RNS Number:4390X
Lloyds Of London
07 April 2004
LL09/04 7th April 2004
LLOYD'S ANNOUNCES #1,892m PROFIT FOR 2003
* Industry-leading results, outperforming international peer group
* Further strengthening of balance sheet
* Continuing focus on underwriting profit
Lloyd's, the world's leading specialist insurance market, today announced a pro
forma annually accounted profit of #1,892million in 2003, an increase of 127%
on 2002.
Highlights:
* Profit of #1,892 million, before tax, for 2003 on a pro forma annually
accounted basis (2002: #834m)
* Initial projection of profit of #1,780 million on a three-year
accounted basis for the 2003 underwriting year
* Further reduction in combined ratio to 90.7% (2002: 98.6%)
* 49% increase in Central Fund to #711 million (total Central Assets up
39% to #781 million)
* Net resources of the Society and Members up 35% to #10.1 billion
The Chairman of Lloyd's, Lord Levene, said:
"Lloyd's is in good shape after a year of strong progress. However, there is no
room for complacency. We get daily reminders of just how risky our world is, and
that is where Lloyd's comes in. This market is founded on providing a shelter
against worldwide risks."
Lloyd's Chief Executive, Nick Prettejohn said:
"These results represent an encouraging underwriting performance and afurther
strengthening of the market's balance sheet following last year's return to
profit. The 2003 result benefited from favourable external conditions, with
strong premium rates and a low financial impact on the market from catastrophic
loss.
"Lloyd's has outperformed our international peer group as businesses in the
market have concentrated on delivering underwriting profit. Lloyd's Franchise
Board took decisive steps in 2003 to strengthen the market, and there will be no
let up in thatwork. In particular, we will continue to take strong action where
businesses are under-performing.
"Lloyd's made good progress in 2003, in absolute and competitive terms. The task
now is to maintain that progress. Consistently good performance, balance sheet
strength and attractive returns for capital providers can only be achieved if
businesses continue to write for profit and price risk adequately. The
continuing increases to reserves across the industry, and conditions in the
capital markets, mean that the need for an underwriting profit is as strong as
ever."
Lloyd's combined ratio for 2003 of 90.7% compares with an estimated average of
100.7% for the US property and casualty insurers (i), 101.2% for US re-insurers
(ii) and 101.4% for European insurers and re-insurers (iii).
Notes to Editors
1. Sources of combined ratio figures - (i) Insurance Information
Institute (estimate - Jan 2004), (ii) Reinsurance Association of America (Mar
2004), (iii) Company Returns / Lloyd's FPMA analysis (Mar 2004)
2. All other figures contained in the release will be disclosed in Lloyd's
Report and Accounts published in May.
3. A presentation on Lloyd's 2003 financial results can be viewed at
www.lloyds.com/results2003.
4. A high-resolution photograph of Lord Levene and Nick Prettejohn
is available to download from www.newscast.co.uk.
For further information, please contact Lloyd's:
Nick Gammage Louise Shield Melanie Batley
Tel: +44 (0) 20 7327 6272 +44 (0) 20 7327 5793 +44 (0) 20 7327 6125
Fax: +44 (0) 20 7327 5229 +44 (0) 20 7327 5229 +44 (0) 20 7327 5229
e-mail: nick.gammage@lloyds.com louise.shield@lloyds.com melanie.batley@lloyds.com
For all calls out of hours:
+44 (0) 7659 597 825
Lloyd's web site: www.lloyds.com
Lloyd's is the world's leading insurance market with a capacity to accept
insurance premiums of more than #14.9 billion in 2004. It is the world's second
largest commercial insurer and sixth largest reinsurance group. In 2004, 66
syndicates are underwriting insurance at Lloyd's, covering all classes of
business from more than 190 countries and territories worldwide.
Lloyd's is regulated by the Financial Services Authority.
Notes accompanying Lloyd's 2003 financial results
1. Result for 2001, projections for 2002 and 2003 - three-year accounts
Difference between annual and three-year accounting
Lloyd's traditional method of accounting has been on a three-year basis. Under
this system, the year's accounts remain open for 36 months. Premium income and
claims are usually accounted for in the underwriting year of account in which
the policy is issued.
Under annual accounting, the result for the year accounts for the movement of
premiums, claims, expenses and reserves during that calendar year period.
There can be considerable differences between the three-year figure and annual
figure for the same year. For example, under annual accounting, the entire
September 11 loss was accounted for in 2001 when the claims occurred. But under
three-year accounting, the September 11 losses were split between 1999, 2000 and
2001 because these were the years in which the relevant insurance policies were
issued.
Whereas 2003 is being reported on a pro forma annually accounted basis, the
result for 2001 year-of-account and the latest projections for 2002 and 2003 are
calculated using the Lloyd's traditional three-year accounting method.
Lloyd's announced today that the result for the 2001 year-of-account is a loss
of #2,378 million. The latest projection from the businesses in the market for
2002 year-of-account is a profitof #1,671 million which is in line with
previous projections.
2. Cautionary note on forward-looking statements
This document includes forward-looking statements. These statements are based
on currently available information and consistent accounting policies as applied
at 31 December 2003. They reflect Lloyd's current expectations, projections and
forecasts about future events and financial performance. All forward-looking
statements address matters that involve risks, uncertainties and assumptions.
Based on a number of factors, actual results could vary materially from those
anticipated by the forward-looking statements. These factors include, but are
not limited to, the following:
* Rates and terms and conditions of policiesmay vary from those anticipated.
* Actual claims paid and the timing of such payments may vary from estimated
claims and estimated timings of payments, taking into account the preliminary
nature of such estimates.
* Claims and loss activitymay be greater or more severe than anticipated,
including as a result of natural or man-made catastrophic events.
* Competition on the basis of pricing, capacity, coverage terms or other factors
may be greater than anticipated.
* Reinsurance placed with third parties may not be fully recoverable, or may not
be paid on a timely basis, or such reinsurance from creditworthy reinsurers
may not be available or may not be available on commercially attractive terms.
* Developments in the financial and capital markets may adversely affect
investments of capital and premiums, or the availability of equity capital or
debt.
* Changes in legal, regulatory, tax or accounting environments in relevant
countries may adversely affect (i) Lloyd's ability to offer its products or
attract capital, (ii) claims experience, (iii) financial return, or (iv)
competitiveness.
* Economic contraction or other changes in general economic conditions could
adversely affect (i) the market for insurance generally or for certain
products offered by Lloyd's, or (ii) other factors relevant to Lloyd's
performance.
Foreign exchange rates may materially fluctuate from the rates prevailing at 31
December 2003
(#1 = US$1.79, CA$ 2.31, Euro1.42)
*The foregoing list of factors is not comprehensive, and should be read in
conjunction with other cautionary statements that are included herein or
elsewhere. Lloyd's undertakes no obligation to update or revise any
forward-looking statement, whether as a result of new information, future
developments or otherwise.
3. Combined Ratio
A combined ratio is a measure of an insurer's underwriting profitability based
on the ratio of net incurred claims plus net operatingexpenses to net earned
premiums. A combined ratio of 100% is break even. A ratio of over 100% is a
loss; less than 100% is a profit.
4. Lloyd's Capital and Reserves #m's
Lloyd's also announces today the most recent figures for its global assets
available to meet policyholders' claims. As at 31 December 2003 these were:
2003 2002
Cash and Investments 27,893 24,512 +14%
Reinsurers'share 11,180 13,693 -18%
of technical provisions
Other assets 9,830 11,091 -11%
Total assets 48,903 49,296 -0.8%
Total liabilities (38,758) (41,787) -7%
Net resources 10,145 7,509 +35%
Cash and investments include members' funds at Lloyd's. Funds at Lloyd's must be
readily realisable and may include letters of credit and bank and other
guarantees.
5. Central Assets #ms
2003 2002
Central Fund 711 476 +49%
Lloyd's Corporation Net 70 87 -20%
assets
Total 781 563 +39%
6. Central Fund
In normal circumstances, the Central Fund is available, at the discretion of the
Council of Lloyd's, to meet a liability if a member has insufficient resources
in its Premium Trust Fund (PTF) and is unable to provide other additional funds.
At 31 December 2003, the assets of the Central Fund amounted to #711 million, an
increase of #235 million since reported last year.
ends
This information is provided by RNS
The company news service from the London Stock Exchange
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