LONDON (AP) - Lloyd's of London said Wednesday that its profit dropped by 43 percent last year as the insurance market took big losses from earthquakes in Chile and New Zealand and from BP's oil rig spill in the Gulf of Mexico.
Lloyd's said its full year pretax profit was 2.2 billion pounds ($3.5 billion), down from 3.9 billion pounds in 2009. Gross premium income rose 3 percent to 22.6 billion pounds.
The market's combined ratio - the measure of premiums against claims - was 93.3 percent, compared with 86.1 percent for 2009. Any measure below 100 percent indicates an underwriting profit, and a lower number indicates higher profitability.
Peter Levene, chairman of Lloyd's, said 2011 looks like another difficult year because of unrest in the Middle East, floods in Australia, another earthquake in New Zealand and the earthquake and tsunami in Japan.
While it is too early to accurately gauge losses in Japan, Levene said, "it is, of course, nothing compared to the human cost of the tragedy."
Chief Executive Richard Ward said he was confident that Lloyds could cover its losses in Japan.
Lloyd's said it expected to pay out between $300 million and $600 million in claims from the Deepwater Horizon oil rig disaster.
It estimates that claims from the Chilean earthquake in February will be 857 million pounds, and it expects to pay 428 million pounds for claims from the September quake in New Zealand.
The market benefited from a benign year of Atlantic windstorms. Although there were 19 named tropical cyclones, the third-highest number in a century, the storms missed landing in the United States or hitting Gulf of Mexico energy fields.
However, the financial crisis may yet cost the insurance market. "We have not yet seen the full anticipated claims impact of the worldwide recession," largely through claims on bad loans and losses on investments, Lloyd's noted.
One of the high points of the past year, Levene said, was gaining a license to operate in China.
Unlike most insurers, Lloyd's operates as a society of members, which may be insurance companies, specialist investors or individuals. Members underwrite insurance through 85 syndicates which compete for business in many specialty areas including marine, aviation, professional indemnity, catastrophe and motor insurance.
Lloyd's does not report a net result, because the tax impact varies among its corporate and individual members. As an association, Lloyd's is not publicly traded, though some of its members are listed companies.