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1 Financial Results Wednesday 7 April, 2004. 2 Cautionary note on forward-looking statements This presentation includes forward-looking statements. These.

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Presentation on theme: "1 Financial Results Wednesday 7 April, 2004. 2 Cautionary note on forward-looking statements This presentation includes forward-looking statements. These."— Presentation transcript:

1 1 Financial Results Wednesday 7 April, 2004

2 2 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 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.

3 3 Agenda IntroductionLord Levene Chairman 2003 Results Nick Prettejohn Chief Executive Questions

4 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

5 5 Annual accounting results £m Net earned premiums10,66911, % Net incurred claims(6,652)(6,697)+1% Net operating expenses(3,586)(3,985)+11% Loss on exchange(401)(30)-93% Investment return % Profit on ordinary activities8341, % *Pro-forma annual accounting basis

6 Annual accounting results Premiums *Pro-forma annual accounting basis

7 Annual accounting results Outwards reinsurance premiums *Pro-forma annual accounting basis

8 Annual accounting results Premiums: on-going businesses *Pro-forma annual accounting basis

9 9 Annual accounting results £m Net earned premiums10,66911, % Net incurred claims(6,652)(6,697)+1% Net operating expenses(3,586)(3,985)+11% Loss on exchange(401)(30)-93% Investment return % Profit on ordinary activities8341, % *Pro-forma annual accounting basis

10 Annual accounting results Net catastrophe losses Source: Syndicate quarterly returns

11 Results – reserve strengthening £m Current accident year2,437 Reserve strengthening(545) Profit on ordinary activities before tax1,892 *Pro-forma annual accounting basis

12 12 Annual accounting results £m Net earned premiums10,66911, % Net incurred claims(6,652)(6,697)+1% Net operating expenses(3,586)(3,985)+11% Loss on exchange(401)(30)-93% Investment return % Profit on ordinary activities8341, % *Pro-forma annual accounting basis

13 13 Annual accounting results £m Net earned premiums10,66911, % Net incurred claims(6,652)(6,697)+1% Net operating expenses(3,586)(3,985)+11% Loss on exchange(401)(30)-93% Investment return % Profit on ordinary activities8341, % *Pro-forma annual accounting basis

14 14 Annual accounting results £m Net earned premiums10,66911, % Net incurred claims(6,652)(6,697)+1% Net operating expenses(3,586)(3,985)+11% Loss on exchange(401)(30)-93% Investment return % Profit on ordinary activities8341, % *Pro-forma annual accounting basis

15 15 Lloyd's combined ratio *Pro-forma annual accounting basis %

16 16 Lloyd's: performance by class of business 2003 Calendar year combined ratios *Pro-forma annual accounting basis at syndicate level

17 Lloyd's vs Industry 2003 Combined Ratios *Pro-forma annual accounting basis Sources i) Company data, ii) Insurance Information Institute estimate, iii) Reinsurance Association of America Lloyd's*European P/C & R/I Industry (i) US P/C Industry (ii)US R/I Industry (iii) %

18 18 Underwriting year result & projection 2001 account result(2,378) 2002 account projection1, account projection1,780 * Three year accounting basis £m

19 19 Net incurred loss ratio development NB All ratio denominators are Q12 actual or estimated ultimate premiums for open years Source: Lloyd’s audited annual accounts

20 20 Net incurred loss ratio development vs 2002 & 2003 NB All ratio denominators are Q12 actual or estimated ultimate premiums for open years Source: Lloyd’s audited annual accounts

21 21 Balance Sheet £m Cash & investments24,51227, % Reinsurers’ share of technical provisions 13,69311,180-18% Other assets11,0919,830-11% Total assets49,29648,903-1% Total liabilities(41,787)(38,758)-7% Net resources7,50910,145+35%

22 22 Lloyd’s central assets £m Central Fund711+49% Corporation of Lloyd’s70-20% Total781+39%

23 23 Lloyd’s central assets

24 central assets – Central Fund arbitration Net potential exposure same as last year Arbitration due later this year Lloyd’s position unchanged

25 25 Central assets – post 9/11 target achieved USD exchange rates

26 26 No increase in capacity 2004 vs 2003 Source: 2003 final stamp capacity, 2004 first stamp capacity. QQS latest business plan estimates

27 27 Market conditions remain attractive Aviation Energy Marine Motor Reinsurance Property Casualty Premium rating index *Pro-forma annual accounting basis Calendar year combined ratios 2003

28 28 Industry fundamentals – the same one year on Capital Markets Industry Reserve Strengthening External Influences Lloyd’s Influences Franchise Implementation UNDERWRITING PROFIT

29 – A year of continued progress Implementation of the Franchise Transition towards limited liability Move to annual accounting Progress on Business Process Reform

30 30 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

31 31 Financial Results Wednesday 7 April, 2004


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