Lloyd’s of London slumps to first loss in six years after ‘very difficult’ 2017
Lloyds revealed losses of £2 billion in 2017 against pre-tax profits of £2.1 billion in 2016 after a year which saw a number of natural disasters across the world.
Lloyd’s of London has slumped to its first loss for six years after a string of devastating hurricanes and earthquakes in 2017 sent it tumbling by £2 billion into the red.
The insurance market said major claims more than doubled to £4.5 billion in an “exceptionally difficult” year, with insurers hit by mammoth bills following hurricanes in the Caribbean and Florida, earthquakes in Mexico and wildfires in California.
It was one of the “costliest years for natural catastrophes in the past decade”, according to the group.
The market experienced an exceptionally difficult year in 2017, driven by challenging market conditions and a significant impact from natural catastrophes. Inga Beale, chief executive
Its members – who insure insurers – forked out £18.3 billion of total claims gross of reinsurance last year, “demonstrating the critical role the market plays in helping businesses, communities and countries recover quickly after disasters”.
Its hefty annual loss comes against pre-tax profits of £2.1 billion in 2016 and marks its first for six years.
The group’s annual report released alongside the results showed that Ms Beale still landed a £405,000 bonus for 2017 – up from £400,000 the previous year – despite the huge losses.
But she saw her total pay cut to £1.3 billion from £1.5 billion in 2016 as she missed out on a share award under the firm’s long-term bonus scheme.
The group’s remuneration committee said it awarded her the bonus, worth 57% of her annual salary, for a range of performance achievements in the year, including actions taken to clean up poorly performing portfolios, as well as increasing visits to the group’s website.
Its results showed the group’s combined ratio – a measure of claims and costs as a proportion of premiums – worsened to 114% from 97.9% in 2016 as the cost of last year’s catastrophes took its toll.
A level above 100% indicates a loss.
But it reassured over the strength of its balance sheet despite the payouts, adding it “met these substantial commitments without any significant impact on total resources, which remain strong at £27.6 billion”.
Inga Beale, chief executive of Lloyd’s, said: “The market experienced an exceptionally difficult year in 2017, driven by challenging market conditions and a significant impact from natural catastrophes.
“These factors mean that for the first time in six years, Lloyd’s is reporting a loss.
“Lloyd’s is here to support customers when it matters most, providing the financial support to enable businesses, governments, and most importantly people, to recover and rebuild their lives as quickly as possible, and I’m proud of the market’s response.”
Lloyd’s also confirmed that its planned EU subsidiary would be operational by July ahead of Brexit.
It aims to get a licence for its Brussels subsidiary so that it is operational by July and ready to write business by Jan 1 2019, according to its annual report.