Forecasts & Results

Lloyd’s announces preliminary market results for 2022

Posted 08/03/2023 – Quick takes

  • Lloyd’s has announced that the market has delivered a preliminary combined ratio (CoR) of 91.9% for the financial year to 31st December 2022 (FY21: 93.5%).
  • There had been some speculation amongst insurance analysts that Lloyd’s might report its lowest CoR since 2014 (i.e. a combined ration below 90%), but although this is not the case, a CoR of 91.9% is the market’s best result since 2015.
  • This improvement in the underwriting performance comes despite major claims of 12.7% (FY21: 11.2%), including c£3.6bn of losses as a result of the conflict in Ukraine (£1.6bn or c4%) and Hurricane Ian (c£2bn or c6%).
  • 2022 gross written premiums (GWP) increased by over +19% to “more than £46bn” (FY21: £39bn).
  • Lloyd’s said that this reflects a combination of the strong US Dollar (+c8%), rate increases (+c8%) and organic growth (+c3%).
  • Lloyd’s also said that its attritional loss ratio had improved by 0.5 percentage points (ppts) to 48.4% (FY21: 48.9%).
  • Prior year reserve releases rose to 3.6% (FY21: 2.1%), whilst the market expense ratio fell by 1.1 ppts to 34.4% (FY21: 35.5%).
  • 2022 recorded an investment loss of c£3bn. This will, in turn, drive a full year loss before tax of c-£0.8bn (FY21: profit of £2.3bn). The investment losses are non-cash (mark-to-market) and should unwind over the next two to three years, as the assets mature.
  • Lloyd’s will release its detailed FY22 results on 23rd March.

John Neal, CEO, commented: “Today we are presenting an underwriting performance and capital position as good as Lloyd’s has reported in recent memory … 2022 showed both strong premium growth and a continued fall in expenses, which, alongside a high-quality balance sheet demonstrates that our market is in the best shape to offer both an attractive return to capital and investors as well as providing businesses the insurance protection they need in these uncertain times”.

Burkhard Keese, CFO, described the results as “absolutely stellar”.

Alpha comment

  • These headline results are clearly positive news for both the market and Alpha’s members and reflect the hard work undertaken by the performance management directorate over the past several years to remediate underperforming books of business.
  • Of all the headline numbers, only the major claims percentage has deteriorated – a result of both a land war in Europe and one of the most costly hurricanes of all time.
  • Given the current rating environment, in particular the recent hardening in the property treaty and retrocession markets, we continue to believe that now is an excellent time to be underwriting at Lloyd’s.
  • Lloyd’s is presenting its semi-annual ‘market message’ tomorrow, possibly the reason for this early announcement. We will report further after tomorrow’s meeting.

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