Equitas, the Lloyd's run-off vehicle created to reinsure the market's losses before 1992, has slashed its level of gross claims outstanding by 12.7%.
More than a billion pounds has been wiped from the figure which now stands at £9bn compared to £10.3bn last year.
The amount of net claims outstanding dropped from £8bn to £7bn, a drop of 13.1%. It caused the solvency margin to improve from 9.6% to 11.2%.
The accumulated surplus (assets over liabilities) has risen from £772m to £784m for the year ending March 31.
Chairman Hugh Stevenson claimed that the results reflected steady progress at the run-off vehicle.
He said: “The results set out in these accounts reflect the further good progress which those who work for Equitas have achieved for Reinsured Names during the past year.”
He added: “Furthermore, our solvency margin strengthened substantially as a result of the reduction in net claims.”
Despite the progress a spokesperson for the Lloyd's run-off vehicle believes it will probably still take 40 years or more for all the debts to be paid. This is because of the number of long-tail claims that have yet to be lodged with Equitas.
Stevenson added: “The auditors properly point to the uncertainties which are fundamental to the long-tail nature of the asbestos, pollution and health hazard claims which now represent nearly two thirds of our outstanding liabilities.”
The company has reinforced its reserves for asbestos liabilities in response to an increase in the number of asbestos claims this year.
But it has been able to release reserves in respect of other classes of business
In previous years auditors have been uncomfortable with the data on which Equitas bases its accounts – this has meant that an audit qualification relating to data quality has been added.
The report revealed that Equitas' efforts over the past year to improve data quality has resulted the removal of this qualification.
The auditors do however still qualify Equitas's accounts because of the uncertainties relating to asbestos, pollution and health hazard claims.
