The Lloyd’s of London insurance market will next year expand to reach record-breaking size – with the potential for a further increase during the first half of next year.

Announcing its expected capacity for 2002, Lloyd’s said that the market’s ability to accept premiums will rise from £11 billion to £12.3 billion, its highest capacity figure ever. The £1.3 billion increase is due to additional capital being committed by the market’s backers in the wake of strong rises in the cost of insurance.

In addition, Lloyd’s said that a number of businesses in the market are currently expected to announce further increases in their capacity in the first half of 2002.

Commenting on the increase, Lloyd’s Chairman Sax Riley said:

“It’s hard to make new records in a 300 year-old business, but we now have our largest ever capacity. Clearly the market has emerged from the turmoil surrounding the events of September 11 in good shape.

“Our capital providers are voting with their chequebooks. Having come through a number of difficult years, they are now increasing their underwriting commitments as we enter a period of sustained market growth. We expect to see the rise in business from all over the world, but especially in the US – which last year was our largest single market.”

2002 is the second year in succession in which the market’s capacity has risen by £1 billion. The market’s size has, therefore, increased by 20 per cent in two years.

Lloyd’s previous highest capacity figure was £11.3 billion in 1991.