Wind, rain and fire do the damage at Lloyd’s of London

Comment Martin Flanagan

The Lloyd’s of London insurance market didn’t actually suffer locusts and pestilence last year. But it had plenty to be getting on with – hurricanes (Caribbean), earthquakes (Mexico) and wildfires (California, even edging towards the edges of Tinseltown).

Major claims from the devastation in 2017 totalled £4.5 billion (more than double the £2.1bn seen in 2016), pushing the three-centuries-old insurance market to a pre-tax loss of £2bn – the first time it has gone into the red in six years.

Somewhat like bookmakers, insurers put a good face on it when things go badly, leaning on their losses or much reduced profits to claim they show they are there for their customers – or punters – when necessary.

Lloyd’s of London chief executive Inga Beale stuck to that script yesterday. The organisation indicated that it is likely to address those losses in 2018 through a mixture of increased premiums and costcutting – the classic insurance industry response to when catastrophes’ wheel of fortune spins against them.

More positively, Lloyd’s anticipation of the challenges of Brexit has been crisp. Its planned EU subsidiary will be operational by this July, about nine months before the official (non-transitional) Brexit deadline.

Lloyd’s, like its rival insurers, is clearly not able to control wind, wave, fire and other natural catastrophes, but it is responding well to what it can control, including (inevitably) more electronically processed insurance business. group Maplin in administrative receivership; Carpetright following its flurry of profit warnings with news yesterday that it is exploring a company voluntary arrangement that could see it close loss-making stores and try to secure big rent discounts from its landlords; a profit warning from Moss Bros; a sharp fall in sales at DIY chain B&Q; and fashion retail bellwether Next expected to unveil continued pressure on trading when it reports annual results tomorrow.

Each of these had or has companyspecfic problems, while also facing generic sector headwinds such as cost pressures and digitalisation. The cumulative picture is of a sector taking shots to the body.