Lloyd's achieves strong financial outcomes in 2023

Institution notes third straight year of double-digit growth

Lloyd's achieves strong financial outcomes in 2023

Insurance News

By Kenneth Araullo

After the release of its preliminary results earlier this month, Lloyd’s has disclosed its financial figures for the full year of 2023 (FY2023), illustrating a rise in profits across underwriting and investment sectors.

The institution reported an underwriting profit of £5.9 billion, up by £3.3 billion from the previous year. This enhancement led to a 7.9 percentage point decrease in the combined ratio to 84.0% (FY2022: 91.9%)—the most favourable result recorded since 2007.

This improved underwriting performance was largely due to decreased costs associated with significant risks and natural disaster claims, with the underlying combined ratio (excluding major claims) slightly increasing to 80.5% from 79.2% the prior year.

Lloyd’s experienced a third consecutive year of double-digit premium growth, with gross written premiums climbing by 11.6% to £52.1 billion (FY2022: £46.7 billion), driven by a 4% increase in volume. Despite inflationary pressures, a 7% hike in prices has maintained 24 consecutive quarters of positive price adjustment.

Continuous initiatives aimed at boosting performance and reducing the cost of operations at Lloyd’s have led to a minor reduction in the attritional loss ratio to 48.3% (FY2022: 48.4%), while the expense ratio has remained constant at 34.4%.

The marketplace also saw a turnaround in investment returns, reporting £5.3 billion (FY2022: £(3.1) billion loss), propelled by higher global risk-free interest rates and the reversal of previously recorded mark-to-market losses. This resulted in an overall pre-tax profit of £10.7 billion (FY2022: £(0.8) billion loss).

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

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

“The results we’re reporting today are our best in recent history, with an outstanding underwriting result underpinned by a strong and resilient balance sheet. Our capacity to attract—and provide returns on—capital is crucial in supporting our customers through uncertain times. We are committed to collaborating with our market to maintain consistent profitable performance through disciplined underwriting, thereby enhancing the value, relevance, and long-term sustainability of Lloyd’s,” CEO John Neal said.

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