Lloyd’s has reported an H1 pre-tax profit of £2.3bn, with a combined ratio of 98.8%, for the first half of 2019. This compares with a pre-tax profit of £0.6bn and a combined ratio of 95.5% for the same period last year.
Gross written premiums for the first half were £19.7bn, up 1.8% on the same period in 2018.
GWP in marine was £1.196bn, with net earned premium of £1.023bn. Net incurred claims were £723m, and net operating expenses were £399m, leading to a net underwriting result loss of £99m.
This compared with GWP of £1.418bn in marine for H1 2018, NEP of £1.078bn, net incurred claims of £678m, net operating expenses of £445m, and a net underwriting result of minus £55m.
In several major lines of business, but most significantly in marine, premium volumes contracted, with syndicates seeking to remediate performance within their portfolios, Lloyd’s said.
A combination of higher individual risk losses in the first half of 2019 and a fall in prior year releases to 0.4% in H1 2019 from 3.8% in H1 2018 contributed to an increase in the loss ratio to 60.7%, from 56.2% in the same period last year.
Larger releases in energy, property, and to a lesser extent motor and marine lines of business were offset by strengthening in reinsurance, casualty and aviation lines with reserve deterioration following the Typhoon Jebi loss in particular contributing to the reinsurance strengthening.
The current underwriting year showed a reduction in the attritional loss ratio when compared to the 2018 underwriting year at the same point in time.
The operating expense ratio was down by 1.2pp in the period, from 39.3% in 2018 to 38.1% in 2019.
Investment income of £2.3bn made a significant contribution to the interim result. The market benefitted from unrealized gains due to reducing US and UK bond yields, plus “robust returns from equities” during H1.
The solvency coverage ratio rose to 266%, from 249% at the turn of the year.