Insurance behemoth Lloyd's of London has issued another stark warning over the fallout from the UK's vote to leave the EU as its underwriting profits slipped in the first six months of the year.
Lloyd's, the home of London's insurance market, reported pre-tax profits of £1.46bn in it half-year results out this morning. That was 22 per cent up on last year's fairly disappointing interim results.
The combined ratio, which calculates losses and expenses as a proportion of earned premiums, largely seen as the benchmark indicator for performance in the insurance sector, climbed to 98 per cent, up from 89.5 per cent last year. The further a score is below 100 per cent, the higher an insurance outfit's profit margin.
Accordingly, underwriting profits slipped by £850m, Lloyd's said.
The firm sold gross written premiums of £16.3bn, up five per cent on 2015.
Lloyd's also said the fall in sterling over the period provided a £300m boost to its balance sheet.
Why it's interesting
Lloyd's did not hold back before the referendum in issuing stark warnings about what a vote to leave the EU could do to its business.
Since then, chairman John Nelson has threatened to leave bits of its business out of the City of London if passporting rights are not protected.
In a joint statement attached to today's interim results, Newlson and chief executive Inga Beale were keen to point out the referendum result has "no immediate impact on the UK's ability to continue trading with the EU. The UK continues to be a full and active member ... This means we continue to trade under the current passporting regime."
Nevertheless, behind the scenes, preparations are afoot for a potential move elsewhere. The pair said they were "advancing our plans for how Lloyd's will continue trading with EU countries when the UK's membership of the EU ends." Lloyd's was unable to comment on the extent of its planning, or how likely a move abroad is.
What Lloyd's of London said:
Chief executive Inga Beale said:
Clearly the UK's referendum on its EU membership is a major issue for us to deal with and we are now focussing our attention on having in place the plans that will ensure Lloyd's continues trading across Europe.
Chairman John Nelson added:
While we are operating in difficult conditions, we have continued to make significant progress in growing our presence in the fast-growth markets across the globe. In 2016 we have applied for onshore reinsurance licences in India and Malaysia as well as opening a new office in Bogota, Colombia. This complements the growth we are seeing in Dubai, China and in our more traditional markets, particularly the United States.