Lloyd's of London bounces back after disasters of 2017

Lloyd’s of London returned to profit in the first half of 2018 as the insurance market recovered from a series of catastrophes that hit its members in late 2017.

Pre-tax profit for the six months to the end of June halved to £0.6bn from a year earlier but rebounded from a £2bn loss for all of 2017.

Last year’s loss was Lloyd’s first for six years after the market was battered by hurricanes, earthquakes and other disasters that sent claims surging. Insurers recorded record losses from natural disasters in 2017 as hurricanes hit the Caribbean, earthquakes rocked Mexico and wildfires blazed in California. Lloyd’s underwriters such as Hiscox and Beazley were badly affected.

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.”

First-half profit fell from a year earlier because investment returns fell to £0.2bn from £1bn, consistent with low returns across the market, Lloyd’s said.

Beale, who is leaving next year, said though Lloyd’s numbers showed signs of improvement the market continues to be weighed down by inefficiencies and unprofitable businesses. She has been trying to push through changes, including adopting an electronic trading system, but some members of the 332-year-old market have been reluctant to update working practices.

Beale said: “While much of the Lloyd’s market is profitable, some syndicates and certain lines of business have a disproportionate negative impact on the market’s profitability. Syndicates are being asked to conduct in-depth reviews of the worst performing 10% of their portfolios, along with all loss-making lines.”