Over the last three years, Lloyd’s’ sustained performance improvement measures contributed to an improved underwriting result of £1.9 billion and a 7.5-per-cent improvement in the combined ratio, excluding Covid-19, to 97 per cent. 2020 saw premium rate increases of 10.8 per cent, with positive rate momentum continuing in the first quarter of 2021.
Lloyd’s maintains strong capital and solvency positions, with net resources increasing to £33.9 billion in 2020, and central and market-wide solvency ratios of 209 per cent and 147 per cent respectively.
Pandemic, Brexit and catastrophe losses made for a challenging year
John Neal, Lloyd’s CEO, said: “Following an extremely challenging year marked by a global health crisis of a scale never seen before, Lloyd’s continued to support its customers with payouts expected to total £6.2 billion in Covid-19 claims. The year was also marked by a high frequency of natural catastrophe claims and the UK's formal exit from the EU, driving further losses and uncertainty.
“Against this unprecedented backdrop, we have made good progress across our performance, digitalisation, and culture transformation plans. Our disciplined underwriting approach and determination to become the world's most advanced insurance marketplace have set us up for real success this year alongside the continued positive rate momentum that will see the market supporting growth for the first time in four years.”
Underwriting profit of £0.8 billion excluding Covid-19 losses
The key figures reported in Lloyd’s 2020 full-year results include:
- Gross written premiums of £5.5 billion (2019: £35.9 billion)
- Combined ratio of 110.3 per cent (2019: 102.1 per cent)
- Attritional loss ratio of 51.9 per cent (2019: 57.3 per cent)
- Net investment income of £2.3 billion, 2.9-per-cent return (2019: £3.5 billion, 4.8-per-cent return)
- Net resources of £33.9 billion (2019: £30.6 billion)
- Central solvency ratio of 209 per cent (December 2019: 238 per cent)
Excluding Covid-19 losses, the market delivered an underwriting profit of £0.8 billion, demonstrating a significant improvement in Lloyd’s underlying performance. This is supported by a 7.8-per-cent improvement of the underlying combined ratio (attritional loss ratio, expense ratio and prior year releases) which has dropped to 87.3 per cent.
Acceleration in positive rate momentum throughout 2020
Gross written premiums of £35.5 billion represent a 1.2-per-cent reduction over the same period in 2019. Exceptional market conditions driven by an acceleration in positive rate momentum throughout 2020 saw the market achieve average risk adjusted rate increases on renewal business of 10.8 per cent. This was offset by a 12-per-cent reduction in GWP due to the remediation of underperforming business in 2020, reflecting the market’s continued focus on the quality of the business it renews and underwrites.
The 2020 expense ratio saw a 1.5-per-cent improvement dropping to 37.2 per cent (2019: 38.7 per cent), and this remains a key area of focus, with the Future at Lloyd’s Blueprint Two solutions and delivery programme central to tackling total acquisition costs and administration expenses.