Disasters mean disastrous results for Lloyds of London

Lloyd's of London has announced 516 million pound loss for 2011 following the largest catastrophe claims year on record for the 324-year-old insurance market.

Lloyd's incurred total net claims of £12.9bn during 2011, including £4.6bn of catastrophe claims.

This was the second biggest loss on record for the specialist insurance market, which is made up of 80 competing insurance syndicates.

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It follows a series of major catastrophes including flooding in Australia in January, a second earthquake in New Zealand in February, the Japanese earthquake and tsunami in March and the floods in Thailand beginning in July.

Lloyd's reported a combined ratio of 106.8%, which compared to 93.3% in 2010.

A combined ratio is a measure of an insurer's underwriting profitability based on the ratio of net incurred claims plus net operating expenses to net earned premiums.

A combined ratio of 100% is break even. A ratio of over 100% is a loss, less than 100% is a profit.

Lloyd's said this result was in line with other markets, with an estimate of 108% for US property and casualty insurers at the high end and 101% for European insurers and reinsurers at the low end of the spectrum.

Chief Executive Richard Ward said it was reassuring that, despite the loss, Lloyd's financial strength had been maintained.

"However I am disappointed that, given the exceptional level of catastrophes in 2011, insurance rates have not responded more positively," he said.

"These events demonstrate the need for the industry to show discipline in terms of pricing."