Lloyd’s posts heavy 2020 loss; hails improvements masked by COVID-19
Lloyd’s has reported a significant market loss for 2020, with COVID-19 claims taking their toll. But the market was keen to stress that, excluding COVID-19 claims, its performance would have been significantly better.
Lloyd’s made a pre-tax loss of £0.9 billion in 2020, a big reversal on the £2.5 billion profit it made in 2019, largely driven by £3.4 billion of COVID-related losses after reinsurance recoveries. These added 13.3 percent to the market’s combined ratio, bringing it to 110.3 percent.
There were several positives for the market. With COVID claims stripped out, it posted an underwriting result of £0.8 billion, which it said demonstrated a significant improvement in its underlying performance. Equally, its combined ratio would have reached 97 percent without COVID, an improvement on the 102.1 percent it posted a year earlier.
It also noted that it enjoyed premium rate increases overall of 10.8 percent in 2020, with that positive rate momentum continuing into this year. Despite this, its gross written premiums last year actually fell slightly to £35.5 billion compared with £35.9 billion in 2019, a 1.2 percent reduction. It said this was “due to the remediation of underperforming business in 2020, reflecting the market’s continued focus on the quality of the business it renews and underwrites”.
It also suffered on the investment side. Its investment income last year was £2.3 billion, a 2.9 percent return, a big fall on the £3.5 billion, 4.8 percent return, it posted in 2019.
John Neal, Lloyd’s CEO, said: “Following an extremely challenging year marked by a global health crisis of a scale never seen before, Lloyd’s continued to support its customers with payouts expected to total £6.2 billion in COVID-19 claims. The year was also marked by a high frequency of natural catastrophe claims and the UK's formal exit from the EU, driving further losses and uncertainty.
“Against this unprecedented backdrop we have made good progress across our performance, digitalisation, and culture transformation plans. Our disciplined underwriting approach and determination to become the world's most advanced insurance marketplace have set us up for real success this year alongside the continued positive rate momentum that will see the market supporting growth for the first time in four years.”
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