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Lloyd’s hails ‘robust’ first-half performance

Despite a highly competitive environment, the Brexit fallout and increased catastrophe losses, Lloyd’s has reported a £1.46 billion ($2.49 billion) profit for the first half, up £260 million ($444.18 million) on the corresponding period last year.

However, the market’s combined operating ratio deteriorated to 98% from 89.5% – the first time it has been above the competitor group weighted average of 95.1% since 2011.

This is attributed to an increase in expense and attritional loss ratios, higher catastrophe losses – most notably from the Fort McMurray fire in Alberta, Canada – and a reduction in reserve releases.

Investment returns moved to 1.8% from 0.6%, due in part to a downward yield shift in the bond portfolio.

Gross written premium increased 5% to £16.31 billion ($27.86 billion).

While rates have continued to decline, volumes increased, reflecting the market’s strong global footprint.

Lloyd’s has also declared net resources of £26.6 billion ($45.44 billion) and a return on capital of 11.7%, compared with 10.7% in the corresponding period last year.

Premiums continue to face pressure, but Lloyd’s financial ratings remain strong with Fitch (AA-), AM Best (A) and S&P Global Ratings (A+).

CEO Inga Beale says the results show Lloyd’s remains robust in a “highly competitive environment”.

“Clearly the UK’s referendum on its EU membership is a major issue for us to deal with and we are now focusing our attention on having in place the plans that will ensure Lloyd’s continues trading across Europe,” she said.

Chairman John Nelson says Lloyd’s is making inroads in emerging markets, with onshore reinsurance markets in India and Malaysia and a new office in Bogota, Columbia.

He says this complements growth in Dubai, China and more traditional markets, particularly the US.