The world’s biggest insurance marketer, Lloyds of London, swung back to profits in the first six months of 2012, recording a pre-tax profit of £1.53 billion. Lloyds Banking Group PLC (LON:LLOY) paid out £4.6 billion in claims, compared to last year’s £6.7 billion. In the first half of 2011, Lloyd’s suffered a net loss of £697 million, due to worldwide natural calamities – floods in Thailand & Australia, an earthquake in Japan, and a hurricane in the US. Lloyd’s said 2011 was the second most expensive year in the history of the insurance sector.
There have been no major catastrophic claims this year, so far. The only disasters during the period were the capsizing of the Costa Concordia cruise liner, and crop destruction, due to drought in the US. However, it may change in the second half, as merciless floods are threatening to ruin thousands of businesses and homes across the UK.
Richard Ward, the chief executive of Lloyds Banking Group PLC (LON:LLOY) said, “This is a welcome return to profit. The result has certainly been helped by the favourable claims climate. But, it is a testament to the market’s disciplined underwriting that, in the face of continuing low premium rates, coupled with low interest rates and the most challenging economic climate for a generation, it is able to return the strongest half year result in five years.”
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Chairman John Nelson said that a break-up of the euro remains a big concern for the insurance market, and Lloyd’s has already been affected by the Eurozone crisis. Earlier, Lloyd’s chief financial officer, Luke Savage, said that Lloyd’s of London has minimized its exposure to the Eurozone, but it could be hit by the liability claims in case of euro disintegration.
Nelson also said that the recent credit rating upgrade by Standard & Poor’s from stable to positive has also proved beneficial. Lloyd’s of London indicates the performance of about 90 insurance syndicates. Its history traces back to 1688, when a London coffee house used to insure merchant ships.