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Lloyd's posts higher pre-tax profit of £1.46b for H1 2016

Thursday, September 22, 2016 - 16:32
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Specialist insurance and reinsurance market Lloyd's has posted a 21.7 per cent year-on-year rise in pre-tax profit for the first six months of the year to £1.46 billion (S$2.58 billion), despite an increase in major claims.

SPECIALIST insurance and reinsurance market Lloyd's has posted a 21.7 per cent year-on-year rise in pre-tax profit for the first six months of the year to £1.46 billion (S$2.58 billion), despite an increase in major claims.

Gross premiums, which have continue to be under pressure, grew 5.2 per cent to £16.31 billion in the six months to June, it said on Thursday.

Underwriting profitability shrank on a year-on-year basis.

This, as its combined ratio rose to 98 per cent in H1 2016 from 89.5 per cent a year ago, due to a rise in major claims that was primarily attributable to the Fort McMurray fires in Alberta, Canada.

A combined ratio is based on the ratio of net incurred claims plus net operating expenses to net earned premiums. To break even, the combined ratio is 100 per cent. So, the lower the combined ratio, the higher the underwriting profit.

In the first half of 2016, investment return came in at 1.8 per cent, up from 0.6 per cent a year ago.

Annualised return on capital rose to 11.7 per cent from 10.7 per cent in 2015.

Its chief executive Inga Beale said the results reflect the "highly competitive environment we are operating in".

"Clearly the United Kingdom's referendum on its European Union membership is a major issue for us to deal with and we are now focusing our attention on having in place the plans that will ensure Lloyd's continues trading across Europe."

Said Lloyd's chairman John Nelson: "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."

Earlier in the month, Mr Nelson had talked about the importance of passporting rights to the London-based insurance market. He had said Lloyd's could move some of its operations to other parts of the European Union if it loses access to the single market.