Pre-tax profits at Lloyd's of London have halved in the first half of 2018 as the insurance firm struggled under the weight of a series of natural disasters.
Profits dropped by 50 per cent to £0.6bn, compared with £1.2bn in the same period the previous year.
For the first six months of the year Lloyd's reported a combined ratio, a measure of underwriting profitability, of 95.5 per cent, down from 96.9 per cent the previous year. It saw an annualised return on capital of 4.3 per cent, down from 8.9 per cent in June 2017, while its net resources climbed to £29bn, up by £1bn on the year before.
Investment return stood at 0.3 per cent, down from 1.5 per cent.
Why it's interesting
Lloyd's said that the fall in pre-tax profits was due to the multiple "severe" natural catastrophes that occurred in 2017.
Lloyd's chief executive Inga Beale told the BBC that her company had in fact returned to profit in what had been "one of the costliest years for natural catastrophes in the past decade".
Beale said the insurer factors in the chances of natural disasters but that they are getting worse because of climate change. "The rising sea levels are causing more losses and more costly losses at this time," she said, adding that the real cost of the most recent hurricane, Hurricane Florence, has not been counted.
Last year the insurance market reported its first annual loss in six years.
What Lloyd's said:
Lloyd’s Chief Executive, Inga Beale, said:
“These results and return to profit demonstrate the strength of the Lloyd’s market following one of the costliest years for natural catastrophes in the past decade. Whilst these results are welcome, Lloyd’s continues to concentrate on improving the Lloyd’s market’s long-term performance by taking action to address underperforming areas of the market.
“The Corporation also remains focused on making the Lloyd’s platform more competitive. Alongside the success of the mandate for the placement of electronic risks, we have recently launched the Lloyd’s lab, our new innovation accelerator, which will help Lloyd’s use technology to better serve our customers around the world. We have also worked tirelessly to secure the Lloyd’s market’s access to the EU27 and our Lloyd’s Brussels subsidiary will start writing business in the European Economic Area from 1 January 2019.”