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According to Lloyd’s of London, the Ukraine war will not cause solvency problems

Lloyd’s of London says the Ukraine conflict will not pose solvency problems as the insurance market returns to profitability

  • Ukraine, Belarus and Russia account for less than 1% of Lloyd’s written premiums
  • Insurers expect to pay billions in damages related to the war in Ukraine
  • Lloyd’s rebounded from a pre-tax loss of £877m in 2020 to a profit of £2.3bn last year

Lloyd’s of London said the war in Ukraine will not create solvency problems but will cause “major damage” to the insurance and reinsurance market this year.

The company said that Ukraine, Belarus and Russia account for less than 1 percent of all premiums written, so it expects the overall loss size to be “within manageable tolerances”.

Insurers are preparing for billions of dollars in damage related to the conflict in Eastern Europe, including damaged buildings, grounded and canceled flights, and cyber attacks.

Recovery: Lloyd’s of London last year reported a rebound to £2.3bn of pre-tax profit after the coronavirus pandemic caused a loss of £877m in the previous 12 months

A report from last week from the financial times suggested that Lloyd’s would have to pay between $1 billion and $4 billion, a figure the group has declined to confirm or deny.

Lloyd’s today acknowledged that the war would have a long-term impact on its balance sheet and performance due to underwriting risks arising from sanctions, risks within investment portfolios and the impact on operations.

But while it said the war’s financial impact on the company was difficult to predict, it added that there were currently no indications that the conflict would prevent it from meeting financial obligations or regulatory capital requirements.

It came as Lloyd’s reported it had recovered to a pre-tax profit of £2.3billion last year after the high number of event cancellations and business interruption costs caused by the coronavirus pandemic over the previous 12 months resulted in a loss of £877m.

The insurance market also announced an underwriting profit of £1.7bn compared to a deficit of £2.7bn a year earlier, as it benefited from a fall in claims for catastrophic events such as hurricanes and wildfires.

This helped the combined operating ratio, a measure of the profitability of general insurance business, improve from 110.3 percent in 2020 to 93.5 percent last year. A level below 100 percent means a win.

Conflict: Insurers are preparing, among other things, for losses in the billions in connection with the Ukraine war from damaged buildings, grounded flights and cyber attacks

Conflict: Insurers are preparing, among other things, for losses in the billions in connection with the Ukraine war from damaged buildings, grounded flights and cyber attacks

At the same time, total gross written premiums rose by £3.75bn to £39.2bn thanks to much higher demand in the reinsurance and casualty lines of business, offsetting lower premiums in the energy and marine, aviation and transport lines of business.

John Neal, Chief Executive of Lloyd’s, said: “In a world beset by increasingly complex and interrelated risks – from the pandemic to geopolitical conflict – Lloyd’s Market stands by its clients and supports them in theirs Recovery when something goes wrong.

‘Against this background, I am pleased that the market is returning to profitability after the decisive measures that have been taken to improve performance in recent years.

‘The market’s underwriting discipline will enable sustained profitability for years to come, coupled with a balance sheet that can support our drive for profitable growth.’

Based in the City of London in a building designed by the late Richard Rogers, Lloyd’s has struggled in recent years through a series of losses stemming from natural disasters and increased competition, as well as the emergence of Covid-19.

The group has also had to deal with harassment and bullying scandals. Last week it imposed its largest fine ever on a syndicate member for conduct that included making inappropriate comments about female employees at a boys’ night out.

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According to Lloyd’s of London, the Ukraine war will not cause solvency problems

Source link According to Lloyd’s of London, the Ukraine war will not cause solvency problems

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