Cloud over Lloyd's future

PROPOSALS to move Lloyd's from private to corporate capital will be discussed by the insurance market's ruling body today against the background of a damning report by industry analysts Chatset.

As the ruling body discusses plans that are expected also to include switching Lloyd's underwriting to yearly accounting against its traditional three-year system, Chatset warns in its latest review that losses for the past three years will be significantly higher than had been thought. Only the motor market has avoided further deterioration in the past year.

Losses for the 1997 year of account are forecast to be £1.66bn against the £1bn estimated a year ago. Losses for 2000 and 2001 are forecast to be £1.5bn and £1.7bn respectively. 'Any hope there might have been for 2001 has been dashed by the events of 11 September,' said Chatset analyst Charles Sturge.

He said net premium income for that year was running 20% higher than in 2000. But the combined loss ratio was higher in 2001 than in the previous year, suggesting the sharp rise in premiums was still not enough.