Lloyd’s of London hails its best results for 17 years
LLOYD’S of London, the world’s biggest insurance market, has hailed the best set of financial results since 2007, helped by a relative lack of underwriting exposure to catastrophes last year.
The year saw relatively few big-claim events for Lloyd’s, with storms that hit the US covered by domestic insurers there. Although there was more disruption in Europe, much of that was not covered by its policies.
That helped underwriting profit rise to £5.9 billion, up by £3.3 billion yearon-year. Gross written premiums were up 11.6% to £52.1 billion, with volume growth of 4% and prices up 7%, offsetting inflationary trends.
Lloyd’s is a major marine insurer and its chairman, Bruce Carnegie-Brown, told the Standard that this week’s collision in Baltimore, where the Francis Scott Key Bridge was destroyed when struck by the Dali cargo ship, “has the capacity to be the largest ever single marine insurance loss”.
And it came at a time of a “heightened level of activity” for the marine insurance category globally, not least with pirate attacks on ships in the Red Sea heading for the Suez Canal.
Carnegie-Brown pointed to three dimensions on the Baltimore claims, “the bridge itself, the ship and its cargo and the second order losses which will arise from supply chain interruption — the ships that are trapped in Baltimore and can’t get out and the ships in transit to Baltimore that now need to find a different harbour or port of entry into the United States.
“We model realistic disaster scenarios across all of our lines of business. And what’s happened in Baltimore is not outside the parameters of those.”
Lloyd’s began as a marine insurer, founded in a coffee house in London’s Tower Street in 1688 and was famously supported by individual “names” through most of its life.
It is now made up of over 50 insurance companies and 200 registered brokers and is the leading international venue for major insurance and re-insurance.
Known for its face-to-face marketplace within iconic headquarters in Lime Street in the heart of the City, contracts worth billions are struck through Lloyd’s each year. They offer financial protection for everything from moon shots to the laying of deep-sea communications cables.
One key industry measure came in at its strongest since 2007. Lloyd’s “combined ratio”, which compares claim-related losses to earned premiums, reached 84%, a 7.9 percentage point improvement.
There was also a helping hand from the significant holdings of government bonds Lloyd’s has, ready to sell in order to settle claims.
In previous years, the book value of these liquid assets dropped when central banks started to raise interest rates, lifting the returns on offer from low-risk government bonds.
With the peak of the hiking process becoming apparent to investors, the selling eased and when Lloyd’s marked its bond holdings to the market, it showed investment returns of £5.3 billion for 2023, up from a loss of £3.1 billion a year earlier.
Carnegie-Brown said price increases for insurance “are beginning to flatten”, but were “expected to stay at these levels” due to “the heightened nature of the risks that are out there”.