliest event on record.
Floods in Australia are expected to cause claims of £200m, while the earthquake in New Zealand is forecast to result in a bill of £860m to the London-based market.
In the report for the six months to June 30, chairman Lord Levene said: “To put the figures into perspective, the claims seen so far in 2011 arising from major events have already exceeded the total for 2010 and we have not yet reached the end of the Atlantic hurricane season.
“Two of the ten costliest natural disasters since 1950 – the earthquakes in Japan and New Zealand – have occurred this year.”
The losses for the first half of 2011 are the worst Lloyd’s has published in the seven years it has been releasing half year results. It registered profits of £628m this time last year, despite claims resulting from the Deepwater Horizon oil rig explosion in the Gulf of Mexico and the Chile earthquake.
Challenging investment conditions resulted in a return of £548m, lower than the £597m registered a year earlier and the £708m returned in 2009.
However, the Lloyd’s of London market has shown that it is able to cope with the cost of natural disasters, such as US hurricanes. It has phased out the number of Names who backed the market with an unlimited liability and brought in a new franchise structure.
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