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Member, Beacon International Group, Ltd.
LONDON—Lloyd’s of London said its pretax profit fell by more than half during the first six months of this year due to significant claims and reduced investment returns.
Lloyd’s said Tuesday that its pretax profit was £628 million ($994 million) for the first six months of this year compared with £1.32 billion ($2.09 billion) for the first half of last year.
The market’s combined ratio rose to 98.7% compared with 91.6%.
First-half investment gains totaled £597 million ($944.9 million) this year vs. £708 million ($1.12 billion) last year.
Lloyd’s CEO Richard Ward said the first half of 2010 has been extremely costly for Lloyd’s and other insurers around the world.
He said Lloyd’s expects net claims of $1.4 billion from the Chilean earthquake in February and $300 million to $600 million from the loss of the Deepwater Horizon oil rig in April.
In addition, Mr. Ward said, Lloyd’s has received claims totaling about $50 million from European windstorms and about $75 million from U.S. snowstorms during the period.
Overcapacity in the insurance and reinsurance market continues to pressure rates, and prices are falling in most lines of business, Mr. Ward noted.
Despite challenging market conditions, Lloyd’s has received interest from entrants wishing to set up syndicates, which Mr. Ward declined to name.
One of Lloyd’s goals is to make itself an attractive place to do business, but new entrants must meet rigorous criteria, he said.
The market is “not pulling up the drawbridge” and is open to new syndicates, but he said their business plans will be examined very closely. Typically, new syndicates are permitted to underwrite only a small amount of business, he added.