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Financial Results Wednesday 7 April, 2004 PowerPoint PPT Presentation


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Financial Results Wednesday 7 April, 2004. Cautionary note on forward-looking statements .

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Financial Results Wednesday 7 April, 2004

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Financial Results

Wednesday 7 April, 2004


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Cautionary note on forward-looking statements

This presentation includes forward-looking statements. These statements are based on currently available information and consistent accounting policies as applied at 31 December 2003. 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.

  • 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.


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Agenda

  • IntroductionLord LeveneChairman

  • 2003 Results Nick Prettejohn Chief Executive

  • Questions


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2003 Results - highlights

  • Profit of £1,892m* for 2003 (£834m for 2002)

  • Further reduction in combined ratio to 90.7% (2002: 98.6%)

  • Initial profit projection of £1,780m for 2003 underwriting year (3 year accounting basis)

  • 39% increase in central assets to £781m

  • Net resources up 35% to £10.1bn

*Pro-forma annual accounting basis


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Annual accounting results

*Pro-forma annual accounting basis


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2003 Annual accounting results Premiums

*Pro-forma annual accounting basis


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2003 Annual accounting results Outwards reinsurance premiums

*Pro-forma annual accounting basis


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2003 Annual accounting results Premiums: on-going businesses

*Pro-forma annual accounting basis


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Annual accounting results

*Pro-forma annual accounting basis


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2003 Annual accounting resultsNet catastrophe losses

Source: Syndicate quarterly returns


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2003 Results – reserve strengthening

*Pro-forma annual accounting basis


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Annual accounting results

*Pro-forma annual accounting basis


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Annual accounting results

*Pro-forma annual accounting basis


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Annual accounting results

*Pro-forma annual accounting basis


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%

110

98.6

100

90.7

90

80

70

60

50

2002

2003

Lloyd's combined ratio

*Pro-forma annual accounting basis


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Lloyd's: performance by class of business2003Calendar year combined ratios

*Pro-forma annual accounting basis at syndicate level


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%

130

120

110

100

121.3

113.3

90

107.5

80

101.4

101.2

100.7

98.6

70

90.7

60

50

Lloyd's*

European P/C & R/I

US P/C Industry (ii)

US R/I Industry (iii)

Industry (i)

2002

2003

Lloyd's vs Industry 2003 Combined Ratios

Sources i) Company data, ii) Insurance Information Institute estimate, iii) Reinsurance Association of America

*Pro-forma annual accounting basis


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2001 account result(2,378)

2002 account projection1,671

2003 account projection1,780

Underwriting year result & projection

£m

* Three year accounting basis


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Net incurred loss ratio development1998-2003

Source: Lloyd’s audited annual accounts

NB All ratio denominators are Q12 actual or estimated ultimate premiums for open years


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Net incurred loss ratio development1993-1997 vs 2002 & 2003

Source: Lloyd’s audited annual accounts

NB All ratio denominators are Q12 actual or estimated ultimate premiums for open years


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Balance Sheet


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Lloyd’s central assets


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Lloyd’s central assets


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2003 central assets – Central Fund arbitration

  • Net potential exposure same as last year

  • Arbitration due later this year

  • Lloyd’s position unchanged


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Central assets – post 9/11 target achieved

$1,398 @ USD 1.79

$1,188 @ 2001 exchange rates


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No increase in capacity 2004 vs 2003

Source: 2003 final stamp capacity, 2004 first stamp capacity. QQS latest business plan estimates


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Premium rating index

2003

2002

2003

2004

Calendar year combined ratios

Casualty

100

121

130

110.4

Property

100

103

98

89.4

Reinsurance

100

104

102

89.3

Motor

100

107

106

93.6

Marine

100

115

121

89.7

Energy

100

104

96

83.4

Aviation

100

98

94

93.0

Market conditions remain attractive

*Pro-forma annual accounting basis


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UNDERWRITING

PROFIT

Industry fundamentals – the same one year on

External Influences

Lloyd’s Influences

Franchise Implementation

Capital Markets

Industry

Reserve Strengthening


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2003 – A year of continued progress

  • Implementation of the Franchise

  • Transition towards limited liability

  • Move to annual accounting

  • Progress on Business Process Reform


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Summary – Another year of progress and profit

  • A year of continued progress against strategic objectives

  • A year of strong financial results

    • £1.9 billion profit, helped by low catastrophe losses but after reserve strengthening

    • Combined ratio of 90.7%, outperforming our international peer group

    • Substantial increase in balance sheet resources (central assets up 39%, net resources up 35%)

  • Market conditions attractive and fundamentals unchanged

  • No room for complacency

*Pro-forma annual accounting basis


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Financial Results

Wednesday 7 April, 2004


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