The specialist Lloyd’s insurance and reinsurance market has reported profit of £1.4 billion for the first-half of 2021, as the marketplace returned to underwriting profitability with an improved combined ratio of 92.2%.
The overall result at Lloyd’s has improved significantly from the net loss of £400 million reported for the same period in 2020, when the market recorded COVID-19 claims of £2.4 billion and a combined ratio of 110.4%.
Year-on-year, the combined ratio has strengthened by 18.2 percentage points from the 110.4% reported at H1 2020, or by 4.8 percentage points excluding COVID-19 from the 97% for FY 2020, which Lloyd’s says demonstrates the substantial turnaround of its profitability and performance.
The lower combined ratio for H1 2021 is the result of a notable reduction in the attritional loss ratio from 52.6% to 50.5%, and an improved expense ratio of 35.8%, against 37.7% a year earlier.
All in all, the Lloyd’s market has reported an underwriting profit of £1 billion for H1 2021, which compares with an underwriting loss of £1.3 billion in the prior year period.
Gross written premiums, at £20.5 billion, increased by £500 million year-on-year as a result of higher premium rates, strong customer retention, and new growth for the first time in four years.
In fact and continuing the trend of the past 15 consecutive quarters, premium rates increased by 9.9%.
During the opening half of the year, Lloyd’s paid claims of a significant £9.4 billion, including to clients impacted by the ongoing pandemic, where Lloyd’s says 80% of the claims notified to date have been paid.
John Neal, Lloyd’s Chief Executive Officer (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.
“Alongside performance, 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 which underpin our purpose.”
For H1 2021, Lloyd’s has announced net investment income of £600 million and a return of 0.8%, compared with income of £900 million and a return of 1.2% a year earlier.