Two combined ratio to show efficiencies as profits plunge by £1.4bn
Lloyd's is expected to report two versions of its combined ratio in its results this year to convince the market that its reforms are improving efficiency.
In an unprecedented move, senior market sources said Lloyd's will publish a combined ratio which excludes the £400m profit hit expected from the Swiss Re and five other insurers arbitration costs relating to the 9/11 attacks.
The omission will show a more "healthy figure" similar to last year's combined ratio of 90.7% which outperformed most US and European insurers.
Lloyd's is also expected to report a sharp drop in profits on 6 April when it announces its 2005 results. With the £400m pay-out over the Swiss Re dispute, plus the initial losses from the worst hurricane season in 100 years, the expected overall profit will be £500m. This is a dramatic slide of £1.4bn from last year's pre-tax profit of £1.9bn.
A source said: "Lloyd's wanted to get the £400m charge out of the way. So it has decided to add this to the accounts for 2005 and publish two combined ratios."
Accountant Mazars partner Andrew Hubbard said: "The Swiss Re issue is a one-off charge and has been very high-profile. It would seem reasonable to take this approach."
A Lloyd's spokeswoman said it was too early to speculate as "the final figures are still being collated".
