23 March 2016 Insurance

‘Better to stay in’ – Lloyd’s makes position clear on EU exit referendum

Executives from specialist insurance market Lloyd’s of London took to the opportunity to make its feelings clear on both the tough re/insurance market it is operating in and the implications should the UK leave the EU at a press briefing on its annual results.

John Parry, director of finance at Lloyd’s, said the forthcoming referendum in the UK on the issue of leaving the European Union (EU) was an issue for Lloyd’s and he made it clear that the market would prefer the UK to remain in Europe.

“It’s better for us if we’re in,” Parry said. “We, at the moment, have untrammelled access to the biggest insurance market [that] there is in the EU, so we’re on record in saying that it’s better for us if we’re in.”

However, he added that Lloyd’s also had to plan for the worst in the event that there is a vote to leave the EU and no central government arrangements were put in place.

The market reported a £2.1 billion profit for 2015, down on the £3 billion it reported for

The results were affected by a fall investment return from £1 billion in 2014 to just £0.4 billion in 2015. “There was an investment return of just 0.7 percent, this was the biggest fall in profits and was the lowest figure that we’ve had since we’ve been reporting on these accounts since 2001,” said Parry. “And this reflects on the bond portfolio environment that we’ve got.”

According to Lloyd’s, its net investment returns fell by 61 percent from 2014 to 2015. Parry said that this fall was down to a number of events in 2015, such as the volatile situation in Greece over its debt, followed by the ongoing slowing of the Chinese economy.

However, he stressed that the overall balance sheet was a very strong one and that although Lloyd’s combined ratio went up slightly from 88 percent to 90 percent, this was still a better number than when compared to other comparable companies.

Gross written premiums for 2015 came to £26.7 billion, a 6 percent rise on the £25.3 billion written in 2014.

Looking ahead at 2016 Parry said that Lloyd’s faced a challenging environment and that it was going to deal with this by investing in technology, by continuing market modernisation, continuing to look at extend its licence network and addressing the issue of underinsured areas of the market.

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