Lloyd's returns to profit after 2017 losses

Lloyd’s has today announced a return to profit of £0.6bn for the first half of 2018.

The group made a £2bn loss overall for 2017 as a result of large catastrophe losses during the year.

And the £0.6bn H1 figure for 2018 was still down on the £1.6bn pre-tax profits recorded for H1 2017.

The group stated that the profits were impacted by a reduced investment return of £0.2bn (June 2017: £1.0bn). It said this was consistent with the low returns seen across most asset classes over the period.

The publication of its interim report did reveal an improved combined ratio of 95.5% though, compared with 96.9% for H1 2017.

The reporting period also featured an improvement in the underwriting result up to £0.5bn from £0.4bn last year.

Lloyd’s stated this partly reflects its ongoing work that commenced in 2017 to review the worst performing portfolios, and the subsequent action by the market to reduce loss making lines.

And Lloyd’s reported a modest increase in gross written premiums to £19.3bn (H1 2017: £18.9bn), which the group said was driven by improvements in pricing and growth in some profitable lines.

It’s capital position was now reported as being at its “strongest ever”, with net resources totalling £29bn. This figure was at £28bn for June 2017.

Strength

Lloyd’s chief executive, Inga Beale, who is set to leave the corporation in October to be replaced by former QBE chief executive John Neal, said: “These results and return to profit demonstrate the strength of the Lloyd’s market following one of the costliest years for natural catastrophes in the past decade.

“Whilst these results are welcome, Lloyd’s continues to concentrate on improving the Lloyd’s market’s long-term performance by taking action to address underperforming areas of the market.

“The corporation also remains focused on making the Lloyd’s platform more competitive.

“Alongside the success of the mandate for the placement of electronic risks, we have recently launched the Lloyd’s Lab, our new innovation accelerator, which will help Lloyd’s use technology to better serve our customers around the world.

“We have also worked tirelessly to secure the Lloyd’s market’s access to the EU27 and our Lloyd’s Brussels subsidiary will start writing business in the European Economic Area from 1 January 2019.”

Lloyd’s was recently rated at A (Excellent) from A.M. Best, A+ (Strong) from Standard & Poor’s and AA- (Very Strong) from Fitch.