Lloyd's of London reports stable profits
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E-mail Xinhua, March 31, 2017
The insurance market Lloyd's of London announced Thursday annual profits of 2.1 billion pounds (about 2.62 billion U.S. dollars), after one of the toughest trading years for a quarter of a century.
Lloyd's saw its combined ratio -- losses and expenses divided by the earned premium, and a common measure of profitability -- move unfavorably from 90 percent to 97.9 percent over 2016, indicating a tough trading year.
Conditions over the course of the year were extremely challenging, with continued downwards pressure on pricing while traditional and alternative capital remained attracted to the insurance industry.
The 2016 profits were the same as for 2015.
"There is huge capacity creating tough conditions. The conditions are probably as tough as they have been for 25 years," Lloyd's chairman John Nelson told Xinhua in an interview.
The level of Lloyd's major claims, at 2.1 billion pounds, was the fifth highest since the turn of the century and above the long-term average, according to the chairman.
"Our underwriting result is significantly down from 2 billion pounds to about 400 million pounds, and that is down to two things: one is that we have had more claims particularly major claims than we have had for some years," said Nelson.
The other main change, Nelson said, was that investment income has improved significantly because of better performance, particularly in bond portfolios where there was an inward yield shift and also in equities.
"Our total assets have just ticked over 100 billion pounds this year. Our net assets are just over 30 billion pounds and our financial ratings are at an all-time high. So, we are in a strong financial position and we are seeing very tough conditions and I don't see in the short term those conditions changing very much," he said.
The formal announcement of Britain's exit from the European Union (EU) was anticipated by Lloyd's, and in order to protect its business it plans to open an office in Brussels in 2018.
"We anticipate that the subsidiary will be running in 2018, and we will certainly be writing all our EU business through that subsidiary early 2019," said Nelson.
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