ITE the record hit to revenue, the Lloyd’s performance was still better than some analysts had expected. Audit firm Mazars predicted losses of £1.5bn last week, but yesterday the results compared favourably to the rest of the sector.
“Last year the average combined loss ratios of UK-listed insurers were slightly better than Lloyd’s,” said insurance partner Andrew Goldsworthy. “This year they were significantly worse.”
But look behind the figures and Lloyd’s is having to do more and more to shore up its own numbers. The top line combined loss ratio of 113.3 per cent was only below some of its syndicate because it used reserves to bolster earnings by £474m – otherwise it would have been closer to 119 per cent.
At the same time, low interest rates and volatile markets mean it’s getting harder to up premiums, and Lloyd’s investments aren’t reaping the same rewards that they used to – paying out just 1.1 per cent in the first half of the year compared to an average of 3.9 per cent over the past five years.
Its diverse business book will help, but with claims this year already higher than for the whole of 2010, losses can only be absorbed for so long.