Lloyd's insurers set to write record £16.1bn of business
Lloyd's chief executive Richard Ward has urged the market to remain disciplined in the face of rising capacity levels and not drive rates down.
His warning comes as Lloyd's is set to write record levels of business this year after underwriting capacity rose to £16.1bn for 2007.
Ward said that capacity may be cut if the market's profitability were threatened and he called for a cautious approach to the capacity rise given current market conditions.
The combination of increased private capital, together with the advent of new underwriting syndicates, has helped fuel a 9% rise in the volume of insurance premiums the market can accept, up from £14.8bn in 2006.
Insurance and reinsurance rates are now regarded to be flat or falling in many lines, even in areas affected by the 2005 hurricanes, where prices are not expected to rise any further.
Ward said Lloyd's would work closely with the market to ensure that, as a result, businesses were able to deliver forecasted profits.
"We are not celebrating that the capacity is up," said Ward in an interview with a national paper this week.
He cautioned that the market should be prepared for capacity to "go down if market conditions determine that this should happen".
The amount of capacity from limited liability members participating in Lloyd's has risen by 40% in 2007.
Individual members now contribute more than £1.4m of capacity to syndicates representing 8.7% of the market's capital input.
But the number of Names has fallen compared to 2006, with capacity decreasing from £1.4m to nearly £1.1m.