Insurance market’s COR improves by 4.3 points to 86.8%
Lloyd’s made a profit before tax of £3.2bn in 2013, up 14% on the £2.8bn it made in 2012.
The insurance market’s combined operating ratio (COR) improved by 4.3 percentage points to 86.8% (2012: 91.1%).
The improved underwriting profitability was helped by a 52% drop in major claims to £836m (2012: £1.8bn), which added 4.4 points to the COR (2012: 9.7 points).
The market’s underwriting profitability was boosted by reserve releases of £1.6bn (2012: £1.4bn).
The improved profit came despite a 36% drop in investment income to £839m (2012: £1.3bn).
Gross written premium increased by 2.3% to £26.1bn (2012: 25.5bn), although the increase was 1.6% when factoring in the impact of foreign exchange and year-on-year risk-adjusted rate change.
Lloyd’s chief executive Inga Beale said: “Disciplined underwriting and a benign year for major catastrophes have enabled us to outperform our peers and post this outstanding profit of £3.2bn.
“From this base, the Lloyd’s market has a great opportunity to expand in the underinsured, high growth economies around the world.
“We have started to build the foundations for this growth, as set out in our long-term strategy ‘Vision 2025’, through close engagement with the market. We will continue to support our expert underwriters, through efficient operations, to attract capital and talent from these high growth economies.”
Lloyd’s chairman John Nelson added: “These are outstanding results for Lloyd’s and are a tribute to the talent and professionalism in the Lloyd’s market.
“While we saw few catastrophe claims in 2013, continued low interest rates saw reduced investment income and high levels of capital continuing to flow into the market, which put pressure on prices.
“These conditions look set to persist. I therefore expect increased competitive pressure on the market to remain in 2014. This underlines the need for continued underwriting discipline as we seek to maintain and reinforce our position as the global centre for specialist insurance and reinsurance.”