Stock - UK insurer LLoyd's
Floods such as the one in the US (shown above) will inflict sizeable damage to insurer numbers. But for now, the Lloyd's results from first-half 2022 offer some respite. Image Credit: Shutterstock

Dubai: The global insurance industry will take on a bit of confidence boost from UK insurer Lloyd’s first-half 2022 numbers, with underwriting profit at 1.2 billion pounds against 960 million pounds a year ago.

Lloyd’s results have traditionally been seen as broad indicators for the wider insurance market. This year, the industry has had to deal with the Russia-Ukraine situation, droughts and floods, geopolitical risks and, not least, whatever rocketing inflation is bringing in its wake.

Against this background, Lloyd’s did turn in a fairly good set of numbers. "Lloyd’s results point to both the sustainable performance of our market and the resilience of our capital position, enabling us to continue supporting customers through whatever lies ahead," said John Neal, CEO.

“Rising interest rates, while prompting an unrealised investment loss on paper at the half-year, will be good news for insurers in the long term as returns on assets strengthen in 2023 and beyond.

“With the conflict in Ukraine continuing to inflict devastating consequences, we’ve taken proactive steps to protect our customers from the fallout while ensuring we can support them – and continue driving sustainable performance – through the uncertain times ahead.”

Overall premiums clocked in at 24 billion pounds against 20.5 billion pounds a year ago.

Investment losses

But the pain of losses is still felt by Lloyd’s. On account of rising interest rates, Lloyd’s reported an overall loss of 1.8 billion pounds (H1-2021 showed a 1.4 billion pound profit) driven by a net investment loss of 3.1 billion pounds from unrealised mark-to-market losses.

But as the investment maturities are short-dated, the ‘market will begin to benefit from higher interest rates in 2023 and therefore improved investment returns,” said Lloyd’s in a statement.

On the war, Neal said: “With the conflict in Ukraine continuing to inflict devastating consequences, we’ve taken proactive steps to protect our customers from the fallout while ensuring we can support them – and continue driving sustainable performance – through the uncertain times ahead.”

To this end, the insurer has taken steps similar to what it did during the Covid phase. “The market (Lloyd’s) has reserved 1.1 billion pound net of reinsurance for customers impacted by the conflict in Ukraine,” a statement said. “Lloyd’s continues to work with governments and regulators around the world to deliver sanctions against Russia, while implementing the landmark facility announced by our market in July to insure ships recovering grain from Ukraine’s ports.”