ChCh earthquakes add to record Lloyd's loss
The London-based insurer received a record £6.7 billion ($12.9 billion) in claims and made a £697 million first-half loss.
The Christchurch earthquakes contributed to a record £6.7 billion ($12.9 billion) in claims and a £697 million first-half loss at insurer Lloyd’s of London.
Tornadoes in the US, a tsunami in Japan and floods in Australia added to the loss, which helped push the total cost to the global insurance industry of $US70 billion in the first half of 2011.
However, Lloyd's has paid the first-half claims without touching its central core of capital. Some of its syndicates – underwriting groups that trade in its market – even managed to book profits.
The bad news was compounded by lower returns on investments, thanks to slumping share markets and low interest rates.
Lloyd's made a low 1.1% return in the first six months to June 30. This compares with average returns of 3.9% in the past five years. A third of its assets are in low-yielding cash.
Lloyd's has released reserves built up in the past decade to offset the weak returns and the surge in claims.
The availability of reserves and surplus industry capital has made it hard for insurers to push through increases in premiums.
While prices have risen in disaster-prone areas, Lloyd's says its premiums are falling up to 5% in casualty areas, such as employer liability cover that comprise around a fifth of its business.
Nevil Gibson
Thu, 22 Sep 2011
Thu, 22 Sep 2011
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ChCh earthquakes add to record Lloyd's loss
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