Lloyd’s has posted a solid set of results for 2014, with profits remaining stable despite an extremely competitive market environment.
Its pre-tax profits remained stable at £3.2 billion for the year ended December 31, 2014 with a return on capital of 14.7 percent. Its gross written premiums dropped slightly to £25.3 million for 2014, compared with £25.6 million in 2013.
Lloyd’s explained that the year-on-year growth in premium income in underlying currency was less than originally planned by the syndicates, which reflected the softer than expected rating environment in the aggregate risk-adjusted rate which saw a 3.3 percent decrease on renewal business.
“With industry capital growth continuing to outstrip growth in global insurance demand, the general competitive environment intensified in most lines,” said Lloyd’s. “Aside from rate reductions, some weakening in other terms and conditions, and the widening of coverage was also evident.”
Its combined ratio deteriorated to 88.1 percent for 2014, compared with 86.8 percent in 2013, but this compared favourably to its competitor group’s combined ratio of 93.1 percent.
Lloyd’s said that contraction was evident in some catastrophe classes, notably property treaty, as a result of growing competitive pressure.
“Fuelled by the influx of capacity from alternative capital providers, and a period of relatively benign loss activity, property catastrophe reinsurance continued to record the most noticeable downward movement in rates,” said Lloyd’s.
During the year, Lloyd’s welcomed three new syndicates: Axis Capital, Dale Underwriting Partners and Acappella. Three special purpose syndicates also joined.
Inga Beale, Lloyd’s chief executive officer, said: “This is a strong set of results for Lloyd’s, despite challenging market conditions. The robust performance of the market in 2014 reflects a collective achievement, of which we should be proud.
“In the face of global challenges, an abundance of capital and the low interest rate environment, Lloyd’s is being proactive in seizing the opportunities out there for growth and diversification. We will continue to engage with our global network of syndicates and brokers, to ensure Lloyd’s remains at the forefront of innovation in the industry.”
John Nelson, Lloyd’s chairman, said: “This is another excellent set of results for the Lloyd’s market, achieved against a backdrop of low interest rates and softening premium rates.
“We are making substantial progress against our long term growth strategy, Vision 2025, with plans to modernise the market and international growth gaining real momentum.
“As regards global access, we have made really excellent progress. Just this month Lloyd’s Dubai platform opened along with our new branch of Lloyd’s China in Beijing. We are opening our office in Mexico this year and the Indian government has now passed legislation to allow Lloyd’s to operate onshore in India. We are continuing to work hard to open up markets such as Turkey, Malaysia and Colombia.”
Lloyd’s, Bermuda, Reinsurance, Inga Beale, John Nelson