Lloyd’s of London posted its first loss in six years after one of the costliest periods for natural disasters in a decade.
The world’s oldest insurance market recorded a pre-tax loss of £2 billion (AU$3.7 billion) in 2017 as major claims more than doubled to £4.5 billion (AU$8.2 billion).
Devastating hurricanes, including Irma which caused widespread damage in parts of the US and Caribbean, helped trigger an underwriting loss of £3.4 billion (AU$6.2 billion). That pushed the combined ratio to 114%, reflecting larger payouts for claims than the revenue generated from premiums.
“The market experienced an exceptionally difficult year in 2017, driven by challenging market conditions and a significant impact from natural catastrophes,” Lloyd’s chief executive officer, Inga Beale, said in a statement.
Despite losses caused by the unusual number of disaster claims last year, other European insurers and reinsurers such as Zurich Insurance Group AG and Munich Re were able to at least maintain dividends and continue share buyback programs. Costly catastrophes included wildfires in California and earthquakes in Mexico.
More Lloyd’s struggles
Lloyd’s CEO Beale said insurance contracts across Europe will remain at risk unless there’s an agreement on how they should be treated in post-Brexit Europe.
“Regulators across Europe can actually come to an agreement themselves and find a possibility to allow all the insurers and banks on both sides to continue to service those old contracts,” Beale said in a Bloomberg TV interview on Wednesday. “That’s what we’re really pushing for, that contract continuity.”
Lloyd’s is setting up a European headquarters in Brussels so it can sell products from a location domiciled in the European Union. While the operation should be up and running by Jan. 1, only about 40 employees will work there. “A lot of the activity that takes place in London will continue to take place in London,” she said.