Global insurer announces record-breaking profit

A major global insurer brought in $5.3bn in 2013—a record-breaking year, thanks to a calm US hurricane year.

Catastrophe & Flood


Global insurer Lloyd’s of London experienced its highest profit in four years, the world’s oldest insurance market announced Wednesday.

Thanks to a drop in natural catastrophes in 2013, Lloyd’s pretax profit increased to $5.3 billion in 2013 from $4.6 billion the previous year—a 14% improvement. Lloyd’s paid out just $1.43 for every $1.66 it collected in premiums.

Chief Executive Officer Inga Beale attributed the insurer’s success to a “benign” US hurricane season and resulting catastrophe claims, a statement backed up by research from Munich Re. According to the reinsurer, claims against both carriers and reinsurers from natural catastrophes dropped 52% last year to just $31 billion.

Lloyd’s also suffered minimal exposure to the typhoon in the Philippines as well as the severe storms and flooding that plagued the UK and much of northern Europe last year.

“This is the highest profit since 2009,” Beale stated.

Lloyd’s also benefitted from a release of 1.6 billion pounds of reserves, which was previously set aside for claims. That’s an increase from 1.4 billion pounds at the same period last year.

Lloyd’s Chairman John Nelson cautioned its member insurance syndicates not to fall into complacency following the strong results, however.

“We’re ahead of our peer group…[but] we have to reinforce our underwriting discipline,” Nelson said Wednesday, warning that increased competition could push premium rates lower and threaten future profitability.

Looser policy wordings and terms could also threaten Lloyd’s, as could the insurer’s failure to “harness the new capital” that is flowing into the insurance industry.

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