Lloyd’s of London, the world’s biggest insurance market, said Thursday it posted a widely anticipated pretax loss for 2005 on the back of hefty claims from hurricane damage.
Lloyd’s reported a pretax loss of $181 million (103 million pounds) for the year, compared with a pretax profit of $1.5 billion (1.4 billion pounds) in 2004.
“2005 was the worst year on record for natural disasters, costing the insurance industry far more than the impact of the 9/11 attacks on New York,” Lloyds Chairman Lord Levene said.
“For Lloyd’s to emerge from such a year with just a small loss represents an excellent performance by the market,” he added.
Net claims for the year totaled $5.8 billion (3.3 billion pounds). The company warned in November that hurricane damage was likely to push it into a deficit.
The 2005 season was the most destructive in recorded history, with 27 named storms and 14 hurricanes, including Katrina, which devastated Louisiana and Mississippi and killed more than 1,300 people.
Levene warned that insurance firms “must not fall into the trap of thinking that 2005 was a freak year which could never happen again.”
Forecasters in the United States are predicting that this year’s Atlantic hurricane season, which runs from June 1 to Nov. 30, is likely to have 17 named storms and nine hurricanes, five of them intense.
“We must continue to improve the way we model potential risk and spread our exposures,” Levene said.
Lloyd’s said it has the capacity to write $26 billion (14.8 billion pounds) of business in 2006, an increase of 7 percent on 2005.
Lloyd’s received the go-ahead in November from the Chinese government to establish an onshore reinsurance operation in China and the insurer said Thursday the license would give Lloyds access to one of the worlds fastest developing economies.
The insurer is also planning for a change at the helm, with current ICE Futures Exchange executive Richard Ward due to take over as chief executive from Nick Prettejohn on April 28.
Lloyd’s — a society of corporate underwriters and wealthy individuals that make insurance transactions through 44 managing agents and 62 syndicates — does not report a net result, because the tax impact varies among its corporate and individual members.