Banks

RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

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Financial

Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Currencies

Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Categorized | Insurance

Lloyd’s profits hit by natural disasters


Posted on September 22, 2016

The Lloyds building in the City of London

A combination of wildfires in Canada, floods in Texas and earthquakes in Japan and Ecuador dented profits at Lloyd’s, the insurance market, in the first half of the year.

The Fort McMurray fires were particularly expensive, costing more than £400m. That was more costly than any event in the first half of 2015.

    But John Nelson, Lloyd’s chairman, does not believe that the impact of the disasters will be enough to push up prices, which have been falling across the market over the past few years.

    “There’s little sign of rates going up,” he said. “In some sectors there are cases of rates at least stabilising but we can’t see much that will drastically change the approach to rates.”

    Lloyd’s combined ratio — claims and costs as a proportion of premiums — worsened from 89 per cent to 98 per cent in the first half, meaning that the market was only just profitable at the underwriting level. The impact of the disasters, along with weaker pricing, offset growing demand for new types of business such as cyber.

    However, the market did manage to push its pre-tax profits up by 22 per cent to £1.5bn thanks to improved investment returns as the value of the bonds it holds rose.

    Speaking as Lloyd’s reported its first-half numbers, chief executive Inga Beale described the Brexit vote as “a major issue for us to deal with”.

    Lloyd’s uses passporting rights to access business in other parts of the EU and said recently that it might have to move some of its business elsewhere if they are lost. It has been lobbying for the rights to be maintained in Brexit negotiations.

    Lloyd’s warns of moving some operations from London

    John Nelson, Chairman of Lloyd's of Lond...John Nelson, Chairman of Lloyd's of London, is interviewed at the group's headquarters in central London on 27 April, 2016. Lloyd's has seen natural disasters, shipwrecks and revolutions. Now the prospect of Brexit is forcing the historic insurance market to look at contingency plans, its chairman told AFP. / AFP PHOTO / LEON NEAL / TO GO WITH AFP STORY BY PATRICE NOVOTNYLEON NEAL/AFP/Getty Images

    Chairman of insurance market says ‘passporting’ rights crucial to staying

    Mr Nelson added that there was growing support for his position on the continent. “There’s a growing feeling within the EU, driven by the big financial services providers, that they are as keen to maintain passporting as we are. People are beginning to see the consequences of having them.”

    For the moment though, Lloyd’s is working on contingency plans in case the rights disappear. To do that it has had to step back from other projects such as a plan to create a new index to track losses across the market. The index was to have been used as the basis for a new range of securities, but work has been postponed.

    “It’s a question of resources,” said Mr Nelson. “We run a fairly tight ship here.”