Lloyd’s, the world’s oldest marketplace for insurance and reinsurance, has today reported a strong set of results for 2023 which includes a 127% year-on-year rise in underwriting income to £5.9 billion, which contributed to a 7.9 percentage point improvement in the combined ratio to 84%.
The considerable strengthening of the combined ratio has led to the market’s strongest result since 2007, as underwriting benefited from reduced costs from large risks and natural catastrophes. However, the underlying combined ratio, so excluding major claims, rose slightly to 80.5% from 79.2% in 2022.
Once again, Lloyd’s produced double-digit growth in 2023, reporting that gross written premium increased by 11.6% to £52.1 billion from £46.7 billion, driven by volume growth of 4%.
Lloyd’s states that price increases of 7% offset inflationary trends in the year, adding that it has now seen 24 consecutive quarters of positive price improvement.
Additionally, Lloyd’s has reported a further 0.1% reduction in the attritional loss ratio to 48.3% from 2022’s 48.4%, with the expense ratio remaining flat at 34.4%, driven by continued efforts to improve performance and reduce the cost of doing business at Lloyd’s.
On the asset side of the balance sheet, it was a much better year for Lloyd’s with investment returns reported at £5.3 billion compared to a loss of £3.1 billion in 2022. The improvement was driven by higher risk-free interest rates around the world and the unwind of the previously booked mark-to-market loss, explained Lloyd’s.
On the back of an impressive underwriting result and much improved investment performance, Lloyd’s has achieved an overall profit before tax of £10.7 billion for 2023, compared to a loss of £800 million in 2022.
Lloyd’s further explained that a strong and resilient balance sheet has supported central and market-wide solvency ratios of 503% and 207%, respectively, compared year-over-year to 412% and 181%, respectively. The total capital, reserves and subordinated loan notes increased by 12.7% to £45.3 billion from £40.2 billion in 2022.
John Neal, Chief Executive Officer, Lloyd’s, said: “The results we’re reporting today are our best in recent history, with an outstanding underwriting result underpinned by a strong and resilient balance sheet. Our ability to attract – and provide returns on – capital is vital to ensuring we can support our customers through uncertainty. We’ll continue working with our market to deliver consistent profitable performance through disciplined underwriting – enhancing the value, relevance and long term sustainability of Lloyd’s.”
