The Lloyd’s of London insurance markets had to bare its second biggest loss on account of claims arising out of last year’s natural catastrophes including earthquake of Japan and floods in Thailand. For 2011 Lloyd’s reported a loss of £516 million or$824 million as against the profit of £2.2 billion in 2010. This loss is the second just to the £3.11 billion deficit of 2001 following the September 2001 attacks.
This loss is the aggregate financial performance of 80 competing insurance syndicates that make up for Lloyd’s market.
For 2011 Lloyd’s incurred claims of £4.6 billion on account of natural disasters which is a record. Total payouts for 2011 for Lloyd are stood at £12.9 billion.
Last year was the second costliest year for insurance industry for catastrophes. Last year’s earthquakes, floods and tornadoes generated total claims of $116 billion. It was surpassed only by insured loss of $123 billion in 2005, when hurricane Katrina devastated New Orleans.
During last year total returns on its portfolio has also fallen 24% to £955 million due to low interest rates and strong demand of high-quality government bonds.
However, Lloyd’s is disappointed that insurance prices which have been declining or stagnated since 2008, even after last year’s catastrophe has also not risen significantly.
Typically, insurance price rise, in the wake of large payouts by the industry as financially week players retrench, which ease the competitive pressures on remaining players and they become free to charge more.
But this year significant increase has been only confined to the directly catastrophe-related lines of businesses. And there has been only moderate increase in the broader market.
Lloyd’s also said in an environment where investment returns are at record low insurance industry is still an attractive place to park capital.