Lloyd’s Takes First-Half Loss On Cats
year’s first half already exceed those for all of
last year—which were around $42 billion.
“While it has been a tough first half-year,
compared to our peers, we think we’ve actu-
BY CAROLINE MCDONALD
LLOYD’S ON Sept. 21 announced an interim loss before tax of £697 mil- lion ($1.12 billion at current exchange
rate) for the 2011 first half, compared to £628 million ($980.3
million) in profit for the same
period a year ago.
The loss reflects the costliest
first six months on record for major catastrophes for the insurance
industry—and Lloyd’s says 2011
is likely to be the second-most-expensive year ever for insurers.
Lloyd’s CEO Richard Ward says
in a statement, “These are tough
times for the insurance industry,
but we are well positioned to han-
dle them. Despite incurring $10.8
billion in claims from the costliest
first half-year on record, Lloyd’s
entered the second half of the year
with $92 billion in net assets to
support our business and pay claims.”
He adds, however, that “while interest
rates are low and equity markets are vola-
tile, we can’t rely on investment income
to subsidize our underwriting; we must
decline underpriced risks.”
Luke Savage, director of finance, risk man-
agement and operations for Lloyd’s, tells NU
that at $60 billion, catastrophe losses for this
ing volatility in financial markets.
Lloyd’s has been stressing underwriting
discipline in the industry, which Savage
believes has helped the situation.
He says that looking at its com-
bined ratio of 113.3, “it looks
like we’ve come through in good
shape compared to our peers. We
like to think underwriting disci-
pline played a big part of it.”
Regarding whether the first-
half events will turn the mar-
ket, Savage says, “We don’t think
what we’ve seen so far is turn-
ing the market. Off the back of
the catastrophes we’ve seen some
strong rating improvement” in
the geographies and classes im-
pacted, including New Zealand
property and Japanese property,
and some improved international
reinsurance rates, he notes.
More recently, he says, there
have been some small improvements in
U.S. reinsurance rates due to tornado activ-
ity, but overall, “in other geographies and
other classes, rates are at best hovering and,
indeed, in U.S. casualty we see them still
drifting slowly downward.”
Savage adds, “I’m not sure what it would
take to turn the market as a whole, but it
doesn’t look like we’ve had it yet.” NU
Despite incurring $10.8 billion in
claims from the costliest first half-year on
record, Lloyd’s entered the second half of
the year with $92 billion in net assets to
support our business and pay claims.”
Richard Ward, CEO of Lloyd’s
ally done pretty well,” Savage says. “It’s been
more or less an earnings event rather than
a capital event, and while we’ve got very
tough times ahead,” Lloyd’s is still “strongly
capitalized—in fact more strongly capital-
ized than we were at year-end.”
Lloyd’s says its conservative investment
mix has resulted in a positive return of £548
million ($883 million), despite the continu-
I’m not sure what it would take
to turn the market as a whole, but it
doesn’t look like we’ve had it yet.”
Luke Savage, Director of Finance,
Risk Management and Operations for Lloyd’s
American Family: $1B In 2011 Claims Payments
BY CHAD HEMENWAY
CATASTROPHE LOSSES in 2011 will reach the $1 billion mark for Ameri- can Family Insurance.
The Madison, Wisc.-based insurer of
homes, automobiles, businesses and farms says
it has paid about $100 million to victims of a
destructive tornado in Joplin, Mo. last May.
The Joplin tornado destroyed 400
homes and damaged hundreds of others.
Policyholders filed 2,300 property, auto and
Severe-weather events heavily affected
many of the insurer’s top states for busi-
ness, according to Highline Data, a part of
Summit Business Media, publisher of NU.
According to Highline Data, American
Family was the top homeowners’ insurer in
Wisconsin with a 22. 9 percent market share.
In Missouri, American Family is second
to State Farm for homeowners’ insurance
with a 16. 7 percent market share.
As of July 31, American Family has paid
$963.5 million in claims and expects the total
to reach $1 billion after payments in August.
This is the third year American Family has
reached the $1 billion mark in catastrophe
losses. The other years were in 2006 and 2008.
The insurer says it paid out $906.3 million for claims in 2010. NU