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Lloyd’s £800m loss said to be temporary

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

Lloyd’s has released its financial results for fiscal year 2022, confirming the loss before tax of £800 million, first reported this month when the organisation released a trading update containing preliminary results.

The organisation said mark-to-market accounting rules on fixed income investments led to the overall loss, but this loss is expected to reverse in the coming years as assets reach maturity and benefit from favourable interest rates.

The overall result compares with a 2021 profit of £2.3 billion.

The organisation reported a net investment loss in FY22 of £3.1 billion (2021: £0.9 billion profit),

Lloyd’s recorded an underwriting profit of £2.6 billion (FY2021: £1.7 billion).

John Neal, the chief executive of Lloyd’s, said: “This is an outstanding underwriting result that follows several years of performance improvement, a comprehensive plan to digitalise our market, steady and sustained progress on our culture and purposeful action to help our industry and society manage the biggest challenges of our time.”

Mr Neal added: “Looking to 2023, Lloyd’s expects strong premium growth to around £56 billion, a combined ratio below 95 per cent and a total investment yield on our assets of more than 3 per cent, enabling us to support customers through the uncertain times ahead.”

Lloyd’s said the market’s profitable growth continued with gross written premium increasing by 19 per cent to £46.7 billion (FY2021: £39.2 billion), including 4 per cent volume growth.

The organisation reported a combined ratio of 91.9 per cent — a 1.6 percentage point improvement and the strongest result since 2015.

In a year that saw major losses contribute 12.7 per cent to the combined ratio — including substantial claims from the conflict in Ukraine and Hurricane Ian in the United States — Lloyd’s paid out more than £21 billion to customers, the organisation said.

The attritional loss ratio improved to 48.4 per cent (FY2021: 48.9 per cent) while the expense ratio improved by 1.1 percentage points to 34.4 per cent (FY 2021: 35.5 per cent), reflecting efforts to deliver strong performance and reduce the cost of doing business at Lloyd’s.

With prices increasing by 8 per cent, the Lloyd’s market has now seen 20 consecutive quarters of positive price improvement.

Lloyd’s capital and solvency position continues to strengthen, it said, with a central solvency and marketwide solvency ratio of 412 per cent and 181 per cent, respectively (2021: 388 per cent and 177 per cent).

Net resources stood at £40.2 billion (2021: £36.6 billion) despite the investment loss, demonstrating the exceptional strength and resilience of Lloyd’s balance sheet, the organisation said.

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Published March 24, 2023 at 7:26 am (Updated March 24, 2023 at 7:25 am)

Lloyd’s £800m loss said to be temporary

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