Losses forecast at £1.78bn, but 2002 profit on target
Lloyd's has raised its loss estimate for the 2001 year of account to £1.783bn.
The forecast market-wide loss has risen by £130m from its first estimate of £1.653bn made in April.
The 2001 year of account was hit by WTC losses as well as suffering from being at the bottom of the pricing cycle.
The 2002 year of account, by contrast, is on target for a significant profit.
Figures from sources working within the market suggest its estimate has risen from April's forecast of £1.484bn to £1.665bn.
Under annual accounting methods, 2002 returned an £834m profit.
Sources suggested that the three managing agents worst hit during the 2001 year of account were Hiscox with a £44m loss due to the WTC tragedy, GoshawK, which posted a £19m loss; and Trenwick, which suffered losses of £10m.
Neil Coulson, a partner with Lloyd's specialist accountants Littlejohn Frazer, said the figures showed a bad year deteriorating and a good year improving.
"If you look back at the history of Lloyd's, when it has losses they tend to deteriorate at the tail, so we shouldn't be too surprised [by these figures]."
Any safety margins built into the accounts for 2001 were likely to have been used up by losses made in the late 1990s and 2000, Coulson said. "Particularly after a few years of poor results, there's no fat left to absorb the losses," he said.
"Hopefully we've seen the worst of it by now."