(Sharecast News) - Lloyd's of London said it expected to pay out up to £5bn for claims related to Covid-19 as the pandemic drove the insurance market to a £400m first-half loss.
The market swung to the pretax loss in the six months to the end of June from a profit of £2.3bn a year earlier as it paid out £2.4bn in coronavirus claims. The payouts drove the combined ratio to 110.4% from 98.8% with a reading of more than 100 indicating a loss.
Lloyd's said its insurers faced a wide range of payouts including for business interruption and cancelled events related to Covid-19. The market said it was financially strong enough to withstand the crisis and that its net resources increased 7.2% to £32.8bn at the end of June.
John Neal, Lloyd's chief executive, said: "The pandemic has inflicted catastrophic societal and economic damage calling for unparalleled measures to stifle the spread of the virus, and to get businesses and economies back on their feet. Our half year results demonstrate that our robust approach to performance management and remediation has begun to take effect, evidenced by a significant turnaround in the underlying performance metrics."
The crisis caused many businesses around the world to stop trading from March until governments eased lockdowns starting in June. Events such as the Glastonbury festival and the January 2021 Davos meeting have been cancelled or delayed.
Neal said excluding Covid-19 the market achieved an underwriting profit of £1bn and the combined ratio fell to 91.7%. Gross written premiums rose 1.7% to £20bn though premiums were flat at constant currency. Business volumes fell 8.6% as underwriters concentrated on the quality of their books.
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