Lloyd’s highlights outstanding 2023 in financial results

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Lloyd’s highlights outstanding 2023 in financial results


Lloyd’s highlights outstanding financial results for 2023 | Insurance business America

The institute reports double-digit growth for the third time in a row

Insurance News

By Kenneth Araullo

Following the release of its preliminary results earlier this month, Lloyd’s has released its full year 2023 (FY2023) financial figures, showing an increase in profits across all insurance and investment sectors.

The institute reported an underwriting profit of £5.9 billion, up £3.3 billion on the previous year. This improvement led to a decline in the combined ratio of 7.9 percentage points to 84.0% (FY2022: 91.9%) – the most favorable result since 2007.

This improved underwriting performance was largely due to lower costs associated with significant risks and natural catastrophe losses, with the underlying combined ratio (excluding major losses) increasing slightly to 80.5% from 79.2% a year ago.

Lloyd’s recorded double-digit premium growth for the third consecutive year, with gross premiums rising 11.6% to £52.1bn (FY2022: £46.7bn), driven by a 4% increase in volumes. Despite inflationary pressures, a 7% price increase ensured 24 consecutive quarters of positive price adjustment.

Ongoing initiatives to improve performance and reduce operating costs at Lloyd’s have resulted in a small reduction in the attrition loss ratio to 48.3% (FY2022: 48.4%), while the expense ratio has remained constant at 34.4%.

The market also experienced a turnaround in investment returns, recording a loss of £5.3 billion (FY2022: £(3.1) billion loss), driven by higher global risk-free rates and the reversal of previously recorded mark-to-market -Losses. This resulted in a total profit before tax of £10.7 billion (FY2022: loss of (0.8) billion pounds).

A robust and resilient balance sheet underpinned core and market-wide solvency ratios of 503% and 207% respectively (FY2022: 412% and 181% respectively), with total capital, reserves and subordinated notes increasing by 12.7% to £45.3 billion increased (FY2022: £40.2 billion).

Due to Lloyd’s sustained profitability and strong capital position, S&P Global has upgraded Lloyd’s market rating from A+ (strong) with a stable outlook to AA- (very strong) with a stable outlook. At the same time, AM Best improved the market outlook from a previously stable outlook to positive.

“The results we are announcing today are our best in recent history, with an excellent underwriting result underpinned by a strong and resilient balance sheet. Our ability to attract capital and generate capital is critical to supporting our clients during uncertain times. We are committed to working with our market to maintain consistent profitable performance through disciplined underwriting, thereby increasing the value, relevance and long-term sustainability of Lloyd’s,” said CEO John Neal.

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2024-03-28 08:47:29

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