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Lloyd’s 2021 Full Year Results

24 Mar 2022

Today Lloyd’s have published their 2021 full year results.

2021 certainly wasn’t an easy year, as the impacts of COVID-19 lingered over economies and communities, and we experienced the fourth largest year for natural catastrophe events since 1970. For many across the world, these challenges have now been compounded by the conflict in Ukraine. Our sympathy and support are with those who are impacted by these events.

We are now living in a period of heightened, systemic risk, and the insurance industry has a critical role to play. Lloyd’s is the only global marketplace for insurance and reinsurance: enabling business to flow, supporting the interconnectedness of international trade, and providing organisations with the confidence to make decisions needed to thrive in a volatile world.

The progress in 2021 delivers on that responsibility and is demonstrated by these strong results.

LLOYD’S 2020 FULL YEAR RESULTS
For 2021, Lloyd's are reporting a pre-tax profit of £2.3bn, an underwriting profit of £1.7bn and a combined ratio of 93.5% (a 3.5-percentage point improvement on 2020, excluding the impact of COVID-19). This is the best combined ratio the market has reported since 2015.

The market grew in 2021, with premium growth of 11% and gross written premiums rising to £39.2bn. On average, the market achieved a risk adjusted rate increase of 10.9%. This is the fourth consecutive year of positive rate momentum, with increases seen across all territories and all classes of business.

Similarly, the attritional loss ratio has substantially improved, falling by 3 percentage points to 48.9%, down from 51.9% at the same point last year. This is testament to the performance management and underwriting action that has been taken by both the market and Corporation.

The expense ratio of 35.5% (2020: 37.2%) also demonstrated an improvement of 1.7 percentage points and has improved by almost 4 percentage points since 2018. The focus on sustainable performance and investment in digitalisation through the Blueprint Two programme will continue to reduce the cost of doing business at Lloyd’s.

Lloyd’s capital and solvency positions remain strong. Net resources increased by £2.6bn to £36.6bn, underlining the exceptional strength and resilience of Lloyd’s balance sheet with central solvency and market solvency ratios of 388% and 177% respectively (2020: 209% and 147%). The quality of Lloyd’s balance sheet, protection to customers and opportunities for market growth were reinforced by the announcement of a landmark £650m five-year cover for the Central Fund in the second quarter of 2021.

Full details of the Lloyd’s market 2021 Full Year Results can be found on the Lloyd’s website.

Delivering our commitments
Alongside the strong performance, Lloyd's have also made significant progress on their other strategic priorities of digitalisation, purpose and culture.

Digitalisation
The plans to digitalise the Lloyd’s market moved to the ‘build’ phase in 2022, owing to the strong foundations laid in 2021. Through Blueprint Two, it will be better, faster and cheaper to do business at Lloyd’s. The roadmap that has recently been published sets out how and when it will achieve these objectives, and how the market can prepare to adopt and implement the solutions.

Purpose
The purpose at Lloyd’s is sharing risk to create a braver world; so every discussion and decision in our market needs to have the debate on sustainability, climate and inclusion at its heart. 2021 was the year of climate action, and Lloyd's continues to dial up it's efforts to position itself as the insurer of the transition to net zero. It's doing this through the leadership of the Sustainable Markets Initiative Insurance Task Force, working with the global insurance industry to build solutions that will help societies and communities face into the very real challenge of climate change.

Culture
Strong performance is driven by good culture, and we must therefore continue to convene the discussion on diversity and inclusion, knowing that a broader, more diverse social base will create a stronger market. That means understanding the needs and expectations of our market; and taking action to improve the experiences of women and ethnic minorities while attracting, developing, retaining and promoting a diverse pool of talent to our industry.

As we reflect on 2021, the insurance industry has a greater role to play in society than has been the case for quite some time; one that is better connected, more innovative and solution-orientated, that attracts the very best talent. It is only by doing this that Lloyd’s can, and will, lead the way. The strong performance reported today, alongside the ongoing work on digitalisation, climate and culture, means Lloyd’s is well placed to drive sustainable and profitable growth in 2022 and beyond.