LONDON, Sept 09
Lloyd's, which reports the combined results of its 100-odd syndicate members, recorded a pre-tax profit of 1.4 billion pounds ($1.93 billion) in the six months to end-June, versus a loss of 400 million pounds for the same period a year earlier.
Loyd's of London is likely to be exposed to around 10% of the billions of dollars of insured losses from Hurricane Ida, its chairman said on Thursday, as the commercial insurance market reported a swing to a first-half profit.
Ida, one of the most powerful hurricanes ever to strike the U.S. Gulf Coast, hit Louisiana more than a week ago before moving northeast and causing intense flooding that killed dozens.
Risk modelling agencies' estimates for the hurricane's total insured losses range from $17 billion to $35 billion..
"Typically, if you looked at Lloyd's' exposure to those kinds of events, it would be about 10% of that number," Bruce Carnegie-Brown, chairman, Lloyd's told Reuters.
"Because of our market share in the U.S., we have a bigger exposure than we would, for instance, to continental flooding."
North America is Lloyd's' biggest market.
Lloyd's gross written premiums increased to £20.5bn (HY 2020: £20.0bn) due to an increase in premium rates, high customer retention and new growth for the first time in four years, it said in a statement.
Lloyd's had an underwriting profit £1.0bn of (HY 2020: loss of £1.3bn) in the reporting period.
Lloyd's combined ratio of 92.2% (HY 2020: 110.4% and 97.0% excluding COVID-19 claims) is a solid improvement with a 4.8 percentage point reduction on the previous year, excluding COVID-19.
A level below 100% in combined ration indicates an underwriting profit.
Lloyd’s continued to provide significant support to its customers around the world, paying £9.4bn of claims, including to customers impacted by COVID-19 where 80% of the claims notified to date have been paid.
John Neal, Lloyd’s CEO, said: “In an uncertain world Lloyd’s remains acutely focused on supporting our customers when they need us, and in the first half of 2021 we have paid out nearly £10bn in claims to help the recovery of businesses and economies globally.Against this backdrop, Lloyd’s has successfully repositioned the market for sustainable, profitable growth as evidenced in this strong set of financial results. I am encouraged to see that market performance has improved as a result of our ongoing remediation efforts. This, as well as our exceptionally strong balance sheet, brings Lloyd’s performance in line with our global peer group.''
Insurers suffered in 2020 due to hefty COVID-19 claims such as on event cancellation and trade credit cover. But after writing exclusions into contracts for the pandemic and raising premiums, they have performed strongly this year.
Lloyd's has also made a push in recent years for its members to exit loss-making insurance lines.
Lloyd's improvements to the combined ratio have been driven by notable reductions to both the attritional loss ratio and the expense ratio. The attritional loss ratio of 50.5% (HY 2020: 52.6%), is a 2.1 percentage point reduction from the ratio reported for the first six months of 2020.
The expense ratio of 35.8% (HY 2020: 37.7%) is a 1.9 percentage point improvement, and 3.7 percentage points improvement since 2017. The reduction in operating expenses remains a focus of Lloyd’s digital transformation programme.
Its net investment income during the H1 2021 was at £0.6bn, 0.8% return (HY 2020: £0.9bn, 1.2% return)
Lloyd’s maintains strong capital and solvency positions, with net resources increasing by £2.6bn to £36.5bn, reinforcing the exceptional strength of Lloyd’s balance sheet with central solvency and market solvency ratios of 218% and 170% respectively (FY: 2020 209% and 147%).
It launched its first sustainability strategy last year and is trying to put more of its business online and improve its record on diversity.
"Lloyd’s has successfully repositioned the market for sustainable, profitable growth," John Neal said..
"We are making great strides on all our strategic priorities which focus on improving the culture in the market, the Future at Lloyd’s digital transformation, and sustainability, climate and inclusion."Lloyd's had a combined ratio of 92.2%, compared with 110.4% a year earlier.