Loss ratio improves in 2012 for Lloyd’s despite billions in Storm Sandy claims

Lloyd’s released its financial results for 2012, reporting a profit of 2.77 billion British pounds despite billions in claims from damage resulting from Hurricane Sandy.

Lloyd’s, which lost 516 million pounds in 2011, said Wednesday that its gross written premium income in 2012 was 25.5 billion pounds, while total net incurred claims were 10.1 billion pounds, down from 12.9 billion pounds in 2011. As of Wednesday a pound was worth $1.54.

“In marked contrast to 2011 there was a low level of major catastrophe activity until the impact of Superstorm Sandy in late October,” Lloyd’s stated in its annual report.

“Results have been aided by stable attritional loss ratios in most lines. The largest losses outside of the U.S. to affect the property catastrophe market were the earthquake losses in Northern Italy and a hailstorm in Calgary, Canada, but these losses had little impact on pricing.”

The combined ratio in 2012 was 91.1%, compared to 106.8% in 2011. Broken down by class, combined ratios were 91% for reinsurance, 94.4% for property, 95.6% for casualty and 99.9% for marine.

The firm’s annual report also looked ahead to this year.

“In January 2013, there was severe flooding in Australia and Indonesia with initial estimates of insurance claims of (more than US$300 million) in both cases,” Lloyd’s stated. “February then saw severe snow storms in the North-Eastern U.S. and Eastern Canada which led to five U.S. states declaring a state of emergency and businesses and airports closed.”

Lloyd’s also noted the storm resulting Hurricane Sandy “does not appear to have been sufficient to materially impact rates” but the timing has resulted in “rate improvements on North American property risks and limited rate reductions that had been anticipated in some of the January 2013 renewals.”

Lloyd’s said claims from Sandy totalled US$2.2 billion, adding the marine reinsurance segment “saw significant rate rises in the 1 January renewals.”

Of the 25.5 billion pounds in gross written premiums last year, 9.8 billion pounds was from reinsurance, 5.5 billion pounds was from property, 4.5 billion pounds was from casualty, 2.1 billion pounds was from marine and 1.7 billion pounds was from energy.

Lloyd’s does 41% of its total business in the U.S. and Canada, according to its 2012 annual report.

In the U.S. and Canada, 33% of its business is in property, 19% in casualty and 27% in reinsurance, while 10% is in energy and 7% is in marine. For all regions, Lloyd’s does 38% of its business in reinsurance, 21% in property and 18% in casualty.