Aon Benfield’s Analytics’ Market Analysis team has updated its report on Lloyd’s to reflect the latest financial figures for the first half of 2013 and business position going into 2014.
Key figures in the report include the following:
– Lloyd’s reported a 10 percent decline in pre-tax profit to £1.38 billion [$2.22 billion] for the first half of 2013, driven by a reduction in the total investment yield from 1.2 percent to only 0.5 percent. A strong underwriting result nevertheless resulted in an annualized return on capital of 14 percent.
– Gross premiums written rose by 5 percent to £15.5 billion [$24.94 billion], driven by risk-adjusted rate increases (1 percent), positive foreign exchange movements (2 percent) and organic growth (2 percent).
– Prior year reserve releases increased to £779 million [$1.253 billion], or 8.1 percent of net premiums earned, while major losses were almost half the long term average at just £230 million [$370 million], or 2.4 percent. Together these contributed to one of Lloyd’s best ever first half underwriting performances – a combined ratio of 86.9 percent.
– Lloyd’s net ‘capital’ resources hit a new high of £20.9 billion [$33.633 billion] at June 30, 2013, despite a debt repurchase of £180 million [$290 million] in May.
– The continued attractiveness of the Lloyd’s platform has been demonstrated by high levels of M&A activity in 2013 and the approval in principal of three new syndicates for 2014.
– A.M. Best and Fitch recently joined Standard & Poor’s in revising the outlook on their Lloyd’s financial strength ratings from stable to positive.
Mike Van Slooten, international head of Market Analysis at Aon Benfield Analytics, commented: “Lloyd’s results in the first half of 2013 extended an impressive track record and investor interest remains at high levels. These traits are likely to be rewarded with rating upgrades over the next 12 months, which in turn will potentially widen the market’s access to business.”
Source: Aon Benfield Analytics