Lloyd's Reports £1.67 bn profit for first half of 2014
Lloyd’s, the world’s specialist insurance and reinsurance market, today announced a profit of £1.67 billion for the first six months of 2014, marking a 21% increase on the corresponding period last year.
While these results show an improvement over the equivalent period in 2013, market conditions are becoming increasingly challenging.
- Pre-tax profit of £1.67 billion (H1 2013: £1.38 billion).
- Return on capital of 16.5% (H1 2013: 14%).
- Investment income of £642 million (H1 2013: £247 million).
- Combined ratio of 88.2% (H1 2013: 86.9%) outperforms competitors.
- Benign period for major catastrophes.
- Rating upgrade in June from Fitch to 'AA-' from 'A+'.
The ratings upgrade that Lloyd’s received in June this year to AA- from Fitch, cited Lloyd’s excellent underwriting oversight, and investment in risk and exposure management practices as part of Solvency II preparations.
Lloyd’s CEO, Inga Beale, said:
“This is an excellent set of half year results for the Lloyd’s market. This is in large part down to the market’s expert underwriting. Continued innovation, combined with robust oversight and financial strength, all ensure the successful operation of the market despite challenging conditions.”
Lloyd’s Chairman, John Nelson, said:
“I am delighted by these half year results, especially as they come against a backdrop of an intensely competitive environment. The Lloyd’s market remains in a strong financial position, and this solid foundation means Lloyd’s is in a great position to expand in both established and high-growth economies around the world.”
Results at a glance
|30 June 2014||30 June 2013|
|Profit*||£1.67 bn||£1.38 bn|
|Return on capital***||16.5%||14.0%|
*Profit before tax
**Actual in first six months. FY 2013: 1.6%
***RoC calculated on an annualised basis
- Lloyd’s 2014 Interim Report can be accessed at: www.lloyds.com/2014interims
- A combined ratio is a measure of an insurer’s underwriting profitability based on the ratio of net incurred claims plus net operating expenses to net earned premiums. A combined ratio of 100% is break even (before taking into account investment returns). A ratio less than 100% is an underwriting profit.
- Central assets include the assets of the Central Fund and the other assets of the Corporation. In aggregate, the value of Lloyd’s central assets, excluding the callable layer and the liability in respect of the subordinated debt and securities, amounted to £2,475 million at June 2014. The Society financial statements are drawn up under IFRS.
- Lloyd’s is rated AA- (very strong) with Fitch, A+ (strong) with Standard & Poor’s and A (excellent) with A.M. Best. Lloyd’s is currently on positive outlook with Standard & Poor’s and A. M. Best.
- Members’ resources operate on a several basis and are only available to meet each member’s share of claims. Central assets are available at the Council’s discretion to meet the liabilities of any member on a mutual basis.
- This press release includes forward-looking statements. These statements are based on currently available information and consistent with accounting policies as applied at 31 December 2013. They reflect Lloyd’s current expectations, projections and forecasts about future events and financial performance. All forward-looking statements address matters that involve risks, uncertainties and assumptions. Based on a number of factors, actual results could vary materially from those anticipated by the forward-looking statements. These factors include, but are not limited to, the following:
- Rates and terms and conditions of policies may vary from those anticipated.
- Actual claims paid and the timing of such payments may vary from estimated claims and estimated timings of payments, taking into account the preliminary nature of such estimates.
- Claims and loss activity may be greater or more severe than anticipated, including as a result of natural or man-made catastrophic events.
- Competition affecting the basis of pricing, capacity, coverage terms or other factors may be greater than anticipated.
- Reinsurance placed with third parties may not be fully recoverable, or may not be paid on a timely basis, or such reinsurance from creditworthy reinsurers may not be available or may not be available on commercially attractive terms.
- Developments in the financial and capital markets may adversely affect investments of capital and premiums, or the availability of equity capital or debt.
- Changes in legal, regulatory, tax or accounting environments in relevant countries may adversely affect (i) Lloyd’s ability to offer its products or attract capital, (ii) claims experience, (iii) financial return, or (iv) competitiveness.
- Economic contraction or other changes in general economic conditions could adversely affect (i) the market for insurance generally or for certain products offered by Lloyd’s, or (ii) other factors relevant to Lloyd’s performance.
- The foregoing list of factors is not comprehensive, and should be read in conjunction with other cautionary statements that are included herein or elsewhere. Lloyd’s undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
- Foreign exchange rates may materially fluctuate from the rates prevailing at 30 June 2014 (£1 = US$ 1.71, £1 = €1.25). Premiums, claims and investment income are translated at the average exchange rate for the six months to 30 June 2014 (£1 = US$1.67, £1 = €1.22).
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Lloyd's is the world's specialist insurance market and occupies fifth place in terms of global reinsurance premium income, and is the largest surplus lines insurer in the US. In 2014, 94 syndicates are underwriting insurance at Lloyd's, covering all classes of business from more than 200 countries and territories worldwide. Lloyd's is authorised under the Financial Services and Markets Act 2000 and regulated by the Financial Conduct Authority and Prudential Regulation Authority.
2014 interim report
Lloyd's has announced a profit of £1.67bn for the first six months of 2014.Download Lloyd's 2014 interim report