September 29, 2017 by Canadian Underwriter
The Lloyd’s market had a 1.1-point improvement in its combined ratio for the first six months of the year, while gross written premiums were up 16%, with professional lines in the United States, cyber and political risk among the lines contributing to the real growth in premium.
Meanwhile, a “preliminary analysis” indicates net claims to the Lloyd’s market, after reinsurance, from Hurricanes Harvey and Irma, are estimated at US$4.5 billion, though there is still a high degree of uncertainty.
“While pricing remains under pressure, volumes have seen continued growth, driven in part by the development of new products in critical areas such as cyber,” Lloyd’s chief executive officer Inga Beale said, of the first six months’ results, in a release.
The interim report “presents the financial results of the Society of Lloyd’s and its members,” Lloyd’s noted
The combined ratio was 96.9% during the first months of this year, down from 98% during the same period in 2016.
Lloyd’s reported its accident year combined ratio was 98.5% for the first six months of 2017, compared to 103.7% during the same period in 2016.
“This improvement is partly explained by an exceptionally benign period when it comes to catastrophe and large losses,” Lloyds reported. “Major losses added 1.9% to the combined ratio for the first half of 2017 compared with 5.7% in the equivalent period last year.”
Gross written premiums were £18.88 billion for the first six months of this year, up 16% from £16.31 billion in the first six months of 2016. After adjusting for the impact of foreign exchange rate movements, gross written premiums increased 4% year over year.
Of the gross written premiums in the six months ending June 30, £7 billion was from reinsurance, £4.6 billion was from property, £4.1 billion was from casualty, £1.38 billion was from marine, £802 million was from energy, £636 million was from motor, £279 million was from aviation and £46 million was from life.
Real growth in gross written premiums “has been driven primarily by Property insurance (US binding authorities); proportional treaty reinsurance lines; Casualty, particularly US professional lines and cyber; and Specialty, notably political risks,” Lloyd’s reported. “Much of this growth is in new products (e.g. cyber), and from traditional distribution channels (US surplus lines).”
In other lines, such as marine, aviation, energy and property catastrophe, “premium has been more stable or contracting,” Lloyd’s stated.
The underlying profit was £1.24 billion during the six months ending June 30, 2017, compared to £1.16 billion during the same period last year. Lloyd’s said the underwriting contribution to underlying profit was £370 million in the first six months of 2017, compared to £210 million in the first half of 2016.
For events during the third quarter, Lloyd’s noted Thursday that of hurricanes Harvey and Irma, its “preliminary analysis indicates net claims, after reinsurance, to the Lloyd’s market” was about US$4.5 billion. But Lloyd’s added 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.”
Hurricane Harvey made landfall Aug. 25 in Texas (causing major flooding in Houston) while Irma made landfall the second week of September in Cuba (causing major flooding in Havana) and then two separate landfalls Sept. 10 in Florida, causing widespread wind damage in the keys, hurricane-force winds in the Tampa area and record river flooding in Jacksonville.
Hurricane Maria, meanwhile, caused widespread damage in Puerto Rico.
“There is a high degree of uncertainty of the value of insured losses and at this stage we have not yet quantified the financial impact to the Lloyd’s market,” Lloyd’s reported of Hurricane Maria.