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The Lloyd’s market achieved its best year since 2009, announcing a profit of £3.2 billion in 2013, despite poor investment returns and pressure on pricing.
The market wrote £26.1 billion in gross written premiums during the year and achieved a combined ratio of 86.8 percent, helped by a benign catastrophe year and prior year releases.
Losses from the year totalled £9.6 billion of net incurred claims, down from losses incurred in 2012. The year helped to strengthen the market’s capital position, which reached £21.1 billion of net resources.
Commenting on the market’s success, Inga Beale, the new CEO, says “Disciplined underwriting and a benign year for major catastrophes have enabled us to outperform our peers and post this outstanding profit of £3.2 billion.”
“From this base, the Lloyd’s market has a great opportunity to expand in the underinsured, high growth economies around the world. We have started to build the foundations for this growth, as set out in our long term strategy Vision 2025, through close engagement with the market. We will continue to support our expert underwriters, through efficient operations, to attract capital and talent from these high growth economies.”
Vision 2025 is a strategic document that refocuses the market’s attention on emerging markets, where Lloyd’s hopes to leverage its network of global licenses. Regional hubs such as Lloyd’s Singapore form part of this drive and a number of Bermuda players have already established a presence in the emerging Asian re/insurance centre.
Lloyd’s chairman, John Nelson acknowledged that headwinds for the market nevertheless persist.
“Whilst we saw few catastrophe claims in 2013, continued low interest rates saw reduced investment income and high levels of capital continuing to flow into the market which put pressure on prices.”
“These conditions look set to persist. I therefore expect increased competitive pressure on the market to remain in 2014. This underlines the need for continued underwriting discipline as we seek to maintain and reinforce our position as the global centre for specialist insurance and reinsurance.”
Lloyd’s’ results follow hot on the heels of an announcement from the London Market Group stating that London needs to do more to defend its competitive global position. The news from the market will undoubtedly be a welcome balm.
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