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LONDON -- Lloyd's of London results for 1995 and 1996 will not match the record profitability of 1994, its last closed year, according to a forecast.
The Assn. of Lloyd's Members, the biggest representative body for Lloyd's investors, predicted last week that Lloyd's as a whole will produce a return on allocated capacity of 10.5%, equating to a profit of 1.08 billion pounds ($1.68 billion for 1995, the next year to be reported in its three-year accounting system.
The prediction for 1996 is a return of 6.5%, a 647.6 million pounds ($1.11 billion) profit.
However, even these estimates are better than Lloyd's' own forecasts -- issued last spring when it reported a record profit for 1994 of 1.1 billion pounds ($1.88 billion) -- of a 1995 profit of 913 million pounds ($1.42 billion) and a 1996 profit of about 600 million pounds ($1.03 billion) (BI, June 2).
While the ALM points out that its forecasts still would make 1995 and 1996 the fourth and fifth successive years of good profits for Lloyd's after a five-year period previously when losses totaled almost 8 billion pounds ($13.08 billion
at the Dec. 15 exchange rate), it attributes the earnings decline to deteriorating trading conditions.
It says that in both years, Lloyd's quoted corporate investment vehicles will produce profits "significantly" below the market average, producing returns in 1995 of 9.31% and in 1996 of 5.5%.
A small number of syndicates is expected to show losses on capacity of more than 20% in both years.
In the worst case, motor syndicate 913 is forecast to show losses of 21.5% and 27.5% in 1995 and 1996, respectively.
Meanwhile, a separate results estimate for Lloyd's from Sedgwick Oakwood Lloyd's Underwriting Agents Ltd., predicts 1997 will show a return on allocated capacity of 5%, or a little less than 542 million pounds ($886.4 million).
The return is expected to be about 5.8% for non-marine business and 8% for marine business. However, the return on aviation business will weaken to under 4%, while the forecast predicts the motor account will lose more than 6% of capacity.