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Lloyd's of London on Thursday reported a steep loss in the first half of 2022, but boasted of its best underwriting result in years, and expects a turnaround in performance in 2023.
‘Lloyd's results today point to both the sustainable performance of our market and the resilience of our capital position, enabling us to continue supporting customers through whatever lies ahead,’ Chief Executive John Neal said.
The insurance and reinsurance market reported a pretax loss of £1.8 billion in the six months to June 30, sinking from a £1.4 billion profit the year before.
Lloyd's pinned this on unrealised mark-to-market losses. It recorded a £3.1 billion net investment loss, reversed from a £600 million gain the year prior.
‘As investment maturities are short dated, the market will begin to benefit from higher interest rates in 2023 and therefore improved investment returns,’ it added.
The market's combined ratio improved to 91.4% from 92.2%, sending its underwriting profit higher to £1.2 billion from £960 million. Any combined ratio under 100% indicates an underwriting profit.
‘Notwithstanding a challenging year of natural catastrophes, the invasion of Ukraine, inflation, and other geopolitical factors, this marks a 0.8% improvement on 2021 and the strongest combined ratio since 2015,’ Lloyd's added.
Gross written premiums increased to £24 billion from £20.5 billion, with net earned premiums up 14% to £14.1 billion from £12.4 billion.
Lloyd's said prices increased for the fifth straight year.
Neal said: ‘Rising interest rates, while prompting an unrealised investment loss on paper at the half year, will be good news for insurers in the long term as returns on assets strengthen in 2023 and beyond.
‘Meanwhile, with the conflict in Ukraine continuing to inflict devastating consequences, we've taken proactive steps to protect our customers from the fallout while ensuring we can support them - and continue driving sustainable performance - through the uncertain times ahead.’
Lloyd's noted it has set aside £1.1 billion net of reinsurance for customers hurt by the conflict in Ukraine.
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