In order to bring in more business, Lloyd's of London (SOYLD.UL) is working hard to encourage more foreign investments. In an interview in Dubai on Wednesday, Inga Beale, chief executive of Lloyds, stated that as an established player in the market, Lloyd’s of London is failing to see much growth in the market and as a result, consolidation is occurring. In terms of global reinsurance premium income, the Lloyd’s market is in 5th place yet as a result of stricter capital rules and increasing competition in the market which is negatively impacting premiums, Lloyd’s has started to target foreign investors. We have also seen a lot of changes in the market over the last few months with companies fighting for first place in the market. In fact last month, Canadian casualty and property insurer, Fairfax Financial Holdings (TO:FFH) announced that they would purchase Brit Plc (L:BRIT) in a $2 billion deal in order to become 1 of the top 5 underwriters on the market. A month prior to this, Lloyd's of London's Catlin Group (L:CGL) was purchased by XL Group (N:XL) for over $4 billion. Beale is currently in Dubai for the opening of a new office in the International Financial Centre. The purpose of this office is to serve Lloyds clients in the Middle East such as the Saudi Arabian Oil Company as well as other large companies and airlines. According to Beale, in 2013, Lloyd's businesses provided insurance cover to the value of $500 million in the Gulf Cooperation Council.
Building on losses from Tuesday, U.S. stocks traded lower on Wednesday. This came in response to a stronger U.S. dollar (USD) among investor expectations that the Federal Reserve is likely to increase interest rates by June this year. As a result, the Dow Jones Industrial Average (DJIA) experienced its biggest points drop in the last 5 months. The DJIA closed down 0.2%, or 27.55 points, to 17,635.39. This marked the Dow’s lowest level since the 2nd of February and the best performer of the session was Intel Corporation which rose 0.65 points, or 2.05%, to trade at 32.35. Also on the downside was the S&P 500 index (SPX) which declined 0.2%, or 3.92 points, at 2,040.24. This also marked the benchmark index’s lowest level since the 2nd of February. Meanwhile, the Nasdaq Composite index (COMP) also lost 0.20%, or 9.85 points, to end at 4,849.94, marking the tech-heavy index’s lowest level since the 11th of February.
Over the last few weeks, the U.S. dollar (USD) has remained higher against most major currencies. This comes in response to expectations that the Federal Reserve is likely to hike interest rates in the near term. Adding to this support was the positive U.S. jobs report released last Friday which also increased expectations for rate increases. Investors are now shifting their attention to next week’s policy statement to see if the Fed will continue to imply that they will remain ‘patient’ regarding rate increases. Meanwhile, the euro traded at a 12 year low against the greenback with EUR/USD at 1.0590, down 0.99%. This comes after the ECB (European Central Bank) started buying securities on Monday as part of the bank’s asset buying program to the value of 60 billion euros a month. Against the British pound and the Japanese yen, the U.S. dollar traded higher with GBP/USD down 0.59% to 1.4980 and with USD/JPY up 0.23% to 121.40. Also, the U.S. dollar index advanced to 99.40, up 0.80%.
In commodity trading on Thursday, crude oil prices rose in early Asian trade. This came in response to crude stock data released yesterday as well as investor concerns regarding demand prospects to ease to the glut in global supplies. WTI crude oil for delivery in April traded at $48.14 a barrel, up 0.29% on the NYMEX. In their report on Wednesday, the EIA (Energy Information Administration) said that crude oil inventories increased by 4.5 million barrels last week. This was up from the expected 4.4 million increase. Meanwhile, Brent crude oil for April delivery rose on Wednesday to trade at $57.43 a barrel, up 0.98 percent, on the InterContinental Exchange (ICE).