Lloyd’s Insurance Grows Underwriting Profit To £5.9bn In 2023
Lloyd’s, the world’s leading marketplace for insurance and reinsurance has announced its Full Year 2023 financial results (FY2023), which demonstrated solid profitability on both the underwriting and investment sides, and a strong balance sheet.
The market delivered an underwriting profit of £5.9bn (FY2022: £2.6bn) – a £3.3bn increase on the previous year. This contributed to a 7.9 percentage point improvement in the combined ratio to 84.0% (FY2022: 91.9%) – the strongest result since 2007. Underwriting benefited from lower costs from large risks and natural catastrophe claims, with the underlying combined ratio (combined ratio excluding major claims) of 80.5% (FY2022: 79.2%).
Lloyd’s delivered a third consecutive year of double-digit growth, with the market’s gross written premium increasing by 11.6% to £52.1bn (FY2022: £46.7bn), driven by volume growth of 4%. With price increases of 7% offsetting inflationary trends, the Lloyd’s market has now seen 24 consecutive quarters of positive price improvement.
The drive to improve performance and reduce the cost of doing business at Lloyd’s has resulted in a further 0.1% reduction in the attritional loss ratio to 48.3% (FY2022: 48.4%), with the expense ratio remaining flat at 34.4% (FY2022: 34.4%).
Investment returns of £5.3bn (FY2022: £(3.1)bn loss), driven by higher risk-free interest rates around the world and the unwind of the previously booked mark-to-market loss, contributed to an overall profit before tax of £10.7bn (FY2022: £(0.8)bn loss).
A strong and resilient balance sheet has supported central and market-wide solvency ratios of 503% and 207% respectively (FY2022: 412% and 181%), with total capital, reserves and subordinated loan notes increasing 12.7% to £45.3bn (FY2022: £40.2bn).
Lloyd’s sustainable profitability and resilient capital were reflected in S&P Global upgrading the Lloyd’s market from A+ (strong) stable outlook to AA- (very strong) stable outlook, and A.M. Best boosting the market’s outlook to positive (previously stable outlook).
“The results we’re reporting today are our best in recent history, with an outstanding underwriting result underpinned by a strong and resilient balance sheet. Our ability to attract – and provide returns on – capital is vital to ensuring we can support our customers through uncertainty. We’ll continue working with our market to deliver consistent profitable performance through disciplined underwriting – enhancing the value, relevance and long term sustainability of Lloyd’s, said John Neal, CEO, Lloyd’s
The key figures reported in Lloyd’s 2023 Full Year results are Gross written premium of £52.1bn (2022: £46.7bn); Underwriting profit of £5.9bn (2022: £2.6bn); Combined ratio of 84.0% (2022: 91.9%); Profit before tax of £10.7bn (2022: £(0.8)bn loss); Attritional loss ratio of 48.3% (2022: 48.4%); Net investment return of £5.3bn (2022: £(3.1)bn loss); Total capital, reserves and subordinated loan notes of £45.3bn (2022: £40.2bn) and Central solvency ratio of 503% (2022: 412%).
