A benign catastrophe period helped return Lloyd’s to profit in the first half of 2012 with a combined ratio of 88.7% compared
to 113.3% in the same period last year.Lloyd’s reported a £1.53bn profit compared to a £697m loss a year earlier, while gross written premium crept up to £14.8bn (H1 2011: £13.5bn). Luke Savage, Lloyd’s director of finance, risk management and operations, told
Post: “It is the best combined ratio we have seen for five years, but perhaps that is not a surprise given the benign first half of the
year.“Major claims in the first half of the year totalled £300m compared with last yearwhen they were 10 times that amount.”
But he added: “Our first half is normally benign. If you look back over the past 15 years, this year was slightly above average, but in the grand scheme of things it is more typical than what we saw last year.” Savage said GWP growth had been supported by a 3% rise in rates: “Overall premium is up 9%. If you pull that apart, 3% is from risk-adjusted rating increases; 2% comes from a slightly stronger US dollar; 2% from businesses outside the Lloyd’s market transferring books of business into it; and 2% for growth.”
He added: “Property treaty and property direct & facultative saw the greatest rate increases. It’s not surprising, given the major losses of last year, that we are seeing reinsurance increases for property. “There are other classes that are stable and have not seen any rate increases at all. But, because property is such a big book within Lloyd’s, the overall book has risen by 3%.”
“Major claims in the first half of the year totalled £300m compared with last year when they were 10 times that amount.”
In reporting the results, Lloyd’s also stated that it submitted its Solvency II internal model application to the Financial Services Authority in July. Savage believes the possibility of further delays to the 2013 implementation date will have “almost nil impact”.
“The market has been working really hard on this for three years. We are materially complete. We are seeing benefits,” he explained.
“Across every managing agent, as well as the corporation, we are much better at articulating our risk appetite; much clearer around governance structures and meeting best practice around that; and we have better capital models.
“People are able to start winding down their Solvency II preparation teams and diverting those resources back to real business issues”
“Despite people knocking Solvency II, as a market we are better off because of it. Now that we have completed our preparation work, people are able to start winding down their Solvency II preparation teams and diverting those resources back to real business issues.
“That is in contrast to some of our peers who are not as far advanced and have to spend more money and time on preparations.“ “They may be grateful for the delays because it gives them more time to get ready but, on the flipside, they are continuing to burn money.”
Autor : Chinwe Akomah – POST