LLOYD’S OF LONDON made a £516 million (€615 million) loss last year after paying out the largest catastrophe claims on record.
The 324-year-old insurance market, which operates out of the famous “inside-out building” in the City of London, paid out £4.6 billion in disaster claims after earthquakes in Japan and New Zealand, storms in the US and floods in Thailand and Australia. Total catastrophe claims for the global industry reached $107 billion (€80 billion) last year, according to insurer Aon Benfield.
The “unprecedented” series of natural disasters forced up the company’s total payout to £12.9 billion, or £1.07 for every £1 paid in premiums last year. The Thai floods, in October, were the biggest disaster for Lloyd’s in term of payouts last year, with total claims estimated at £1.4 billion.
Richard Ward, chief executive of Lloyd’s, said: “Seven industrial parks the size of Birmingham – and they remained underwater for a couple of months.” He said the Thai floods were a “double whammy” for Japan because 80 per cent of the buildings were owned by Japanese technology companies, many of which had transferred production to Thailand following the country’s devastating earthquake and tsunami in March.
Mr Ward said £1.2 billion of tsunami payouts was lower than for the Thai floods because Japanese companies tend to insure their businesses with local insurers and, “worryingly” for the people of Japan, a lot of properties were not insured at all.
The scale of the payouts dragged Lloyd’s to its biggest full-year loss since the 7/11 attacks, which led to the market of 80 insurance syndicates reporting a £3.1 billion loss. In 2010 the company made a £2.2 billion profit.
“Make no mistake, 2011 was a difficult year for the insurance industry,” Mr Ward said. “Given the scale of the claims, a loss is unsurprising, but it reflects what we’re here to do: help communities and businesses rebuild after disaster.” He said the size and stability of Lloyd’s market structure, which allows underwriters and brokers to operate under the protection of its £2.3 billion central fund, had enabled the company to absorb the “pretty spectacular” £12.9 billion payout. – (Guardian)
