The loss cycle at Lloyd's shows no sign of abating as Chatset, the publishers of the Lloyd's League Tables Review, predicted a £346 million loss for 1999.
The largest losses are expected to come from the non-marine sector. Severe weather in December is expected to produce losses of $6 billion (£3.6bn). This will affect Lloyd's and claims are expected to hit the market in the next six months. In addition, despite an improved net premium income, rate rises are having a limited effect on the 1999 year.
Chatset has also revised its predictions for 1997 and 1998 to higher losses of £68m and £479m respectively.
The predictions come as Lloyd's faces six cash calls from syndicates.
But Lloyd's is quick to point out that these calls do not mean that the syndicates are going out of business.
Adrian Beeby, media manager of Lloyd's, commented: "If a syndicate has to make a cash call it means that there is not enough money in the Premium Trust Fund – a separate account built up with premium cash – to meet claims. The only way the Members Fund is affected is if the Name or corporate capital decides to liquidate assets from it to meet the cash call, then tops the fund back up later."
Thirteen syndicates made cash calls in 1999 and three in 1998. These were mostly met by corporate providers.
However, almost £400m of capacity has recently been withdrawn from the market by corporate backers. Charles Sturge, Chatset editor, questioned whether Lloyd's was right to try to dispose of the 3,500 remaining Names.
He said: "Not only does such a late withdrawal of capacity by a corporate backer destabilise the market but when syndicates such as 490 and 957 produce an aggregate loss over three years of over 50%, or greater than funds at Lloyd's, the threat to call on the Central Fund is obvious."