Insurance Industry Told: Stop Writing Rubbish Business

Lloyd's CEO, Richard Ward, Opened the 2010 Insurance Day Summit With a Stark Warning to the Industry and Urged Them to Tighten Belts With Their Very own Mr Motivator

LONDON, May 18, 2010 - Capacity will need to be cut and Lloyd's underwriters will have to 'stop
writing rubbish business' in order for the market to maintain its
profitability through the uncertain economic environment, Lloyd's chief
executive officer, Richard Ward warned on the opening day of the Insurance
Day Summit in London.

Describing 2010 as the 'worst and most challenging' year that Lloyd's had
faced since he became chief executive officer of the market in March 2006,
Ward said: " Every year I normally stand up on this platform and say it is
going to be a tough year. There is a challenging investment environment and
therefore we have to focus on underwriting profitability.

"Well, you might have accused me of crying wolf for the past four years
but I don't think that will be the case this year."

"Don't talk to me about growing, talk to me about how you are going to
shrink and make underwriting profit," he urged underwriters at the Insurance
Day Summit.

Ward said that the market's large losses from the Chilean earthquake and
the Transocean oil spill, combined with low rates and investment returns
meant that it was faced with an uncertain outlook moving forward.

"We need to make money from underwriting profit but this has been
dropping off since 2005," he continued. "It doesn't look too good moving
forward.

"So what do we need to do? We need to stop writing the rubbish business.
Cut it out. Focus on the good business where we can generate the profit.

"We have got to lose some weight. We need capacity to reduce so rates can
go up and we need to get fit. Rest assured we have got our own Mr Motivator
in the Lloyd's market in Tom Bolt [director, performance management, Lloyd's]
who will make sure your businesses remain lean and mean to fit the
challenging environment of 2010 and 2011. If we can do all that then the Room
will remain a very profitable place to do business."

Ward concluded that the insurance industry had performed very well
through the financial crisis, without the need to fall back on either
government or taxpayer support.

"We've helped protect the economy during the crisis. Now it's time to
protect ourselves," he concluded.

The Insurance Day Summit London continues today.

For further information and/or an interview with the editor of Insurance Day, please contact: kirstin.stocker at informa.com or Kirstin Stocker on +44(0)7716-756453