Lloyds makes hay in a disaster-free world
The lack of any major natural or man-made disasters in the world last year helped insurance market Lloyds of London to return to profitability after its loss in 2005.
The market announced a profit of £3.6bn in 2006, compared with the loss of £103m the year before when hurricane Katrina devastated the southern seaboard of the United States and destroyed swathes of New Orleans.
A Lloyds spokesperson characterised 2006 as a period of “an exceptionally low level of catastrophes”, but warned it was “unrealistic” to expect repeat performances in coming years.
Lloyds is made up of 70 individual underwriting syndicates and was badly hit by the catastrophic hurricane season of 2005. Katrina on its own cost Lloyds £1.9bn, while Wilma and Rita cost it an additional £1bn.
“After two years of hurricane activity, 2006 was an exceptional year but for very different reasons,” said Lloyds chairman Lord Levene.
“It would be unrealistic to expect such a favourable claims experience this year. With a trend for more frequent and severe natural catastrophes, we must continue our focus on underwriting for profit.”
Lloyds was keen to stress that climate change was a major challenge for the business but emphasised that it had improved the methods by which it managed climatic risks.