Lloyd’s Interim Results H1 2023

September 8th 2023 – The Lloyd’s Market reported an underwriting profit of £2,500m on a combined ratio of 85.2% for the six months to 30 June 2023 (H1 2022 £1,217m and 91.4%). The investment return was a gain of £1,808m (H1 2022 -3,122m), generating an overall pre-tax profit of £3,920m or 23.2% of net premiums earned (H1 2022 loss of £1,801m, -12.7% NPE), equivalent to an annualised return on average capital of 19.5% (H1 2022 -9.8%).

The combined ratio improved by 6.2 percentage points (pp), while the attritional loss ratio deteriorated by 2pp to 50.9%. The expense ratio was stable at 35.4%. Major claims contributed 3.6% of net premiums earned (H1 2022 9.9%), marking a relatively light period for catastrophe losses. Prior year reserve releases were 4.7% of net premiums earned (H1 2022 2.8%). Lloyd’s target combined ratio for 2023 is less than 95%.

The investment profit of £1,808m, representing an investment return of 1.9%, was aided by the unwind of valuation losses previously reported and the benefit of higher reinvestment yields. Lloyd’s is targeting total investment performance of more than 3% for 2023. Asset allocation remains conservative with 69% held in corporate and government bonds and 23% in cash and LOCs. Equities and alternative assets were 8% of the total.

Gross premiums written rose 21.9% to £29.3bn with FX movements (chiefly the US dollar against sterling) generating 4.1% and volume growth 8.7%. Price rises contributed 9.1%, marking 22 consecutive quarters of positive price improvement. Growth and price increases were driven largely by the Property segment offset by less attractive conditions in some areas of Casualty.

Total capital / net resources, including the Corporation’s subordinated debt, increased by 1.4% to £40.8bn. Lloyd’s Central Solvency Capital Requirement (CSCR) coverage ratio was 438% at 30 June 2023 (FY 2022 412%) compared to Lloyd’s risk appetite / minimum of 200%. The Market-wide Solvency Capital Ratio was 194% at 30 June 2023 (FY 2022 181%).

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