Lloyd’s of London stumbled to a major loss of £516 million in a year of what the insurance market called “unprecedented catastrophe”, but bonuses for top executives still rose.
The losses are topped only by those made in 2001, when the 9/11 terror attacks put Lloyd’s in the red to the tune of £3.1 billion.
A series of major disasters last year, including floods in Australia and earthquakes in New Zealand, saw Lloyd’s insurers face claims of £12.9 billion.
That they were able to pay these claims will be taken as a sign of the market’s strength, especially given that low interest rates mean insurers are getting a low return on the premiums they take in from customers.
Chief executive Richard Ward said: “Make no mistake, 2011 was a difficult year for the insurance industry. Given the scale of the claims, a loss is unsurprising, but it reflects what we’re here to do — help communities and businesses rebuild after disaster.
“It is also reassuring that, despite this loss, our financial strength has been maintained,” he added.
Ward picked up a bonus of £752,000 for his work in 2011, taking his total pay to £1.44 million. That’s down a bit on a year earlier, but the bonus payment was higher.
Lloyd’s defended its executives’ pay, noting that none of them picked up a “market performance bonus” due to the lack of profits.
The bonuses they did get “come through from previous years,” said a Lloyd’s spokesman.
Tom Bolt, the director of performance management, saw his bonus stay level at £450,000, taking his total pay to just over £1 million. Luke Savage, the finance director, got £893,000 including a £338,000 bonus, up by £13,000.The remuneration committee is chaired by Andreas Prindl. His pay for a part-time role rose £20,000 to £104,000.
Ward thinks that the losses mean that rates should rise, but the amount of capital flowing into the market is keeping them low.
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He said: “I am disappointed that, given the exceptional level of catastrophes in 2011, insurance rates have not responded more positively. These events demonstrate the need for the industry to show discipline in terms of pricing.”
Asked if he believed in global warming, Ward said that was for those “better qualified” than him to discuss. But he added: “The severity and frequency of hurricanes, windstorms and typhoons is increasing. When I see my daffodils coming out in January, I do wonder.”
Lord Levene, the chairman since replaced by John Nelson, was paid £538,000 for his non-executive role.
