Lloyd’s of London’s plans to drastically cut the cost of buying insurance as part of a strategy to restore the company’s fortunes seems to have paid off. The oldest insurance market in the world has now reported a £2.5 billion (around AU$4.9 billion) pre-tax profit for 2019, and credits tighter underwriting and robust investment returns for this win. The market also said it was ready to support customers and partners affected by coronavirus.
Lloyd’s reports aggregate result figures of its syndicate members and stated that its solvency ratio, which measures balance sheet strength, came in at 205% in spite of the swings in financial markets over recent weeks.
“Now more than ever, our customers need us to be ready to support them through these challenging times,” said Bruce Carnegie-Brown, Lloyd’s chairman.
The market did not comment on the extent to which its members could be impacted by COVID-19, though in recent weeks, Lloyd’s asked those members to provide estimates of their potential current and final losses from coronavirus to help it determine the financial hit it will take from the global health emergency, according to Reuters. The cancellation and postponement of sporting events, such as the Summer Olympics in Tokyo, and other public gatherings are notable exposures of Lloyd’s of London insurers, which include Beazley and Hiscox.
The Future at Lloyd’s modernisation plan will continue to take centre stage after chief executive John Neal said in light of the results that “it had never been more important” to accelerate the progress on this plan, which aims to speed up claims processing with the goal of around 80% of Lloyd’s business being supported digitally.
In 2018, the market reported a loss of £1 billion, on the heels of a loss of £2 billion 2017, thanks to a slew of natural catastrophes. In 2019, members were directed to drop their worst-performing lines of business as part of a plan to return to profit.