Lloyd’s reports strong underwriting result in 2022 Half Year results

09 September 2022 Lloyd’s

Lloyd’s, the world’s leading marketplace for commercial, corporate and specialty risk solutions, today announced an improved underwriting result for the first six months of 2022, with an underwriting profit of £1.2bn (HY 2021: £0.96bn) and a combined ratio of 91.4% (HY 2021: 92.2%). 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.

As a result of rising interest rates, Lloyd’s reported an overall loss of £1.8bn (HY 2021: £1.4bn profit) driven by a net investment loss of £3.1bn (HY 2021: £0.6bn income) from unrealised mark-to-market losses. As investment maturities are short dated, the market will begin to benefit from higher interest rates in 2023 and therefore improved investment returns.

The attritional loss ratio improved to 48.9% (HY 2021: 50.5%), while the expense ratio showed a 0.4 percentage point improvement at 35.4% (HY 2021: 35.8%). Lloyd’s expects expenses to continue falling as it delivers sustainable performance and invests in digitalisation through its Blueprint Two programme to drive improved efficiency.

Lloyd’s also leveraged favourable trading conditions to achieve premium growth, with Gross Written Premium (GWP) increasing 17.4% to £24bn (HY 2021: £20.5bn) and Net Earned Premium (NEP) increasing by 14.4% to £14.1bn (HY 2021: £12.4bn). Continuing the trend of five consecutive years of positive rate movement, prices increased by 7.7%.

Lloyd's continued to help global customers make more confident decisions in the face of unforeseen events. In line with the early and realistic action taken on COVID-19, the market has reserved £1.1bn net of reinsurance for customers impacted by the conflict in Ukraine. Lloyd’s continues to work with governments and regulators around the world to deliver sanctions against Russia, while implementing the landmark facility announced by our market in July to insure ships recovering grain from Ukraine’s ports.

Lloyd’s capital and solvency positions remain strong with net resources at £36.5bn (FY 2021: (£36.6bn), underlining the exceptional strength and resilience of Lloyd’s balance sheet. The central solvency and market solvency ratios, of 395% and 179% respectively (FY 2021: 388% and 177%), point to Lloyd’s ability to continue supporting customers through uncertainty and challenging conditions.

John Neal, CEO, Lloyd’s, said: “With political and economic uncertainty looming large over society, it’s more important than ever that insurers are ready to support. 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.

“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.”

The key figures reported in Lloyd’s 2022 half year results are:

• Gross written premiums of £24bn (HY 2021: £20.5bn)
• Underwriting profit of £1.2bn (HY 2021: £0.96bn)
• Combined ratio of 91.4% (HY 2021: 92.2%)
• Underlying combined ratio of 81.5% (HY 2021: 85.4%)
• Attritional loss ratio of 48.9% (HY 2021: 50.5%)
• Net investment loss of £3.1bn (HY 2021: income of £0.6bn)
• Loss before tax of £1.8bn (HY 2021: profit of £1.4bn)
• Net resources of £36.5bn (FY 2021: £36.6bn)
• Central solvency ratio of 395% (FY 2021: 388%)

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