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Lloyd’s market posts strong interim result (US$)


* Strong profit before tax of £1.35bn ($2.50bn) in first half
* Improved combined ratio outperformed major international peer groups
* Increased profitability and growth in central assets
* Further increase in solvency ratio

27/09/2006 - Lloyd’s, the world’s leading specialist insurance market, today announced an interim profit before tax of £1.35 billion ($2.50bn) for the six month period ending 30 June 2006. This result is broadly similar to that of last year, underpinning the market’s consistency with a 20% improvement in underwriting profit offset by a smaller contribution from investment income compared with the same period last year.


* Profit of £1.35 billion ($2.50bn) (first half ending 30 June 2005: £1.38 billion);
* Combined ratio of 86.0% (first half ending 30 June 2005: 87.3%), compared with an estimated average of 93% for US property & casualty insurers (i); 96.5% for US reinsurers (ii); 88% for Bermuda(iii); and 93.2% for European insurers and reinsurers;
* Increased central assets to £1,401 million ($2.592bn) (31 Dec 2005: £1,265 million); and
* Solvency ratio increased to 529% (31 Dec 2005: 384%)

Lloyd’s Chairman Lord Levene said:

“These are an excellent set of results. Today’s numbers clearly show the underlying strength of the market. Lloyd’s, in the first half of 2006, outperformed its major international peer groups due to a combination of good market conditions and the strong underwriting discipline within the market.”

Lloyd’s Chief Executive Richard Ward added:

“Five new syndicates have joined the market in the last year, which together with the £2bn ($4bn) of fresh capital during the same period demonstrates once again Lloyd’s continuing appeal as a place to do business.”

Notes to editors

1. A copy of Lloyd’s Interim Report and presentation to analysts can be accessed at:
2. A combined ratio is a measure of an insurer’s underwriting profitability based on the ratio of net incurred claims plus net operating expenses to net earned premiums. A combined ratio of 100% is break even. A ratio of over 100% is a loss; less than 100% is a profit.
3. Sources of combined ratios figures for international peer groups (i) US P&C industry 93% - Insurance Information Institute (estimate - September 2006), (ii) US r/i industry 96.5% - Reinsurance Association of America (August 2006), (iii) Bermuda 88.5%, Europe P&C & r/I industry 93.2% - Company Returns / Lloyd’s analysis (September 2006).
4. Central assets include the assets of the Central Fund and the other assets of the Corporation. In aggregate, the value of Lloyd’s central assets, excluding the callable layer and the liability in respect of the subordinated debt, amounted to £1,401m ($2.592bn) at June 2006.
5. Balance due to/from Members and Funds at Lloyd’s represent the aggregate of each member’s resources. These resources operate on a several basis and are only available to meet each member’s share of claims. Central Assets are available at Council’s discretion to meet the liabilities of any member on a mutual basis.
6. Foreign exchange rates may materially fluctuate from the rates prevailing at 30 June 2006, (£1 = US$1.85, £1 = € 1.45)
7. This press release includes forward-looking statements. These statements are based on currently available information and consistent accounting policies as applied at 30 June 2006. They reflect Lloyd’s current expectations, projections and forecasts about future events and financial performance. All forward-looking statements address matters that involve risks, uncertainties and assumptions. Based on a number of factors, actual results could vary materially from those anticipated by the forward-looking statements. These factors include, but are not limited to, the following:

- rates and terms and conditions of policies may vary from those anticipated;
- actual claims paid and the timing of such payments may vary from estimated claims and estimated timings of payments, taking into account the preliminary nature of such estimates;
- claims and loss activity may be greater or more severe than anticipated, including as a result of natural or man-made catastrophic events;
- competition on the basis of pricing, capacity, coverage terms or other factors may be greater than anticipated;
- reinsurance placed with third parties may not be fully recoverable, or may not be paid on a timely basis, or such reinsurance from creditworthy reinsurers may not be available or may not be available on commercially attractive terms;
- developments in the financial and capital markets may adversely affect investments of capital and premiums, or the availability of equity capital or debt;
- changes in legal, regulatory, tax or accounting environments in relevant countries may adversely affect (i) Lloyd’s ability to offer its products or attract capital, (ii) claims experience, (iii) financial return, or (iv) competitiveness; and
- economic contraction or other changes in general economic conditions could adversely affect (i) the market for insurance generally or for certain products offered by Lloyd’s, or (ii) other factors relevant to Lloyd’s performance.

The foregoing list of factors is not comprehensive, and should be read in conjunction with other cautionary statements that are included herein or elsewhere. Lloyd’s undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Lloyd’s is the world’s leading specialist insurance market and expects to have the capacity to write approximately £14.8bn of business in 2006. It occupies sixth place in terms of global reinsurance premium income, and is the second largest surplus lines insurer in the US. In 2006, 64 syndicates are underwriting insurance at Lloyd’s, covering all classes of business from more than 200 countries and territories worldwide.


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