Lloyd's Of London announces 50% reduction in profits
Lloyd's Of London, the central insurance market of the world, has today announced profits of £1.9 billion in 2008 against £3.9 billion just 12 months earlier. A number of factors have to be taken into account including reduced investment returns, a number of significant major catastrophes as well as currency movements. All in all, when considering the very difficult scenario around the world this is a more than inadequate performance by Lloyd's of London.
Interestingly, of the £1.9 billion in profits it emerged that £853 million was booked as a consequence of currency movements with the vast majority of insurance premiums paid in dollars. However, there is no doubt that 2009 will be "a challenging year" with interest rates down to 0.5%, which has forced Lloyd's of London to announce the expectation of significant insurance rate increases. Insurance premiums seem set to rise as a consequence of reduced investment income and a tightening of the market which does not bode well for 2010 either.
There have been significant changes to the Lloyd's insurance market over the last decade which would appear to have offered some kind of safety net in light of the current economic downturn. There is a feeling that increased insurance premiums through 2009 will offer a great deal of support to the overall profitability of the insurance market although a recovery in the pound could lead to currency exchange losses.
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