Lloyd's Chain of Security Presentation

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Lloyds security
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Lloyds security

• Financially strong and secure
• Stable security rating
• High quality and diverse capital base
• Chain of Security
• Standards and supervision

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Lloyds securityFinancially strong and secure

• Stong and sustained financial performance
• Disciplined underwriting
• Record profit of 1,357 million (2,605 million)
  in 2004
• 13.7 billion (26.3 billion) capacity in 2005

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A diverse, high-quality capital base
bn
16
14.96
14.40
13.72
14
12.20
11.26
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Names (unlimited)
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10.90
10.20
10.32
10.17
10.13
9.99
9.88
Names conversion capital
7
10
Other non-insurance industry
3
Capacity
Other insurance industry
13
8
Bermudian insurance industry
7
6
US insurance industry
15
UK insurance industry
44
4
2
0
2005
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
1994
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Lloyds securitySecurity is paramount

• Lloyds enjoys stable security ratings
• A (Excellent) A M Best, August 2004The rating
  reflects Lloyds improving prospective
  capitalisation, strong operating performance, its
  global reach and improvements in risk
  management
• A (Strong) Standard Poors, July 2004 The
  rating on Lloyds reflects the continuing
  commitment of capital providers to the Market and
  the consequent increase in capacity and funds at
  Lloyds for 2004 the maintenance of Lloyds
  strong business position and likelihood of the
  continuation in 2004 and 2005 of the strong
  operating performance seen in 2003.
• A (Strong) Fitch Ratings, September 2004
• The rating reflects Lloyds improved
  capitalisation, the markets ability to attract
  and retain capital, improved risk controls and
  recent strong earnings.

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Lloyds securityLloyds Chain of Security -
overview

• Lloyds provides security to policyholders
  through the four links in the chain
• Syndicate level assets
• Members funds at Lloyds
• Members other declared assets
• Lloyds central assets

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Lloyds securityLloyds Chain of Security
Syndicate level assets Premiums trust funds and
overseas regulatory deposits 21,873m
(41,996m) Payment of claims takes precedence
over distribution of profits
Source Lloyds Annual Report, 2004, figures as
at December 31, 2004. Exchange rate 1 1.92
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Lloyds securityLloyds Chain of Security
Members funds at Lloyds Capital held at
Lloyds 9,622m (18,474m) Additional funds
are held in trust as security for members
underwriting liabilities
Source Lloyds Annual Report, 2004, figures as
at December 31, 2004. Exchange rate 1 1.92
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Lloyds securityLloyds Chain of Security
Members other assets Members other declared
assets 219m (420m) Members other resources
are also available to meet claims
Source Lloyds Annual Report, 2004, figures as
at December 31, 2004. Exchange rate 1 1.92
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Lloyds securityLloyds Chain of Security
Lloyds central assets Lloyds net central
assets 556m (1,066m) The Central Fund is
available at the discretion of the Council of
Lloyds, in the event that a claim cannot be met
from the first three links in the chain of
security.
Source Lloyds figures as at 31 December,
2004. Exchange rate 1 1.92
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Lloyds securityUS Trust Funds 2004

• Lloyds American Trust Funds 536m
• Credit for Reinsurance and Surplus Lines Trust
  Funds 10,642m
• Joint Asset Trust Funds 438m
• Illinois Trust Fund 493m
• Kentucky Trust Fund 112m

Source Lloyds figures as at 31 December,
2004. Exchange rate 1 1.92
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Lloyds securityStandards and supervision

• Lloyd's requires disciplined business planning
  from all its businesses.
• Managing Agents are regulated by the FSA and
  closely monitored by Lloyds
• Lloyds demands outstanding risk management
  capability

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