Lloyd’s underwriting results improved last year, lifted by organic growth and rate increases in key markets including Australia, the business said in a preliminary update.
However, the investment loss of around £3 billion ($5.4 billion) would take the business to a pre-tax loss of around £800 million ($1.4 billion). In 2021, Lloyd’s earned £2.3 billion ($4.1 billion) in pre-tax profits and investment income of £900 million ($1.6 billion).
Lloyd’s gave preliminary figures for the year to December 2022 overnight from London ahead of the release of its final results due later this month on March 23.
Australia and New Zealand Regional Head Chris Mackinnon said business here performed well last year.
Total gross signed premium in Australia is expected to exceed $4 billion for the first time, rising from $3.4 billion in 2021.
“The premium market growth from Australia is exceptional in 2022,” Mr Mackinnon told insuranceNEWS.com.au today.
“We are delighted with these results, and the significant contribution that comes from Lloyd’s strong position in the Australian market.”
Lloyd’s is a major provider of capacity to underwriting agencies here and Australia is its fourth largest market.
The preliminary update says gross written premium (GWP) grew by more than 19% to more than £46 billion ($82 billion) last year, up from £39.2 billion ($70.4 billion) in 2021.
The higher GWP reflects a combination of growth from the strong US dollar, direct price increases (8%) and organic growth (3%).
Underwriting performance improved more than expected, by 1.6 percentage points. The result led to a combined ratio of 91.9% despite significant claims losses including from the conflict in Ukraine and from Hurricane Ian in Florida. In 2021, Lloyd’s combined ratio is 93.5%.
At the same time, the expense ratio decreased to 34.4% from 35.5% and the attritional loss ratio improved to 48.4% from 48.9%.
“We are demonstrating an underwriting performance and capital position as good as Lloyd’s has reported in recent memory,” said CEO John Neal.
“2022 showed both strong premium growth and a continued decrease in costs, which, together with a high-quality balance shows that our market is in the best shape to offer both attractive attracting returns to capital and investors as well as giving businesses the insurance protection they need in these uncertain times.”
Lloyd’s said the mark-to-market accounting treatment of rising interest rates in fixed income portfolios has forced a write-down of asset values and is expected to lead to higher yields and investment returns in the coming years.
It says the £3 billion investment loss has no currency impact, and is expected to be reversed over the next two to three years as assets reach maturity.
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