LONDON — Lloyd's of London is forecast to lose $4.5 billion between 1998 and 2000 because of rising claims and falling insurance rates at the world's largest insurance market, said Moody's Investors Service.
Lloyd's reports earnings three years in arrears to allow syndicates to settle claims. Estimates are given in the interim.
Lloyd's insurers have suffered over the last few years as competition pushed insurance rates lower and natural disasters boosted claims.
Lloyd's said it doesn't expect to return to profit until after 2001.
Marine insurance is forecast to be the worst-performing industry, with claims and costs exceeding premiums and investment income by 17.5 percent in 1999 and 11 percent in 2000, Moody's said.
Competition among companies selling motor insurance also depressed rates in this industry and claims and costs are forecast to exceed premiums and other income by 21 percent in 1998. The motor insurance industry is projected to produce losses for six straight years, between 1995 and 2000, Moody's said.
U.K. property and casualty insurers have been raising rates this year in an attempt to gain profit rather than market share. Still, these rate increases won't boost earnings until the second half, analysts said. Lloyd's said it doesn't expect to return to profit until after 2001.
"Money flooded into the industry in the 1990s putting pressure on insurers to cut prices," said Sarah Pelling, a spokeswoman for Lloyd's. "We've turned the corner now and expect to see a profit after 2001."
Lloyd's will report results at the start of next month.