Lloyd's Market Messages Q1 2023
Lloyd’s held its quarterly briefing on the morning of March 9th. These market messages are an opportunity for Lloyd’s centrally to discuss areas of priority with market practitioners. The market results are currently satisfactory. Lloyd’s provided a trading update on 8th March giving details of the 2022 calendar year with an overall combined ratio of 92%, Patrick Tiernan reminded the audience that this is best underwriting result since 2015. He went further, saying that the contribution of major losses to the combined ratio was less than 4% in 2015 but more than 12% in 2022. This underlines the improvement in fundamentals including the underlying attritional loss ratio and the expense ratio. Nonetheless, he said that this a new year with a new start and the underwriters would need to keep up the performance. Dealing with catastrophe and major loss in a heightened risk environment remains a priority.
The slides and a full recording of the event are available here.
Jargon buster - combined ratio is a measure of insurer profitability. It expresses claims and expenses as a proportion of premium income. At 100%, an insurer is breaking even from its underwriting operation with the final result dependent on the performance of the investment portfolio. Lloyd's combined ratio at 92% indicates that the market is reporting a profit of 8p for every £1 of premium income.