Lloyd’s has released its results for the six month period that ended on 30 June 2017.

In summary figures are as follows



6m to

30 June 2017

6m to

30 June 2016


Gross written premium




Net earned premium




Profit before tax




Combined ratio



1.1 percentage points better

Return on capital(annualised)



2.8 percentage points worse

The underlying increase in premium volumes, adjusted for changes in the rate of foreign exchange is 4.7%. Although prices and rates have continued to reduce, syndicates have been able to increase their overall business volumes. Areas of growth include property insurance in the USA, casualty (especially professional lines and cyber) and political risks. Other lines, including marine, energy, aviation and property catastrophe have been stable or reducing. Lloyd’s calculates that the average risk adjusted rate on renewal business is down 2.3%, compared with a reduction of 3.5% twelve months ago.

The full interim report can be found here

Although the overall profit is down, this is due to a lower investment return. Lloyd’s syndicates generally invest in safe assets such as gilts and treasuries and highly rated corporate bonds. Performance in this sector was weaker than twelve months ago and weak when compared to gains on equity investments.

The results only refer to the first half year, so do not include the impact of the Atlantic hurricane season or earthquakes in Mexico all of which will included in the full year results. Catastrophe activity in the first half year was benign, with the largest single event for the market being an explosion at a refinery in Abu Dhabi in January. The results do include some of the impact of the change in the Ogden rate, used to calculate the compensation paid to the most seriously injured victims of accidents including motor accidents and incidents at work.

The combined ratio is slightly better than 12 months ago and better than the ratio achieved by the market for the full 2016 year, which was 97.9%. This was aided by a release from reserves held for prior years of £0.2 billion, although this was lower than the reserve in the first half of 2016 which was £0.6 billion.

It is obvious that the losses inflicted on the market by hurricanes Harvey, Irma and Maria will dominate the results for the full year. Lloyd’s comments on Harvey and Irma as a post balance sheet event, stating that “It is currently too early to reliably estimate the financial impact of these loss events to the Lloyd’s market given the level of uncertainty at this stage of development. Our preliminary analysis indicates net claims, after reinsurance, to the Lloyd’s market in the region of $4.5bn.

More recently, although the powerful hurricane Maria spared the US mainland, it wrought huge destruction on the US protectorate of Puerto Rico. This is thought to be a significant loss to the market. Information is still far from complete; the island is without any form of power and only just beginning the recovery and aid process. Lloyd’s states that it has not yet quantified the financial impact to the market.

Press reports suggest that the total insured and reinsured damage from catastrophe losses for the year could be as high as $190 billion, which will be almost double the totals of 2005 and 2011. Hurricanes Maria and Lee have been downgraded to category one storms and are expected to weaken further as they move east across the Atlantic towards Europe. There are no other active storms in the Atlantic at present although the hurricane season is generally regarded to run until the end of November with some intense storms occurring during October. There can be no guarantee that there will not be further catastrophe losses in the period.

After at least five years of declining rates, and with additional capital being attracted into the business by the good and non-correlated returns made in the industry, some syndicates are now beginning to expect a market turn, with increased rates and lessened availability of capital into 2018. We are aware that a number of managing agents are revising plans for 2018 in expectation of an improved rating environment in key areas such as US and international property and reinsurance.

Lloyd’s will provide updated forecasts for the 2015 and 2016 year of account for syndicates with third party capital on 15 November.