LONDON (Reuters) - The Lloyd’s of London LOL.UL insurance market swung back into profit in the first six months of 2012, after a comparative lack of natural disasters reduced its claims bill by nearly a third, it said on Wednesday.
Lloyd’s made a profit of 1.5 billion pounds ($2.4 billion) compared with a 697 million loss in the same period last year, when it paid out billions due to severe earthquakes in Japan and New Zealand and tornadoes in the United States.
Lloyd‘s, which traces its origins back 324 years to a London coffee house where merchants met to insure ships, covers businesses worldwide against large-scale risks, and takes a financial hit from most major disasters.
The market’s claims bill fell to 4.6 billion pounds in the first half of 2012 from nearly 7 billion a year earlier, it said.
Catastrophes during the period included the capsizing of the Costa Concordia cruise liner and drought-related crop destruction in the United States, but they failed to match the claims generated by last year’s earthquakes and tornadoes.
“This is a welcome return to profit for the market after a six-month period that could not be in greater contrast to the first half of 2011,” Chief Executive Richard Ward said in a statement.
The market crashed to its second-biggest annual loss in 2011 as the global insurance industry paid out a near-record $116 billion in natural catastrophe claims.
Lloyd’s finance chief Luke Savage said the market had minimized its investment exposure to the troubled euro zone, although it could be hit by professional liability claims in the event of the single currency area disintegrating.
“If there is a break-up one can only assume that there will be a proliferation of claims against banks for bad advice, as there was after the dot-com bubble, and the sub-prime situation in the U.S.” Savage told Reuters.
Lloyd’s has in the last 10 years slashed its exposure to so-called “directors and officers” insurance, which protects executives against lawsuits for customers or shareholders, so any claims would be “within the usual course of business,” he added.
Lloyd’s financial performance represents the combined results of about 80 competing insurance and reinsurance syndicates that operate under its banner. Listed companies which operate syndicates at Lloyd’s include Catlin CGL.L, Hiscox (HSX.L) and Amlin (AML.L).
Reporting by Myles Neligan; Editing by Sinead Cruise and David Holmes