Lloyd’s 2001 losses top Cdn$7 billion

For the first time ever, Lloyd’s of London is reporting it financial results on an annual basis, but the picture is not a rosy one for 2001. With Cdn$4.53 billion (1.98 billion British pounds) losses from the September 11 terrorist attacks, the company’s loss tally for 2001 is Cdn$7.11 billion (3.11 billion British pounds).The September 11 loss estimate is up slightly, having originally been pegged at 1.9 billion pounds. But this was not the only catastrophe hitting the books of the world’s oldest insurance market, with others accounting for Cdn$848 million (371 million British pounds) in losses. The loss of the Petrobras oil rig off the coast of Brazil, the attacks on the Air Lanka fleet in Sri Lanka, a factory explosion in Toulouse, France, and Tropical Storm Allison in the U.S. all added to last year’s poor results. While the number of catastrophes was relatively low, their value was high, and in many cases cut across several lines of business in which the market specializes.Lloyd’s chairman Sax Riley, used the losses to point out the need for market reform proposals put on the table which would create a “franchise” system, and effectively curtail the investment of individual members (Names) in favor or corporate capital. “The franchise model we are proposing means that poor performance will be spotted before, rather than after, the fact,” says Riley.Despite 2001’s losses, there are signs of significant hardening, says Lloyd’s CEO Nick Prettejohn. “Capacity is at an all time high, and we are seeing significant improvements in trading conditions across all lines of business,” he says. “The last six months have seen an estimated increase in premium income of nearly two thirds, compared with the same period a year ago.”Year-on-year rate increases projected between the fourth quarter 2000 and 2001 by line of business are: Aviation 60-90% Property reinsurance35-60% Marine 25-250% Motor 10-15% Personal accident 25-35% Property 10-50% General liability 20-50% % reflect adjustment to price and terms and conditions”These increases give us confidence that 2002, in the absence of any extraordinary catastrophes, should see the return to profitability for the Lloyd’s market,” says Prettejohn.