By Ranamita Chakraborty
Lloyd’s has confirmed that its 330-year-old commercial insurance market is in a strong position to respond to the impacts of COVID-19 as well as support its customers and business partners. This announcement comes after the publication of its 2019 annual results.
“Although the fast-moving global development of COVID-19 will create challenges for the Lloyd’s market and the corporation with respect to the management of its operations, its assets and its liabilities, Lloyd’s is well prepared to respond and adapt to ensure our customers and business partners are supported,” said Lloyd’s chairman Bruce Carnegie-Brown.
In its latest annual results, Lloyd’s reported GBP2.5bn ($2.9bn) in pre-tax profits which was driven by the repair in investment markets in the first half of 2019.
This marks a return to a profit for the market after it had reported two consecutive years of losses in 2017 and 2018. It had seen $1.3bn of aggregated market losses in 2018, a slight improvement from its $2.25bn losses in 2017.
At the same time, Lloyd’s gross written premiums for 2019 increased to a total of GBP35.9bn from GBP35.5bn in 2018. Its net resources also increased by 8.6% to GBP30.6bn – reflecting a strong balance sheet and a central solvency ratio of 238%.
The road ahead
Despite the current challenges caused by COVID-19, Lloyd’s CEO John Neal said the market will continue its focus on underwriting performance to achieve an improved underlying combined ratio in 2020.
“Our differentiated approach to oversight will continue to play a key role in enabling the best performing syndicates the space to grow, while at the same time rooting out unsustainable business across the poorest performing classes and syndicates,” he said.
Meanwhile, Mr Carnegie-Brown highlighted that the value of assets held by Lloyd’s for the payment of claims has been subject to the significant volatility experienced by financial markets globally.
Nevertheless, he said that the corporation is monitoring these changes in asset value and has a plan in place to mitigate risks to the asset portfolio.
He also said that Lloyd’s is well advanced in gathering and assessing the market’s liability for claims including asking the market to report on expected losses connected to the impact of COVID-19, as it does for any potential large loss event.
Against this backdrop, the market is therefore laying the foundations to support customers more effectively.
“By focusing on performance management, modernising the market and creating a market culture that will attract the best and brightest talent, we are making the market more resilient, more successful and better placed to meet our customers’ needs.
“Our robust financial strength means we can pay claims, even in exceptional circumstances,” said Mr Carnegie-Brown.
Asia Insurance Review