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LONDON_Lloyd's of London, the world's largest insurance market, said Tuesday that gains on recent stock and bond market rallies were unlikely to be sustained in coming months, leading it to keep its full year earnings expectations unchanged.
Lloyd's noted recent renewed investor demand for equities, corporate debt and government bonds as confidence in the global economy grew and the easing of monetary policy lowered yields.
That gave Lloyd's investment returns "somewhat above the very modest levels which might be predicted from the low prevailing levels of interest rates and risk free yields," it said in a trading update for the third quarter.
"However, the scope for further such gains is increasingly limited and we expect that current market levels will make it difficult to achieve significant returns in the balance of the year," Lloyd's said.
The report showed Lloyd's in a sound position, with total assets exceeding solvency shortfalls by its members by 2.55 billion pounds at Sept. 30, little changed from 2.5 billion pounds three months earlier.
Unlike most insurers, Lloyd's operates as a society of members, which may be insurance companies, specialist investors or individuals. Members underwrite insurance through 75 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.
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