Lloyd’s expects profits, despite cat losses

Despite Hurricane Katrina losses of approximately 1.4 billion, Lloyd’s of London predicts it will turn in full-year profits.The insurance market indicated pre-tax profits increased by 21% on the pro-forma number for the same period 2004 (or an increase of 1.38billion). However, business written in the first half of 2005 plummeted from 9.84 billion to 8.4 billion, in reaction to falling premiums.The full impact of hurricane season and the extensive damages of Hurricanes Katrina and Rita have are not certain so Lloyd’s says it cannot draw firm conclusions about the full-year result. However, profit is expected as long as no more major catastrophic losses or unforeseen events take place. Lloyd’s 2005 result will likely not be as high as the 1.4 billion profit seen in 2004’s profit, however it is expected to exceed 1 billion. The pre-tax profit may reach 1.4 billion, when excluding Rita losses and assuming Lloyd’s remains in the normal course of business. Lloyd’s says optimistic results are anticipated as there are signs of stronger premiums, particularly in the US energy sector as a result of the hurricanes. The Company’s combined ratio is reported at 87.3%, compared to 85% during the same period of 2004.Lloyd’s plans to raise its central fund levy from 0.5% to 1% of total insurance capacity although the Company says that it does not expect to have to dip into central funds as a result of individual syndicates going out of business due to the storms.