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Lloyd’s to report ‘paper’ losses of £800 million

John Neal, CEO of Lloyd’s (File photograph)

Lloyd’s of London expects to report a full-year 2022 loss before tax of approximately £800 million, the organisation said in a trading update as it released preliminary figures for the period.

The full year 2022 loss compares with a FY2021 profit of £2.3 billion.

Lloyd’s said full year results will be released on March 23, and accompanied by guidance on expectations for FY2023.

It said the information included in the trading update is subject to the completion of ongoing assurance procedures performed on the pro forma financial statements by Lloyd’s auditors and the approval by Lloyd’s Council.

The loss is due to the mark to market accounting treatment of rising interest rates on fixed income portfolios that forced a write down of asset values and is forecast to lead to higher yields and investment returns in future years.

Lloyd’s said the reported investment loss of approximately £3 billion (FY 2021: £900 million income) is in line with the result reported at the half year. The investment loss has no cash impact, and is expected to be reversed out over the next two to three years as the assets reach maturity, the organisation said.

Gross written premium increased by over 19 per cent in 2022 to more than £46 billion (FY 2021: £39.2 billion) reflecting a combination of growth from the strong US dollar (eight per cent) direct price increases (8 per cent) and organic growth (three per cent).

Lloyd’s said underwriting performance improved more than expected by 1.6 percentage points to deliver a combined ratio of 91.9 per cent, despite major claims of 12.7 per cent including losses arising from the conflict in Ukraine and from Hurricane Ian in Florida.

The attritional loss ratio improved to 48.4 per cent (FY 2021: 48.9 per cent), prior year releases were 3.6 per cent (FY2021: 2.1 per cent) and the expense ratio dropped to 34.4 per cent (FY 2021: 35.5 per cent)

John Neal, CEO of Lloyd’s, said: “Today, we are presenting an underwriting performance and capital position as good as Lloyd’s has reported in recent memory.”

He added that “2022 showed both strong premium growth and a continued fall in expenses, which, alongside a high-quality balance sheet demonstrate that our market is in the best shape to offer both an attractive return to capital and investors as well as providing businesses the insurance protection they need in these uncertain times.”

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Published March 15, 2023 at 7:49 am (Updated March 15, 2023 at 7:49 am)

Lloyd’s to report ‘paper’ losses of £800 million

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