By Marcus Leach
Lloyd’s of London have announced a profit of £2.2 billion for 2010 despite a challenging year of significant claims.
In the face of tragic events in many parts of the world, such as the devastating earthquakes in New Zealand and Chile and floods in Australia, Lloyd's has returned what Chief Executive Richard Ward has described as 'solid' results.
The London insurance market also reported a combined ratio of 93.3% which compares favourably with competitors.
Following the release of Lloyd's Annual Results, Chairman Lord Levene said that the catastrophes of both 2010 and 2011 demonstrate the "crucial role" insurance plays in helping communities rebuild after a crisis. He added that insurance remains part of a wider financial services industry that is "essential to Britain’s economic recovery".
CEO Dr Ward also spoke of what lies ahead for the Lloyd's market over the coming months, describing these as "challenging times for insurers". Speaking about 2011, Dr Ward said "we must help the market steer through the cycle, ensuring they underwrite for profit and not growth".
He added, "at the same time we are positioning the market to take advantage of future opportunities by expanding in new economies and making it even easier to do business with Lloyd’s."
He said that 2011 has already been an "extraordinary" year of tragic natural disasters: "We extend our deepest sympathies to those affected and we are working hard to make sure claims are dealt with swiftly so communities in Japan, New Zealand and Australia can rebuild and recover."
Another challenge faced by Lloyd's in 2011 is Solvency II, a new set of EU-wide requirements on capital adequacy and risk management for insurers.
Dr Ward said that he is confident that Lloyd's is making good progress on Solvency II but is growing "increasingly concerned" by the cost and complexity of the exercise. "We must make sure this one piece of regulation doesn’t do lasting damage to our international competitiveness — either for Lloyd’s or the industry more widely," he said.