Lloyd's today released an interim report showing before-tax profit of ?949 million ($1.88 billion) for the six-month period ended June 30, compared with ?1,807 million for the same period in 2007 ($3.48 billion), saying the results reflect softening in market conditions.
Also impacting the market Lloyd's said were smaller attritional claims, separate from large claims or claims forming part of a catastrophe.
Lloyd's said in a statement that a conservative investment mix has resulted in a positive return of approximately 1 percent, "which showed the impact of the extreme volatility in the capital markets, with both equity and bond holding adversely affected."
Peter Levene, Lloyd's chairman, and Richard Ward, chief executive officer, said in the interim report: "The reduction from last year came as no surprise as a softening in rates from their peak was inevitable and the very low levels of claims could not continue."
Lloyd's said its combined ratio of 89 percent (compared with 82.9 in June 2007) compares well with its peers, but the 6.1 point increase indicates "the significant challenges faced with weaker prices and easing of terms and conditions across almost all lines of business."
Mr. Levene and Mr. Ward continued, "Reductions in the volume of business written by a significant number of established syndicates was a welcome sign of underwriting discipline. Revenues were boosted by new business brought into the market by recent entrants."
According to the report:
o Lloyd's said its combined ratio of 89 compares with an estimated average of 99 for U.S. property & casualty insurers; 98 for U.S. reinsurers; 86 for Bermuda; and 96 for European insurers and reinsurers.
o Lloyd's said its investments returned ?346 million ($689 million).
o Lloyd's reported central assets of ?1,936 million ($3.85 billion)--its strongest ever.
o Lloyd's financial strength ratings from A.M. Best Co. were "A" (Excellent), Standard & Poor's "A-plus" (Strong) and Fitch Ratings "A-plus" (Strong).
Lloyd's said it expects to have capacity to write approximately ?15.95bn ($29.56 billion) of business in 2008, being fifth place in terms of global reinsurance premium income. It is the second largest surplus lines insurer in the U.S. In 2008, 75 syndicates are underwriting insurance at Lloyd's, covering all classes of business from more than 200 countries and territories worldwide, Lloyd's reported.
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