How have Lloyd's Underwriters been faringsince the COVID-19 pandemic was declared?
AM Best analysts delved into this question. Lloyd's has remained relevant through this crisis, but underwriting challenges remain and are hindering a potential return to profitability, they firm concludes in a report called Lloyd's Resilient Against Significant COVID-19-Related Losses.
The return to profitability was taking shape long before the pandemic began. The underwriting syndicates that make up Lloyd's have had their share of losses not only related to claims arising from the pandemic, but also to the many natural disasters that occurred in 2020.
Over five years, from 2016 to 2020, Lloyd's has a combined ratio of 105.9 per cent, above the break-even point of 100 per cent. New syndicates have emerged during this period, while others have closed.
In 2020, Lloyd's combined ratio was 110.3 per cent. Does this augur a dismal future, considering the amount of capital its underwriting syndicates provide to the global property and casualty insurance market?
Not necessarily, say AM Best analysts.
Insurance brokers dealing with Lloyd's can expect the governing body to continue to scrutinize its risk exposure. That means maintaining strict underwriting requirements, AM Best analysts say.
However, there is a cloud on the horizon. The financial performance of Lloyd's in 2021 will depend on the hurricane season in North America. The continent has already seen a series of natural disasters since the beginning of the year. The recent track of Ida, Larry and Nicholas, combined with potential storms that follow, could have a surprisingly adverse impact on Lloyd's underwriting capacity in 2022.
