31 Mar 2021
Today Lloyd’s have published their 2020 results. The overall result has inevitably been heavily impacted by COVID-19 losses, and although 2020 will forever be remembered as the ‘year of COVID-19’, the market also suffered threats from two other fronts: the first driven by Brexit uncertainty, the second being a significant increase in the number of natural catastrophe events, the fifth largest year on record.
For 2020, Lloyd’s is reporting a pre-tax loss of £0.9bn, driven by £3.4bn net incurred COVID-19 losses adding 13.3% to the market’s combined ratio of 110.3%.
Throughout 2020, Lloyd’s has provided critical financial support to our customers, with COVID-19 claims pay-outs expected to reach over £6 billion. Although the majority of claims are yet to be reported, the market has responded at pace, having already paid out two thirds of the £2bn claims reported to date.
Excluding COVID-19 claims, our 2020 results demonstrate solid underlying progress having embarked on a three-year journey to improve performance. The market’s underlying combined ratio has shown substantial improvement over the past three years, dropping to 97.0% in 2020. This represents a 5.1% improvement on 2019 (102.1%) and a 7.5% improvement on 2018 (104.5%). The attritional loss ratio has also improved by 5.4% to 51.9% when compared with 2019.
Furthermore, we have achieved a £1.9bn improvement in underwriting earnings from a loss of £1.1bn in 2018, to a profit of £0.8bn in 2020 (excluding COVID-19). Over the same period, the market has achieved year-on-year rate increases of approximately 10%, whilst shedding approximately 20% of the worst performing business. This is tangible evidence that the performance measures introduced over the last three years are beginning to bite.
Lloyd’s balance sheet remains exceptionally well capitalised post COVID-19, with total resources standing at £33.9bn and a central solvency ratio of 209%. Our excellent financial strength is further evidenced by Lloyd’s strong financial strength ratings which are A+ (Strong) stable outlook with Standard & Poor’s, A (Excellent) stable outlook with A.M. Best, AA- (Very Strong) with Fitch Ratings.
Notwithstanding the challenges 2020 has brought, these results demonstrate the positive impact of Lloyd’s sustained performance improvement measures and a strong return to profitability.
Full details of the Lloyd’s market 2020 Full Year Results can be found on the Lloyd’s website.
Alongside our strong performance improvement, the pandemic highlighted the importance of our ambition to digitalise the marketplace. 2020 saw substantial progress made on the next phase of our Future at Lloyd’s journey with the publication of Blueprint Two in November, our two-year digitalisation programme.
We have also made encouraging strides in our commitment to transform our shared culture, which is vital to our long-term success. The results of our second annual Culture Survey demonstrate strong progress, which gives us the encouragement that we can make a difference, albeit there is much more work to be done.
Looking ahead to 2021, it is clear that our purpose of sharing risk to create a braver world has never been more important. That is why we are placing ‘purpose’ as our fourth strategic pillar, alongside performance, digitalisation and culture. As the world shifts from the tangible to the intangible, amid rapid digitalisation and economies rebuilding, we must build back not only better, but braver. Every discussion and decision in our market needs to have at its heart a debate on sustainability, climate, innovation and inclusion.
As we look back on 2020, we can be proud of the way Lloyd’s has stood up and demonstrated its resilience through an incredibly challenging period. We are now entering a period of favourable trading conditions, so we must make the best of that opportunity, whilst continuing to develop the products and services that our customers want and need. Our performance improvement agenda has been well executed and has set us up well for 2021 and beyond.
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