But improved business efficiencies could have produced a profit, say experts
Lloyd's could have turned its £103m loss last year into a profit had it improved its business process efficiencies, according to accounting experts.
The market's "small" loss in 2005 - the first since 2001 - came after unprecedented US hurricane losses, which cost the market £3.3bn. In 2004, Lloyd's made a £1.4bn profit.
But according to insurance specialist accounting firm Mazars, had Lloyd's been able to improve its efficiency it could have broken even or gone into profit.
Andrew Hubbard, partner and head of the insurance group at Mazars, said: "Lloyd's operating expenses, at 31%, are still too high. Everybody is talking about how much business process needs to be more efficient and the need for a massive paper crunching exercise.
"But, if you manage to save money on net operating expenses then you can actually improve your results."
In 2005, of the £11,785m Lloyd's earned in net premiums, £3,668m was spent on running the business, down by just 1% from the previous year.
Hubbard said if Lloyd's had made just a 1% saving on net operating expenses in 2005, it would have saved itself £118m. Helped by good investment returns, with a loss of only £103m the market would have made a profit, he said.
"This underlines the need to keep the pressure on for business process reform," Hubbard added.
Lloyd's chairman Lord Levene insisted that in the past three years the market had "got its act together in managing the business," but he admitted that there was still progress to be made.
"I'm fed with coming up in the lifts of this building with people carrying trunks of paper files," he said. "Nobody else in the financial services sector does it."
Levene insisted that the new chief executive Richard Ward, who starts at the end of April, would help Lloyd's "get a lot further along that line".
Ward was responsible for leading London-based International Petroleum Exchange (IPE), re-branded ICE Futures, through a period of radical development designed to improve efficiency and profitability.
He piloted the transformation from open outcry to an electronic trading platform.