U.K. specialty insurance giant Lloyd’s of London made $1.9 billion USD in profits over the first half of 2016, the company recently revealed in its financial disclosure statements. With an annualized return on capital of 11.7%, this marks a $340 million USD jump over its profits during the initial six months of 2015.
While the company’s executives are naturally pleased with the profit increase, there was a marked deterioration in some of Lloyd’s results. Its underwriting returns — measured by its “combined ratio” — came in at 98.0% compared to a much better 89.5% at the same point in 2015. While this still represents a profit, it also reflects a drop in underwriting discipline on the roughly $1 billion USD in additional premiums written.
Inga Beale, chief executive of Lloyd’s of London, recognized that the Brexit decision in June, on top of all the global economic uncertainly, means that turbulent times remain ahead.
“These results reflect the highly competitive environment we are operating in, but they demonstrate that Lloyd’s is in robust financial shape,” said Beale. “Clearly the U.K.’s referendum on its E.U. membership is a major issue for us to deal with and we are now focussing our attention on having in place the plans that will ensure Lloyd’s continues trading across Europe.”
Despite the fall in underwriting results and an overall difficult climate, the company saw much better investment results. It took in a 1.8% return on investment in the first half of 2016 compared to just 0.8% in 2015. Between this and the company’s ongoing global expansion, Lloyd’s is optimistic about its progress so far this year.
“Whilst 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,” said John Nelson, chairman of Lloyd’s. “In 2016, we have applied for onshore reinsurance licenses 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.”